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1 The Value Quadrant of Healthcare Reform

2 ACOs in PPACA Provider Organizations or networked groups Accountable for quality, cost and overall care of defined population of Medicare FFS benes Key metrics to be defined but likely to include: Care coordination Use of HIT and data Assess and manage population risk Measure clinical processes and outcomes, patient experience

3 ACOs in PPACA Pilots to start January 2012 FFS Medicare only No new $ for funding; ACO payments from shared savings Likely to use claims-based measures on 3- year trend. 3

4 Potential ACO Organizations Shortell and Casalino identified 5 types of current organizations that could be or be part of an ACO Independent Practice Association Multispecialty Group Practice Hospital Medical Staff Organization Physician-Hospital Organization Organized or Integrated Delivery System In fact, there is little agreement about what constitutes an ACO

5 Three Essential Characteristics Ability to provide and manage with physicians the continuum of care across different institutional settings, at the very least, ambulatory and inpatient care Capacity to prospectively set budgets and allocate resources Sufficient size to support comprehensive, valid, and reliable performance measurement Sounds an awful lot like an MA Plan

6 How Would an ACO Work for Purchasers and Health Plans? Well-founded concern about Medicare sanctioned ACOs developing and using market power in negotiations to drive prices higher Concern is they might reduce costs but not provide the savings to purchasers in reduced premiums

7 Key Considerations for MA Plans Can we afford to ignore the ACO movement? Should we participate in the ACO movement? What core competencies do we bring? Where would we start? How does an ACO strategy create competitive advantage for our plan?

8 Percentage of Medicare Beneficiaries with Chronic Conditions 0 19% 2 or more 60% 1 21%

9 Most Common Chronic Conditions for Medicare Beneficiaries % of Beneficiaries 0% 5% 10% 15% 20% 25% 30% 35% 40% Ischemic Heart Disease Cataract Diabetes Arthritis Congestive Heart Failure Osteoporosis Major Depression COPD Glaucoma Alzheimer s & Related Disorders

10 Chronic Condition: Diabetes 24% of Medicare beneficiaries have diabetes Beneficiaries with diabetes account for 40% of Medicare spending Medicare spends on average $11,800 per beneficiary with diabetes annually 89% of those with diabetes have at least 1 other chronic condition

11 Common Comorbid Conditions Associated with Diabetes % of Beneficiaries with Diabetes 0% 10% 20% 30% 40% 50% 60% Ischemic Heart Disease Congestive Heart Failure Cataract Arthritis Chronic Kidney Disease

12 Chronic Condition: Congestive Heart Failure (CHF) 20% of Medicare Beneficiaries have CHF Beneficiaries with CHF account for 48% of Medicare Spending Medicare spends on average $17,700 per beneficiary with CHF annually 98% of those with CHF have at least 1 other chronic condition

13 Common Comorbid Conditions Associated with CHF % of Beneficiaries with CHF 0% 10% 20% 30% 40% 50% 60% 70% 80% Ischemic Heart Disease Diabetes Cataract RA_OA COPD

14 Telehealth And Hit Enabled Chronic Care Delivery Network (THE-CCDN) PPACA Section III establishing CMS Innovation Center; Model V, as proposed by Pharos Innovations and client partners

15 THE-CCDN Operational Model Entity Function Rationale Care Coordinators (RN s) Telehealth (Daily Remote Monitoring) and Disease Registry Technology Physician Care Coordination Oversight Network Administration Deliver daily self-care support, patient monitoring and clinical care triage Monitor clinical and behavioral status of individuals and populations while allowing care coordinators to be maximally efficient Monitor and approve plan of treatment; adjust medications as needed Care Coordinator training, QA, Protocol approval, provider contracting, management of bonus payment model This role supplements the physician and leads to improvement in quality and cost outcomes when following standard treatment protocols Proven to dramatically reduce admissions by identifying candidates for care coordination interventions; reinforces patient self-care regimen Prescriptive authority and treatment protocol approval Organizing entity for regional and local providers

16 Implementation Approach Establish Provider Network - Beneficiaries with target chronic conditions able to receive care within regional or potentially local level care networks, with existing physician provider relationships Network administration contracts with physicians, handles data systems, trains care coordinators, manages quality assurance and reporting Identify and Enroll Target Beneficiaries - Target enrollees identified using HCC grouper definition from Medicare claims Enrollee claim data populates network disease registries Network administration and providers begin beneficiary enrollment process Track and Process CPT Claims- FI s process monthly CPT claims directly to providers Audit trail maintained by administrative network entities Track and Process Performance Pool Bonus- FI s and CMS track two year national cost trend for specific HCC groupers Monthly claims paid vs. trend to allow rapid bonus reconciliation

17 Population Impact on Costs* per Member $9,000 >$4MM Saved vs. Control ( p = 0.001) $8,750 $8,500 $8,250 $8,000 $7,750 $7,500 Base Year Year 1 Year 2 Year 3 Year 4 Year 5 Intervention Population Control Population * Risk Adjusted using HCC methodology

18 Population Impact on 30 Day Readmissions* All Cause 30-Day Readmission Rate Following Hospitalization for Heart Failure for ALL CHF Patients National average = 24.5% Population Baseline = 18% (prior year avg) Month of Program Delivery * Represents organizational level impact as a result of 57% of population enrolled

19 Questions Randall Williams, MD CEO, Pharos Innovations

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