Accountable Care Organizations and the DME Industry Why are we here talking about accountable care???

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1 Accountable Care Organizations and the DME Industry Alan Morris Director Alternate Care Programs The VGM Group Why are we here talking about accountable care??? This is why.. Federal Council of Economic Advisors 1

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3 Here come the baby boomers. The increase in both the total volume of adults over 65 in the United States, and the total share of population that those adults represent: From 20.6 million in 1970, representing under 10% of the population; To 41.1 million, representing 13% of the population in 2010; To 73.1 million, representing almost 20% of the population in

4 Considering The Future Of Home Medical Care It can be very well argued that the most significant threat to healthcare today, is the tsunami of chronic disease. It s estimated today, that over 140 million Americans, over 40% of Americans, live with a chronic condition. By 2030 it s estimated that some 171 million, well over half the population, will be suffering from at least one chronic condition. That s a worry, because persons with chronic conditions today account for a reported 83% of all healthcare spending. By 2030, those costs will double. Traverse Bay Strategy Group Those are dramatic figures Those are dramatic figures. The threat though is made more powerful in understanding that the statistics are baked into our population In other words, the threat can not easily go away Why? 1. because Americans are living longer. (Greatly due to the significant advancements in quality of medical care.); 2. because older adults are more likely l to develop chronic conditions; and, 3. because with one chronic condition tend to develop multiple chronic conditions and, people with multiple chronic conditions are much more likely to be hospitalized which is where the costs of healthcare sky rocket. The threat is also widespread presenting itself in a range of rapidly growing diseases (from congestive heart failure, to chronic pulmonary disorders, to diabetes), which impact a wide swath of the economy including the vast majority of the largest employers and health plans. Traverse Bay Strategy Group 4

5 Most frightening The threat is simply not being met today In fact, there are now few realistic plans on the table to even begin dealing with it. The threat is powerfully manifested in several ways 1. Based on current patient care schemes, the existing Primary Care Physician base will be quickly overwhelmed with demand. They simply won t have the time to see these numbers of patients 2. Similarly, the healthcare infrastructure will be overwhelmed. The current system does not have enough existing beds to service the worst case scenarios; 3. And, of course, the third and perhaps greatest shortfall will simply be the inability of our economy to shoulder the cost burden which will outstrip existing budget plans rather dramatically. Traverse Bay Strategy Group Any viable solution will meet each of three criteria Any solution must meet three criteria 1. It must flatten the escalating progression of chronic disease: It must slow the rate at which patients move from one to multiple conditions, and from that back into acute care; Traverse Bay Strategy Group 5

6 Any solution must meet three criteria 2. The solution must engage and enable care givers. Today s approach to treatment of chronic conditions does little to recognize the critical role played by patient caregivers; and does even less, to ease the burden on caregivers. To work, any solution simply must assist and enable care givers, in providing better and less burdensome care for their loved one; Traverse Bay Strategy Group Any solution must meet three criteria 3. Finally, any solution must also, and rather significantly bend the cost curve. What few solutions for chronic care today, do very very little to reduce the costs of chronic disease. And, in too many cases, they simple re direct the check from destination to another. Consider home nursing. While the service can be truly excellent, and does certainly provide great assistance to the patient and care giver; at the end of the day, the costs of home nursing are pretty much the same as the costs of a visit to the doctor s office. Traverse Bay Strategy Group Don Berwick s Triple Aim : Care, Health, And Cost Improving the U.S. health care system requires simultaneous pursuit of three aims: improving the experience of care, improving the health of populations, and reducing per capita costs of health care. Preconditions for this include the enrollment of an identified population, a commitment to universality for its members, and the existence of an organization (an "integrator") that accepts responsibility for all three aims for that population. The integrator s role includes at least five components: partnership with individuals and families, redesign of primary care, population health management, financial management, and macro system integration. Health Affairs, 27, no. 3 (2008): , Berwick, Nolan, and Wittington 6

7 Accountable Care Organizations Background Section 3022 of the Affordable Care Act, added a new section 1899 to the Social Security Act (the Act) that requires the Secretary to establish the Shared Savings Program by January 1, CMS 1345 P Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations Notice of Proposed Rule (NPRM) was released March 31, 2011 The Purpose of CMS ACO Initiative ACO participating providers agree to be held accountable for improving the health and experience of care for individuals and improving the health ofpopulationswhile reducingthe rate of growth in health care spending. Per CMS: studies have shown that better care often costs less because coordinated care helps to ensure that the patient receives the right care at the right time, with the goal of avoiding unnecessary duplication of services and preventing medical errors. 7

8 A Macro View of ACO Infrastructure: What does one look like? Durable Medical Equipment Statutory Requirements for ACOs Accountability for cost, quality and overall care of the assigned Medicare fee for service beneficiaries Formal legal structure; leadership and management structure Sufficient number of primary care physicians Minimum of 5,000 beneficiaries Patient centered criteria Processes for reporting quality and cost savings payments and measures Three year agreement Payment Structures for ACOs How will shared savings work? Medicare would continue to pay individual providers and suppliers for specific items and services as it currently does under the Original Medicare payment systems. Payments continue under FFS schedule CMS would also develop a benchmark for each ACO against which ACO performance is measured to assess whether it qualifies to receive shared savings, or be held accountable for losses. The benchmark is an estimate of what the total Medicare feefor service Parts A and B expenditures for ACO beneficiaries would otherwise have been in the absence of the ACO The benchmark would take into account beneficiary characteristics and other factors that may affect the need for health care services 8

9 Two Proposed Payment Models: One sided risk model (Limited Risk, Limited Reward) sharing of savings only for the first two years and sharing of savings and losses in the third year Two sided risk model (Greater Risk, Greater Reward) sharing of savings and losses for all three years An approved ACO may opt for one or the other models, allowing for: flexibility in design, and an entry point for organizations with less experience with risk models. Beneficial for rural and smaller ACOs with lesser or no experience with value driven payment systems. ACO Participants The Affordable Care Act specifies that an ACO may include the following types of groups of providers and suppliers of Medicarecovered services: ACO professionals (i.e., physicians and hospitals meeting the statutory definition) in group ppractice arrangements, Networks of individual practices of ACO professionals, Partnerships or joint ventures arrangements between hospitals and ACO professionals, or Hospitals employing ACO professionals. Other Medicare providers and suppliers as determined by the Secretary The Secretary has used her discretion to add certain critical access hospitals as eligible to participate in the Shared Savings Program. Not DME. Proposed Quality Measurements CMS has proposed to measure quality in five key domains: 1. Patient experience 2. Care coordination 3. Patient safety 4. Preventive health 5. At risk population/frail elderly health. 9

10 How are beneficiaries assigned to an ACO? Each ACO, depending on a CMS determined capacity, will be assigned a minimum of 5,000 beneficiaries Demonstrations showed that as many as 200K could be assigned to a large ACO Beneficiaries will not enroll in a specific ACO like they do in an HMO The proposed rule calls for Medicare to take a retrospective look at the beneficiary s use of services to determine whether a particular ACO should be credited with improving care and reducing expenditures CMS has a dedicated ACO site FTC/DOJ Press Release Regarding ACO Antitrust Issues FTC, DOJ Seek Public Comment on Proposed Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Provides for Antitrust "Safety Zone" and Expedited Antitrust Review The FTC and DOJ recognize that ACOs may generate opportunities for health care providers to innovate in both the Medicare and commercial markets to achieve the cost savings Congress intended when establishing the Shared Savings Program. At the same time, however, the agencies also understand that collaborations among competitors as will occur through the formation of ACOs may raise concerns about competition. The FTC and DOJ have jointly developed the proposed antitrust Policy Statement to coordinate competition analysis with CMS s review of ACO applications, to ensure the newly formed organizations do not lead to reduced competition and higher prices for consumers. 10

11 FTC/DOJ Policy Statement This Policy Statement applies to collaborations among otherwise independent providers that seek to participate, or have otherwise been approved to participate, in the Shared Savings Program. Long Story Short: Antitrust protections are in place for qualifying ACOs. Those working with ACOs, but not an actually part of the ACO legal entity (DME) are not afforded antitrust protections and may not seek remuneration for services rendered. Some CMS assumptions must be proven true if ACOs are to succeed The realization that the presumption that fee forservice creates overutilization is true. ACOs will not create monopolization of the marketplace.. Health systems and physicians will be willing to assume financial risk given appropriate incentives. A broad spectrum of health care providers will be willing and able to collectively accept accountability by reshaping the culture of care. The DME Industry Must React 11

12 Whom does the ACO driven marketplace benefit? Hospital based suppliers Those that have differentiated themselves in other ways Consider repositioning yourself to make your DME more attractive to ACO Networks, Self Health and Telehealth may be great opportunities Networks For small suppliers, it may be advantageous to operate in some form of network ACOs will turn to homecare suppliers who have the ability to provide a wide variety of services One stop shopping 12

13 The Case For Home Medical Equipment Providers Considering an Enhanced Business Model in Response to ACOs Why should this be of interest to the HME industry? For two reasons: First, because HME is under attack today as a player in the chronic care industry, but with ihlittle l recognized value. And second, because on consideration, the HME industry represents perhaps the single best opportunity for the medical industry to stem the threat of chronic disease. The simple truth is that HME providers are in a truly vulnerable position But, on the other hand In strict fact, the current approach to caring for patients with chronic conditions, simply does not fulfill the real day to day needs of patients with chronic disease 1. in a service perspective The current model isbased on direct professional care be it delivered by a physician, a nurse, or a mid level / physician assistant always in a medical setting; and, 2. the cost basis of the current service model is a high one and, necessarily so, given the dependence on physicians and nurses, in a costly center. Put another way, physicians and mid levels in a medical center setting, are over qualified and over engineered to fill the patient need. Self Health Care By comparison, a more appropriate model would be based on Self Care Delivered At Home The important reality is that chronic care does not require a highly trained / highly specialized provider. Rather, it requires unique equipment and tools, used on a day to day basis, by either the patient himself, or through the assistance of a non professional care giver. 13

14 The Componentry Of The Self Health Initiative The Self Health Concept, was originally titled, the Self Health Initiative in recognition that the individual / patient must take an active/personal role in maintaining and improving on the steady state of his/her health. Key components of the concept include A Plan in Extension of the Physician Care Plan A plan that is in direct fulfillment lfll of the physician s directives; with a long term goal of providing the physician an electronic report on patient compliance, to augment the EHR. A Health Coach and Consultative Program providing a range of services, to include assessments of the patient s safety (workplace and home), lifestyle / activity, and psycho social state; combined with a personal coach to help the patient and care giver recognize needs, set a course, and pursue the course on a path that is lead by the patient s own initiative. Establishing a new physical place, in the community, in service to patients and care givers. (Greatly in displacement of the traditional HME type centers.); and, Providing a system of reward both emotional and tangible to increase patient participation and commitment. Primary goals of the concept test included: Demonstration of the concept as influencing patient compliance; Demonstration of the concept as a retail type business Becoming a place that patients want to go to / participate in, vs. a place that need to or must go to (but quite dislike going to); Demonstrating a positive financial model Demonstrating meaningful reductions in reimbursement among the traditional payor groups (employers, insurance plans, CMS); and, Demonstrating ability to add positive cash / retail demand as a meaningful part of the business model Development of evidence in support of achieving CMS Demonstration Project consideration. The Self Health Initiative concept, was tested by Henry Ford Health System, in Detroit, in mid 2010 across a range of patients/conditions. Goals of those most likely to gain ACO participation are going to closely resemble the SHI goals to help patients and care givers understand what to expect (with their condition) better manage their condition minimize the severity of their current symptoms slow the advance of their conditions improve their life, lifestyle, dignity, and independence; and, do it all under the single care / treatment plan of their physician. 14

15 The HME Industry is in prime position to meet the challenge The industry exists today; The industry understands chronic care. It is fully centered on serving the chronic condition needs of the patient right now; The industry is quite certainly in closer physical proximity to the patient and caregiver than any other component of the healthcare system. Telehealth A differentiating tool that assists docs and home health agencies in monitoring patients vitals and compliance ACO rules bode well for mobile and telehealth While politicians, mainstream media and much of the general public continues to frame healthcare reform in terms of insurance rather than actual care (or, in some cases, socialism and Big Brother), actual, technology enabled reform of the American healthcare sector continues. As proposed, the rules, authorized by the Patient Protection and Affordable Care Act, offer lucrative financial incentives for providers to employ mobile and wireless health in managing recently discharged Medicare patients and those with chronic diseases. The ACO shall define processes to promote evidence based medicine and patient engagement, report on quality and cost measures, and coordinate care, such as through the use of telehealth, remote patient monitoring, and other such enabling technologies, is one section Dishman likes. Because of its capabilities with respect to prevention and anticipation, especially for chronically ill people, an ACO will be able to continually reduce its dependence on inpatient care. Specifically, the HHS proposal calls on ACOs to draw upon the best, most advanced models of care, using modern technologies, including telehealth and electronic health records, and other tools to continually reinvent care in the modern age. 15

16 Telehealth Opportunities Many providers have already begun investing into telehealth hardware Revenue opportunities are presented through rental agreements to ACOs and home health agencies Thank you! And a special thanks to Traverse Bay Strategy Group for the ongoing research on the Self Health Initiative 16

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