Case Studies on Accountable Care Organizations and Primary Care Medical Homes

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1 Case Studies on Accountable Care Organizations and Primary Care Medical Homes Monday, April 29, 2013 Presented by: Richard Belko Kara Clark, FSA

2 4/25/2013 Society of Actuaries Provider Payment Reform Seminar Accountable Care Organizations 2013 Walgreen Co. All rights reserved. 1

3 4/25/2013 Healthcare is Evolving to Meet Patient Needs 2013 Walgreen Co. All rights reserved. 2 2

4 4/25/2013 Accountable Care Organizations & Triple Aim Accountable Care Organizations (ACO) Physician-led team of health care providers Work together to provide fee-for-service Medicare patients with enhanced care that is: High-quality Evidence-based Cost-effective ACO Goal: THE TRIPLE AIM Improve outcomes Improve patient satisfaction and provide high touch experience Lower total medical cost and deliver appropriate care from lower cost providers, such as pharmacists and nurse practitioners 2013 Walgreen Co. All rights reserved. 3 3

5 4/25/2013 How is quality measured in an ACO? 33 distinct quality measures in four Quality Domains: 2013 Walgreen Co. All rights reserved. 4 4

6 4/25/2013 Quality Metrics Reporting ACO must meet the quality measures in each of the Quality Domains and lower the cost of care delivery to obtain financial rewards. Each Quality Domain accounts for 25% of the pay-for-performance calculation Year 1 is reporting only Payments for performance kick in years 2 and Walgreen Co. All rights reserved. 5 5

7 4/25/2013 Shared Savings Determination To qualify for Shared Savings: The ACO s actual PMPY is compared to an expected PMPY (known as the benchmark); If the actual PMPY is sufficiently less than the expected PMPY (by an amount known as the hurdle rate ), the ACO is eligible ibl to share in the difference between actual and expected PMPYs (50%/50% share with CMS) Walgreen Co. All rights reserved. 6 6

8 4/25/2013 Walgreens ACOs: First pharmacy chain to be approved by CMS to have an ACO Dynamic and trusted community leaders positioned to deliver best-in-class care: Scott and White Healthcare Temple, Texas A non-profit health system with 65 physicians offices Owns, partners or manages 12 current hospital sites over 29,000 square miles ACO will manage 31,200 lives Diagnostic Clinic Largo, Florida A 100 provider multi-specialty practice located the Tampa Bay area Main location in Largo contains a Walgreens Health System Pharmacy ACO will manage 7,500 lives. Advocare - Marlton, N.J. Over 350 multi-specialty physicians and 70 physician extenders Over 110 locations throughout New Jersey and Southeastern Pennsylvania ACO will manage 11,500lives 2013 Walgreen Co. All rights reserved. 7 7

9 4/25/2013 How do the aims of the ACO drive strategy? 4x Aims of the ACO Patient experience ACO Strategies Health Cost Administrative burden 1. Clinical Programs End of Life Readmissions Etc. 2. Care Gaps Based on 33 quality measures Others in support of clinical i l programs 2013 Walgreen Co. All rights reserved. 8 8

10 4/25/2013 The Role of Analytics Analytics supports the goals of the ACO through the following processes: 1. Conducting opportunity analysis to identify (and then quantify) potential clinical programs; 2. Aggregating and warehousing data from multiple sources; 3. Predictive modeling/risk stratifying at the patient level for implementation of clinical programs; 4. Identifying gaps in care at the patient level; 5. Developing baseline quality measures for outcomes reporting (33 quality measures); 6. Providing ongoing reporting for program management and outcomes Walgreen Co. All rights reserved. 9 9

11 Blue Shield of California Accountable Care Richard Belko Actuarial & Analytics Blue Shield of California April 29,

12 What we re collectively solving for Create partnerships that allow us to: deliver below-market trends Achieve financial results in acceptable and sustainable returns for all parties find cost and quality improvements Increase market share Health Plan Trust Hospital Physician Group 2 2 2

13 Framework of Partnership Initial focus on HMO network Goal in first year hold Total Cost of Care (TCC) flat, or to a minimal increase Establishing up front savings goals and cost targets Incentive model by establishing risk share arrangement with provider partners on all services Actionable ACO program initiatives to achieve targets 3 3 3

14 pilot ACO (Dignity & Hill) 2010/2011 results 2010 outcome combined $15.5M in savings to CalPERS ($20.5M total savings) major reductions in: readmissions inpatient days inpatient stays of 20 or more days ALOS $37M in savings to CalPERS PMPM cost trend ~ 3% vs. ~7% for non-aco population 2011 quality results: Increase in ACE/ARB use Decrease in readmissions Significantly higher patient satisfaction Other measures comparable to non-aco 4 4 4

15 Early ACO Results beyond Sacramento CCSF: Hill/UCSF /Dignity Health (7/2011 6/2012) CCSF: B&T /CPMC (7/2011 6/2012) AllCare/ St. Joseph Health Doctors Medical (1/ /2012)( Center (1/ /2012) % reduction vs. results in baseline period 13% in admits/1000 9% in ALOS for inpatient admits 14% in admits/1000 2% in ALOS for inpatient admits 9% in admits/1000 4% in ALOS for inpatient admits 37% in admits/ % in ALOS for inpatient admits 7% in ER/ % in ER/1000 4% in ER/ % in ER/

16 Emerging Financial Results Emerging Financial Results First Year ACO Provider Collaborations - 6 months experience ACO1 ACO2 ACO3 ACO TCC Target 1 : $ $ $ ACO Experience 2 : $ $ $ Current indicative risk share totals: ($27.24) ($23.19) ($23.32) 1. Reflects flat TCC 12 month trend 2. Paid completed experience with two months run-out Note: early PMPM experience is susceptible to volatility, and may be subject to significant fluctuation 6 6 6

17 Activities, Tools, & Initiatives Driving Results Activities Relationship building Actuarial presence at the table from start Consultative role responding to provider concerns to establish comfort levels Target setting (both financial and utilization) - great motivator Analytics and Reporting Program Initiatives 7 7 7

18 Activities, Tools, & Initiatives Driving Results - continued - Tools Population analysis Membership mix Risk profile Risk drivers Case mix-adjusted ALOS Inpatient tool - plug and play OOA referrals ER tool plug and play Frequent fliers 8 8 8

19 Activities, Tools, & Initiatives Driving Results - continued - Initiatives Case manager discharge follow-up Discharge instructions understood Follow-up visitsi it Rx instructions Specialty Clinics Dedicated Hospitalists Leveraged senior program for ACO enrollees ED out-reach Understanding date/time of use Proactive letters Dedicated pharmacy resource Polypharmacy Non-adherence 9 9 9

20 Examples

21 Illustrative example of risk share arrangement Partner at Risk Service Category Target (pmpm) Hospital Physician Group Plan Hospital services (provider partner) $115 50% 25% 25% Hospital services (non provider partner) $25 20% 30% 50% Physician services $90 20% 50% 30% Ancillary services $10 20% 30% 50% Pharmacy card $50 10% 45% 45% Total Cost $

22 Case-Mix adjusted ALOS Example from Population Analysis

23 Risk Profile Example from Population Analysis

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