What Wisconsin’s Healthcare Leaders Are Learning about Payment Innovation

June 13, 2013
During the Lean Healthcare Transformation Summit that was held June 4-6 in Orlando, Fla., Karen Timberlake, director of the Madison, Wis.-based Partnership for Healthcare Payment Reform, delivered a compelling presentation entitled “Go Big or Go Home: Lessons from Payment Reform Experiments in Wisconsin.” Timberlake shared her perspectives on broad bundled payment-based payment initiatives exclusively with HCI’s Mark Hagland.

During the Lean Healthcare Transformation Summit that was held June 4-6 at the Hilton Lake Buena Vista in Lake Buena Vista (Orlando), Fla., Karen Timberlake, director of the Madison, Wis.-based Partnership for Healthcare Payment Reform, delivered a compelling presentation entitled “Go Big or Go Home: Lessons from Payment Reform Experiments in Wisconsin.”

In a presentation June 5, Timberlake provided an overview of the exciting set of payment reform experiments that have been taking place in the state of Wisconsin, where physicians, hospitals and health systems, health insurers, and employer-purchasers have come together under the aegis of the Partnership for Healthcare Payment Reform, to conceive, design, test, and implement payment reform experiments that could potentially move providers and payers forward together in that state, with strong implications for replicability nationwide.

Karen Timberlake

Timberlake first provided an overview of what she described as the spectrum from payer-provider contracts involving small changes and minimal financial risk on the part of providers, to what she saw at the other end as global capitation as a logical ultimate destination, even while acknowledging that not everyone agrees that payment reform should end in forms of global capitation.

She then described the consensus-building process that has incorporated into all the efforts taking place under the Partnership for Healthcare Payment Reform umbrella in Wisconsin, including a statewide, nearly-all-payer database, operated by the Wisconsin Health Information Organization, or WHIO. WHIO as an organization has 21 organizations participating as members, among them most of the health plans in the state, the state’s hospital association and medical society, and the Wisconsin Department of Health Services.

Among the most interesting specific experiments Timberlake described has been a program involving bundled payments for total-knee replacements. Defining the covered procedure as a total knee replacement for patients between the ages of 18 and 64 with degenerative osteoarthritis, the umbrella organization was able to help three sites to go live with the bundled-payment initiative, beginning a year and a half ago. To date, three organizations have been participating—two hospitals and one ambulatory surgery center. Two more hospitals are still working through legal and other final administrative steps prior to implementation.

Among the other pilots has been a shared savings payment model for the care management of diabetics with hypertension, hyperlipidemia, and/or ischemic heart disease.

Timberlake told her audience that, even with an enviable level of collaboration present among payers and providers in these initial pilot programs, all the initiatives that have been launched so far have taken longer to design and take live than had been hoped for. Still, she said, “Even the process of changing the smallest elements in payment has changed providers’ thinking and behavior,” and caused physicians in particular to rethink their practice patterns, once they’ve been shown their performance data with regard to cost and outcomes, in a manner that has been regularized, reliable, and helpful.

Importantly, too, Timberlake emphasized, “There is a lot to gain even from the initial projects. I call these projects a tremendous diagnostic tool for organizations.”

What lessons have been learned? “There’s good news and bad news here,” Timberlake told her audience. “For payment reform to work, we have to have all the parts of the complex, interconnected system, to change. Everybody has to change. Providers have to change, payers have to change, employer-purchasers have to change, and consumers have to change.” What’s more, she said, “Payment reform is hard because it’s a complex problem; it’s not a technical problem where if we change this, we get that. And the shape of the problem, the definition of the problem, continually changes.” Ultimately, she said, one of the biggest lessons learned so far from the experiments taking place in Wisconsin is that all of the payment initiatives moving forward around accountable care, bundled payments, and other payment innovations, will need to gather steam faster in order for significant cost savings to be realized and for the healthcare system to benefit in a timely way from those innovations.

Immediately after her presentation, Karen Timberlake sat down with HCI Editor-in-Chief Mark Hagland for an industry-exclusive interview, to discuss the implications of the topics she had presented, for healthcare IT leaders. Below are excerpts from that interview.

Based on your experience so far in Wisconsin with the Partnership for Healthcare Payment Reform, how would you gauge the preparedness of providers nationwide to participate in these kinds of bundled-payment and other initiatives?

In terms of provider readiness, it really is your classic bell curve. There are organizations doing the smaller projects; there are a handful and growing, of organizations that are going right to ACO [accountable care organization] development and global payments, something much more comprehensive; but the vast majority of organizations are the undecideds. They’re organizations where the small stuff seems too small, and the big stuff seems to risky, so the leaders of those organizations appear to be waiting to waiting it out for others to act first before they make any moves. And in fairness, we’ve just spoken for an hour and 15 minutes about all that we don’t know about all of this. So can they be blamed for waiting? The argument I’m going to make for “start somewhere,” is one of preparedness. How is doing nothing going to help you do anything big? And as I said, what strikes me is how even the smallest experiments have created so many learnings.

Are the provider organization leaders in Wisconsin having problems with the blocking and the tackling involved in these efforts?

A couple of our participant organizations have made the point, who are Epic [electronic health record (EHR)] users, that much of the Epic architecture is not well-designed for the kind of architecture they need to support bundled payments. Payment systems are not set up to support bundled payments, and neither are most EHRs. One of our participants actually went to an Epic user group meeting to talk about this. And it’s not so much that they don’t know what to do, but that the steps are labor-intensive and costly. There’s cost associated with workarounds to claims payment systems.

And what you were saying, with regard to the American College of Cardiology’s initiative around the care management of cardiac patients, about cardiology and manual coding, applies here, correct?

Yes, exactly. That gets back to this idea of complexity theory, where the system continues to evolve and change, and where one change helps in one way but also creates totally unintended results. So, capturing those unintended consequences and fixing them remains a challenge.

What should CIOs and other healthcare IT leaders do, as they try to help support their organizations in potentially going forward with accountable care and bundled-payment initiatives?

What leaders are beginning to discover is that their organizations lack strategies around what’s being called clinical business intelligence, which is a key success factor in this work. With regard to clinical business intelligence, healthcare IT leaders need to ask themselves and their colleagues, where does it live organizationally? And is it connected to their strategic business vision?

So to your question about what CIOs can do, in an earlier phase of my career, I was in human resources, so I know that all the support service groups tend to end up being pushed aside strategically. So, to begin with, CIOs need to get themselves to a seat at the strategic table, and make the promise of data-into-information real for the CEO; and then figure out how to get better at population-level analytics, even though the tools aren’t where they need to be. The reality is that, from a CIO perspective, it’s going to be all about managing populations of patients, and doing a better job of predictive risk modeling; that’s the work that has to be done.

Sponsored Recommendations

Data: The Bedrock of Digital Engagement

Join us on March 21st to discover how data serves as the cornerstone of digital engagement in healthcare. Learn from Frederick Health's transformative journey and gain practical...

Northeast Georgia Health System: Scaling Digital Transformation in a Competitive Market

Find out how Northeast Georgia Health System (NGHS) enabled digital access to achieve new patient acquisition goals in Georgia's highly competitive healthcare market.

2023 Care Access Benchmark Report for Healthcare Organizations

To manage growing consumer expectations and shrinking staff resources, forward-thinking healthcare organizations have adopted digital strategies, but recent research shows that...

Increase ROI Through AI: Unlocking Scarce Capacity & Staffing

Unlock the potential of AI to optimize capacity and staffing in healthcare. Join us on February 27th to discover how innovative AI-driven solutions can revolutionize operations...