Accountable Care Organizations: How Does the DME Join the Party?

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1 Accountable Care Organizations: How Does the DME Join the Party? Presented by: Jeffrey S. Baird, Esq. Chairman, Health Care Group, Brown & Fortunato, P.C Brown & Fortunato, P.C.

2 BACKGROUND Accountable Care Code of Hammurabi Babylonian legal code from ~1772 B.C. 282 laws Number 218 requires a surgeon s hand to be cut off in the event of certain unsuccessful surgeries

3 BACKGROUND Dr. Ernst Codman early 1900s End Result System Early health systems to use accountable care: Mayo Clinic Kaiser Permanente Group Health Cooperative of Puget Sound

4 BACKGROUND Medicare and Accountable Care The Affordable Care Act ( ACA ) March 2010 Section 3022 of the ACA contains accountable care provisions

5 BACKGROUND What is an ACO? A group of providers and suppliers of services that can contract directly with Medicare and will work together to coordinate care for the patients they serve.

6 Background Aims of ACA accountable care provisions Expand value based purchasing Broaden quality reporting Improve level of performance feedback Improve beneficiary outcomes Increase value of care

7 BACKGROUND Previous value based Medicare systems Hospital Inpatient Quality Reporting Program Physician Quality Reporting System

8 BACKGROUND Accountable care also aims to reduce expenditures Medicare is on an unsustainable path ACA attempts to simultaneously slow growth and improve care ACA amended Title XVIII of Social Security Act by adding section 1899 to establish the Shared Savings Program (SSP)

9 SHARED SAVINGS PROGRAM

10 SHARED SAVINGS PROGRAM ACA attempts to achieve these goals through the Shared Savings Program ACA requires use of Accountable Care Organizations ( ACOs ) to achieve goals of SSP ACA gives some instruction on who can belong to an ACO ACA also gives some instruction regarding ACO requirements

11 SHARED SAVINGS PROGRAM ACO Requirements Accountable for quality, cost, overall care of assigned beneficiaries Must agree to at least 3 year terms Must have formal legal structure Must have sufficient primary care professionals Must have at least 5,000 assignees

12 SHARED SAVINGS PROGRAM ACO Requirements Must share needed info with DHHS Secretary Must have leadership and management Must define processes to promote goals Must demonstrate patient-centeredness

13 SHARED SAVINGS PROGRAM ACA also does the following for the SSP: Lays out quality and reporting requirements Prohibits duplication of participation Allows DHHS Secretary to determine beneficiary assignment method Establishes principles and requirements for shared savings payments

14 ACO MECHANICS

15 ACO MECHANICS Who Can Form an ACO? ACA lists the following groups: ACO professionals in group practice arrangements Networks of individual practices of ACO professionals Partnerships or joint venture arrangements between hospitals and ACO professionals Other groups allowed by DHHS Secretary

16 ACO MECHANICS Who Can Form an ACO? ACO Professionals MD or DO PA, Nurse Practitioner, Clinical Nurse Specialist Hospitals Acute Care Hospital

17 ACO MECHANICS Who Can Participate? What about other providers/suppliers? Rural Health Centers Skilled Nursing Facilities Chiropractors DME Suppliers Pharmacists

18 ACO MECHANICS Who Can Participate? All of these providers/suppliers can participate as well A few other facility types were explicitly added to the list

19 ACO MECHANICS Who Can Participate? Independent ACO formation ACO participation

20 ACO MECHANICS How is an ACO created? Formal legal structure Corporation, Partnership, LLC Multiple existing entities must form new entity TIN Allows for receipt and distribution of shared savings payments Allows for repayment of shared losses

21 ACO MECHANICS How is ACO Governed? Must have an identifiable governing body Authority to execute ACO functions Responsibility for oversight and direction Transparent governing process

22 ACO MECHANICS How is ACO Governed? Meaningful participation by ACO participants At least 75% control held by ACO participants Inclusion of Medicare beneficiary representative Conflict of interest identification

23 ACO MECHANICS How is ACO Led and Managed? Executive, Officer, Manager, General Partner, or other similar appointed party Clinical management overseen by senior level medical director Board certified physician Licensed in state ACO operates in Physically present in that state

24 ACO MECHANICS Primary Care Professionals Sufficient ACO Professionals to care for assigned beneficiaries Assigned Beneficiaries At least 5,000 assigned beneficiaries

25 ACO MECHANICS How Are Beneficiaries Assigned? Beneficiary utilization of primary care services Plurality Approach Allowed Medicare charges for PCS provided by an ACO s primary care physicians > Allowed Medicare charges for PCS provided by (1) ACO professionals in another ACO, and (2) ACO professionals not in any ACO

26 ACO MECHANICS Other Requirements Patient centeredness processes Evidence-based medicine Beneficiary engagement Quality and cost reporting Coordination of patient care

27 ACO MECHANICS Evidence-Based Medicine Processes Must cover diagnoses with significant quality improvement potential

28 ACO MECHANICS Patient Engagement Processes Must address patient experience survey requirement Must address beneficiary representative on governing board requirement Must address shared decision making Written standards addressing communication and medical record access

29 ACO MECHANICS Infrastructure Processes Must address development of internal reporting infrastructure

30 ACO MECHANICS Coordination of Care Processes Must address coordination of care across all providers and suppliers

31 ACO MECHANICS SSP Participation Not if ACO participant involved in another Medicare program of shared savings Multiple ACO Participation Only ACO Participants upon whose billings beneficiary assignments are made are limited to one ACO DME suppliers may belong to multiple ACOs

32 ACO MECHANICS Shared Savings and Losses Two options for initial 3 year term Track 1 One-sided risk model Track 2 Two-sided risk model

33 ACO MECHANICS Track 1 One-Sided Risk Model Entry point for less experienced organizations Less/no risk Track 2 Two-Sided Risk Model Some risk Opportunity for greater share of savings

34 ACO MECHANICS Track 1 Benchmark = Surrogate measure of Medicare A & B expenditures without ACO Initial benchmark based on 3 years prior to agreement Benchmark then updated annually during the agreement

35 ACO MECHANICS Track 1 Minimum Savings Rate Sliding scale Depends on number of assigned beneficiaries

36 ACO MECHANICS Number of Beneficiaries MSR (low end of assigned MSR (high end of assigned beneficiaries) beneficiaries. 5,000-5, % 3.6% 6,000-6, % 3.4% 7,000-7, % 3.2% 8,000-8, % 3.1% 9,000-9, % 3.0% 10,000-14, % 2.7% 15,000-19, % 2.5% 20,999-49, % 2.2% 50,000-59, % 2.0% 60, % 2.0%

37 ACO MECHANICS Track 1 Each year, CMS calculates the ACO s average per capita Medicare expenditures (APCME) Must achieve APCME below the benchmark by at least the MSR

38 ACO MECHANICS Track 1 Example ACO has 5,000 assigned beneficiaries ACO has a benchmark of $10 million Minimum savings rate is 3.9% If exact MSR is achieved, the savings equals $390,000 ACO is eligible for up to half of the savings, or $195,000 Shared savings not affected by cap of 10% of benchmark

39 ACO MECHANICS Track 2 Possibility of sharing in losses as well as savings Potential for more shared savings than in Track 1 Lower MSR for ACOs with under 60,000 assigned beneficiaries

40 ACO MECHANICS Track 2 Benchmark set same way as Track 1 Minimum savings rate for shared savings is fixed at 2% Loss sharing requires APCME that are 2% over benchmark

41 ACO MECHANICS Track 2 If MSR and quality performance standards (to be discussed) are met, ACO shares savings Eligible to share up to 60% of savings rather than 50% Shared savings capped at 15% of benchmark rather than 10%

42 ACO MECHANICS Track 2 Example ACO has 5,000 assigned beneficiaries ACO has a benchmark of $10 million Minimum savings rate is 2% If 3.9% savings is achieved, the savings equals $390,000 ACO is eligible for up to 60% of the savings, or $234,000 Shared savings not affected by cap of 15% of benchmark

43 ACO MECHANICS Track 2 Shared loss threshold is 2% over APCME May share up to 60% of losses Recoupment caps are: 5% of benchmark in year one 7.5% of benchmark in year two 10% of benchmark in year three Recoupment payments due within 90 days of demand

44 ACO MECHANICS Track 2 Example ACO has 5,000 assigned beneficiaries ACO has a benchmark of $10 million Shared loss threshold is 2% If APCME are exactly 2% over benchmark, the losses are $200,000 ACO is liable for up to 60% of the losses, or $120,000 Shared losses not affected by 5%, 7.5%, or 10% caps

45 QUALITY PERFORMANCE STANDARDS

46 QUALITY PERFORMANCE STANDARDS ACA Requires DHHS Secretary to determine quality of care measures These measures must address: Clinical processes and outcomes Patient and caregiver experience Utilization

47 QUALITY PERFORMANCE STANDARDS CMS will use 33 measures in 4 domains Patient/caregiver experience (7 measures) Care coordination/patient safety (6 measures) Preventive health (8 measures) At-risk population Diabetes (6 measures) Hypertension (1 measure) Ischemic Vascular Disease (2 measures) Heart Failure (1 measure) Coronary Artery Disease (2 measures)

48 QUALITY PERFORMANCE STANDARDS Annually, multiple chronic condition patients See 13 different physicians Fill 50 prescriptions Account for 76% of hospitalizations Are 100 times more likely to have a preventable hospitalization Chronic disease treatment costs over $1 trillion annually

49 QUALITY PERFORMANCE STANDARDS DME suppliers uniquely positioned to help: Optimize appropriate equipment and products Reduce chronic problems by proper utilization of equipment and products Improve health outcomes

50 QUALITY PERFORMANCE STANDARDS Inclusion of DME suppliers in an ACO can reduce: Hospital readmissions Lengths of stay ER visits

51 QUALITY PERFORMANCE STANDARDS DME Supplier Can Impact Quality Performance Standards The Six Patient/Caregiver Experience measures are evaluated by survey Several of the questions of test survey made available relate to DME suppliers

52 QUALITY PERFORMANCE STANDARDS Primary care providers likely to talk to patients about DME supplier if DME supplier is part of ACO team Increases odds of positive survey results and high marks on measures evaluated by the survey

53 QUALITY PERFORMANCE STANDARDS Care Coordination/Patient Safety Measures Hospital Readmissions Generally Hospitalized beneficiaries who were readmitted within 30 days Effective communication between PCP and DME supplier can help Proper utilization of equipment and products can help reduce readmissions

54 QUALITY PERFORMANCE STANDARDS Care Coordination/Patient Safety Measures COPD or Asthma Patient Hospital Admissions Often can be avoided by high quality outpatient care This includes ensuring proper use of oxygen concentrators and nebulizers

55 QUALITY PERFORMANCE STANDARDS Care Coordination/Patient Safety Measures Congestive Heart Failure Hospital Admissions Same points as with COPD

56 QUALITY PERFORMANCE STANDARDS At Risk Population Measures - Diabetes Educating patients about testing Offering testing Communication with PCP regarding diabetes education and treatment

57 PRIVATE INSURANCE MARKET

58 PRIVATE INSURANCE MARKET Accountable Care and other team based care has been going on in private insurance industry for some time Ancillary providers are important in many of these

59 PRIVATE INSURANCE MARKET Advocate Physician Partners Joint venture between physicians and hospitals 10 hospitals, 3,800 physicians Cares for 1 million patients in Illinois Clinical Integration incentive payment program integrates ancillary providers to improve outcomes

60 PRIVATE INSURANCE MARKET Geisinger Health System Physician led, fully integrated health care delivery system 3 hospitals, 40 primary care clinics Cares for 2.5 million people in Pennsylvania Developing an enterprise-wide ancillary provider approach to determine best ways to utilize ancillary providers

61 PRIVATE INSURANCE MARKET Group Health Cooperative 26 Clinics, 990 physicians Cares for 675,000 patients in Washington

62 PRIVATE INSURANCE MARKET HealthCare Partners 50 clinics, contracts with 57 hospitals in L.A. Cares for 740,000 patients Employs ancillary clinicians involved in integrated clinical and medical management Monitor and manage patients Continuing to explore ways to integrate ancillary providers

63 PRIVATE INSURANCE MARKET Hill Physicians Medical Group Independent Practice Association of 1,000 PCPs and 2,000 specialists in Northern CA Hill physicians care for 300,000 patients Employs ancillary clinicians Significant involvement in guiding medical practice Looking to expand ancillary clinicians role to act as virtual physician extenders in select disease areas

64 PRIVATE INSURANCE MARKET Kelsey-Seybold Clinic Multi specialty group practice in Houston 370 physicians caring for 350,000 patients Employs ancillary clinicians Devoted to direct patient care and education activities

65 NATIONAL ACO MARKET 2015

66 National ACO Market 2015 Accountable Care Organizations Structural Model Commercial ACO Medicare/Medicaid ACO Payers: Health Plan/ Employer-sponsored Plans Payers: CMS and States Various Payments Models with Shared Up/Down Risk ACO Network of Providers Inpatient Acute Care Primary Care Physicians and Ancillary Suppliers Post-Acute Care

67 National ACO Market 2015 CMS January 2015: 89 new ACOs join Medicare SSP Chart represents total ACOs through Q1 2015, Medicare SSP ACOs and Commercial ACOs Source: Leavitt Partners Center for Accountable Care Intelligence

68 National ACO Market 2015 Source: Leavitt Partners Center for Accountable Care

69 National ACO Market 2015 Payers continue to enter the ACO market Source: Leavitt Partners Center for Accountable Care

70 National ACO Market 2015 ACOs have increasingly expanded the number of contracts under which they are operating Source: Leavitt Partners Center for Accountable Care

71 National ACO Market 2015 Number of people covered by ACOs continues to rise Source: Leavitt Partners Center for Accountable Care

72 National ACO Market 2015 One analyst predicts ACOs will cover over 70 Million people by 2020, and potentially 150 Million by 2025 Source: David Muhlestein, Growth and Dispersion of Accountable Care Organizations in 2015

73 National ACO Market 2015 How to find ACOs near you? Medicare SSP ACO list available at: https://data.cms.gov/aco/medicare-shared-savings-program- Accountable-Care-O/ay8x-m5k6 Medicare SSP ACO map available at: https://data.cms.gov/aco/medicare-shared-savings-program- Accountable-Care-O/x5qt-6kt3 Commercial ACO list No one-stop-shop for list of all commercial ACOs MCOL s HealthQuest Publishers: Accountable Care Directory 2015 Selected list of 563 ACOs, including Medicare SSP ACOs Available for purchase at: https://www.managedcarestore.com/yhlthqst/hqaco.htm

74 CONCLUSION Accountable care and other similar models are on the rise It will become increasingly important for DME supplier to integrate themselves into these models Size of patient population controlled by ACO and DME supplier s ability to meet that demand Possible EHR implementation and costs DME suppliers should understand Medicare SSP and ACOs How savings/risk will be allocated among participants DME suppliers should also looked to private organization utilization of their services

75 THE END A production of: Brown & Fortunato, P.C. 905 S. Fillmore, Suite 400 Amarillo, TX Jeffrey S. Baird, Esq

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