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What Wisconsin’s Healthcare Leaders Are Learning about Payment Innovation

June 8, 2013
by Mark Hagland
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Karen Timberlake of the Partnership for Healthcare Payment Reform shares learnings from the payment initiatives taking place now in Wisconsin

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?


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