Leveraging your PHO in a Value Based Environment
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1 Leveraging your PHO in a Value Based Environment May 1,
2 Today s discussion Aurora Mitchell Aurora Branum Mitchell is a healthcare executive with over 20 years of hospital, medical, managed care and consulting experience, with focus in healthcare and medical operations, strategic planning and growth, working with for-profit and non-profit organizations. Aurora is currently the CEO of Mitchell Healthcare Consulting and works as a consultant to ACOs, HMOs and Academic Health Centers. Prior to that, Aurora was the CEO of Houston and Beaumont Health Plans, at Amerigroup Corporation. Our Speaker 2
3 Today s discussion Now that You Have Your Clinically Integrated Network- What Next? Potential Payor-Specific Options for Value-Based Reimbursement Contracts Maintaining a Competitive Edge- What are Large Employers, Government Entities, and Insurance Payers looking for from their PHOs 3
4 Clinical Integration Checklist Adapted from Dixon Hughes Goodman Oct
5 Clinical Integration as the Foundation Positioning for the future Clinically integrated; can begin contracting Clinically integrated; delivering results Progression to new models Clinical Integration Program Delivery System Improvement Accountability; Financial Management Population Management: Accountable Care Organization; Bundled Payments Establish Structure & Network Information Technology 5
6 Quality and Performance Measures 6
7 Clinical and Financial Data Integration Access to Data is Key 7
8 Clinical and Financial Data Integration Ability to analyze quality, utilization and cost Identify high cost, high risk patients Target over-utilization; high cost services Comprehensive patient data, viewed across providers Data needs to be actionable and as close to real-time as possible Use data that is most readily available Physician performance against peers and external targets/benchmarks Tools to support population management 8
9 Reward For Performance Examples of contracting models that reward for performance: Enhanced base rates- increased fee-for-service rates based on expected performance Performance incentives- incentive payments made for performance improvement initiatives Shared savings- savings shared based on a reduction in the cost of care These may be a starting point to move towards greater levels of financial accountability 9
10 Take a Step Back Why Contract Differently? What s Different Now: Unsustainable costs Fragmented care New models that align incentives, increase quality and decrease cost Financial Imperatives: Continued Medicaid FFS deterioration Medicare FFS rates below Medicaid s by 2020 Employers less willing to accept cost shifting FFS penalizes high-value providers The Fit With Value-Based Care Why Should Providers Play? Waste: 30-40% of all medical expense is waste. 1 Quality: 50% of medical care is substandard. 2 Provider sponsored plans are more efficient and effective. 5 Preventative Disease: 75% of total medical costs are for preventable conditions. 3 Administrative Cost: 31 cents out of every health care dollar goes to administrative cost, not medical care to people. 4 Source: 1) Institute of Medicine reports. 2)New England Journal of Medicine 3) CDC 4) Richard Clarke, Wall Street Journal 5) Commonwealth Fund. 10
11 Contracting Options & Rewards for Value Although the sole purpose for creating a CI network is not negotiating better rates with payers--- CI Networks are rewarded for demonstrated value VALUE = the highest quality care at the lowest cost Able to contract with payers and employers (including health system) Develop a strategy to take to the payers to promote consistency Arrangements range from specific procedure to population of patients Increasing financial opportunity and alignment P4P PCMH CLINICAL INTEGRATION SHARED SAVINGS BUNDLED PAYMENTS SHARED RISK CAPITATION FULL RISK Provider- SPONSORED PLANS 11
12 Value Based Contracting -Provider Based HMOs Identify the potential network size and types of providers What other providers would be participating in the plan? How strong is our primary care base? Assess local payer reaction Identify the organization s market position and local competition Gauge community receptiveness Regulatory environment Costs and financial position Will independent payers still be willing to work with the organization? If not, can the organization function without those contracts? With which patients or in which geographical regions does the provider hold a competitive edge over other systems? How will the region s consumers and employers respond to a providersponsored plan? Is there legislation that makes it difficult or is there legislation that is supportive? Does the provider organization have the cash on hand and a bond rating high enough to allow it to set aside the necessary reserves? 12
13 Contracting Opportunities By Payor Type Medicaid (State) Medicare (Federal) Commercial (National or Local Self Funded (Local) Local or Regional Direct Contracting OBJECTIVES OF PRESENTATION In-depth study of Medicaid contracting opportunity Discuss general models and quality metrics of Medicare opportunities Discuss general Commercial opportunities 13
14 Medicaid Opportunity By January 1, 2015, 50% of Illinois Medicaid clients are to be enrolled in some form of care coordination system with risk-based payments In addition to existing Managed Care Organizations (MCOs), new models are being developed: Care Coordination Entities (CCEs) for seniors and persons with disabilities CCEs for children with complex needs Managed Care Community Networks (MCCNs) and MCOs for seniors and persons with disabilities ACE: Solicitation from the State was released August 1,
15 What is the ACE Model? An ACE is an organization comprised of and governed by providers An ACE must be an integrated delivery system with sufficient PCPs, specialists, behavioral health, and hospitals. There are maximum travel distances and maximum scheduling wait times to see physicians An ACE must be able to serve a minimum number of lives Health IT is needed to coordinate and analyze data and is an essential requirement on the ACE ACE model population may include Children and family members Optional newly eligible adults under ACA Option under state s upcoming mandatory managed care requirements 15
16 Payer cost Fixed costs Variable costs Why Consider the ACE? Protect or enhance market share Refocus mission to population management from acute episodes Advance / accelerate quality initiatives Strengthen relationships with physicians Financially benefit from bending the cost curve Increase control of network usage Build infrastructure for MCO/MCCN Risk in TANF Medicaid population isn t that risky as it is predictable Easy Glide Path to Risk Provider Risk Government Based 16
17 ACE Economics: Shared savings calculation Savings = MCO capitation rate PMPM Measurement Year PMPM The Measurement Year PMPM is derived from: FFS costs for covered population Adjusted for relative risk compared to overall population Adjusted for geographic region Excluding claims > $80,000, but including a pooling charge (undefined) Savings are shared 50/50 with the state: 10% of the 50% is automatically given The other 40% based on quality measures (10% for each of four measures) Total shared savings to ACE cannot exceed 5% of target 17
18 Cap Rate Development State will hire an actuarial firm (currently Milliman) to annually develop the actuarially sound premium rates Rates include the following components Historical medical expense levels Apply expected trend and other adjustments Administration Other pass throughs Profit margin 100% 80% 60% 40% 20% Profit Admin Medical 0% 18
19 ACE Participation May Make Sense For. Hospital Profile #1 Over 50% of hospital revenue comes from Medicaid Since acute care will be provided largely within their facility the risk is much less Wants to maintain Medicaid market share Wants to be in control of reimbursement and care management Wants to improve the quality of care to these patients Hospital Profile #2 Medicaid represents a small % of revenue for the hospital Hospital would like to dip its toe in the water for value-based reimbursement ACE is an easy path and low risk pilot The infrastructure built for the ACE can be used for larger scale initiatives down the road 19
20 What ACE Infrastructure is Required to be Successful Function 0-18 Months Months 37+ Months Shared Savings w/ Care Coordination MCCN or MCO with Shared Risk MCCN or MCO with full risk Marketing X X X Legal & Regulatory X X Risk & Financial Mgmt X X X Claims X X Shared Savings/Bonus/Cap Payment Provider Network Selection/Contracting X X X X X X Out of Network/Wrap Network X X Member Services X X Care Mgmt X X X Quality Measurement/Reporting X X X Clinical Integration X n/a n/a 20
21 Developing a Path Forward Assessment & Planning LOI and RFP Assess Capabilities, Gap Analysis and Closure Plan Develop Network Governance and Legal Structure Define Business Case Create Roadmap & Budget Technology, Analytics, and Risk Monitoring Launch Model Technology infrastructure Implement Care Delivery Model Ongoing cost, risk, and clinical analysis Population Health Take on Risk From monitoring to managing Additional enhancements to care model Incentives internally Increased operations (e.g. paying claims) Financial measurement and reporting Further evolve care delivery model Strategic and Tactical Planning Technology & Analytics Services 21
22 Technology & Analytics Population health infrastructure / technology Quality Clinical Quality Measurement Module Cost and utilization analytics Risk stratification Data collection process to work with varying technologies and sources (depending on ACE structure) Capability to work with / analyze postadjudicated claims Ability to disperse funds within ACE (depending on Structure) Cost 22
23 Medicare Opportunities Medicare Advantage HMOs Physician Services Networks. PSNs operate much like an HMO, but are not subject to the reserve requirements established for HMOs. PSNs may receive a monthly fee (usually a percentage of premium) for each customer that chooses an associated PSN physician to cover the medical care required of that customer. Integrated Dual-Eligible Demonstration projects (Medicaid/Medicare) Through Minnesota's participation in the Medicare Multi-payer Advanced Primary Care Practice (MAPCP) demonstration, certified health care homes have been reimbursed for care coordination services provided to fee-forservice Medicare beneficiaries since 10/1/11 The Community Based Care Transitions Program (CCTP) program designed to reduce hospital readmissions, test sustainable funding streams for care transition services, maintain or improve quality of care, and document measureable savings to the Medicare program. 23
24 Medicare Opportunities-STAR Ratings-2014 Ratings of Health Plans (Part C)-2014 Staying healthy: screenings, tests, vaccines Managing chronic (long-term) conditions Member experience with the health plan Member complaints, problems getting services and improvement in the health plan s performance 24
25 Medicare Opportunities-STAR Ratings-2014 New 4-star thresholds to be set for 2014 Adult BMI assessment COA medication review, functional status assessment, pain screening Pain all-cause readmissions Complaints about the Plan Beneficiary Access and Performance Problems Members Choosing to Leave the Plan Adherence measures Oral diabetes Hypertension (RAS antagonists) Cholesterol (Statins) 25
26 Medicare Opportunities-STAR Ratings Potential new measures: Disenrollment reasons CAHPS Healthy Information Technology EHR measures CAHPS Complaint Resolution Changes to existing measures: Adherence for Diabetes Meds: Adopt addition of 2 drug classes Breast Cancer Screening reflect NCQA proposed modifications New Display measure: Healthy Outcomes Survey (HOS) Model Raise 4-star thresholds of Star Rating measures relevant to Million Hearts Initiative Cardiovascular Care Cholesterol Screening Controlling Blood Pressure Diabetes Treatment Medication Adherence for Diabetes Medications; Hypertension (RAS antagonists); and Cholesterol (Statins) 26
27 Medicare Opportunities-STAR Ratings The Affordable Care Act established CMS Star Ratings as the basis of Quality Bonus Payments (QBPs) 5-star Plans can market year-round. Beneficiaries can join at any time via a special enrollment period (SEP). The Medicare Plan Finder (MPF) blocks enrollment into plans with the Low Performer Icon (those with less than 3 stars for at least the last 3 years in a row) CMS can terminate Low Performer Plans, beginning in
28 Commercial or Large Employer Opportunity Risk carve outs based on hospital and/or physician specialty (i.e. Centers of Excellence) such as open heart surgery, transplants, stroke, spinal injuries etc. Risk carve outs based on population needs and specialty such as seniors, persons with disabilities, children, children with complex needs, etc. Self-funded payer opportunities, such as large hospital and academic systems, local city, county, municipal government entities, large local employers, universities and colleges, etc. Commercial HMOs/Insurance companies with exclusive contracting arrangements. 28
29 Key questions to ask Should you pursue at all? Does The Risk Contracting Opportunity align with your mission / organization goals? If yes, with whom do you partner? Where are your network holes? What type of Capital Requirements will you need based on assumed lives? What technology is in place, what is required, how will you close gaps? Which expertise and operations do you have internally, which will you build and which will you buy? What is your total downside risk, financially, brand-wise, etc.? 29
30 In Closing, Key Take Aways Opportunities for value-based contracting exist in many forms with a number of payer sources, including Medicare, Medicaid, Commercial. The number of provider models continues to expand to include Provider based HMOs, ACOs, ACEs, Provider Services Networks (PSNs) Care Coordination Entities (CCEs) for seniors and persons with disabilities, CCEs for children with complex needs, Managed Care Community Networks (MCCNs), and MCOs for seniors and persons with disabilities (among others). To be viable, entities must demonstrate value. Value is defined as the highest quality of care at the lowest cost. Entities must be able to: Define, measure, and sustain quality Package the value offering in such a way that it meets demand (market what payors want and not necessarily what entity thinks they do best) Keep current with regulatory, contractual and local, state and national healthcare environment changes. 30
31 Valence Health Snapshot Technology-enabled services since 1996 National presence with 400 employees, 4 offices Serve IPAs, PHOs, ACOs Serve 35,000 physicians, 100+ hospitals Support 20 million patients 50 million member months in analytics and services Privately held We were not looking for a vendor, we were looking for a partner with a collaborative approach we found that in Valence Health. Ben Humphrey, MD, CPE CEO, The Medical Group of Ohio 31
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33 For questions and to learn more about Valence Health s capabilities, Contact: Aurora Mitchell information@valencehealth.com
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