Evolution and Challenges of Accountable Care Organizations. Historical Performance and Regulatory Changes

Transcription

1 Evolution and Challenges of Accountable Care Organizations Historical Performance and Regulatory Changes Presented to: June 3, 2015 This presentation is the property of PNC Bank, N.A. and may not be used without PNC Bank s prior written approval.

2 Contact Information Marlowe J. Dazley Sr. Vice President, PNC Healthcare Phone: Cell: John D. Valiante President, Valiante Healthcare Management Solutions Cell:

3 Objectives Evolution of ACOs ACOs in perspective Philadelphia region activity ACO performance to date ACO regulatory changes Observations 3

4 ACO Concept Incentivize providers to: o Reduce Medicare costs $470mm o Improve quality and effectiveness of care 33 measures Create provider organizations that agree to: o Coordinate care for assigned beneficiaries o Emphasize primary care, PCMHs o Use evidence-based medical practices o Measure performance in improving health o Share in savings and risk of care for assigned beneficiaries 4

5 What if we bought cars like this? What if we had to shop for an engine, a drive train, a body and tires, all separately, from separate vendors, with separate billing systems? Source: Dr. Brad Stuart, accessed August

6 What if we bought cars like this? Then, when you have purchased all the parts o It s up to you to assemble those parts and make your own car, o You have to pay each of the vendors separately, o You end up with something that might or might not work, o AND, you will pay full price whether it works or not! The average consumer simply wouldn t do this!! BUT, THIS IS HOW WE PURCHASE HEALTHCARE! Source: Dr. Brad Stuart, accessed August

7 Healthcare Industry is Fragmented In healthcare, the product we are trying to buy is our physical well-being We are responsible for purchasing all the parts o o o o o We have to assemble our own health, Deal with multiple, independent specialist providers, Deal with different payment systems, Decide among different delivery systems, And, we pay full price whether it works or not! Plus, the rules are constantly changing! ACOs need to prove that the overall healthcare product they re creating works better and costs less 7

8 ACO History Historically, the healthcare industry has functioned as follows: o Healthcare financial incentives have promoted volume, not quality outcomes o Fragmented delivery of care o Variability in treatment practices This has resulted in increased utilization, increased cost, and questionable value Accountability for care is not a new concept o 1990s: programs intended to create greater accountability on the part of providers for their performance The objective/goal of the ACO model is to address the lack of incentives for reducing costs while improving quality, coordination, and consistency of care o Incentives include the sharing of savings resulting from efficiencies gained and lower costs 8

9 Timeline 32 Pioneer 220 MSSP 366 ACOs 2007 Elliott Fisher of Dartmouth Medical School publishes Creating Accountable Care Organizations: The Extended Hospital Medical Staff. He is generally credited with coining the phrase Accountable Care Organization Source: Numerof & Associates, Inc., ACA Section 3022 PPACA signed into law Outlines a Shared Savings Program. CMS will determine how this program is to be implemented /31/11: CMS releases its proposed rules for the Shared Savings Program, inviting commentary before rules are finalized. 6/6/11 Comment period closes. Final rule will be released after all comments have been reviewed. CMS accepts applications for ACOs /1/12 Shared Saving Program begins. There will be two tracks for ACOs One allows the ACO not to share in risk for the first two years of the program, One shares risk from the beginning, for a larger share of potential cost 2014 All first year ACOs will have reached the shared risk stage, if they have continued with the Shared Savings Program Initial results 2015 New rules planned, 405 ACOs % of Medicare payments under value-based purchasing plans 9

10 What is an ACO? An ACO can be defined as a set of health care providers including primary care physicians, specialists, and hospitals that work together collaboratively and accept collective accountability for the cost and quality of care delivered to a population of patients. Source: 10

11 Characteristics of ACOs Integration Range of services directly furnished by ACO Differentiation Total range of services either directly provided or through contracted provider Centralization Number of decision-makers that comprise the ACO Outpatient: Primary Care and specialty care Inpatient: Inpatient and some subspecialty care Full Spectrum: Wide range of subspecialty care, psychiatric care, long-term care, and community services Ambulatory: Primary Care and specialty care Hospital: Emergency Services, surgical services, diagnostic services and specialty services Advanced Care: Trauma services and subspecialty services Single Owner: There is only one organization that owns the ACO and has decisionmaking authority Multiple Owner: The ACO has multiple owners that have decision making authority Source: Leavitt Partners,

12 Types of ACOs Full Spectrum Integrated All services are provided directly by the ACO. May include one or multiple organizations ~101 ACOs ~5.9 Million Lives C A Independent Physician Group A single organization that directly provides outpatient care ~164 ACOs ~5 Million Lives Physician Group Alliance Multiple organizations that directly provide outpatient care ~140 ACOs ~3.2 Million Lives Independent Hospital A single organization that directly provides inpatient care ~69 ACOs ~1.8 Million Lives Expanded Physician Group Directly provides outpatient care and contracts for inpatient care ~77 ACOs ~2.7 Million Lives Hospital Alliance Multiple organizations with at least one that directly provides inpatient care ~86 ACOs ~2.2 Million Lives Source: Leavitt Partners,

13 ACO Models Medicare Shared Savings Program Advance Payment ACO Model Pioneer ACO Model (32 original, now 19) Commercial Model Government Models NOW CMS to expand Pioneer Model Next Generation ACO 13

14 Key Features of the Next Generation ACO Model Goal: Test whether increased financial incentives can help improve health outcomes and lower expenditures. Must have >10,000 beneficiaries and majority of patients (Medicare & Commercial) covered under outcomes-based contracts. Risk and shared savings Care coordination Benchmarks Payment mechanisms Expands shared savings Expands financial risk Encourages more care coordination Expands telehealth Prospective benchmarks One year of historical expenditures then trend forward using regional adjusted trend 4 types FFS, FFS + monthly infrastructure payment, Populationbased payment or Capitation 14

15 ACO Model Design Pioneer ACO Model (n=19) Designed for early adopters of coordinated care. Ongoing, but no longer accepting applications. Launched in 2012, designed to: 1) Show how particular ACO payment arrangements can best improve care and generate savings for Medicare 2) Test alternative program designs to inform future rulemaking for the Medicare Shared Savings Program Quality and financial performance results for Year 1 (2012) and Year 2 (2013) Medicare Shared Savings (n=89) Facilitate coordination and cooperation among providers to improve quality of care for Medicare Fee-For-Service (FFS) beneficiaries and reduce costs. Eligible providers, hospitals, and suppliers may participate in the Shared Savings Program by creating or participating in an Accountable Care Organization (ACO). Designed to improve beneficiary outcomes and increase value of care by: promoting accountability for care, requiring coordinated care, & encouraging investment in infrastructure & process redesign. Source: CMS 2015, 15

16 Medicare Shared Savings Program Where are the MSSPs? (January 2014) 23 Pioneer ACOs 351 Shared Savings ACOs 16

17 ACO Model Design (cont.) Advance Payment (n=35) Advance Payment Model is designed for physician based and rural providers who have come together voluntarily to give coordinated high quality care to the Medicare patients they serve. Through the Advance Payment ACO Model, selected participants will receive upfront and monthly payments, which they can use to make important investments in their care coordination infrastructure. A supplementary incentive program for selected participants in the Shared Savings Program. Commercial (150+) Private ACOs have more flexibility in designing accountable care contracts. Many private sector ACOs do mimic the shared savings model of the MSSP, but others have moved to full or partial capitation models, bundled payments, retainer agreements, in kind services and subsidies provided by payers, and pay for performance incentives. Similar to the MSSP, most of these arrangements also require some form of quality benchmarking to achieve full payment. Source: CMS 2015, 17

18 ACO Model Design Next Generation (n=~20) Must have at least 10,000 beneficiaries and majority of patients (Medicare & Commercial) covered under outcomes-based contracts. Participants in the Pioneer Model and MSSP Model are eligible to apply; however, may not simultaneously participate in the Next Gen Model and one of the current models. CMS will establish benchmark before the start of each performance year using one year of historical expenditures trended forward using a regional projected trend. Two risk/reward arrangements with higher shared savings (caped at 15% of annual benchmark). Source: CMS 2015, 18

19 ACO Growth ACO Rate of Growth (year-over-year) Accountable Care Lives Source: Leavitt Partners,

20 Growth of Commercial and Government Contracts Source: Leavitt Partners,

21 ACO Shared Savings 2 Tracks ACO Launched Projected Spending Target Spending Shared Savings Expending Actual Spending Year

22 Payment Track 1 Fee-for-service payment during the performance period One-side risk model in years 1 and 2 Must first meet minimum savings rate between 2% and 3.9% Share up to 50% of savings depending on quality scores after 2% threshold ACOs including FQHC/RHCs share up to 2.5% more in first 2 years Caps savings at 7.5% of benchmark in years 1 & 2 and 10% in year 3 Two-sided risk model in year 3 following track 2 parameters Caps loss in year 3 to 5% of benchmark Applies 25% withhold on savings each year to ensure ACO can repay losses if incurred 22

23 Payment Track 2 Two sided risk model for three years Share up to 60% of savings/losses depending on quality scores First dollar savings/loss after 2% minimum surpassed ACOs including FQHC/RHCs share up to 5% more Caps savings at 10% of benchmark Caps losses at: o 5% of benchmark in year 1 o 7.5% in year 2 o 10% in year 3 Applies 25% withhold on savings to ensure ACO can repay losses 23

24 Payment Next Generation Two risk/reward arrangements with higher shared savings (caped at 15% of annual benchmark): Plan A, share 80% of shared savings or losses from and 85% in years Plan B, share 100% of savings or losses. Four payment structures Normal FFS traditional fee for service payment Normal FFS + Monthly Infrastructure Payment fee-for-service payment with perbeneficiary per-month payment (unrelated to claims), maximum of $6 PMPM to be recouped in full regardless of savings/loss but maintains cash flow and encourages investment in infrastructure Population-Based Payment ACO may specify % of normal fee-for-service payment due to provider/suppliers that CMS will deduct and pay to the ACO (also subject to recoupment) Capitation begins 2017 based on the estimated total annual expenditures for beneficiaries. PMPM payment with money withheld to compensate care provided by non-aco providers/suppliers (ACO is responsible for paying providers/suppliers. 24

25 Philadelphia Area ACOs ACOs Providers Payers Abington Health ACO Abington HS, Lansdale Hospital IBC Childrens Hosp of PA ACO Childrens Hosp of PA IBC Delaware Valley ACO Main Line, Jefferson, Holy Redeemer, MSSP Magee, Doylestown, Abington* Independence BC/IPPIP Most Health Systems IBC Jefferson HS ACO Jefferson HS IBC LHS ACO Lourdes Health System HorBCBS, Aetna Noble Health Alliance Abington*, Crozer Keystone, Aria, Einstein IBC Penn Medicine UPenn HS, Penn Presb MC, Penn Hospital IBC Renaissance Hlth Network MDs Pioneer, IBC, Keystone Tandigm/DaVita/IBC Renaissance, Gateway, Holy Redeemer/IWA IBC Valley Preferred ACO Lehigh Valley HS Aetna, CIGNA *In transition. 25

26 PA 2012 Reimbursement and 2007 Quality Source: Dartmouth Atlas [CMS Hospital Compare Summary Quality Scores, by Condition (2007) & Total Medicare Reimbursements per Enrollee, by Adjustment Type (2012)], 26

27 ACO Performance PGP Demonstration Pioneer ACOs CMS results L&M Policy Research Evaluation MSSP ACOs 2013 Results Market Trends This information is confidential to PNC Bank, N.A. It may not be shared with any third party without written permission.

28 Changes in Hospital Reimbursement 18.0% 16.0% 14.0% 12.0% Annual Percent Change Per Person in Hospital Spending, (3 yr moving average) Medicare $ per Beneficiary, % Change 10.0% Comm Ins $ per Person <65, % Change 8.0% 6.0% 4.0% 2.0% 0.0% % 28

29 PGP Demo Results Performance Year 5: PGP Demonstration Sites MD Group Quality Shared Savings Type Score % Pmts ($m) Billings Clinic Group 100% $ Dartmouth Hitchcock Clinic Group 96% $ Everett Clinic Group 100% $ Forsyth Medical Group Group 100% $ Geisinger Clinic Group 100% $ Marshfield Clinic Group 98% $ 15.8 Middlesex Health System Network 100% $ Park Nicollet Health Services Group 100% $ 5.7 St. John's Health System Group 100% $ 2.6 Univ of Michigan Fac Px Grp Group 98% $ 5.3 $

30 PGP Demo Results PGP DEMO PERFORMANCE, Amount % of Medicare ($m) Allowed Charges PGP Losses $ % Performance Payments $ % Medicare Program Savings $ % Gross Savings from PGP Demo $ % SOURCE: PGP Demonstration Evaluation, RTI,

31 Pioneer ACO Results PIONEER ACO PERFORMANCE, n = n = 20 Amount % of Med Amount % of Med ($m) Allowed ($m) Allowed Pioneer ACO Losses $ % $ % Shared Savings Pmts $ % $ % Net CMS Savings $ % $ % Gross Savings/Losses $ % $ % SOURCE: CMS Medicare Pioneer ACO Model Performance,

32 Pioneer ACO Results PIONEER ACO PERFORMANCE, ($millions) CMS Results Reported: Sept, 2014 May, 2015 (vs benchmarks) (vs Comp Grp) Pioneer ACO Losses $ 9.5 $ 9.5 Shared Savings Pmts $ $ Net CMS Savings $ 51.3 $ Gross Savings/Losses $ $

33 Pioneer ACO Cost Performance, (Source: L&M Policy Research Evalua on Report, 2015) $ per Medicare Beneficiary Per Month $1,020 $1,000 $980 $960 $940 $920 $900 $880 $860 $840 $820 $993/+4.0% $954/+1.9% $985/+4.3% $937 $944/+.8% $949/+1.8% $932/+4.9% $889 Baseline Pioneer ACOs Ann Ave = +2.6% Comparison Group Ann Ave = +3.4% Pioneer + Shared $ Ann Ave = +3.0% Period This information is confidential to PNC Bank, N.A. It may not be shared with any third party without written permission. 33

34 Pioneer Utilization vs Comp Group Pioneer Comp Group Diff % Annual Cost $ 985 $ % Units of Utilization of Services: Care Per Acute IP Days % 1000 IP Admits thru ER % 1000 IRF/SNF Days % 1000 Home Health Visits % 100 PCP E&M Visits % 100 Procedures % 100 Imaging % 100 ER Visits % 100 Post Disch Visit <7 days % 1000 disch Readmits within 30d % 1000 disch SOURCE: L&M Policy Research Pioneer ACO Evaluation,

35 MSSP ACO Performance MSSP ACO PERFORMANCE BY AMOUNT SAVED, 2013 Pts to Medicare Spending ($m): Bonus Net +/ # ACO (000) Tgt Spend Actual /+ Tgt Pmts to CMS Top ACO Performers $12,168 $11,463 $705 $316 $389 ACOs w/ 0 2% Savings 60 1,060 $11,777 $11,650 $128 $0 $128 ACOs w/no savings 102 1,680 $18,554 $19,153 ($599) ($4) ($595) Total 220 3,675 $42,499 $42,266 $234 $312 ($78) SOURCE: CMS Detailed MSSP ACO data file,

36 High Cost Regions = Most Savings MSSP ACO PERFORMANCE BY TARGET $PMPM, 2013 ($millions) # Pts to Medicare Savings/(Losses) vs Tgt: Less: Net +/ ACO Target $PMPM ACO >2% <2% +/ Tgt Bonus to CMS High: $1,160 $1, $ 360 ($134) $226 $147 $79 Mid High: $965 $1, $ 189 ($122) $67 $93 ($26) Mid Low: $773 $ ,147 $ 123 ($173) ($50) $56 ($107) Low: $418 $ $ 33 ($43) ($9) $15 ($25) 220 3,675 $ 705 ($471) $234 $312 ($78) SOURCE: CMS Detailed MSSP ACO data file,

37 ACO Results vs CMS Plan MSSP ACO SAVINGS: ESTIMATED VS ACTUAL, 2013 Performance Year 1: 2013 ($m) CMS Estimate Actual Difference ACOs Net Federal Savings $ 90 $ (78) $ (168) ACO Bonus Payments (Net) $ 280 $ 312 $ 32 ACO Operating Costs ($1.27m) $ (203) $ (279) $ (76) ACO Startup/5 yrs ($580k) $ (19) $ (26) $ (7) Net ACO Benefit $ 58 $ 7 $ (51) SOURCE: CMS Actuaries, CMS MSSP Report. 37

38 Pioneer vs MSSP ACO Trend Pioneer and MSSP ACO Performance by Market >10% MSSP: >10% Pioneer: Number of HRRs* Medicare Cost in 2011 $ 10,012 $ 10,054 $ 10,507 $ 9,972 Percent Change from % 2.0% 1.0% 1.2% Non ACO HRRs % Change 3.1% 3.1% 3.1% 3.1% Estimated ACO Impact 1.2% 1.1% 2.1% 1.9% *Markets defined as Hospital Referral Regions (HRRs). SOURCE: Office of the Actuary, CMS, April,

39 Keys to Success 1. Care coordination (PCMH, navigators, coaches) Monitoring chronically ill, high risk Med compliance, condition changes ER avoidance Limit readmissions Post-acute care: shift SNF care to home 2. MD commitment Independent groups Health systems: employed MDs 3. Informatics/IT 4. Location, location This information is confidential to PNC Bank, N.A. It may not be shared with any third party without written permission.

40 ACO Challenges 1. Beneficiary assignment Attribution vs enrollment: >30% churn Retrospective vs prospective 2. Benchmarks Risk-adjustment, Rebasing that captures gains Patient/provider history vs regional 3. Specialty Care Leakage: >50% 4. Quality metrics Too many, measure process not performance 5. Administrative costs Care coordination Informatics/IT Realistic admin costs: $2 million This information is confidential to PNC Bank, N.A. It may not be shared with any third party without written permission.

41 Proposed MSSP ACO Changes 1. Three Tracks Track 1: 3 yr extension for one-sided risk, lower savings (40%) Track 2: sliding scale (2-3.9%) min savings and loss rates New Track 3: Higher max savings (75%), prospective assignment 2. Program waivers for Track 3, maybe Track 2: 3-day IP stay before SNF care Telemedicine Home health homebound requirement 3. Benchmark adjustments considered Regional factors, risk adjustment Rebasing 4. Quality metrics Still 33 measures, 8 new measures This information is confidential to PNC Bank, N.A. It may not be shared with any third party without written permission.

42 Impact of New MSSP Regs CMS Estimates CMS ACO Regs: ($m) Current Proposed ACOs Net Federal Savings $ 730 $ 1,010 ACO Bonus Payments $ 310 $ 630 Shared Losses $ (170) $ (30) ACO Oper Costs (@ $.86m) $ (114) $ (532) ACO Startup (@ $580k) $ (7) $ (30) Net ACO Benefit $ 19 $ 38 42

43 This information is confidential to PNC Bank, N.A. It may not be shared with any third party without written permission. 43

44 NextGen ACOs Goal: Stronger incentives (85 100%), more risk Effectively Medicare Advantage without Admin Primary features: Prospectively assign 10k+ beneficiaries, voluntary enrollment Baseline spending: risk adjusted (HCC), up to 3% Discounts:.5% 4.5% for quality, regional, national efficiency Risk model A: 80% PY1 3, 85% PY4 5; 15% max savings/losses Risk model B: 100% PY1 5; 15% max savings/losses Payment Options: #1: Normal FFS with retrospective settlement #2: $6 PMPM advance + FFS with retrospective settlement #3: Population Based Payment + Discounted FFS w/settlement #4: Capitation + withhold for non ACO care This information is confidential to PNC Bank, N.A. It may not be shared with any third party without written permission.

45 NextGen ACOs Primary features (cont): Quality: 32 MSSP measures (no EHR) Benefit enhancements: Beneficiary pmts: $50/beneficiary for >50% of care thru ACO Telehealth Home health SNF CMMI seeking ACOs June, June, 2016 This information is confidential to PNC Bank, N.A. It may not be shared with any third party without written permission.

46 ACO Observations 1. Incentives work: some ACOs have saved CMS real $$ and been rewarded well Pioneers: 2%+/- savings before shared savings MSSP: 1%+/- before shared savings But most ACOs have not saved money--incentives work only when goals achievable And few have stepped up to the risk expected in the future 2. All ACO sponsors have spent huge $$ not reflected in CMS savings estimates Startup $1-3m and $2m+ annual operating costs CMMI budget: $10b over ten years 3. Highest savings achieved in: High cost areas: >$10k per beneficiary per year Independent MD groups This information is confidential to PNC Bank, N.A. It may not be shared with any third party without written permission.

47 ACO Observations 4. Few ACOs have overcome inherent weaknesses of models tested to date: Beneficiary churn >30% Specialty care leakage >50% High admin costs--min $2m Fundamentally still a FFS system of payment 5. Overlapping policies a growing concern: BPCI model, Med Advantage, ACO rules HRRP, 3-day stay, PQRS, HAC Change from SGR to MIPS for MDs This information is confidential to PNC Bank, N.A. It may not be shared with any third party without written permission.

48 ACO Observations 6. ACOs provide a benefit to commercial, Medicare Advantage plans: Greater savings 5-10% More flexibility PMPM pmt for care coordination Improved Stars scores 7. Hospital System impact Employed MDs increasing Hospital consolidation Revenue Cycle: Reform vs more Reimbursement compression Provider Sponsored Health Plans This information is confidential to PNC Bank, N.A. It may not be shared with any third party without written permission.

49 2X This information is confidential to PNC Bank, N.A. It may not be shared with any third party without written permission. 49