Accountable Care Organizations: Forging Stakeholder Partnerships for Health Care Performance and Efficiency

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1 Accountable Care Organizations: Forging Stakeholder Partnerships for Health Care Performance and Efficiency Julie Lewis Director of Health Policy Dartmouth Institute for Health Policy and Clinical Practice Presented to Northeast Home Health Leadership Summit January 20, 2010

Health Policy Dartmouth Institute for Health Policy and Clinical

2 AGENDA Dartmouth Research Home Health Spending Accountable Care Organizations

3 AGENDA Dartmouth Research Home Health Spending Accountable Care Organizations

4 Nearly three fold variation across the U.S. Per Capita Medicare Spending, 2007 (Age-Sex-Race-Adjusted) $10,250 to 17,184 (55) 9,500 to < 10,250 (69) 8,750 to < 9,500 (64) 8,000 to < 8,750 (53) 6,039 to < 8,000 (65) Not Populated

5 Where is the variation? More Care in High Spending Regions Less Care in High Spending Regions Evidence Based Quality Preference Sensitive Care Supply Sensitive Care

6 What do higher spending regions get? (1) Fisher et al. Ann Intern Med: 2003; 138: (2) Baicker et al. Health Affairs web exclusives, October 7, 2004 (3) Fisher et al. Health Affairs, web exclusives, Nov 16, 2005 (4) Skinner et al. Health Affairs web exclusives, Feb 7, 2006 (5) Sirovich et al Ann Intern Med: 2006; 144: (6) Fowler et al. JAMA: 299:

Health Affairs web exclusives, October 7, 2004 (3) Fisher et al.

7 Research on causes of regional variations

8 Drivers of Supply Sensitive Care: Gray Area Decision Making & Local Capacity Decision Making Example: For a patient with well controlled hypertension and no other medical problems, when would you schedule the next visit? Other guideline free decisions used in intensity index Referral to specialist (reflux, angina) Diagnostic testing (cardiac ultrasound, chest CT) Hospital admission (angina, heart failure) Admission to ICU (heart failure) Referral to palliative care (heart failure) Sirovich et al. Health Affairs 2008: 27: 813

Other guideline free decisions used in intensity index Referral to specialist (reflux, angina) Diagnostic testing (cardiac

9 Local spending strongly correlated with practice intensity Sirovich et al. Health Affairs 2008: 27: 813

10 Average annual inflation adjusted growth rates in per-capita Medicare spending, % to 8.4% (59) 4.0% to < 4.5% (52) 3.5% to < 4.0% (68) 3.0% to < 3.5% 1.6% to < 3.0% (62) (65) Not Populated

11 Per Capita Medicare Spending Growth Source: Slowing the Growth of Health Care Spending: Lessons from Regional Variation Fisher, Skinner, Bynum, New England Journal of Medicine, February 26, 2009

12 What do higher spending regions get?

13 Why does the growth rate matter? Using 2008 Medicare trustees report on projected revenues and total Part A and B spending: Estimated a $660 billion deficit by 2023 in Medicare. By reducing annual growth in per capita spending from 3.5% (national average) to 2.4% (rate in San Francisco) Medicare would have an estimated balance of $758 billion, a cumulative savings of $1.42 trillion.

Estimated a $660 billion deficit by 2023 in Medicare.

14 AGENDA Dartmouth Research Home Health Spending Accountable Care Organizations

15 Home Health Per Capita Medicare Reimbursements Hospital Referral Regions Home Health Per Capita Spending (2006, Dollars)

16 Medicare Spending on Home Health (2007 per capita) Bottom 10 Top 10

17 Medicare Home Health and Total Expenditures ( per capita)

18 Medicare End of Life Spending Total Spending and Home Health Spending ( per capita)

19 AGENDA Dartmouth Research Home Health Spending Accountable Care Organizations

20 Key Elements of Accountable Care Model

21 The ACO is the overarching structure within which other reforms can thrive Accountable Care Organization Bundled Payments Medical Home Partial Capitation HIT Shared Decision Making

22 Accountable Care Organizations ACO configurations can vary, reflecting the diversity of local health care markets Integrated delivery systems, Physician Hospital Organizations, Independent Practice Associations (IPA), physician group practices, regional collaborations Several characteristics are essential for all ACOs:

23 What providers comprise an ACO? It varies. Accountable Care Organization Primary Care Hospital Specialists Other Possible Components: Home Health Mental Health Rehab Facilities

24 No Lock In: Patient assignment to ACO Providers sign agreement to participate with ACO (PCPs must be exclusive to one ACO; Specialists can be part of multiple ACOs) Patients are assigned to their PCP based on the majority of their outpatient E&M visits

25 Calculating savings based on spending targets ACO Launched Projected Spending Target Spending Shared Savings Actual Spending

26 Multiple initiatives within the ACO model: $800M (Target Expenditures) $160M (20% Capitation) $365M (Traditional Fee for Service Payments) $115M (Bundled Payments for Specific Conditions) $150M (PMPM Payments for Medical Home) $10M (Available Shared Savings if Quality Targets are Met) (80/20 agreed upon split) $8M to the Providers $2M to the Payers (if performance metrics are met)

27 Options for Payment Reform

28 ACO Expenditure Target $100M ACO Actual Expenditures $80M $0 To ACO: $89M To ACO: $96M To ACO: $96M $9M to ACO (50%) $9M to Payer (50%) $2M to Payer (2% threshold) $80 to ACO in FFS Payments Simple Shared Savings $16M to ACO (80%) $4M to Payer (20%) $80 to ACO in FFS Payments Shared Savings + Symmetrical Risk $16M to ACO (80%) $4M to Payer (20%) $60M to ACO in FFS $20M to ACO in Partial Cap Shared Savings + Partial Capitation

29 ACO is responsible for all patient expenditures Expenditures Attributed to ACO Patient Expenditures PCP 1 Patient Expenditures Patient Expenditures ACO Patient Expenditures Patient Expenditures PCP 2 Patient Expenditures

30 Performance Measurement Timeline

31 How Does This Work? Steps for initial ACO implementation

32 Brookings Dartmouth ACO Collaborative

33 ACO Pilot Sites Round 1

34 ACO Learning Network

35 Comparison of Legislation ACO Language Independence at Home Language Type of Program Pilot Demonstration Length of Program Indefinite Up to 5 years Limit of Participants None Defined Up to 10,000 benes Minimum Number of Benes per Organization Expenditure Target YES YES Risk Corridor before Savings Quality Reporting YES YES YES YES

36 Eligible Beneficiaries Eligible Providers ACO Language Enrolled in Part B and entitled to Part A Not enrolled in Medicare Advantage Formal legal structure Sufficient number of primary care professionals for number of beneficiaries Leadership and managements structure Provides information on ACO professionals Defines process to promote evidence based medicine and patient engagement Reports on quality and cost measures Coordinates care using HIT Patient centered Independence at Home Language Enrolled in Part B and entitled to Part A Not enrolled in Medicare Advantage 2 or more chronic illnesses Non elective hospital admission within past 12 months Acute or sub acute rehabilitation services in past 12 months 2 or more functional dependencies Agreement to enroll Legal entity Comprised of physician or nurse practitioners that provide care as part of a team Experience providing home based visits Available 24 hours per day, 7 days per week Furnish services to at least 200 applicable beneficiaries Use electronic health information systems Note: Neither providers nor patients can participate in both programs.

37 Next Steps Continued work with pilot sites Sensitivity analysis Expanded pilots Different geographic areas Different provider configurations Medicaid Safety net and FQHC Special Populations (e.g., snow birds) Community reports on spending and utilization

Nuts and Bolts of. Frank G. Opelka, MD FACS American College of Surgeons. Vice Chancellor for Clinical Affairs Professor of Surgery LSU New Orleans

Nuts and Bolts of. Frank G. Opelka, MD FACS American College of Surgeons. Vice Chancellor for Clinical Affairs Professor of Surgery LSU New Orleans Nuts and Bolts of Accountable Care Organizations Frank G. Opelka, MD FACS American College of Surgeons ACS Advocacy & Health Policy, Vice Chancellor for Clinical Affairs Professor of Surgery LSU New Orleans