MEPRS Management Improvement Group (MMIG) Strategic Plan Update

TMA/MEPRS Program Office:

Mr. Patrick WesleyMr. Eric MeadowsMr. Herb Escobar

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Strategic Planning

A process

Used to focus /guide an organization

A map leading to a desired state

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OVERVIEW• Why a Strategic Plan?

– MHS Strategic Plan– MMIG Charter– Last Plan 2006

• Conceptual Framework– Purpose of managerial cost accounting– Annual Operational Plan

• Initiatives in progress– Consolidated Cost Report– RVU Based Allocation Study

• Way Forward– Finalize the plan– Implement the plan

If you are planning for a year… plant rice

If you are planning for a decade… plant a tree

If you are planning for a life … Educate the People

Unknown

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Why a Strategic Plan?The Quadruple Aim

ReadinessEnsuring that the total military

force is medically ready to deploy and that the medical force

is ready to deliver health care anytime, anywhere in support of

the full range of military operations, including

humanitarian missions.

Population HealthReducing the generators of ill health by encouraging healthy behaviors and decreasing the likelihood of illness through focused prevention and the development of increased

resilience.

Experience of CareProviding a care experience that is patient and family centered,

compassionate, convenient, equitable, safe and always of the

highest quality.

Per Capita CostCreating value by focusing on quality, eliminating waste, and

reducing unwarranted variation; considering the total cost of care over time, not just the cost of an individual health care activity.

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Why a Strategic Plan?• MEPRS Management Improvement Group (MMIG)

– Tri-Service Working Group responsible for developing, implementing, and managing MEPRS policies, procedures and business practices, and for integrating the collection, processing and reporting of standard workload, financial, and labor data in the Expense Assignment System (EAS)

• April 2009 Updated MMIG Charter:

– Develop and update the MHS MEPRS Strategic Plan

– Derive from the Strategic Plan Annual Operational Plans citing then current requirements for accomplishment.

A Goal without a Plan is … a WishLarry Elder

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Why a Strategic Plan?

FY2006 MEPRS Strategic Plan Status:

Don’t mistake activity for

achievement John Wooden

10. Migrate (Scope) EASfrom an expense reporting system to a managerial cost accounting system whichintegrates/compliant with BMMP.

9. Develop/Implement Tri-Service training for MEPRSprogram managers that emphasizes both functional skill sets as wellas policy.

8. Maintain and update management tools to perform analysis forvarious funding initiatives (e.g., tool to look at qualityof the data, MTFbusiness plan).

7. Develop/Implement a helpdesk with expertise to handle Tri-Service functional MEPRSissues.

6. Support change management training for MTFpersonnel (end users) as they adapt to new system changes/processes.

5. Audit policies and business rule implementation through ongoing data analysis related to reconciliation. Determine andresolve discrepancies between MEPRSand source systems (financial, labor, and workload).

4. Ensure TMA/RMpolicies for MEPRSare integrated in the DoD6010.13M. Achieve Tri-Service standardized execution ofpolicy/SOPs.

3. Develop integrated workload definition, data collection andreporting requirements; coordinate requirements with source system owners to ensure standardized business rules.

2. Develop a process to achieve a collaborative relationship with the UBO, UBUand MEPRSas these programs movetowards achieving the MHSgoals.

1. Develop Tri-Service business practices and processes for recording and capturing labor hours with internal controls,validation and audits. Validate standardized business rules and resolve Tri-Service labor/expense capture andreporting variances impacting the development of DMHRSi.

10. Migrate (Scope) EASfrom an expense reporting system to a managerial cost accounting system whichintegrates/compliant with BMMP.

9. Develop/Implement Tri-Service training for MEPRSprogram managers that emphasizes both functional skill sets as wellas policy.

8. Maintain and update management tools to perform analysis forvarious funding initiatives (e.g., tool to look at qualityof the data, MTFbusiness plan).

7. Develop/Implement a helpdesk with expertise to handle Tri-Service functional MEPRSissues.

6. Support change management training for MTFpersonnel (end users) as they adapt to new system changes/processes.

5. Audit policies and business rule implementation through ongoing data analysis related to reconciliation. Determine andresolve discrepancies between MEPRSand source systems (financial, labor, and workload).

4. Ensure TMA/RMpolicies for MEPRSare integrated in the DoD6010.13M. Achieve Tri-Service standardized execution ofpolicy/SOPs.

3. Develop integrated workload definition, data collection andreporting requirements; coordinate requirements with source system owners to ensure standardized business rules.

2. Develop a process to achieve a collaborative relationship with the UBO, UBUand MEPRSas these programs movetowards achieving the MHSgoals.

1. Develop Tri-Service business practices and processes for recording and capturing labor hours with internal controls,validation and audits. Validate standardized business rules and resolve Tri-Service labor/expense capture andreporting variances impacting the development of DMHRSi.

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So What’s the Plan?

• Conceptual Framework

– Purpose of managerial cost accounting

– New MEPRS Strategic Plan

– Annual Operational Plan

Failing to Plan is … Planning to FailAlan Lakein

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Conceptual Framework for An Integrated Cost System

Experience and research show the Military Health System (MHS) has struggled to effectively use its only managerial cost accounting system to support a variety of external reporting and managerial requirements. This conceptual framework for evolving the Expense Assignment System (EAS) to better support a comprehensive integrated cost accounting system for the MHS is predicated on improving the current system to meet the three fundamental information requirements of any cost accounting system. This model is an adaptation of Kaplan’s Four Stage Cost Model1 which begins with data quality and ends with a fully integratedcost system. Instead of employing the linear construct used by Kaplan, our model emphasizes that evolution can be non-linear meaning one stage does not have to be completed prior to progressing to the next and that modifications affecting one stage can have profound effects on the other three stages. The greatest benefit of this model is its flexibility in supporting enhancements as small as updating an algorithm or as large as implementing multiple costing systems if needed to meet diverse user needs.

1Finkler, Steven A., Ward, David, and Baker, Judith J. Essentials of Cost Accounting for Health Care Organizations. 3rd Ed. Sudbury, MA: Jones and Bartlett Publishers, Inc., 2007.

EASInformation for Financial Statements

Information for Management

Decisions

Information to Motivate and Evaluate

Managers

Exte

rnal Report

ing

Data Quality

Innova

tion a

nd

Manage

rial R

ele

vance

Integrated Cost System

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Draft FY2011 MEPRS Strategic

Plan• Goal 1: Enhance data quality by systematically eliminating data compilation errors to include mathematical errors, large variances, and significant year-end adjustments.

• Goal 2: Sustain and enhance Tri-Service data uniformity, integrity, consistency and compliance with DoD MEPRS policy.

• Goal 3: Transform MEPRS to produce managerially relevant data to support the MHS Strategic Goals and Senior MHS Stakeholders' operational objectives.

• Goal 4: Support financial reporting and product cost management through linked databases.

101010

Draft FY2011 MEPRS Strategic Plan

EAS

Data Quality

Exte

rnal

Rep

ort

ing

Integrated Cost System

Man

ag

eria

l Rele

van

ce

Inn

ovatio

n a

ndInformation for

Financial Statements

Information for

DecisionsManagement

Information to Motivate and Evaluate

Managers

Six Sigma

MEWACS

MERHCFPPS

UBO Rates

MEPRSWeb Portal

DQ CC Statement

EAS IVRepository

M2MDRCHCS/AHLTASvc Fin SysEHR-WA

DMHRSi

MEPRS ConfMADI/5M2U

MEPRSManual

PCMH

Front-End Objectives--Inputs(Policy, System, Business Rules etc.)

Back-End Objectives--Outputs(DQ Surveillance, Analytics, Education etc.)

Standardization of FCCs, PECs, and SEECsRe-look at DMHRSi LCA Business Rules

Implement Patient Groups Level of Cost AccountingEASIV migration to utilization of weighted workloadComply with DoD FMR guidelines for cost accounting

Develop the Consolidated Cost Report (CCR)Develop Personnel Report

Research Industry Accepted Performance FactorsDevelop financial ratios and vertical analysis toolsAnalyze impact of overridden warnings and errors

Operational Plan

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Initiatives

• Consolidated Cost Report—Data quality Tool

• Relative Value Unit Allocation Study—External Reporting

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ConsolidatedCost Report (CCR)

MEPRS Consolidated Cost Report (CCR)

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• CCR is a detailed MEPRS data quality and reporting tool, building on the usefulness of prior “MEPRS-1 Reports” by adding enhancements such as:– Interactivity– Automated variance

detection– Accessibility– Service-specific

Reports– Integration with other

MEPRS tools and resources

Overview

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• Presently in advanced development phase• Integrated enhancements based on TMA/MEPRS

internal reviews and user feedback from hands-on demonstrations at 2010 UBO/UBU Conference.

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Next Steps: 2010 UBO/UBU Conference demonstrations MMIG demonstration and feedback (June 2010)

• MEPRS Conference demonstration and hands-on user feedback (July 2010)• Limited field testing (August 2010)• Deployment via MEPRS.info web portal (October 2010)

Status

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Features

• Service-specific Executive Summary metric identifying specific MTFs, 1st Level FCCs, and Fiscal Months deserving immediate attention.

• Built-in documentation listing data sources, dates of data extracts, and explanation of metrics.

• Links to external tools including MEWACS and S2M3, learning resources, policy documents, etc.

• Service-specific interactive displays of 4th Level FCC data by MTF and Fiscal Month including automated variance detection.

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Automated Variance Detection

• Negative Total Post-Stepdown Expenses• 4th-Level FCCs with expenses, but no workload• Ancillary or Support Expenses remaining after step-down is complete• For 4th-Level FCCs accounting for 80% of total MTF expenses

(Pareto Principle or 80-20 rule), individual workload and expense components deviating by more than ±3 Standard Deviations from historical average (accounting for workload fluctuations)

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• CCR uses multi-step criteria to automatically flag data values by MTF, 4th-Level FCC, and Fiscal Month that should be validated or corrected.

• Criteria include:

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MEPRS Consolidated Cost Report (CCR)Demonstration

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RVU-Based Expense Allocation R&D Study

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Background• The underlying MEPRS expense allocation approach has remained

largely unchanged since the mid ‘80’s. • MEPRS expense allocation algorithms are not aligned with industry

best practice -- some MEPRS expenses are commonly “un-allocated” and redistributed before application in TMA metrics, measures, and programs (i.e., PLCA, MERHCF, etc.).

• Currently about 12% of Total Direct Care expenses are distributed in MEPRS through the stepdown process on the basis of raw workload counts – Dispositions, Total Visits, etc. (over $1.1 Billion in FY07)

• Expense allocation based on relative value workload units enhances final expense assignments by linking resource consumption to workload intensity.

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Study Goals Employ simulation analysis to quantify the impact of using Total RVU

as the basis of expense allocation where Total Visits are presently used – outpatient cost pools (B*X), outpatient depreciation (EAB), outpatient TRICARE administration (EKA).

Compare Simulated Total Expenses to Current MEPRS values by: Functional Cost Center General Product Line MTF Peer Group Service

Serve as the basis for potential MEPRS policy and EASIV allocation algorithm updates designed to move MEPRS closer to widely accepted industry rules and practice.

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Approach

1. Harvest detailed expense data from the EASIV Repository by FY, FM, Child DMISID, and 4th-level FCC

2. Harvest Total RVU measures from M2 by FY, FM, Child DMISID, and 4th-level FCC

3. Unwind EASIV expense allocation process4. Combine EASIV expenses and RVUs by FY, FM, Child DMISID, and

4th-level FCC5. Re-allocate expenses based on Total RVUs6. Compare original and simulated expenses by FCC, PPS Product

Line, MTF Peer, and Service

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Preliminary Results Summary by PPS Product LinePercent Change in Total Expenses, Simulated vs. Actual

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-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

Derm ENT ER HearingCon.

IM Sub MH OB Optom Ortho Other PC Surg SurgSub

Metric Derm ENT ERHearing

Con.IM Sub MH OB Optom Ortho Other PC Surg

Surg Sub

Over 80 % of MTF

Max Inc 7.8% 3.3% 3.0% 3.2% 29.7% 6.4% 17.8% 43.1% 4.8% 5.2% 0.3% 2.3% 2.4%

Average 1.6% 0.7% 0.2% -10.1% -2.1% 0.5% 1.3% 7.7% -0.6% -0.5% -0.6% 0.5% 0.5%

Max Dec -3.3% -0.8% -0.5% -50.8% -27.1% -1.5% -1.7% -2.6% -9.0% -8.3% -2.6% -1.4% -5.0%

• Consistent results across

MTF Peer Groups, Service and MTFs

• Impact on top 3 Product Lines (PC, Orthopedics, & ER) is subtle: < ±1%.

• On average, greatest impact on Hearing Conservation (-10.1%)

and Optometry (+7.7%)

• Way Forward

– Finalize the plan

– Implement the plan

– Track progress/Accountability

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Strategic Plan Way Forward

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If you don’t know where you are going, you’ll wind up some where else.

Yogi Berra

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SUMMARY• Why a Strategic Plan?

• Conceptual Framework

• FY2011 TMA MEPRS Strategic Plan

• Way Forward

• Initiatives Under Development We all have a plan… until you get hit in the mouth.

Mike Tyson

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QUESTIONS

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Back Up Slides

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Strategic Imperatives and the Quadruple Aim • The MHS leadership recognized that our current strategic plan is aligned with four aims* and we have begun to use the term "Quadruple Aim ” . The four aims are:

─ Increased Readiness─ Enhanced experience of care─ Improved population health─ Responsible management of per capita cost

• To achieve the Quadruple Aim, the MHS has developed a set of Strategic Imperatives:

─ Strategic Imperatives are the critical few things we must do to achieve the MHS Vision and the Quadruple Aim

─ Each Strategic Imperative has one or more performance measures; each measure will have a target for FY10, FY 12 and FY 14.

─ The difference between our current performance and target performance is our performance gap

•Reference: The Triple Aim: Care, Health, And Cost; Berwick, Donald, Health Affairs 27, no. 3 (2008): 759–769; 10.1377/hlthaff.27.3.759; May-June 2008•Reference: The Triple Aim: Care, Health, And Cost; Berwick, Donald, Health Affairs 27, no. 3 (2008): 759–769; 10.1377/hlthaff.27.3.759; May-June 2008

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Bibliography“Charting Your Course Through Hospital Medicare Cost Reporting.” HFMA Education Foundation. Spring Seminar. Baltimore, MD. March 19 – 22, 2007.EASIV Operational Requirements Document, 1998.Expense Assignment System, Version IV (EAS IV) Software Requirements Specification (SRS)Software Release 3.1. Number 102-059-007. Falls Church, VA: Park City Solutions, Inc., 2005.Finkler, Steven A., Ward, David, and Baker, Judith J. Essentials of Cost Accounting for Health Care Organizations. 3rd Ed. Sudbury, MA: Jones and Bartlett Publishers, Inc., 2007.Hankins, Robert W. and Baker, Judith J. “Tools and techniques for Decision Support.” Management Accounting for Health Care Organizations. Sudbury, MA: Jones and Bartlett Publishers, Inc., 2004. MEPRS Senior Stakeholder’s Meeting Minutes. Falls Church, VA. Feb 2007.MMIG Strategic Plan. Falls Church, VA. Oct 2005.Nowicki, Michael. Financial Management of Hospitals and Healthcare Organizations. ,4th Ed. Chicago, IL: Foundation of the American College of Healthcare Executives, 2008.Medical Expense And Performance Reporting System for Fixed Military Medical and Dental Treatment Facilities Manual. DOD 6010.13-M. Office of the Assistant Secretary of Defense Health Affairs. April 7, 2008.“Prospective Payment System (PPS), Program Review and Evaluation.” Health Budgets and Financial Policy. Office of the Assistant Secretary of Defense Health Affairs. August 2008.Glass, Kathryn P. RVUs Applications for Medical Practice Success. Medical Group Management Association, 2003.Statement of Federal Financial Accounting Standards (SFFAS) No. 4, "Managerial Cost Accounting Concepts and Standards for the Federal Government", 1996VHA Managerial Cost Accounting System. Veterans Health Affairs (VHA) Directive 2006-020. Washington, DC: Department of Veterans Affairs, April 25, 2006.“Patient-Centered Medical Home, Baseline View Across the Services and HA/TMA.” 2010 Military Health System Conference“The Quadruple Aim, MHS Game Plan for Improving Performance.” 2010 Military Health System Conference

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M2 - MHS Mart DMHRSi - Defense Medical Human Resources System Internet

MDR - MHS Data Repository MEPRS WebPortal - Medical Expense and Performance Reporting System Web Base Portal

CHCS/AHLTA - Composite Health Care System/Armed Forces Health Longitudinal Technology Application

EAS IVRepository – Expense Assignment System IV Repository

Svc Fin Sys – Service Financial System DQ CC Statement – Data Quality Commanders Statement

EHR-WA – Electronic Health Record - Way Ahead Six Sigma - MEPRS Management Metrics (S2M3)

MERHCF - Medicare Eligible Retiree Health Care Fund

MEWACS - MEPRS Early Warning and Control System

PPS - Prospective Payment System PCMH – Patient Centered Medical Home

MADI/5M2U - MEPRS Application and Data Improvement/ Five Minute MEPRS University

Acronyms