Potential Partners for Community-Based Organizations in the California Health Care Landscape

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1 Potential Partners for Community-Based Organizations in the California Health Care Landscape By Jennifer Rak and Sally Rodriguez Preparing Community-Based Providers For Successful Health Care Partnerships August 2012 While efforts are underway to improve care transitions and coordination, there is a dearth of information on how best to build partnerships between community-based long-term services and healthcare systems. Both sectors are tackling the issue of care coordination and good care transitions, but have been doing so in silos. To better understand specific opportunities for these partnerships in California, the Foundation developed this series of background briefs. Recent policy changes put in motion by the Affordable Care Act (ACA) are shifting health care payment incentives in order to hold providers accountable for quality and cost of care. The shift towards value-based reimbursement has produced a variety of new payment policies, demonstration programs, and newlycreated agencies tasked with improving care coordination and reducing costs. Many of these policies and programs specifically target improvements in care transitions, or the transfer of patients from one site of care to another location. For example, the ACA reduces Medicare payments for hospitals with higher than expected readmissions for patients with specified conditions (i.e., patients returning to the hospital within 30 days of a hospitalization to treat heart failure, heart attack, or pneumonia). The ACA also authorized new programs that promote care coordination more broadly and set up two new federal offices tasked with integrating care for dual eligibles and testing innovative new models of payment and care delivery. These programs, policies, and demonstrations encourage providers to consider how better to ensure successful care transitions, reduced rehospitalizations, and improved care coordination. Hospitals, post-acute care providers, provider networks, and insurers will need assistance as they shift towards integrated care delivery and consider their options for providing care transition services. Community-based organizations (CBOs) will be important partners to these entities as they begin offering a broader range of integrated care delivery services. Ongoing and upcoming care coordination and/or transition initiatives and programs include: Accountable Care Organizations (ACOs): Section 3022 of the ACA created the Medicare Shared Savings Program to govern ACOs, which are provider-based networks that bear financial risk for Medicare beneficiaries health care and have the opportunity to share savings gained through better care coordination. The Centers for Medicare and Medicaid Services (CMS) began accepting applications in October Community-based Care Transitions program: Section 3026 of the ACA authorized a 5-year program beginning in 2011 to test the efficacy of care transition models among high-risk Medicare beneficiaries. Under the program, hospitals with high readmission rates will partner with CBOs that provide 1

2 August 2012 Potential Partners in the California Health Care Landscape care transition services; CMS will pay CBOs an all-inclusive rate, per eligible discharge, for care transitions services provided. Though CMS has already approved applications from some CBOs, additional applications are being accepted and reviewed on a rolling basis. The Bundled Payments initiative: Authorized by section 3023 of the ACA, this payment demonstration tests a fundamental change in the way Medicare pays for services; CMS will link payments for multiple services (e.g., acute care, postacute care, outpatient services) across a full episode of care. Providers applying to participate in the first iteration of this demonstration have been asked to define the bundle under one of four models (two models for hospital inpatient services only, one inpatient and post-acute care model, and a post-acute care only model) and to set a price/target savings for each bundle. Initiatives focused on dual eligibles: the new Medicare-Medicaid Coordination Office, authorized by Section 2602 of the ACA, is tasked with integrating Medicare and Medicaid services and payment for individuals eligible for both programs; a state demonstration to integrate the programs is underway. under these programs, to be strong partners for CBOs in delivering Long-Term Services and Supports. Hospitals in California Most evidence-based care transition models rely on the successful engagement of hospitals; the assessment and discharge processes are often the key targets of care transition interventions. Accordingly, recent policy changes attempt to hold hospitals accountable for one of the adverse outcome indicators associated with poor care transitions: readmissions to the hospital. While the readmissions penalty under the ACA is perhaps the most imminent care transitions policy affecting hospitals, there are many other ongoing or upcoming initiatives related to care coordination that will necessitate the involvement of hospitals. California s mix of very urban to very rural counties is reflected by the variation in the number of hospitals in each county (shown in Map 1). This paper will focus on the opportunities of each of these programs within the health care sector in California. Five key segments from the sector will be included in the discussion: Hospitals, Medicare Advantage Plans, Dual Eligible Special Needs Plans and Demonstrations, Accountable Care Organizations and Major Medical Groups. Each of these players has the potential, 2

3 August 2012 Potential Partners in the California Health Care Landscape MAP 1 Number of Hospitals in California s Counties Number of Hospitals per, 2012 Over to 35 6 to 10 2 to 5 1 Source: Billian s HealthDATA 2012 Note: No data were available for the counties colored grey. The following table provides basic information for the top 25 hospitals in California, as measured by number of discharges. In subsequent tables within this report, the same 25 hospitals will be profiled; for a full table of hospitalspecific data, see Appendix

4 August 2012 Potential Partners in the California Health Care Landscape TABLE 1 Number of Beds, Discharges, and Patient Revenue for the Top 25 Discharging Hospitals in California Hospitals Hospital Name Total Beds Discharges Patient Revenue ($) Cedars-Sinai Medical Center Los Angeles ,756 8 billion Northridge Hospital Medical Center Los Angeles , billion Community Regional Medical Center Los Angeles -USC Medical Center Kaiser Permanente Sacramento Medical Center Fresno , billion Los Angeles , billion Sacramento ,392 Not available Scripps Mercy Hospital Diego , billion Loma Linda University Medical Center , billion Huntington Hospital Los Angeles , billion UCSF Medical Center Francisco , billion Sutter Memorial Hospital Sacramento , billion University of California-Davis Medical Center Hoag Memorial Hospital Presbyterian Sacramento , billion Orange , billion Sharp Grossmont Hospital Diego , billion Kaiser Permanente Diego Medical Center Diego ,668 Not available Sharp Memorial Hospital Diego , billion Kaiser Permanente Fontana Medical Center Kaiser Permanente Los Angeles Medical Center ,412 Not available Los Angeles ,133 Not available Antelope Valley Hospital Los Angeles , billion Citrus Valley Medical Center- InterCommunity Campus Los Angeles , billion St. Agnes Medical Center Fresno , billion 4

5 August 2012 Potential Partners in the California Health Care Landscape Hospital Name Total Beds Discharges Patient Revenue ($) Torrance Memorial Medical Center Los Angeles , billion Los Angeles Harbor-UCLA Medical Center Long Beach Memorial Medical Center Los Angeles , billion Los Angeles , billion Stanford Hospital & Clinics ta Clara , billion UCSD Medical Center-Hillcrest Diego , billion Source: Billian s HealthDATA, Discharge data were not available for all hospitals; this list is based on available data. California Hospitals: Reliance on Public Payers California s hospitals vary in their proportion of Medicare and Medicaid revenue to total revenue, which can include revenue from Medicare, Medicaid, private insurers, out-ofpocket payments, charitable donations, and other sources. Hospitals that derive a higher percentage of their revenue from Medicare may be more sensitive to the aforementioned policy changes. Map 2 displays the percent of California hospital patient days covered by either Medicare or Medicaid. 5

6 August 2012 Potential Partners in the California Health Care Landscape MAP 2 California Hospitals: Patient Days Covered by Medicare or Medicaid Patient Days Covered by Medicare or Medicaid, per, % or higher 60% to 69% 50% to 59% 40% to 49% 30% to 39% Less than 30% Source: Billian s HealthDATA 2012 Note: No data were available for the counties colored grey. California Hospitals: Quality Quality measurement in the context of health care delivery is a rapidly evolving field and its development is being fueled in part by policy initiatives that will depend on robust quality measurement to determine accurate reimbursement. Historically, hospitals have been required to submit to oversight and onsite quality assurance processes by various agencies like the Joint Commission, but recent years have seen a rapid development of clinical data-based quality measures as well as other dimensions of quality measurement, such as patient experience surveys and 6

7 August 2012 Potential Partners in the California Health Care Landscape adverse outcome measures, i.e. hospitalacquired conditions (HACs) measures. CMS makes certain quality information available to the public on its Quality Care Finder website, which includes a module called Hospital Compare. The visibility of this and other quality information about hospitals increases both the public s awareness of hospital performance as well as the pressure on hospitals to provide high quality care. The following tables display California hospitals performance on three key quality measures. Table 2 displays hospitals readmission rates associated with the 3 ACA-specified conditions, and Table 3 shows the percent of patients rating their hospital a 9 or 10 overall (on a scale of 1 to 10, where 1 is the worst rating) on a standardized patient experience survey, and percent of patients receiving care instructions and other information upon discharge. TABLE 2 Unadjusted Readmission Rates Associated with ACA-Specified Conditions, National Average and the Top 25 Discharging Hospitals in California. Hospital Name Heart Attack Heart Failure Pneumonia National Average % 24.8% 18.4% Cedars-Sinai Medical Center 19.2% 23.5% 16.9% Northridge Hospital Medical Center 19.6% 24.1% 17.8% Community Regional Medical Center 20.5% 26.3% 19.9% Los Angeles -USC Medical Center 20% 25.1% 20.3% Kaiser Permanente Sacramento Medical Center N/A 25.9% 19.4% Scripps Mercy Hospital 20.4% 23.3% 18% Loma Linda University Medical Center 21.2% 24.7% 20.2% Huntington Hospital 20.4% 23% 18.6% UCSF Medical Center 20.6% 25.2% 17.7% Sutter Memorial Hospital 19.1% 24.8% 17.5% University of California-Davis Medical Center 19.9% 27.4% 18.3% Hoag Memorial Hospital Presbyterian 18% 24.1% 17.6% Sharp Grossmont Hospital 19% 23.3% 19.5% Kaiser Permanente Diego Medical Center 2 N/A N/A N/A Sharp Memorial Hospital 18.4% 23.8% 17.8% Kaiser Permanente Fontana Medical Center 2 N/A N/A N/A 7

8 August 2012 Potential Partners in the California Health Care Landscape Hospital Name Heart Attack Heart Failure Pneumonia Kaiser Permanente Los Angeles Medical Center 2 N/A N/A N/A Antelope Valley Hospital 22% 28.5% 20.0 Citrus Valley Medical Center-InterCommunity Campus 18.3% 22.1% 17.2% St. Agnes Medical Center 19.3% 25.1% 18.4% Torrance Memorial Medical Center 19.5% 23% 20.5% Los Angeles Harbor-UCLA Medical Center 22.3% 25.4% 17.8% Long Beach Memorial Medical Center 18.4% 21.7% 18.3% Stanford Hospital & Clinics 17.9% 23.8% 16.4% UCSD Medical Center-Hillcrest 17.9% 24.8% 18.8% Source: Billian s HealthDATA. Discharge data were not available for all California hospitals; this list is based on available data. 1 National averages are derived from Hospital Outcome of Care Measures at Data.Medicare.Gov. 2 No 30-day readmission rate data were available N/A = Not Available TABLE 3 Patients Giving Highest Hospital Rating and Receiving Instructions upon Discharge for the Top 25 California Hospitals Hospital Name Percent Rating Hospital 9 or 10 1 Percent Receiving Instructions at Discharge Cedars-Sinai Medical Center 76% 78% Northridge Hospital Medical Center 60% 78% Community Regional Medical Center 65% 80% Los Angeles -USC Medical Center 68% 78% Kaiser Permanente Sacramento Medical Center 68% 83% Scripps Mercy Hospital 65% 81% Loma Linda University Medical Center 75% 84% Huntington Hospital 79% 81% UCSF Medical Center 75% 84% Sutter Memorial Hospital 67% 84% University of California-Davis Medical Center 67% 83% 8

9 August 2012 Potential Partners in the California Health Care Landscape Hospital Name Percent Rating Hospital 9 or 10 Percent Receiving Instructions at Discharge Hoag Memorial Hospital Presbyterian 80% 83% Sharp Grossmont Hospital 70% 82% Kaiser Permanente Diego Medical Center 66% 85% Sharp Memorial Hospital 81% 84% Kaiser Permanente Fontana Medical Center 67% 83% Kaiser Permanente Los Angeles Medical Center 74% 82% Antelope Valley Hospital 58% 77% Citrus Valley Medical Center-InterCommunity Campus 63% 79% St. Agnes Medical Center 70% 80% Torrance Memorial Medical Center 70% 80% Los Angeles Harbor-UCLA Medical Center 63% 77% Long Beach Memorial Medical Center 69% 76% Stanford Hospital & Clinics 74% 84% UCSD Medical Center-Hillcrest 69% 83% Source: Hospital Compare, Centers for Medicare and Medicaid Services. Accessed at: California Hospitals: Medicare Reimbursement. There are significant variations in the average Medicare payments received by California s hospitals. Table 4 below displays information about Medicare payments for beneficiaries in the last two years of life. 9

10 August 2012 Potential Partners in the California Health Care Landscape TABLE 4 Medicare Per Capita Spending Data for Beneficiaries with Serious Chronic Illnesses in the Last Two Years of Life, , for the Top 25 Discharging Hospitals in California Hospital Name Per Capita Medicare Reimbursement Total Inpatient Outpatient SNF Home Health Cedars-Sinai Medical Center $117,615 $72,049 $20,031 $11,848 $7,694 Northridge Hospital Medical Center $84,569 $47,662 $11,664 $13,210 $5,890 Community Regional Medical Center $59,613 $37,413 $7,920 $8,128 $1,819 Los Angeles -USC Medical Center Kaiser Permanente Sacramento Medical Center NA NA NA NA NA NA NA NA NA NA Scripps Mercy Hospital $78,254 $41,449 $10,405 $15,739 $3,059 Loma Linda University Medical Center $82,164 $49,417 $11,302 $11,294 $2,797 Huntington Hospital $80,216 $42,622 $11,516 $13,987 $5,326 UCSF Medical Center $89,695 $58,931 $13,887 $8,256 $3,628 Sutter Memorial Hospital $59,386 $34,007 $9,996 $8,332 $2,329 University of California-Davis Medical Center Hoag Memorial Hospital Presbyterian $73,179 $47,269 $10,706 $7,397 $1,926 $82,111 $36,415 $21,047 $12,081 $4,522 Sharp Grossmont Hospital $66,505 $32,563 $9,129 $14,921 $2,296 Kaiser Permanente Diego Medical Center NA NA NA NA NA Sharp Memorial Hospital $66,279 $33,330 $11,234 $10,953 $2,722 Kaiser Permanente Fontana Medical Center Kaiser Permanente Los Angeles Medical Center NA NA NA NA NA NA NA NA NA NA Antelope Valley Hospital $79,228 $44,882 $11,523 $12,195 $3,645 Citrus Valley Medical Center- InterCommunity Campus $84,842 $44,499 $10,561 $19,347 $4,

11 August 2012 Potential Partners in the California Health Care Landscape Hospital Name Per Capita Medicare Reimbursement Total Inpatient Outpatient SNF Home Health St. Agnes Medical Center $57,458 $28,392 $13,007 $8,819 $2,007 Torrance Memorial Medical Center $72,266 $37,419 $12,345 $11,751 $3,388 Los Angeles Harbor-UCLA Medical Center Long Beach Memorial Medical Center $97,965 $64,683 $16,370 $7,183 $4,283 $90,555 $46,988 $ $11,821 $21,665 $4,172 Stanford Hospital & Clinics $79,591 $47,447 $16,402 $7,667 $2,837 UCSD Medical Center-Hillcrest $78,293 $45,575 $11,166 $11,078 $2,861 Source: The Dartmouth Atlas of Health Care, accessed at: All data reflect feefor-service Medicare beneficiaries with chronic illnesses who are in the last two years of life. Medicare pays the same base rate for procedures and treatments, but service utilization may vary among hospitals due to differences in patient mix and hospital practices. N/A = Not available California s hospitals span the continuums of small to large and rural to urban. Given the ACA s readmissions penalty, new financing arrangements tying payment to quality, and the many initiatives related to care transitions and care coordination, hospitals both large and small have an increasing interest in monitoring the care of their patients more broadly, from admission, to discharge to post-acute care. Due to the Medicare readmissions payment penalty, and to the extent that hospitals participate in new financing arrangements that encourage improved quality and cost-effectiveness, hospitals are now at greater financial risk. Many of California s hospitals may not be fully equipped to respond to these shifting incentives and may comprise a large pool of potential customers for CBOs that provide the models and tools to improve care transitions and/or coordination. Medicare Advantage Plans in California The Medicare Advantage (MA) program allows Medicare beneficiaries to receive their Medicare benefits from private plans that are approved by the Centers for Medicare and Medicaid Services (CMS). The types of plans that beneficiaries can enroll in include health maintenance organizations (HMOs) and preferred provider organizations (PPOs). 1 MA plans provide all Medicare-covered benefits, including hospital services (Medicare Part A), and physician services (Medicare Part B). Most MA plans, known as MAprescription drug (MA-PD) plans, also cover prescription drugs under Medicare Part D. Despite significant payment reductions enacted by the Affordable Care Act (ACA) for MA 11

12 August 2012 Potential Partners in the California Health Care Landscape plans, the MA program has remained steady in its popularity and growth. Nationwide, the number of MA plans, including MA-PD plans, increased between 2011 and MA enrollment rose by nearly 10 percent, from 12.2 million in 2011 to 13.3 million in Twentyseven (27.0) percent of all Medicare beneficiaries are currently enrolled in an MA plan. 2 The MA program has an exceptionally strong presence in California, with over 1.8 million (36.4 percent) of the state s Medicare beneficiaries enrolled in an MA plan. Over 90 percent of MA enrollees in California are enrolled in plans offered by one of the top ten plan sponsors. In fact, nearly half of California s MA enrollees are in plans offered by Kaiser, and nearly another 20 percent are enrolled in UnitedHealth plans. Table 5 lists the top ten MA plan sponsors in California. Nationally, UnitedHealth, Humana, and Kaiser, in that order, are the top three MA sponsors by enrollment, covering over 40 percent of all MA enrollees (over 5 million enrollees). TABLE 5 Top MA Parent Organizations by Number of California Enrollees, 2012 Parent Organization Number of California Enrollees Percentage of Total California Enrollees (N = 1,807,489) Kaiser Foundation Health Plan, Inc. 827, % UnitedHealth Group, Inc. 334, % Health Net, Inc. 137, % SCAN Health Plan 114, % WellPoint, Inc. 104, % California Physicians' Service 61, % Aetna Inc. 29, % Easy Choice Health Plan Inc. 27, % Humana Inc. 26, % Care1st Health Plan 22, % Source: Avalere Health analysis of CMS Medicare Advantage/Part D ct and Data. Monthly by ct/plan/state/, March

13 August 2012 Potential Partners in the California Health Care Landscape At least one MA plan is available in every California county, and most have several operating MA plans. Map 3 shows the counties with high numbers of MA enrollees (which will differ from the counties with high percentage of beneficiaries enrolled the most populous counties will generally have the highest numbers of MA enrollees). Map 3 shows the number of MA enrollees in each California county. MAP 3 Number of MA Enrollees by, 2012 Number of MA Enrollees, March ,000 or more 10,000 to 99,999 1,000 to 9, to to 99 Source: Avalere Health analysis of CMS Medicare Advantage/Part D ct and Data. Monthly by ct/plan/state/, March

14 August 2012 Potential Partners in the California Health Care Landscape There is, however, considerable variation at the county level in the percentage enrolled in MA plans, as shown in Map 4. MAP 4 Medicare beneficiaries enrolled in MA % MA, March % or greater 20.00% to 39.99% 5.00% to 19.99% Less than 5.00% Source: Avalere Health analysis of CMS Medicare Advantage/Part D ct and Data. Monthly by ct/plan/state/, March

15 August 2012 Potential Partners in the California Health Care Landscape Map 5 shows the number of participating MA plans per county in California. MA plans in many California counties face significant competition for enrollees and are likely to be continually seeking ways to attract more enrollees with better care services and quality. MAP 5 Number of MA Plans per, 2012 Number of MA Plans, March or more 10 to 19 5 to 9 1 t o 4 Source: Avalere Health analysis of CMS Medicare Advantage/Part D ct and Data. Monthly by ct/plan/state/, March

16 August 2012 Potential Partners in the California Health Care Landscape MA Plan Quality Now Linked to Plan Payments CMS uses a star rating system to evaluate the quality of MA plans, and the rating scale ranges from one star, representing poor performance and plan quality, to five stars, representing highest performance and quality. CMS has published the MA plan star ratings on the Medicare.gov website for a number of years to provide Medicare beneficiaries with plan quality information to consider when making enrollment decisions. However, the ACA reduced payments to MA plans and for the first time, directly tied payments to MA plans to their performance on the star ratings. The ACA directed CMS to increase payment benchmarks for MA plans with ratings of four or more stars beginning in Only a fraction of plans would have qualified for bonuses under these requirements, covering only about 30 percent of MA enrollees. However, to ease MA plans transition to the new quality-based payment system and to test a graduated bonus system, CMS launched a demonstration that expanded bonus payment eligibility to MA plans with three or more stars for Under this demonstration, a significant majority of MA plans (covering nearly 90 percent of MA enrollees) qualify for the bonuses. In 2015, only 4- and 5-star plans will be eligible for bonuses, as required by the ACA. CMS scores MA plans on a number of measures that gauge the plans performance in several areas, including access to screenings, management of chronic conditions, responsiveness to beneficiaries, handling of complaints and appeals, and quality of customer service. For prescription drug coverage plans, CMS evaluates adequacy of customer service, quality of members experiences, management of complaints and appeals, and drug pricing transparency. Overall star ratings are then calculated by averaging the individual measure scores, which are weighted differently. CMS weights outcomes measures three times as much as process measures, and the agency weights patient experience and access measures 1.5 times as much as process measures. For MA-PD plans, the overall star rating also includes performance on the prescription drug measures. In line with its recent focus on quality improvement and value-based purchasing within Medicare, CMS has announced its intention to strengthen the star ratings over time, increasing the focus on outcomes measures while limiting the inclusion of administrative and process measures. For 2012, CMS added a measure assessing plans ability to minimize hospital readmissions and to improve medication adherence. In 2013, CMS plans to introduce a measure assessing care coordination based on beneficiary responses to the Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey. Additionally, CMS is considering a measure on the use of highly rated hospitals by plan members and a measure based on the evaluation of a plan sponsor s Chronic Care Improvement Program (CCIP) and Quality Improvement Project (QIP), for possible inclusion in the star ratings in future years. Beginning January 1, 2012, MA plans must newly report encounter, or utilization, data to CMS, which is likely to help CMS to construct and adopt more outcomes-based measures. While MA plans may focus immediate efforts on boosting scores for process measures that 16

17 August 2012 Potential Partners in the California Health Care Landscape they have direct control over (such as those assessing the quality of customer service), improving scores on measures regarding care transitions services is likely also a goal for MA plans moving forward. As such, plans may welcome working with community-based organizations to improve their members care transition processes within their network of providers and facilities to increase their measure scores and overall star ratings. A much higher percentage of California MA plans are rated high-quality than is the case nationally. As a result, California MA enrollees are more likely than MA enrollees nationally to have at least one high-quality plan from which to choose. The following table summarizes the distribution of plans and enrollment among the star rating categories for California and the U.S. TABLE 6 Plan by Star Rating for California and the United States, s Plans Enrollees California U.S. California U.S. 4 to 5 stars 41.90% 17.88% 57.33% 27.78% 3.5 stars 36.41% 24.20% 31.72% 32.75% 3 stars 9.42% 31.60% 3.73% 25.15% 2.5 stars 4.44% 12.68% 3.46% 7.91% 2 stars 0% 0.94% 0% 0.25% Not enough data for rating 1.75% 2.18% 0.91% 0.96% Plan too new to be measured 3.30% 5.77% 2.42% 3.01% Source: Avalere Health analysis of CMS Part C and D Performance Data Part C & D Medicare Plan Ratings Data, April 2, Values do not add to 100 percent because certain types of MA plans (1876 cost, employer/union only, and national Program of All-Inclusive Care for the Elderly [PACE] plans) do not receive overall star ratings. 17

18 August 2012 Potential Partners in the California Health Care Landscape Map 6 displays the percentage of MA enrollees in 4 to 5-star plans in each county. MAP 6 4- to 5-Star MA Plan by, 2012 % of MA Enrollees in 4 to 5-Star Plans, by county 80% or greater 60.00% to 79.99% 40.00% to 59.99% 20.00% to 39.99% Less than 19.99% Source: Avalere Health analysis of CMS Part C and D Performance Data Part C & D Medicare Plan Ratings Data, April 2,

19 August 2012 Potential Partners in the California Health Care Landscape Dual Eligible Special Needs Plans Dual eligible special needs plans (D-SNPs) are a type of special needs plan (SNP), which are specialized MA plans that serve a select population of Medicare beneficiaries. The D-SNPs provide managed care to beneficiaries who are eligible for both Medicare and Medicaid (dual eligibles). The D-SNP program was originally authorized by the Medicare Prescription Drug Improvement and Modernization Act (MMA) of 2003, and it is currently only authorized through the end of However, D-SNP reauthorization is highly likely in light of federal and state policymakers recent focus on efforts to manage these high-cost patients through better care coordination. There are currently 1.2 million Medicare beneficiaries enrolled in D-SNPs nationally and over 162,000 enrolled in California. As many D-SNPs currently designate their Medicaid benefits as supplemental benefits, CMS aims to allow D-SNPs flexibility to design supplemental benefits that improve the integration of Medicare and Medicaid benefits. CMS identified as the most appropriate supplemental benefits under this initiative several care transition-related services like non-skilled in-home support services, in-home food delivery, supports for caregivers, and adult day care services. This new benefit flexibility is likely to create additional opportunities for community-based organizations to partner with D-SNPs to provide such supplemental benefits. Table 7 provides an overview of the popularity and the quality of D-SNPs currently operating in California. In an effort to ensure that these plans are coordinating care between programs for their enrollees, Congress established a requirement that beginning in calendar year (CY) 2013, all sponsors of D-SNPs must contract with the Medicaid agencies of the states in which they operate. Sponsors will not be permitted to create new D-SNPs without such contracts, and existing D-SNPs that fail to obtain a contract will not be allowed to operate. California recently released guidance for D-SNPs on fulfilling this requirement. For CY 2013, CMS announced a proposal to increase flexibility in the types of benefits certain highly integrated D-SNPs can offer to enrollees. CMS will allow qualifying D-SNPs that meet high integration and performance standards to offer supplemental benefits beyond what MA plans are permitted to offer. 19

20 August 2012 Potential Partners in the California Health Care Landscape TABLE 7 California s D-SNP Plans, 2012 ct Name Plan Name Geographic Area Star Rating Alameda Alliance Joint Powers Authority (JPA) Care1st Health Plan Care1st Health Plan Care1st Health Plan Care1st Health Plan Alliance CompleteCare Care1st TotalDual Plan Care1st TotalDual Plan Care1st TotalDual Plan Care1st TotalDual Plan Alameda 4,413 3/5 stars Los Angeles 3,240 3/5 stars Orange 147 3/5 stars 107 3/5 stars Diego 2,019 3/5 stars CareMore Health Plan CareMore Connect Los Angeles and Orange Counties (partial) /5 stars Central Health Plan of California, Inc. Central Health Medi- Medi Plan Los Angeles and Partial 3, /5 stars Chinese Community Health Plan CCHP Senior Select Program Francisco 3, /5 stars Community Health Group CommuniCare Advantage Diego 1,049 Not enough data Easy Choice Health Plan Inc. Easy Choice Freedom Plan Los Angeles, Orange, Riverside and Counties 8, /5 stars Health Net of California Health Net Seniority Plus Amber I Los Angeles, Kern, Orange, Riverside and Counties 1, /5 stars Health Net of California Health Net Seniority Plus Amber II Parts of So. Cal., Alameda,, Francisco 12, /5 stars IEHP Health Access IEHP Medicare DualChoice Riverside and Counties 6,789 3/5 stars Kaiser Foundation HP, Inc. Kaiser Foundation HP, Inc. Senior Advantage Medicare Medi-Cal Plan South Senior Advantage Medicare Medi-Cal Plan North Southern California 31,566 5 stars Northern California 29,081 5 stars 20

21 August 2012 Potential Partners in the California Health Care Landscape ct Name Plan Name Geographic Area Star Rating L. A. Care Health Plan L.A. Care Health Plan Medicare Advantage Los Angeles 2, /5 stars MD Care, Inc. Preferred Dual SNP Los Angeles, Orange, Riverside and Counties 2, /5 stars Molina Healthcare of California Molina Healthcare of California Molina Medicare Options Plus Molina Medicare Options Plus Southern California 4, /5 stars Sacramento 1, /5 stars Orange Health Authority OneCare Orange 13,318 4/5 stars Partnership Healthplan of California PartnershipAdvantage Napa, Solano, and Yolo Counties 7,271 4/5 stars Mateo Health Commission Scan Health Plan Scan Health Plan Scan Health Plan Scan Health Plan Scan Health Plan Scan Health Plan Scan Health Plan UnitedHealthcare of California UnitedHealthcare of California HPSM CareAdvantage SCAN Connections (HMO SNP) SCAN Connections (HMO SNP) SCAN Connections (HMO SNP) SCAN Connections at Home SCAN Connections at Home SCAN Connections at Home SCAN Connections (HMO SNP) UnitedHealthcare Dual Complete UnitedHealthcare Dual Complete Mateo 8, /5 stars Los Angeles 2,923 4/5 stars Riverside 1,005 4/5 stars 666 4/5 stars Los Angeles 1,462 4/5 stars Riverside 565 4/5 stars 295 4/5 stars Joaquin /5 stars Los Angeles 1, /5 stars Orange /5 stars UnitedHealthcare of California UnitedHealthcare Dual Complete Riverside and Counties 1, /5 stars Source: Avalere Health analysis of CMS Part C and D Performance Data, 2012 Part C & D Medicare Plan Ratings Data, April 2,

22 August 2012 Potential Partners in the California Health Care Landscape Dual Eligibles Demonstrations The ACA established the Medicare-Medicaid Coordination Office (the Dual Eligibles Office) to better align and coordinate benefits between Medicare and Medicaid for dual eligibles. In April 2011, the Dual Eligibles Office awarded grants of $1 million each to 15 states, including California, to support state efforts to develop and test coordinated, integrated care approaches for dual eligibles. All 15 states proposed to contract with managed care organizations or integrated provider networks to coordinate care for dual eligibles. In August 2011, CMS released a letter to all state Medicaid directors that identified two financial alignment models that states could use in proposals to improve coordination of care for dual eligibles, including a fully capitated model which would involve a three-way contract between CMS, a state, and one or more health plans or a managed fee-for-service (FFS) model with the state eligible for shared savings. Twentyeight states are expected to release proposals to participate in this demonstration. In April 2012, California released its draft proposal to coordinate care for dual eligibles in four counties: Los Angeles, Diego, Orange, and Mateo counties, where approximately 535,000 of the state s total 1.1 million dual eligibles reside. The state also announced the health plans that are eligible to participate in the demonstration in the four counties: L.A. Care, Health Net, Care1st, Community Health Group, Molina, CalOptima, and Health Plan of Mateo. Many of these plans are current D-SNP sponsors and are likely be interested in improving care transitions for their particularly vulnerable dually eligible members. Governor Jerry Brown recently proposed expanding the demonstration to up to 8 additional counties and approximately 201,000 additional dual eligibles. Accountable Care Organizations are Forming In April 2012, CMS announced the first 27 Medicare Shared Savings Program participants. These new ACOs will enroll almost 375,000 beneficiaries across 18 states and be eligible for shared savings depending on their performance on 33 quality measures. Nine of the 27 participants are partnerships between local providers and a wholly owned subsidiary of Universal American, an MA plan sponsor committed to creating ACO partnerships. Although none of the Medicare Shared Savings Program ACOs in California (AppleCare Medical ACO, LLC, and Premier ACO Physician Network) is in partnership with Universal American, more plans are expected to engage with physicians in managing ACOs based on their experience in managed care. Additionally, in December 2011, CMS and the Center for Medicare & Medicaid Innovation (the Innovation Center) announced the organizations selected to participate in the Pioneer ACO Model. The Pioneer ACO Model is designed for ACOs that have experience in coordinating patient care under financial risksharing contracts and are positioned to move from a fee-for-service financial model to a population-based payment model. California s MA providers will play a role in the Pioneer ACO program. For example, Orange s Monarch Healthcare, a physician-led independent practice association, was one of the 32 organizations selected to participate in the Pioneer ACO Model. Monarch s network includes the Monarch Health Plan, 22

23 August 2012 Potential Partners in the California Health Care Landscape a California-licensed health plan bearing full risk for over 11,000 MA beneficiaries. As ACOs are expected to be fully financially responsible for care coordination and transitions for their members, ACOs would also be a likely partner for community-based organization in care transitions initiatives. Major Medical Groups in California The variety of ongoing care coordination, quality improvement, and payment realignment initiatives are driving physicians and other providers to seek arrangements with larger, more integrated provider networks and groups. California does not allow direct employment of physicians by entities other than professional corporations, which has historically limited hospital and physician integration. Recently, however, hospitals and health systems have developed other mechanisms for formal arrangements, such as medical foundations or exclusively contracted medical groups. Among these medical groups, there is wide variation in the use of care management models, contracted organizations, quality measurement, and financial incentives. 3 Due to the emphasis that many new initiatives place on care coordination and integration, medical groups with integrated delivery networks are well-positioned to participate. Specifically, California s dual eligible integration demonstration and the Medicare ACO program require that applicants provide a comprehensive set of services to all enrollees. Medical groups are best-positioned to offer such services, and many in California are actively strengthening their networks and offerings as they apply to participate in these new programs. Several medical groups applied for CMS Pioneer ACO program; Table 8 lists the provider organizations that were recently selected as participants. TABLE 8 California Providers Selected by CMS for the Pioneer ACO Program, as of June Organization Brown & Toland Physicians HealthCare Partners Medical Group Heritage ACO California Monarch HealthCare PrimeCare Medical Network Sharp HealthCare Service Area Francisco Bay Area Los Angeles and Orange Counties Southern, Central, and Coastal California Orange and Riverside Counties Diego 23

24 August 2012 Potential Partners in the California Health Care Landscape Six of California s largest provider organizations are described below. Four of these groups are participants in the Pioneer ACO program, and the others have experience setting up ACO-like programs. HealthCare Partners According to its publicly available annual report, HealthCare Partners is one of the largest single providers of pre-paid health care for seniors in California. Founded in 1992, HealthCare Partners provides health care services to both HMO enrollees and fee-forservice patients with contracts with most major HMOs and PPOs serving the Los Angeles area. The full service area includes Los Angeles, Pasadena/the Gabriel Valley, South Bay, Long Beach, the Fernando and ta Clarita Valleys, and Orange. HealthCare Partners Medical group (staff model) employs more than 700 physicians and provides care through a network of more than 50 medical offices. In addition, the HealthCare Partners Independent Physician Association (IPA) contracts with physicians in the community to provide more access to physician care; more than 900 physicians and 3,000 specialists are available to patients served by the staff model medical group as well as the IPA. Notably, HealthCare Partners Medical Group announced in December 2011 that it was selected to participate in the Pioneer ACO demonstration. 4 Brown & Toland Physicians Based in Francisco, Brown & Toland is a physician-owned and governed independent practice association of more than 800 community physicians serving 300,000 enrollees. Per the 2010 annual report, Brown & Toland serves about 115,000 HMO and 175,000 PPO participants; in Francisco, Brown & Toland serves about 15,000 MA enrollees through contracts with HealthNet, UnitedHealth, and SCAN Health Plan. Brown & Toland has an operating income of $6.8 million, and was selected to participate in the Pioneer ACO demonstration. 5 Hill Physicians Medical Group Per its 2010 Annual Report, Hill Physicians Medical Group is the largest Independent Physician Association in Northern California. Founded in 1984, Hill Physicians serves more than 310,000 patients via a provider network of more than 3,500 physicians and other practitioners. The service area includes the East Bay, Francisco, Sacramento, and Joaquin, and Hill Physicians contracts with 12 health plans, including Aetna of California, Anthem/Blue Cross of California, CIGNA Healthcare of California, Health Net Medicare, United Healthcare West, SCAN Health Plan, and others. In 2010, Hill Physicians reported $455 million in revenue, with a net income $5.4 million. Notably, Hill Physicians participated in a virtual ACO initiative in Sacramento with Catholic Healthcare West (CHW) and Blue Shield of California. The initiative yielded positive results; average length of stay decreased by 12% and hospital readmission rates decreased by 22%. 6 Sharp HealthCare Sharp HealthCare is an integrated health care delivery system based serving the Diego area. The system includes Sharp Community Medical Group, an Independent Physician Association (IPA) and Sharp Rees-Stealy Medical Group, a Multispecialty Group Staff Model, and operates four acute-care hospitals, 24

25 August 2012 Potential Partners in the California Health Care Landscape three specialty hospitals, two affiliated medical groups and a health plan, as well as other facilities and services. 7 Sharp contracts with 2,600 physicians. In addition, Sharp HealthCare operates Sharp Health Plan, the only commercial health plan based in Diego. Sharp hospitals also hold six capitated commercial HMO contracts and one capitated senior HMO contract. In fiscal year 2009, Sharp reported net revenues of $2.1 billion. Scripps Health Scripps Health is a private, nonprofit health system in Diego, California that includes four acute-care hospitals on five campuses, more than 2,600 affiliated physicians, and outpatient care network, home health care and associated support services. Scripps Health was established more than 80 years ago in the community of La Jolla but now extends from Chula Vista to Oceanside, with more than 20 primary and specialty care outpatient centers. 8 Scripps average daily inpatient census is 831 patients. Heritage Provider Network Heritage Provider Network provides programs and services designed specifically for the managed care environment. Founded in 1995, Heritage has expanded to include Southern and Central California and currently has 500,000 patients in its panel. Affiliated Medical Groups include Bakersfield Family Medical Center, Coastal Communities Physician Network, Desert Oasis Health Care, High Desert Medical Group, Heritage Victor Valley Medical Group, Lakeside Medical Group, Regal Medical Group, Sierra Medical Group, and Affiliated Doctors of Orange. Heritage contracts with 11 health plans, including Aetna, Anthem, CIGNA, HealthNet, SCAN Health Plan, United Healthcare, and others. Notably, in December 2011, that Heritage Provider Network was selected to participate in the Pioneer ACO demonstration. 9 Table 9 displays general information about these medical groups. TABLE 9 Publicly-Available Information about Selected California Medical Groups Medical Group Service Area Patients Physicians Income ACO? Health Care Partners Los Angeles and Southern CA 575, MDs/3,000 specialists (IPA) Not available Yes: Pioneer Brown & Toland Francisco area 300, MDs Operating income $6.8 million Yes: Pioneer Hill Physicians Northern CA 310,000 3,500 MDs + specialists Net income $5.4 million Virtual ACO Sharp Diego NA 2,600 MDs Scripps Diego NA 2,600 MDs Net revenue: $2.1 billion Revenue: $2.3 billion Yes: Pioneer ACO-like Integrated Delivery Network Heritage Provider Network Southern and Central CA 500,000 2,100 MDs, 30,000 specialists Not available Yes: Pioneer Source: Annual reports, fact sheets, and other information within medical groups websites. 25

26 August 2012 Potential Partners in the California Health Care Landscape Conclusion Hospitals, insurers, physicians, medical groups, and other health care entities are increasingly responding to the shift away from fragmented, siloed care delivery towards coordinated, integrated care. New payment arrangements and policies, discussed in this paper, that encourage high-quality coordinated care will put unprepared providers at risk of lost patients and revenue. As providers and insurers determine how best to thrive in this new policy and financial environment, CBOs offering evidence-based care coordination expertise and service models have an excellent opportunity to develop partnerships and provide services to a larger customer base. Author Bios Jennifer Rak, Senior Manager at Avalere Health, provides policy analysis and strategic advice on Medicare legislation and regulation and health insurance market reform. In particular, she focuses on policy and payment issues related to the Medicare Advantage and Part D programs. Prior to joining Avalere, Jennifer was an executive director in the Federal Programs Health Policy department at America s Health Insurance Plans (AHIP), a national trade association, where she worked with members on policy developments impacting plans participating in the Medicare program. She analyzed key implementation issues arising from health reform relating to Medicare Advantage, Medicare Part D, state Exchanges and the Medicaid program. She also worked as an associate in the law firm of Cooper and Dunham, LLC doing patent prosecution and IP strategy for biotech applications. Jennifer holds a B.A. from Reed College, a J.D. from Case Western Reserve University with a focus in health law, and a M.P.H. from Emory University. Sally Rodriguez, Senior Manager at Avalere Health, provides research and analytic support to clients on Medicaid and long-term care policy issues, focusing on longterm care reform. Prior to joining Avalere, Sally worked as an Analyst for the Government Accountability Office (GAO), producing Congressionally-requested reports that analyzed domestic health policies and programs. Prior to GAO, Sally conducted survey research for the Center for the Study of Services and worked for a Washington, DC-based policy consultant. Sally holds a B.S. in Health Promotion Disease Prevention Studies from the University of Southern California and received her M.P.H. with a concentration in policy from the George Washington University. 26

27 August 2012 Potential Partners in the California Health Care Landscape References 1. MA plans also include private fee-for-service (PFFS), cost, and demonstration MA-PD plans, which together represent only approximately 15 percent of all MA plan offerings in Avalere Health. Analysis of CMS MA State/ Penetration File. April 2012; 3. Burtley, Cleo et al. Physician-Hospital Integration 2012: How Health Care Reform Is Reshaping California s Delivery System, California Health Care Foundation; MEDIA%20LIBRARY%20Files/PDF/P/PDF%20PhysicianHospIntegration.pdf 4. HealthCare Partners. About HealthCare Partners; aboutus.asp 5. Brown & Toland Physicians Annual Report; Documents/en/about/Annual%20Report% pdf 6. Hill Physicians Medical Group. More Than Ever: Strength in Numbers Annual Report; Sharp HealthCare. About Sharp; 8. Scripps. Transforming Results: 2010 Annual Report; 9. Heritage Provider Network. About Us; For more information contact: The SCAN Foundation Erin C. Westphal, MSG, Program Officer 3800 Kilroy Airport Way, Suite 400, Long Beach, CA (888) Follow us on Twitter Find us on Facebook

28 Appendix 1: California Hospitals: General Information, Readmissions, and Quality Indicators Hospital Name Discharges Total Beds Patient Revenue Patient Days: Medicare Patient Days: Medicaid Rates: Heart Attack Rates: Heart Failure Rates: Pneumonia Patients Rating the Hospital 9 or 10 Percent Providing Info Upon Discharge Cedars-Sinai Medical Center Los Angeles 58, $ 7,994,336, % 39.1% 19.2% 23.5% 16.9% 76% 78% Northridge Hospital Medical Center Los Angeles 35, $ 1,576,529, % 30.7% 19.6% 24.1% 17.8% 60% 78% Community Regional Medical Center Fresno 35, $ 2,474,693, % 16.6% 20.5% 26.3% 19.9% 65% 80% Los Angeles -USC Medical Center Los Angeles 35, $ 1,870,786, % 6.0% 20.0% 25.1% 20.3% 68% 78% Kaiser Permanente Sacramento Medical Center Sacramento 32, N/A 5.7% 5.7% 0.0% 25.9% 19.4% 68% 83% Scripps Mercy Hospital Diego 32, $ 2,067,850, % 29.8% 20.4% 23.3% 18.0% 65% 81% Loma Linda University Medical Center 31, $ 3,948,648, % 22.4% 21.2% 24.7% 20.2% 75% 84% Huntington Hospital Los Angeles 29, $ 1,906,879, % 34.6% 20.4% 23.0% 18.6% 79% 81% UCSF Medical Center Francisco 29, $ 5,946,735, % 21.8% 20.6% 25.2% 17.7% 75% 84% Sutter Memorial Hospital Sacramento 29, $ 2,815,201, % 21.1% 19.1% 24.8% 17.5% N/A N/A University of California-Davis Medical Center Sacramento 29, $ 5,219,460, % 28.6% 19.9% 27.4% 18.3% 67% 83% Hoag Memorial Hospital Presbyterian Orange 28, $ 1,840,576, % 31.1% 18.0% 24.1% 17.6% 80% 83% Sharp Grossmont Hospital Diego 28, $ 2,219,714, % 32.6% 19.0% 23.3% 19.5% 70% 82% Kaiser Permanente Diego Medical Center-Kaiser Foundation Diego 27, N/A 2.0% 2.0% 0.0% 0.0% 0.0% 66% 85% Sharp Memorial Hospital Diego 27, $ 2,923,962, % 27.7% 18.4% 23.8% 17.8% 81% 84% Kaiser Permanente Fontana Medical Center 25, N/A 3.0% 3.0% 0.0% 0.0% 0.0% 67% 83% Kaiser Permanente Los Angeles Medical Center Los Angeles 25, N/A 2.0% 2.0% 0.0% 0.0% 0.0% 74% 82% Antelope Valley Hospital Los Angeles 25, $ 1,058,085, % 27.2% 22.0% 28.5% 20.0% 58% 77% Citrus Valley Medical Center- InterCommunity Campus Los Angeles 24, $ 1,087,968, % 27.4% 18.3% 22.1% 17.2% 63% 79% St. Agnes Medical Center Fresno 24, $ 1,646,872, % 48.1% 19.3% 25.1% 18.4% 70% 80% Torrance Memorial Medical Center Los Angeles 24, $ 2,163,972, % 34.6% 19.5% 23.0% 20.5% 70% 80% Los Angeles Harbor-UCLA Medical Center Los Angeles 24, $ 1,748,063, % 7.1% 22.3% 25.4% 17.8% 63% 77% Long Beach Memorial Medical Center Los Angeles 23, $ 1,777,416, % 33.5% 18.4% 21.7% 18.3% 69% 76% Stanford Hospital & Clinics ta Clara 23, $ 6,705,342, % 34.6% 17.9% 23.8% 16.4% 74% 84%

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