PHOTO HERE. Monarch Pioneer ACO: Designing and Implementing a Successful Shared Risk Model

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1 PHOTO HERE Monarch Pioneer ACO: Designing and Implementing a Successful Shared Risk Model March 2014

2 Agenda About Monarch HealthCare Monarch s Pioneer ACO Experience Monarch s Evolving ACO Strategy Future of the ACO Model

3 About Monarch HealthCare Founded in January 1994 with the consolidation of three IPAs Contracts with nearly every major health plan with a California presence Largest Independent Practice Association (IPA) in Orange County, California HMO Network ~650 PCPs, ~1,600 specialists, 19 contracted hospitals 180,000 HMO patients (including ~38,000 Medicare Advantage patients) Pioneer ACO 1 of 32 selected for participation Brookings Dartmouth ACO 1 of 5 selected for participation Commercial ACOs Actively discussing ACO arrangements w/ commercial payers

4 Monarch s Accountable Care Programs Medicare ACOs Commercial ACOs Pioneer ACO (Medicare) Medicare Shared Savings Program ACOs Brookings Dartmouth ACO (Commercial) Other Commercial ACOs ACO Info Monarch Pioneer ACO PrimeCare MSSP AppleCare MSSP Seeking Partner Q Launch & Announcement 1 of 23 in the U.S. 2 of 343 in the U.S. 1 of 5 in the U.S. 1 of??? In the U.S. Eligible Population Medicare FFS patients (223K in OC) Medicare FFS patients (223K in OC) TBD - All patients in partner benefit plan All patients in partner PPO & ASO plans Enrollees ~25,000 (as of 1/1/14) ~17,000 (as of 1/1/14) 0 (as of 1/1/14) ~5,000 (as of 1/1/14) Geography Primarily Orange County w/ ~10% outof-area Primarily Orange County w/ ~7% outof-area TBD - Partner benefit plan geography Primarily Orange County Payment Arrangement Shared Savings - Upside & downside risk Shared Savings - Upside only Shared Savings - Initially upside only Shared Savings - Initially upside only Performance Metrics Part A & B Utilization Metrics 33 HEDIS and Patient Experience Metrics Part A & B Utilization Metrics 33 HEDIS and Patient Experience Metrics Performance Metrics Part A Utilization Metrics 25 HEDIS and IHA P4P Metrics

5 Medicare ACO Performance Objectives CMS s Triple Aim Objective Improve the quality of care. Improve the health of populations. Reduce the cost of care. Quality Performance Measures 33 measures across 4 domains Patient/Caregiver Experience Care Coordination/Patient Safety Preventive Health At-Risk Population Medical Cost Management Drive ACO medical cost trend lower than the national trend used to set budgets/benchmark Inpatient, Inpatient, Inpatient 67% of Monarch Pioneer ACO s total medical cost

6 Performance Year 1 Results Quality Performance Top performer in several Patient/Care Giver Experience metrics Monarch scored highest in Physician communication with the patient and Patient overall satisfaction with their physician Top performer in several Care Coordination/Patient Safety metrics Monarch scored highest in prevention of admissions for ambulatory sensitive conditions Medical Cost Reduction 2 nd highest performer in the Pioneer program in PY1 Monarch reduced medical cost -5.4% in 2012 from its baseline, while national medical cost grew +1.1% for a comparable population This favorable expense trend was driven primarily by reductions in hospital admissions, and SNF utilization and unit costs

7 Key Success Drivers 1. Network Selection Invited a narrow list of top performing physicians (mostly PCPs) to participate in ACO (vs. shotgun approach) 70% of aligned network on common EHR platform 2. Performance-Based Incentives Incentives for PCPs to perform an Annual Wellness Visit, complete a Health Risk Assessment, and perform key health screenings for each attributed patient Resulted in greater than 95% physician participation and collection of HRAs for 38% of patients 3. Targeted care management Identification of high risk patients using Optum risk stratification tools and Actuarial Services Provide access to Care Navigators, dedicated case managers, home visiting physicians, and personalized pharmacy care

8 Key Success Drivers 4. Physician Tools Practice Connect Proprietary point-of-care web interface which displays a summary of a patient s 12-month medical history Highlights significant clinical events such as recent hospitalizations or ER visits Also identifies patient diagnoses, recent lab results, list of other attending physicians, and required preventive screenings Annual Senior Health Assessment (ASHA) Addresses comprehensive list of patient screenings required for comprehensive care of a senior and addresses majority of ACO quality metrics Document is mostly completed by patient in the form of a pre-exam survey and reviewed by physician with patient during Annual Wellness Visit Becomes part of medical record once complete

9 Lessons Learned Patient engagement remains challenging Patients suspicious of ACO services and don t understand the value of care coordination Patients are most likely to engage (1) if their physician endorses the ACO and (2) they ve recently been discharged from the hospital after an acute event Patient care is highly fragmented Monarch patients saw an average 22 clinicians in performance year one 70-80% of ACO patient office visits are with non-aco specialists Physician engagement requires strong value proposition Share savings is delayed and not guaranteed Timely, meaningful physician incentives required to attract critical mass

10 Monarch s Pioneer ACO Strategy Improve specialist engagement Acknowledge specialists as principal care givers and treat them like PCP for chronically ill Identify high performing mini-networks of physicians and experiment with performance-based incentives Shared risk for attributed poly-chronic patients Episodic / bundled payments Promotion of price and quality transparency Publication of specialist clinical outcomes and relative episodic performance to the physician network and to patients Publication of comparative hospital costs and quality performance across common procedures to the physician network and to patients Invest in partnerships with hospitals, SNFs, and ancillary vendors Offer incentives for lowering readmission rates, contributing to quality performance

11 Medicare ACOs Gaining Traction Legislators Finally Making Tough Decisions with Bicameral Bipartisan Support SGR Repeal Repeal of the 23.7% decrease in the Medicare Fee Schedule slated for 4/1/14 Annual update of 0.5% , and then frozen through 2023, except Merit-based incentive payments/penalties (MIPs) available to physicians based on quality, efficiency and EHR utilization Physicians in Alternative Payment Models are exempt from MIPs penalties, will receive a 5% bonus for participation in an APM from , and will receive 200% of the annual increase for non-apm physicians starting in 2024 Better Care Lower Cost Act Lead by Senator Ron Wyden (D-OR), new Senate Finance Committee Chair Recommends enrollment of all poly-chronic Medicare patients in ACO-like models 11

12 Medicare Fee Schedule Increases, Post-SGR Repeal Impact of SGR Repeal Legislation on the Medicare Fee Schedule Index The Medicare Trust Fund must ensure that average fee schedule changes over time do not exceed the sustainable growth rate, indicating that they expect many independent providers to underperform The new Medicare Fee Schedule is far more attractive to physicians participating in an ACO or other APM Source: Monarch HealthCare analysis of SGR Repeal language summary from the House Committees on Energy & Commerce and Ways & Means and the Senate Committee on Finance Staff, February 6,

13 The Future of the ACO Model Medicare ACOs CMMI is exploring evolutionary changes to improve attractiveness and longevity of the program New methods of payment, including combination of capitation, shared savings and episodic/bundled payments Offer patients incentives for choosing high quality, low cost services, through preferred participating networks Limit ACO risk for attributed patients living outside ACO s service area Commercial ACOs Performance-based contracting will become ubiquitous over next 5 years Hospital-Based ACOs Will continue to proliferate in integrated delivery systems that have accepted that the hospital arms race is over Standalone facilities will acquire/partner with ambulatory deliver system to guarantee volume and share savings to mitigate reduction of inpatient revenue

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