Payment Reform in Wisconsin
The problem we are trying to solve with payment reform is that our present payment design rewards volume and subspecialty intervention. What does “volume” mean? This is the case of more procedures, hospitalizations and office visits leading to more revenue with no consideration as to whether these interventions were necessary or not. The same is true of subspecialty intervention. The oncologist, for example, delivering chemotherapy in the last 3 weeks of a patient’s life because he is rewarded by the payment associated with the intervention vs. delivering significantly longer life for the patient. What payment system would be the right one? If we consider this question from the perspective of the patient the countermeasure is radically different than if we consider it from the perspective of the hospital or doctors.
In 2007, for instance, a team looking at coordinating care in Labor & Delivery found that a surprising 35 percent of babies were born “early term” – 39 weeks or earlier – in ThedaCare hospitals. A little digging in the data revealed that this high percentage of pre-term births was due to labor being induced at a prearranged date. This is a classic example of the system creating defects. The assumption that it was acceptable to deliver one week earlier created a clinical defect. Even at 39 weeks, lungs are not fully developed, not ready for the real world. While inducing labor has scheduling advantages for physicians and families, early births were a defect that needed elimination. With a new policy and some unconventional tactics – namely, publicizing the names of doctors who were inducing labor earlier than 40 weeks gestation – the practice stopped. As a result, ThedaCare saw the average number of days that the tiniest patients spent in the neo-natal ICU drop from 30 to 16. Babies were being born stronger – even the babies that needed a stay in the Intensive Care Unit. As a result, revenue to our neo-natal ICU fell by nearly half.
This is the kind of math we do not want hospital administrators to struggle with, but it is the arithmetic created by a strict fee-for-service system.
One of the big questions for payment reform is how do we get from where we are to where we need to be. We know hospitals are paid when patients are in beds. In the 1990s HMOs created many restrictions on patients but hospital bed days/1000 went down. We are about to enter the same fight with patients again, hopefully, we can do it better this time. The focus needs to be on keeping people healthy and when they need to be in the hospital having the experience be as patient centered, efficient, and mistake free as possible.
Most of us agree the payment system must change; unfortunately we have no good evidence which way we should go. In a situation in which we don’t know answers we need to develop well designed experiments study them and act on them to improve them. In Wisconsin we are running a series of experimentsto see if we can use payment to incent better patient outcomes. Payment reform in Wisconsinstarted in 2009 when the Partnership for Healthcare Payment Reform was established. A multistakeholder group of providers, payers, employers, and state government met and split healthcare into three major categories – acute, chronic, and preventative — to help us isolate issues and organize work.
Acute care, for instance, often involves a dynamic situation. How do we pay lump sums for gunshot wounds when we have no idea how extensive the damage might be? The injury to U.S. Representative Gabrielle Gifford’s from a head wound – involving months of hospitalization and rehabilitation as the country watched, transfixed by an apparent medical miracle – will involve a very different team of specialists than a hunting accident in which a man shoots himself in the knee. As a category, acute care involves all hospitalizations and outpatient surgeries. Joint replacements, organ transplants, and delivering babies, for instance all fall under the acute care category.
The advantage in acute care is that hospitals have the right specialists in place to deal with complex care requirements. The challenge is focus. Instead of applying each specialist to a case as needed, then allowing physicians to treat, move on, and bill separately, hospitals will need to create coordinated care teams that are focused on patient needs.
ThedaCare has created one such group for musculoskeletal care that includes surgeons, sports medicine doctors, imaging, physical therapy, and nursing. The OrthoPlus team is a good example of a care team designed to address all aspects of a patient’s needs in a particular event. In this model, a team of caregivers is assigned to each patient, reflecting the treatments a patient will need as he or she progresses through healing. What ThedaCare has not been able to do yet is provide a single, bundled bill for OrthoPlus patients and so continues to create bills from each department or practitioner. This on-going waste is due to one of many unforeseen consequences: payers still want bills from every individual department. If a patient was registered in the OrthoPlus physical therapy department, but using the Appleton Medical Center outpatient physical therapy center – as most patients do – the AMC center would not be paid unless the patient was officially registered there. For AMC and OrthoPlus to be paid, patients would need to register with AMC anew, every time they used the center, and then register with OrthoPlus again on return. If ThedaCare refused to make patients go through this wasteful exercise, AMC’s outpatient PT center lost $350,000 loss in revenue. The separate billings continue.
- American Journal of Managed Care March 2011 Vol.17,No.3