Response to FY13 NDAA Section 731: Plan for Reform of the Administration of the Military Health System (Draft

FEB 4 2013) The Military Health System Our Performance Aims Every system must have a set of aims. The Military Health System (MHS) has four. Together these aims are known as the Military Health System Quadruple Aim. The Quadruple Aim is the strategic performance measurement framework used to measure and improve the value that the MHS creates for its customers and investors, and to unite the 133,000 people of the MHS around a common strategy. This MHS strategy is grounded in the belief that it is possible to achieve all aims at once, but only through careful system design that integrates and aligns the incentives and activities of all elements of the MHS: patients, providers, health plan, employer, communities, and policy makers. The four elements of the Quadruple Aim are: Improving Readiness, Better Health, Better Care and Lower Cost. When we refer to these aims, here is what we mean: Improving Readiness encompasses the work done by the MHS to keep the 1.8 million service members medically ready to deploy (medically ready force); ensuring that providers and other members of the medical team have the right skills, training, and support structure to provide care in the most austere settings (ready medical force); and helping family members prepare for and cope with the physical and psychological demands of having a loved one deployed (family readiness). Better Health is about reducing the generators of ill health by encouraging healthy behaviors, decreasing the likelihood of illness through prevention and the development of increased resilience, and reducing the impact of chronic illness by helping people become expert at self-management and self-care. Better Care is about providing a care experience that is safe, timely, effective, efficient, equitable, and patient centered--the six elements of a 21st-Century Health Care System defined by the Institute of Medicine in its seminal publication, Crossing the Quality Chasm. Lower Cost does not mean withholding care or shifting costs. We fundamentally believe that improving quality and safety, integrating and coordinating care, increasing health, optimizing the use of our assets, and aligning provider and consumer incentives with health outcomes will lead to a lower cost health system.

Why We Are Reorganizing the Military Health System The MHS has been moving along a path of greater jointness and integration over the last decade, particularly in battlefield medicine. And the outcomes achieved on the battlefield and through the sophisticated choreography of medical services back to the United States are historic. The proposed changes in governance of the MHS are predicated on the belief that we can better achieve these aims through a continued, and accelerated, evolution to an even more integrated delivery system, both for our deployed personnel and in garrison to the ten million Americans served by the MHS. The Departments leaders civilian and military, line officers and medical officers recognize that the MHS must increase the integration of its peacetime system of care. While we regularly interact with the civilian health system in this country, we also recognize that the MHS is a unique and uniquely complex health system. No other organization has a global readiness mission, nor is engaged in combat and non-combat deployments in which every member of its organization is expected to play a role in this mission. Our enduring obligations to maintain a medically ready force, ready medical forces, and a healthy population required us to establish our own definition of an integrated health system: The integrated Military Health System delivers a coordinated continuum of preventive and curative services to eligible beneficiaries and is accountable for health outcomes and cost while supporting the Services warfighter requirements. The integrated Military Health System consists of a policy and oversight element (Health Affairs), and four execution components (three Service Medical Departments and a Defense Health Agency) that coordinate to deliver best value to the Nation. Integrated health care leads to better performance, improved outcomes, and reduced costs. This is why we are reorganizing -- to create a more fully integrated delivery system, and to drive our system to improve its performance in each of element of the Quadruple Aim.

Goals of Implementation The governance reforms outlined in this report will implement specific changes to the design of the system and a new structure for accountability that enables continuous performance improvement and reduces the projected cost growth of the Defense Health Program (DHP). Leadership has established the following goals that will enable the MHS to function as a more fully integrated delivery system and achieve the Quadruple Aim. 1) Align incentives with health and readiness outcomes to reward value creation. 2) Establish more inter-Service standards / metrics, and standardize processes in clinical, business, and readiness to enhance quality outcomes, recapture care, reduce cost, and reduce infrastructure. 3) Match personnel, infrastructure, and funding to current missions, future missions and population demand. 4) Manage resources in all military medical markets using an integrated approach aligned to five-year business performance plans. These plans will focus on capturing/recapturing referrals, providing medically ready Service members to supported missions, sustaining clinically current medical forces ready for deployment, reducing purchased care by optimizing prime enrollment to MTFs and fully leveraging capacity for patient-centered specialty care, and ensuring optimal care for wounded, ill and inured service members. 5) Provide patient-centered medical homes with improved, integrated health services featuring: personalized medicine, timely evidence-based prevention, coordinated specialty care, team-based disease management, convenient access, better continuity, a positive patient experience, and IT tools that enable each patient to be a partner in their care. 6) Support MHS health care operations through enterprise-wide shared services that achieve economies of scale, strengthened purchasing power, and enhanced interoperability; further streamline and standardize key support processes to realize savings in cost, infrastructure, and manpower. 7) Improve governance to ensure unity of purpose and shared pursuit of performance goals relating to health services and the mission. It is important to note that the first six goals identified are focused on the delivery of health and health care. These goals are coupled and supported by changes in governance and oversight. Yet, the actions are directed most closely to local and market-level health services. The reason behind this approach is straightforward. As Exhibit 1 shows, the overwhelming majority of Defense Health Program (DHP) costs are consumed by health care delivery. [Insert planets slide].

The actual costs consumed by headquarters personnel, infrastructure, contracting pale in comparison to the cost of health care delivery. While we will reduce the overall size of headquarters through this reorganization, the true value in improved clinical and business practices in the delivery of health services will effect the greatest savings with respect to cost, infrastructure and personnel reductions. The following sections outline the specific actions that the Department will undertake in the coming two years. The work of implementation has already begun.

Major Governance Milestones and Program Schedule The Deputy Secretary of Defense has outlined the major activities that will be undertaken in the coming six months (reference to signed DepSecDef memo, February XX, 2013). These actions will be completed no later than the milestone dates. A summary of these activities with the detailed schedule is provided below. Establish New MHS Decision-Making Model. By May 1, 2013, we will implement a new set of governing councils aligned with, and anticipating the new enterprise structure. The streamlined governance structure will increase jointness, clarify accountability and support integration of health delivery. We are eliminating a number of inter-Service coordinating councils, and streamlining decision-making in order to increase the agility of the organization in executing our governance goals. While we have not yet detailed the specific personnel efficiencies to be achieved by this more lean approach to reviewing and approving both policy and operational issues, we will reduce the number of personnel required to coordinate actions across the Services. This new governance model, already being tested and evaluated, will oversee implementation of other governance transformation efforts, such as the evaluation of the business case analyses supporting the structure for shared services; the establishment and implementation of performance planning in our medical markets; and the integration of the Joint Task Force National Capital Medical (JTF CAPMED) into the Defense Health Agency. (such as) Clear paths for dispute resolution of major decisions will be outlined to ensure stakeholder issues are resolved in a transparent and timely manner. In sum, there will be fewer governing councils than exist today, organized for agility, and decision-making. Establish a Defense Health Agency. A series of actions has commenced to ensure a Defense Health Agency (DHA) is established and achieves Initial Operating Capability (IOC) by October 1, 2013. By June 1, 2013, the Department will have identified and nominated a DHA Director in the grade of Lieutenant General or Vice Admiral. The nomination package will be forwarded to the US Senate for consideration by July 1, 2013. By June 1, 2013, the process to designate the DHA as a Combat Support Agency in accordance with DoD Directive 3000.06, Combat Support Agencies, and this designation will be included in the proposed DHA Charter Directive. This CSA designation ensures that the DHA remains focused on the primary mission of medical readiness, and is responsive to the Combatant Commanders through a formal oversight process established by the Chairman, Joint Chiefs of Staff. By July 1, 2013, we will prepare and have coordinated establish a Charter Directive for the Defense Health Agency for the Deputy Secretary of Defenses approval. o By July 1, 2013, the ASD(HA) will provide the Deputy Secretary of Defense with a detailed plan for implementing a shared services model within the MHS. The Deputy Secretary of Defense initially identified ten functions that will be organized as shared services: Medical Logistics; Facility Planning; TRICARE Health Plan; Health Information Technology; Pharmacy Programs; Education & Training; Research & Development; Public Health; Acquisition; Budget & Resource Management.

o We will phase-in the shared services infrastructure over the next two years. We will begin with reengineering clinical and business processes in Medical Logistics, Facility Planning, TRICARE Health Plan, and Health Information Technology in 2013. o By July 1, 2013, Business Process Reengineering plans for these four shared services will be completed. The plans will include projected cost savings and performance improvements, personnel reductions, implementation costs, organizational design, performance measures, and necessary changes to accountabilities and authorities. By July 1, 2013 five year business performance plans will be completed for each multiService Market. The market level (specifically, Prime Service Areas surrounding military medical hospitals and clinics) is where substantial improvements in clinical and business processes will occur, and where major reductions in cost through standardized processes and recapture of private sector care are most achievable.. Each market will have yearly targets for recapture of private sector health care and performance targets tied to the quadruple aim. The performance plans will specify how improvements in clinical and business practices will result in cost reductions, infrastructure reductions, and personnel reductions. By September 1, 2013, the ASD(HA) will appoint an individual in each of the ten shared service areas within the DHA; this individual will be accountable for the cost and performance of their respective areas. These individuals will have the authority to drive improvements in the delivery of shared services across the enterprise. By September 30, 2013, Business Process Reengineering plans for Pharmacy Programs; Education & Training; Research & Development; Public Health; Acquisition; Budget & Resource Management will be completed. The plans will include projected cost savings and performance improvements, personnel reductions, implementation costs, organizational design, performance measures, and necessary changes to accountabilities and authorities. By October 1, 2013, we will begin implementation of shared services under the authority of the DHA. This effort will improve integrated health service delivery by providing a common, standardized approach to those services; reduced overhead to manage the services; and service delivery expectations agreed to by the supporting and supported organizations. By October 1, 2013, we will establish the NCR directorate within the DHA, replacing the existing Joint Task Force National Capital Region Medical (JTF CAPMED). This transition will sustain the joint organizational structure for the two inpatient medical facilities in the NCR, and also clarify accountability for comprehensive market management, and allow the MHS to reduce the intermediate headquarters overhead for managing the market. By October 1, 2013, the existing charter directive for the Office of the Assistant Secretary of Defense for Health Affairs, DoDI 5136.01, will be updated to more clearly delineate and differentiate responsibilities for policy development and oversight from policy execution responsibilities carried out by the Service Medical Departments and the future DHA. The elimination of dual-hatting within the OASD(HA) will allow the OSD leadership to ensure policies are in place to drive the changes needed for the MHS to

function as a fully integrated delivery system. Improved oversight will also ensure that goals for cost reduction, infrastructure reduction and personnel reductions are met. By October 1, 2013, the Uniformed Services University will be separately organized with direct reporting to the ASD(HA).