Managed Care 101 Art and Science of Medicine 2/17/2010

2. Managed Care 101Art and Science of Medicine 2/17/2010 Edward Anselm, MD Chief Medical Officer FidelisCare, New York Assistant Professor of Medicine,  Mount Sinai School of Medicine eanselm@msn.com 

4. Course Objectives: • Overview of the US Health Care System • Rationale for Managing Care • Tactics of Managed Care • The mind of the consumer • Regulatory environment • The future of managed care

5. Ageing population Expanding population New technology and procedures Unnecessary testing Fraud Malpractice litigation Really bad doctors Dysfunctional delivery systems Profit Tax deductibility of health insurance premium Inadequate regulation of insurance markets No national health care policy Dysfunctional financing and payment systems Drivers of Health Care Costs

6. Defective Health Care Infrastructure • Over supply of hospital beds and specialists • Shortage of primary care physicians • A high proportion of individual and small group practices • Shortage of nurses • Over supply of radiology services • Distorted pharmaceutical benefit design and pricing

7. Variation in Quality of Care Percent of recommended care received: • Overall: 54.9% • Preventive: 54.9% • Acute: 53.5% • Chronic: 56.1% • Breast cancer: 75.7% • Hypertension: 64.7% • Depression: 57.7% • Diabetes mellitus: 45.4% • Alcohol dependence: 10.5% Source: McGlynn EA, et al. The Quality of Health Care Delivered to Adults in the United States. New England Journal of Medicine 2003; 348;26:2635-45

8. Insights from the work of John Wennberg • Effective Care • Medically necessary on the basis of clinical outcomes evidence; benefits so outweigh the risks that all with medical need should receive them • Preference-sensitive Care • Discretionary surgery for which there are two or more valid treatment alternatives; choice of treatment involves tradeoffs that should be based on patient preference • Supply-sensitive Care • Physician visits, referrals to specialists, hospitalizations, ICU stays. The majority of these services are for patients with chronic illness From www.dartmouthatlas.org

11. Standardized ratio (log scale) Hip Fracture (13.8) Knee Replacement (55.0) Hip Replacement (67.2) Back Surgery (93.6) Rates of four orthopedic procedures among Medicare enrollees in 306 hospital referralregions (2000-01)

12. Association Between Capacity and Utilization:Hospital Beds and Admissions 44.0 38.0 C.H.F. R2 = 0.41 32.0 26.0 Discharge Rate 20.0 14.0 Hip Fracture R2 = 0.06 8.0 2.0 1.0 2.0 3.0 4.0 5.0 6.0 Acute Care Beds

13. 2.5 2.0 1.5 Visits to Cardiologists per enrollee 1.0 0.5 R2 = 0.49 0.0 0.0 2.5 5.0 7.5 10.0 12.5 15.0 Number of Cardiologists per 100,000 Association between cardiologists and visits per person to cardiologists among Medicare enrollees (1996): 306 HRRs

14. Electrocardiogram Echocardiogram Routine Stress Test Imaging Stress Test Coronary CT Angiogram Left Heart Catheterization PCI/CABG/No Intervention Duplicative Testing • Adds little to patient outcome • Potential complications • Increases cost

15. Rising Utilization Trends Cardiac imaging increasing faster in outpatient offices than in hospital outpatient departments - Lucas et al Circulation 2006; 113:374 379

16. The Prevention Quality Indicators • The Prevention Quality Indicators represent hospital admission rates for the following 14 ambulatory care sensitive conditions: • Diabetes, short-term complications (PQI 1) • Perforated appendicitis (PQI 2) • Diabetes, long-term complications (PQI 3) • Chronic obstructive pulmonary disease (PQI 5) • Hypertension (PQI 7) • Congestive heart failure (PQI 8) • Low birth weight (PQI 9) • Dehydration (PQI 10) • Bacterial pneumonia (PQI 11) • Urinary infections (PQI 12) • Angina without procedure (PQI 13) • Uncontrolled diabetes (PQI 14) • Adult asthma (PQI 15) • Lower extremity amputations among patients with diabetes  (PQI 16)

17. Total Hospitalizations Attributed to Ambulatory Care-Sensitive Conditions, by Payer and Sex

18. Rehospitalizations among Patients in the Medicare Fee-for-Service ProgramStephen F. Jencks, M.D., M.P.H., Mark V. Williams, M.D., and Eric A.Coleman, M.D., M.P.H. • Background Reducing rates of rehospitalization has attracted attention from policymakers as a way to improve quality of care and reduce costs. However, we have limited information on the frequency and patterns of rehospitalization in the United States to aid in planning the necessary changes. • Methods We analyzed Medicare claims data from 2003–2004 to describe the patterns of rehospitalization and the relation of rehospitalization to demographic characteristics of the patients and to characteristics of the hospitals. • Results Almost one fifth (19.6%) of the 11,855,702 Medicare beneficiaries who had been discharged from a hospital were rehospitalized within 30 days, and 34.0% were rehospitalized within 90 days; 67.1% of patients who had been discharged with medical conditions and 51.5% of those who had been discharged after surgical procedures were rehospitalized or died within the first year after discharge. In the case of 50.2% of the patients who were rehospitalized within 30 days after a medical discharge to the community, there was no bill for a visit to a physician's office between the time of discharge and rehospitalization. Among patients who were rehospitalized within 30 days after a surgical discharge, 70.5% were rehospitalized for a medical condition. We estimate that about 10% of rehospitalizations were likely to have been planned. The average stay of rehospitalized patients was 0.6 day longer than that of patients in the same diagnosis-related group whose most recent hospitalization had been at least 6 months previously. We estimate that the cost to Medicare of unplanned rehospitalizations in 2004 was $17.4 billion. • Conclusions Rehospitalizations among Medicare beneficiaries are prevalent and costly. • NEJM Volume 360:1418-1428April 2, 2009Number 14

19. Rationale for Managing Care • Improve health status of health plan members • Encourage use of primary care • Coordinate care • Avoid unnecessary testing and procedures • Employ business efficiencies • Design health insurance products that can be marketed HMO, PPO, out of network benefits • Develop customer satisfaction metrics • Define Quality

21. A Brief History of Health Care Cost Containment For patients: • Deductible • Co-Payment • Increasing employee contribution • Referrals • Limited network For doctors: • Fee schedules • Formulary • Utilization management guidelines • Second Surgical Opinion • Capitation

23. Defining Quality • Institute of Medicine • Safe, Timely, Efficient, Effective, Equitable • National Commission for Quality Assurance • Centers for Medicare and Medicaid Services • National Quality Foundation • Agency for Health Care Research and Quality • Benefits Consultants • Advocacy Groups • Pharma, AHIP

24. Tactics for Quality Improvement • Member-focused • Newsletters, phone calls, targeted mailings • Web-based HRA • Education for preference sensitive care • Provider-focused • Addressing gaps in care • Provider Profiling • Pay for performance • Disease Management • Case Management

25. Tactics for Utilization Management • Privileging for outpatient procedures • Prior Authorization • Use of utilization management vendors • Hospital Admission Review • Case Management • Pharmacy Management • Disease Management

27. Evidence Based Medicine • EBM is the conscientious, explicit, and judicious use of current best evidence in making decisions about individual patients or populations. • Clinical Practice Guidelines • Utilization Management Guidelines • Milliman, Interqual, CMS • Comparative Effectiveness data is not available in many instances

28. The mind of the consumer Choice of health plan design Choice of health plan Choice of doctor Choice of procedure Entitlement Empowerment Equity Dissatisfaction

29. The Regulatory Environment for Managed Care • Exclusion of Emergency Care • Reconsiderations • Appeals • External appeals • Complaints • Regulations regarding transparency of claims processing rules • Medicare fee schedule

31. The Future of Managed Care • Electronic Medical Records • Regional Health Information Organizations • Medical Home • Episodes of care • Severity Adjustment for Premiums • Elimination of pre-existing conditions • Accountable Health Care Organizations