Key Challenges for Accountable Care

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1 Key Challenges for Accountable Care Mark McClellan, MD, PhD Director, Engelberg Center for Health Care Reform Senior Fellow, Economic Studies Leonard D. Schaeffer Chair in Health Policy Studies Brookings Institution The Brookings Institution. All rights reserved. No part of this presentation may be reproduced or transmitted in any form or by any means without permission in writing from the Brookings Institution, 1775 Massachusetts Avenue, N.W., Washington, D.C (

2 Real health care reform Changes in health care delivery to improve health and lower costs Prevention More Effective and Efficient Care for Chronic Diseases Care Coordination Patient-Focused Support Many Other Steps Not easy.not accomplished from Washington But policy environment matters 2

3 Topics ACO Implementation Context External Challenges Internal Challenges 3

4 Key Issues for Final CMS Regulation For Medicare Shared Savings Program Overall Cost-Benefit Impact for Health Care Organizations Responses to comments in many areas Advance Payment model for startup costs through CMMI 270 ACOs expected Multipayer/ Payment Reform Alignment Tried to align with private/state performance measures DOJ/FTC guidance favors organizations that are already implementing parallel programs in private sector Patient Assignment/Attribution Assignment based on primary care use, but second step allows for certain specialists to provide basis for assignment Retrospective but advance lists and quarterly updates of beneficiaries expected to be attributed at end of year Participation by FQHCs and rural health centers 4

5 Key Issues for Final CMS Regulation For Medicare Shared Savings Program Performance Measurement 33 measures, reporting only first year, then 25 influence payment in year 2 and all in year 3+ More closely aligned with PQRS/GPRO EHR meaningful use participation is a performance measure, not a 50% requirement CMS pays for CAHPS survey on beneficiary experience for first two years Includes measures for frail elderly Benchmark Calculation Allows for some coding adjustments, so risk adjustment might increase or decrease over time Beneficiary expenditures truncated at 99 th percentile Shared Savings and Risk Minimum threshold must be reached, but shared savings (losses) calculated from 0 Track 1 has shared savings only through year 3; Track 2 remains 2-sided risk; Pioneer model available for partial capitation 5

6 Key Issues for Final CMS Regulation For Medicare Shared Savings Program Governance and Organizational Requirements Simplified Marketing/Education and Beneficiary Involvement Simplified requirements File and use for marketing materials subject to CMS language requirements Beneficiary opt-out for data sharing remains Antitrust and Stark/ Antikickback Issues DOJ/FTC revised guidance out today; similar safety zone and rule of reason review for commercial/medicare ACOs OIG set of Stark/antikickback waivers including preparticipation and beneficiary incentives (nonfinancial) Timing and Application Details Application materials will be out soon; similar to Pioneer Accepting applications beginning 1/1/12 for 4/1/12 start date, but allow for rolling applications with start date as late as 7/1/12 so whole initial contract period may be 3 ½+ years 6

7 Little formal ACO activity two years ago {Not exhaustive} Public Sector = Medicare Physician Group Practice Demo ; Medicare Health Care Quality Demos 7

8 Now ACO implementation is accelerating across the U.S. {Not exhaustive} Private Sector = Brookings-Dartmouth = Premier = CIGNA = AQC (9 organizations in MA) = Other private-sector ACOs Public Sector = Beacon Communities = PGP, MHCQ 8

9 Wide variety of possible models for ACO implementation Integrated Delivery System Multispecialty Group Practice Physician- Hospital Organization Independent Practice Association Regional Collaborative One or more hospitals & large group of employed physicians Insurance plans (some cases) Aligned financial incentives, advanced health IT, EHRs, & wellcoordinated team-based care E.g., Dartmouth Hitchcock, Intermountain Health Care Strong physician leadership Contract with multiple health plans Developed mechanisms for coordinated care (sometimes arranged through another partner) E.g., Marshfield Clinic, Everett Clinic Joint venture between one or more hospitals & physician group Vary from focusing contracting with payers to functioning like multi specialty group practices Many require strong management focused on clinical integration & care management E.g., Tucson Medical Center Small physician practices working together as a corporation, partnership, professional corporation or foundation Often contract with health plans Individual practices typically serve non- HMO clients on a standalone basis E.g., Mt Auburn/Cambridge, Beacon IPA/ Long Island Independent or small providers Leadership may come from providers, medical foundations, nonprofit entities or state government Sometimes in conjunction with health information exchanges or public reporting E.g., NC-CCN, THINC 9

10 Leadership for Accountable Care Internal Prioritization Information Technology and Support Systems Cost Accounting Internal Payment Alignment Execution and Evolution 10

11 Leadership for Accountable Care Internal Prioritization Information Technology and Support Systems Cost Accounting Internal Payment Alignment Execution and Evolution External Anticipating Policy Environment: Federal, State Consistent and Effective Measurement Pathway to Partial Capitation and Beyond Alignment of Payers, Payment Initiatives Beneficiary Education, Support, and Incentives 11

12 Spending on health care driving federal deficits Source: 2011 CBO Long-Term Budget Outlook 12

13 Deficit consequences of health care reform legislation Source: Congressional Budget Office Presentation to the Institute of Medicine, May 26,

14 What s next for health care reform Deficit reduction as dominant political issue must address health care, but maybe not til 2013 Affordable Care Act and Supreme Court Affordable Care Act and 2012 election States 12 states have already enacted ACO-related bills for state programs (Colorado, Connecticut, Florida, Idaho, New York, New Jersey, Texas, Utah, Washington, Wyoming), 27 have introduced legislation Multipayer/regional quality improvement and reform initiatives (heath information exchanges, performance measurement and quality improvement initiatives) Mixed progress on exchange implementation but general support for better performance measures and payment reform Medicaid reform happening now more aggressive price controls and more momentum for bundled payment 14

15 CMS Initiatives on Coordinated Care for Dual Eligibles State demonstrations to integrate care for dual eligible individuals: In April 2011 CMS awarded design contracts of up to $1 million to 15 states to develop service delivery and payment models that integrate care for dual eligibles. CMS will select a subset of proposals, with selected proposals implementation targeted for Financial models to support state efforts to integrate care for Medicare-Medicaid enrollees: In July 2011 CMS outlined two different potential payment models to promote better care for dually eligibles through better aligned incentives: Capitated health plan model, where CMS, States, and commercial health plans enter into a three-way contract to use prospective blended payments to provide comprehensive coverage Managed FFS model, where states and CMS to enter into an agreement whereby the state would be eligible to benefit from Federal savings resulting from initiatives that improve quality and reduce costs 37 states responded by deadline last week 15

16 Driving policy support for real health care reform Expanding insurance coverage and squeezing prices won t do it Policy reforms plus delivery reforms to achieve better quality at lower costs Requires much more accountability and support for better care, lower costs system wide Four key elements: 1. Measurement and Evidence 2. Payment 3. Benefits 4. Insurance Choice 16

17 Measuring and supporting better performance Core measures Overview: Easily calculable through administrative data or existing patient survey systems Health IT: Implementable without fully functioning and integrated EHRs (e.g. internal web portals, patient registries) Sample Measures: breast cancer screening, hemoglobin A1c testing in patients with diabetes, patient and care giver experience of care, and total per-capita expenditures Interim process measures Overview: Require clinical data on evidence-based care processes Health IT: Expanded health IT capabilities from investments in electronic data systems and better access to clinical data Sample Measures: drug therapy for lowering LDL cholesterol, beta-blocker therapy for left ventricular systolic dysfunction, and childhood immunization status Longitudinal & Advanced measures Overview: Advanced, patient-reported measures that include functional outcomes and health risk assessment Health IT: Advanced health IT capabilities that likely include an integrated and fully-functioning EHR system Sample Measures: selfreported physical functioning in patients with heart failure, 10-year risk of developing hard CHD, and condition-specific outcome measures Increasingly Sophisticated Measures Over Time 17

18 Performance Measurement Using Distributed Data Systems Data Exchange for Care Coordination and Quality Improvement Data Use: Consumer Engagement/Choice C O N S U M E R S Pharmacies Lab Hospitals Registries Physicians H E A L T H P L A N S Date Use: Payment & Benefit Reform Identifiable Patient-Care Data Remains Behind Firewalls Summary results (denominator/numerator) are consistently calculated and transmitted 18

19 Advancing payment reform to support improved ACO Launched performance Shared savings when quality improves Benchmark based on per-capita spending for assigned patients If actual spending lower than target AND quality measures improve, providers receive additional payments Projected Target Shared Savings Actual Shared savings Two-sided risk Partial capitation Going further with transitions to twosided risk and partial capitation Two-Sided Risk: Increased confidence in sharing savings, but at risk if spending exceeds targets Partial Capitation: Mix of FFS and prospective fixed payment; provides greater flexibility for redirecting care, but greater financial downside if ACO exceeds budget target 19

20 Synergy in payment reform Aligned Performance Measures Quality (Including Impact on Outcomes, Population Health) Cost/Efficiency Impacts Aligned Reform Priorities and Support Timely data for patient care Supportive health plan, specialty providers, hospitals Value-based payment reform Aligned Payment Reforms HIT Meaningful Use Payments for Reporting/ Medical Homes Episode Payments Accountable Care Others Sufficient Scale Sufficient capital to provide time, effort, and technical support for real delivery change (payers, providersincluding physicians, equity) Strategy for using and augmenting Federal payments Systemwide leadership: regional collaborations; business groups; states; Federal government? 20

21 Multi-payer efforts critical to successful ACO formation Successful ACOs should build support from private payers, states, and CMS 21

22 Reinforcing accountable care payment reforms Many ways to move toward paying for value/results not volume/intensity Fee for value reforms Pay for reporting HIT meaningful use payments Value modifier and other coming Medicare reforms Medical Home Payments Bundled payment for primary care Accountability for structural/process features (registries, office capabilities) and better results Episode Payments Specialty care, other bundles of care Move from FFS payments toward better support for identifiable improvements in quality and efficiency (examples in all types of specialty care) 22

23 Key challenges for successful ACO implementation Challenges Potential solutions Accountable Health Care Aligning multipayer ACOs with other reform initiatives Catalyzing real leadership from providers & payers Reducing start-up costs Develop a common set of performance measures with a pathway for more sophistication over time Create harmony between other payment and delivery system reforms Commit sufficient leadership support within organization and trust toward shared goals between payers and providers Develop common frameworks and contract templates to reduce costs and uncertainty Promote transparency to accelerate learning ACOs: Coordinated networks of providers with shared responsibility to provide the highest value care to their patients 23

24 Reform coverage and benefits for greater value Medicare Part D Exchange Experience Broad range of benefit design and coverage options allowed (subject to minimum standards for actuarial equivalence ) Comparative cost and quality information available Fixed subsidies based on income and health status: strong incentives for beneficiaries to choose lower-cost plans that met their needs Steps to address adverse selection: subsidies; risk adjustment; some reinsurance and risk corridors 45% lower costs than projected Beneficiaries chose tiered benefits that enabled much more savings based on their drug choices, not traditional Medicare insurance design Implications for Health Care Reform Benefit design reforms to support wellness, better adherence and healthier behaviors More comprehensive and more personalized application of benefit tiers: beneficiaries share in savings or get other benefits 24

25 ACO Learning Network aims to address implementation challenges through focused learning Webinars series on key developments in national ACO efforts (including state and federal policy updates) Two member-driven in-person workshops to discuss and dissect implementation solutions Core Learning Network Implementation tools and research products to address core implementation challenges Online ACO resources including all ACO LN archived materials, ACO profiles, and much more *All organizations participate in the core Network and elect to join 1 work group Implementing Performance Measures Monthly meetings Development of concrete products and research deliverables Structuring Payment Models Monthly meetings Development of concrete products and research deliverables Clinical Transformation: From Leadership to Quality Improvement Monthly meetings Development of concrete products and research deliverables Addressing Vulnerable Populations Monthly meetings Development of concrete products and research deliverables Facilitated by Brookings-Dartmouth but Member-Led 25

26 Leadership Priorities for Pacing Change Alignment: Internal/ External, Delivery/ Financing/ Support Ongoing CEO Level Involvement Engaging and Focusing Time and Effort of Clinical Staff 26

27 Time to lead is now Implement real delivery reforms along with accountable payment models that incentivize value not volume At both the system and provider level Align payment reforms across initiatives and payers to create mutually reinforcing incentivizes and support clinical transformation and innovation Support benefit designs (including tiers based on quality and efficiency) and strategies that enhance consumer confidence in reforms (e.g., better performance measures) Keep going 27

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