ACO A Roadmap for Success HFMA Los Angeles

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1 ACO A Roadmap for Success HFMA Los Angeles Melayne Yocum, Sr. Vice President, The Camden Group March 17, 2011

2 Core Themes of Healthcare Reform Expand Coverage Paying for It Payment Reform Delivery System Reform Proposed Method Expand Medicaid Subsidies for moderate income individuals No exclusions for pre-existing conditions Create new market competition for health insurance Individual and employer mandates Increase payroll taxes on high earners Tax on Cadillac plans Disproportionate Share Hospital ( DSH ) payments reduced Drug companies, medical device, and health insurers assessed fees Reduced payment for hospitals with high readmission rates Value-based purchasing ( VBP ) program - hospitals and physicians Further payment reductions for healthcare - acquired conditions Increased payments for primary care services - more for shortage areas Medicare Bundling pilots Accountable Care Organizations ( ACO ) CMS Center for Medicare and Medicaid Innovation ( CMI ) Medicaid payment demonstration projects 10/27/2010 ι 1

3 ACA and CI/Accountable Care Timing and Key Provisions Billions Tax Credits to Small Employers Medicaid Global Payment System Demonstration 2011 Fees on Drug Makers Begin reductions in annual updates to FFS Medicare rates 2012 Voluntary Accountable Care Organization ( ACO ) Create Co-Ops Tax High-income earners Tax investment income Tax medical devices 2014 Exchanges created Mandated insurance coverage Insurance industry fees Reductions in DSH payments Reduced payment for hospital acquired conditions 2016 Increased penalty for individuals without insurance Permits states to form healthcare choice compacts 2018 Tax on Cadillac Plans Additional Uninsured Covered 1/24/2011 ι 2

4 Mixed Bag (Win and Lose) in Healthcare Reform Hospitals Reason Win Reduced bad debt More insured users No more new physician-owned hospitals as of January 1, 2011 Lose Decrease to federal aid dollars distributed as DSH to those hospitals that receive it No relief for uninsured undocumented aliens who must be cared for under EMTALA Medicare payment update reductions - estimated to be $14.8 billion over ten years Less ability to cost shift Payer mix will shift as baby boomers move into Medicare and revenue per unit decreases Overall pressure to decrease costs increase as cost of programs becomes apparent New payment models (e.g., ACO, bundled payments) will work to decrease inpatient utilization and margin loss. 4/15/2010 ι 3

5 Mixed Bag (Win and Lose) in Healthcare Reform (cont d) Physicians Reason Win More insured patients for those with poor payer mix reimbursement enhanced for those with high uninsured Enhanced reimbursement for community clinics Ability to access shared savings (increase beyond FFS) from bundled payment/acos PCPs will have an increase in pay from Medicaid (2013/14) and Medicare (rural, HPSA) Lose Add to patient load of physicians which could create access issues and exacerbate physician shortage No resolution to the SGR sustainable growth rate calculation Independent physicians with no access to clinical reporting tools will find it more difficult to compete No tort relief 4/15/2010 ι 4

6 Payment Impact on Hospitals and Physicians $ Current Breakeven DSH Commercial Medicare Medicaid Indigent/ No Pay Payer Type Undocumented Aliens 1/24/2011 ι 5

7 Payment Impact on Hospitals and Physicians How to achieve new breakeven level? ACO Clinical Integration Clinical Care Process Redesign Operations Improvement Current Breakeven $? New Users New Breakeven DHS Commercial Medicare Medicaid Indigent/ No Pay Undocumented Aliens Payer Type 1/24/2011 ι 6

8 Winners in Healthcare Reform Pharmaceutical Companies Insurers Clinically Integrated Delivery Systems Reason Increase of insured will mean more people will comply with doctors orders because they can pay for prescription drugs Protection from the release of generic biotech drugs No government negotiation of prices for medicines sold through the Medicare Part D drug benefit 20 million new customers (some of whom who qualify for subsidies), easily accessible through the health-insurance exchanges Taxes of $70 billion delayed until 2014 No national public option Payment reforms reward those medical groups/hospitals/health systems who provide healthcare at the best value (quality and service/cost) 4/15/2010 ι 7

9 Healthcare Reform Strategy Check List 1. Reduce operating costs/improve efficiency A. Overhead B. Clinical resource consumption C. Implement Patient-Centered Medical Home 2. Prepare for bundled payments A. Orthopedics and cardiac service lines B. Health plan contracts (PPO) first, Medicare Pilot second C. Must conduct an assessment now, engage your physicians 3. Prepare for an Accountable Care Organization (delivery system) A. Assess your market position B. What is your physician alignment strategy? C. What will your competitors (medical group, IPA, and hospitals) do? 10/27/2010 ι 8

10 Healthcare Reform Strategy Check List 4. Invest in IT A. aemr B. Hospital EMR C. CPOE D. Assume you have: PACS diagnostic test results reporting 5. Assess your market to stay close to payer activity A. Meet with brokers B. Meet with health plans C. Identify and begin work with selffunded employers (including you) 10/27/2010 ι 9

11 Context and Perspective Change is good; you go first. 10/8/2010 ι 10

12 Accountable Care Organization: Definition Accountable Care Organization is an organization that: Can provide primary care and basic medical/surgical inpatient care for a patient population Are willing to take responsibility for overall costs and quality of care for a population Have the size and scope to fulfill this responsibility Hospitals and Physicians will be allowed to be organized as ACOs and eligible for a piece of the shared savings they achieved for Medicare if they meet quality thresholds ACOs could be: Integrated Delivery System Physician-Hospital Organization ( PHO ) Independent Practice Association ( IPA ) Partnership of PHOs and/or IPAs Large group practice Preliminary ACO model: Medicare Physician Group Practice Demonstration Project (includes 10 physician groups, averaging 500 doctors and 22,000 beneficiaries) Five groups awarded $25.3 million out of $32.3 million in savings in 2009 Source: MEDPAC, Report to the Congress: Improving Incentives in the Medicare Program, June 2009; Patient and Protection Act, March 23, /15/2010 ι 11

13 Physician-Hospital Integration: Driving the Value Proposition High ACO IDS Bundled Payments Managed Care Shared Risk Clinical Integration Specialty Co-management COE/Specialty Institutes Medical Foundation PSA Physician-owned Hospital Low Limited Integration Full 10/27/2010 ι 12

14 New Model: Collaboration is Essential Primary Care Physicians Specialty Care Other Providers (Home Health) Patients/Members/ Employees Pharmacy Utilization Ancillary (Lab, Imaging, O/P Surgery) Utilization Hospital (Acute, Specialty) Utilization 4/15/2010 ι 13

15 New Paradigm: Increase the Defined Population We Care For Likelihood of Inpatient Stay or Cost Low High Defined Population 10/20/2010 ι 14

16 How is an ACO Different from the HMO Days? HMO Era Low Prices Withholds Booming Economy Limited/No Government Intervention Assignment of Patients Limited Systems to Implement Prevention ACO Era Appropriate Utilization Incentives Recession Government Pushing Down Medicare Advantage and Elevating ACOs Attribution/Relationships Robust Systems Management of Chronic Disease 10/8/2010 ι 15

17 ACO Requirements - Medicare From PPACA, an ACO must: Have a formal legal structure for receiving and distributing shared savings payments Have a leadership and management structure that includes clinical and administrative systems Agree to participate for at least three years Have at least 5,000 Medicare (10,000 Medicaid, 15,000 Commercial) beneficiaries with a sufficient number of Primary Care Providers Have processes relating to quality and coordination of care: e.g., telehealth, remote monitoring Have patient-centered processes that meet criteria specified by CMS Meet reporting requirements (TBD by CMS) 4/15/2010 ι 16

18 Sample ACO Configuration Medicare/Other Payers Infrastructure (Provided or Contracted ACO Operations) Physician Network Hospitals $ Accountable Care Organization Medical Group Foundation IPA Continuum of Care Services Management Services Agreement Joint Ventures Information Technology EMR, CPOE, PACS Data warehouse Reporting Care Management Hospitalists and Intensivists CMO Disease management Clinical protocols Advanced analytics and modeling Call center Utilization management Knowledge management Medical Group(s) Community MDs Hospitals Other Regional Hospitals? Outpatient services Nursing homes Home health Acute rehab Hospice Other Health Network Delivery network Financial/Payment Systems 7/13/2010 ι 17

19 Process for ACO Development Establish purpose and care principles of ACO. Establish committee to review ACO governance/structure models and arrive at best fit for organization. Arrive at ACO financial/payment model guiding principles and goals and frame initial business model. Develop care model with physician involvement. Assess delivery system capabilities - inventory components existing within the system, gaps of services in continuum of care and recommendations on how to fill them. Develop operational process and IT tools to allow for near real-time data collection, review, and feedback. 4/15/2010 ι 18

20 The Patient-Centered Medical Home Key Concepts-Shared Responsibilities Adherence to evidencebased care plans and protocols Clarity on which provider has primary responsibility for care Use disease registries and multiple data sources to coordinate care Acknowledged care plan and engaged in the care process Provide care in many forms: e-visits, access, group visits, individual visits Reasonable access to care and information 4/15/2010 ι 19

21 Clinical Integration: Goals of the Program Clinical Guideline Goals: Ensure network providers are acting as a unit and adhering to evidence-based guidelines Physicians develop, review, and approve guidelines Guidelines and measures for all specialties Guidelines and measures for cost-driver conditions Performance Management Goals: Reduce practice variation Monitor/evaluate each provider s performance Identify individual providers who may need assistance to meet quality and efficiency goals Compare the network to national benchmarks 2009 Greater Rochester Independent Practice Association 4/15/2010 ι 20

22 Patient Segmentation and Care Delivery Model Evolution Well e.g., Low Risk, Good Nutrition, Active Lifestyle At Risk e.g., Inactivity, High Stress, Overweight, High Blood Pressure, smoking Acute Conditions e.g., Respiratory, Strain and Sprains, Lacerations Chronic Conditions e.g., Prevalent Diseases and Chronic Conditions Catastrophic Conditions e.g., Severe burns, premature infant, head injury Integrated Care Management Interventions Health Promotion Health Risk Management Self Care Disease Management Case Management General Health Awareness Health Risk Assessment Self Care Education Patient Identification and enrollment Utilization Management Immunizations Targeted Behavior Modification Nurse Line Behavioral and Clinical Support Case Management Preventive Exams and Screening Stress/Mental Health Management Decision Support Care Coordination Care Coordination Healthy Lifestyle Education Physical Activity Campaign Occupational Health and Safety Address Co morbid Conditions Address Co morbid Conditions Source: Mercer 4/15/2010 ι 21

23 Improving Guideline Compliance - Using Electronic Tools Point of Care Alerts Available to all physicians at Point of Care Display services that a patient is overdue for or beyond goal ( Actionable Alerts ) Updated as transactional data is received Physicians are able to provide feedback if a patient is mis-identified with a disease or has a contra-indication related to an alert Care Opportunities Report Population report to look at all actionable items on all patients within a practice at once Filters allow physician to focus on a subset of population Allows offices to do outreach to those patients in need of services 2009 Greater Rochester Independent Practice Association 4/15/2010 ι 22

24 Sample Performance Measures Overuse Use of imaging studies in low back pain Antibiotic treatment of adults with acute bronchitis Appropriate treatment of children with upper respiratory infection Population Health Breast cancer screening Colorectal cancer screening HbA1c management Beta-Blocker treatment after a heart attack Safety Annual monitoring of patients on persistent medications Potentially harmful drug interaction in the elderly Care Coordination 30-day all cause (risk-adjusted) readmission rate following pneumonia hospitalization Source: Dartmouth-Brookings ACO Pilot Project 4/15/2010 ι 23

25 Financial Model Guiding Principles PCPs are in the most appropriate position to drive and direct the healthcare of defined population. (fee-for-service, partial cap, shared savings) Specialists have the most influence on resource utilization in the hospital (inpatient and outpatient services) and their reimbursement method must incentivize them to provide the most appropriate care while in the hospital. (case rates, shared savings) Hospitals and other components of the care continuum must be incentivized to promote appropriate utilization of healthcare resources across the system. (case rates or capitation) Any and all modes of payment will be explored and utilized if they are effective tools to promote accountability throughout the system Incentives or skin in the game will be required to promote quality and effective utilization of resources. (shared savings, pay for outcome) 4/15/2010 ι 24

26 Critical Steps for CI/ACO Development Planning Process for ACO/CI Development - Key Steps Months Action Confirm Vision and Goals Conduct Readiness Assessment Determine Payer Strategy Determine Organization Structure Establish Conditions of Participation Define Clinical Measures and Protocols Develop IT Plan Develop Care Management Plan Prepare Business Plan 4/15/2010 ι 25

27 Scope of Work for Implementation Model and Structure (Steering Committee) Structure Ownership Governance Management Finance and Business Model Payment model Financial incentives Target population Cost/Utilization projections Network and Quality/Service Continuum of care Requirements for participation Clinical/Cost improvement measures Care redesign initiatives Service standards Operations Information technology capabilities, requirements (may require a sub-committee) Functional capability development Staffing/Resource identification 4/15/2010 ι 26

28 CalPERS: Piloting Accountable Care Integrated delivery model: Blue Shield, CHW, and Hill Provides coordinated care and services Resulting in improved quality and reduced costs Network Integrated Delivery Model Integrated Processes Data Integration Metrics and Reporting 10/27/2010 ι 27

29 Putting Profits on the Line Upfront rate reduction in 2010 for CalPERS members in 3 counties Success by taking cost out of the delivery system -- not by shifting risk to other partners Align financial incentives so that Blue Shield, CHW, and Hill are at risk 10/27/2010 ι 28

30 Cost Savings Strategies Manage utilization through coordinated operational infrastructure and clinical processes Personalize care and disease management to eliminate unnecessary utilization and noncompliance Reduce physician clinical and resource variation through quantitative analysis and targeted interventions Reduce pharmacy costs through directed member outreach, drug purchasing and contracting strategies Facilitate communication of patient medical information through integrated electronic health information 10/27/2010 ι 29

31 Progress To Date Overutilization Hysterectomies and elective knee surgeries were revealed to be the biggest cost drivers in the region Hill and CHW are collaborating on evidence-based approaches to therapy and treatments to be pursued before surgery Preventable Readmissions Intensive examinations of readmission patterns caregiver education Out-of-Network Services Repatriation program identifies patients going out-of-network and brings them back in 10/27/2010 ι 30

32 ACO Demonstrations Medicare Pilot Sites Private Payer Pilot Sites Roanoke, VA Louisville, KY Irvine, CA Tucson, AZ Torrance, CA 10/27/2010 ι 31

33 Critical Success Factors for ACOs Willing payer Incentives for shared savings Pay-for-performance Shared risk Care delivery network Full spectrum of physician specialties Hospital and sub-acute care Other diagnostic/treatment services Care management Incentive/Payment structure Infrastructure Physician leadership Data warehouse/population management capabilities Ability to capture financial and clinical data Real-time reporting and alerts Entity for contracting and distributing payments 4/15/2010 ι 32

34 Key Prerequisites Are you Ready? Physician leadership and support key Takes time! Establish guidelines, measure, and enforce parameters to improve care and prove value! Establish strong infrastructure and IT for physicians and hospitals to: Efficiently gather, analyze, report, and provide alerts based on clinical data and financial information in real time Systems must support care givers by facilitating immediate high quality care, enabling follow-up, and feedback Uniform metrics across the System to evaluate quality of care and cost effectiveness, across the population Establish one incentive system that physicians and hospitals control, understand, and gets results Relentless focus on redesigning clinical care delivery across the continuum to find new ways of improving efficiency, service, and quality 1/24/2011 ι 33

35 Last Word This time like all times, is a very good one if you know what to do with it. Emerson 10/27/2010 ι 34

36 Melayne Yocum Senior Vice President Laura Jacobs Executive Vice President The Camden Group 100 N. Sepulveda Blvd. Suite 600 El Segundo, CA (310) The Camden Group Offices located in: Los Angeles (El Segundo), CA Chicago, IL Rochester, NY 10/27/2010 ι 35

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