Accountable Care Organizations An Operational Overview

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1 Accountable Care Organizations An Operational Overview Chris Champ Principal Medicare Spending 2 1

2 CMS Goal Transition of Risk Percentage of payments tied to risk models: 3 CMS Goal Transition of Value Percentage of payments tied to quality 4 2

3 Triple Aim 5 Population Health Wikipedia Definition Population health has been defined as "the health outcomes of a group of individuals, including the distribution of such outcomes within the group". It is an approach to health that aims to improve the health of an entire human population. 6 3

4 ACO s Wikipedia Definition An accountable care organization (ACO) is a healthcare organization characterized by a payment and care delivery model that seeks to tie provider reimbursements to quality metrics and reductions in the total cost of care for an assigned population of patients. A group of coordinated health care providers forms an ACO, which then provides care to a group of patients. The ACO may use a range of payment models (capitation, fee-for-service with asymmetric or symmetric shared savings, etc.). The ACO is accountable to the patients and the third-party payer for the quality, appropriateness and efficiency of the health care provided. 7 ACO CMS Definition According to the Centers for Medicare and Medicaid Services (CMS), an ACO is "an organization of health care providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it." 8 4

5 Accountable Care Organizations Current ACOs cover about 4 million of the 40 million Medicare beneficiaries New cohort announced on January 10 that 106 new Medicare ACOs were accepted into the program 9 Types of ACO s Medicare Pioneer ACO s Shared Savings ACO s Advance Payment ACO Next Generation ACO NRACO Commercial/Private ACO s 10 5

6 Pioneer ACO s Designed for health care organizations and providers that are already experienced in coordinating care for patients across care settings Designed to allow groups to move more quickly from shared savings payment model to a population-based model 11 Shared Savings ACO s Rewards ACOs that lower their growth in health care costs while meeting performance standards on quality Two models One-sided Two-sided 12 6

7 Shared Savings ACO s One sided model Savings only Sharing rate up to 50% Based on quality performance Up to 10% of benchmark 13 Shared Savings ACO s Two models Savings and losses Sharing rate up to 60% Based on quality performance Savings Up to 15% of benchmark Losses 5% in first year 7.5% in second year 10% in third year 14 7

8 Advanced Payment Response to lack of access to capital Upfront fixed payment - $250,000 Upfront variable payment based on historically assigned beneficiaries - $36 Monthly payment based on historically assigned beneficiaries - $8 Recoupment of payments through an offset of an ACO s earned shared savings 15 Next Generation ACO s For those experienced in coordinating care for populations of patients Allows for higher levels of financial risk and reward Applications were due June 1, 2015 Another round due May 1, 2016 Anticipate ACOs to participate 16 8

9 Medicaid ACO s Medicaid programs emerging Anticipate continued growth 17 Medicaid ACO s 18 9

10 NRACO (and others) National Rural ACO Rural ACO model consisting of rural providers coming together to obtain the necessary lives and resources to enter the ACO market 6 initial ACOs CMS AIM Grant 24 new ACOs for communities Medicare Shared Savings Model 19 Commercial/Private ACOs Terms vary dependent on the individual ACO 20 10

11 Shared Savings Example 5,000 Medicare beneficiaries $7,500 spend per beneficiary $37,500,000 total spend 21 ACO Quality Measures and Performance Standards Quality measures affect MSSP amounts 33 quality measures Patient/care giver experience Care coordination/patient safety At risk population Preventive health Of the 33 measures, 7 measures of patient / caregiver experience are collected via the CAHPS survey, 3 are calculated via claims, 1 is calculated from Medicare and Medicaid Electronic Health Record (EHR) Incentive Program data, and 22 are collected via the ACO Group Practice Reporting Option (GPRO) Web Interface

12 Shared Savings Example One Sided Model required savings % depending upon number of lives For our example (3.9%) minimum savings to begin sharing in savings = $1,462,500 or $293 per Medicare beneficiary Once this benchmark is met, savings the ACO would receive 50% (up to a 10% limit) on a first dollar basis $1,500,000 savings = $750,000 payment $1,500,000 * 50% $8,000,000 savings = $3,750,000 payment $8,000,000 * 50% $3,750,000 limit ($37,500,000 * 10%) 23 Shared Savings Example Two Sided Model required loss/savings 2% For our example minimum savings to begin sharing in savings = $750,000 or $150 per Medicare beneficiary Beyond this savings the ACO would receive 60% (up to a 15% limit) on a first dollar basis $1,500,000 savings = $900,000 payment $1,500,000 * 60% $8,000,000 savings = $4,800,000 payment $8,000,000 * 60% $5,625,000 limit ($37,500,000 * 15%) 24 12

13 Shared Loss Example Two Sided Model required loss/savings 2% For our example minimum loss to begin sharing in loss = $750,000 or $150 per Medicare beneficiary Beyond this loss the ACO would pay 60% (up to a 5-10% limit depending on which year) on a first dollar basis $1,500,000 loss = $900,000 shared loss $1,500,000 * 60% $8,000,000 loss = $1,875,000 shared loss $8,000,000 * 60% $1,875,000 limit ($37,500,000 * 5%) 25 Other Medicare Payment Adjustments Value Based Purchasing Readmission penalties Hospital acquired conditions penalties Bundled payments Physician Quality Reporting System (PQRS) adjustment Will become MIPS adjustment in

14 VBP Reductions to Providers 27 Value Based Purchasing Domain Weighting 28 14

15 Readmission Penalty Reductions Up to a 3% reduction! Keep adding the number of conditions that qualify Acute Myocardial Infarction Heart Failure Pneumonia Chronic Obstructive Pulmonary Disease Total Hip and/or Knee Arthroplasty Net saver for CMS % of Hospitals Penalized Avg Hospital Penalty # of Hospitals Penalized U.S.* -.63% 2,610 * 39 hospitals received the maximum penalty 29 Hospital Acquired Conditions (HAC) penalty FY 2015 a 1% penalty kicks in 721 Hospitals are affected this first year 1 in ND CMS assessed rates of 10 patient injuries at hospitals Blood stream infections Patient falls Bed sores Urinary tract infections Collapsed lungs Cuts that occur during or after surgery Blood clots Net saver for CMS! 30 15

16 Bundled Payments Set price for a pre-defined episode of care Advantages Simplified, single payment Discourages unnecessary care Predictable price Most common services so far: Surgery (Orthopedic, General) Obstetrics New CMS Program Comprehensive Care for Joint Replacement 75 MSA s Mandatory No downside in year 1 Bismarck was one of the 75 MSA s identified 31 PQRS Payment Adjustment Individual (EPs) and group practices who do not satisfactorily report data on quality measures for covered professional services will be subject to a negative payment adjustment under the (PQRS) beginning in program participation will affect 2015 payments by a 1.5% negative payment program participation will affect 2017 payments by a 2% negative payment. The PQRS negative payment adjustment applies to all of the EP s or group practice s Part B covered professional services under the Medicare Physician Fee Schedule (MPFS). Source: CMS 32 16

17 Medicare ACO s as of July Medicare ACO s as of January

18 Medicare ACO s as of April 2014 Source: The Advisory Board 35 Medicare ACO s January

19 Share of Medicare Beneficiaries Enrolled in Medicare Advantage Plans, by State, 2013 National Average, 2013 = 28% 0% 28% 7% 15% 12% 42% 49% 33% 30% 13% 33% 3% 27% 14% 39% 12% 37% 32% 11% 21% 33% 21% 37% 35% 15% 12% 24% 22% 20% 29% 38% 16% 17% 20% 29% 12% 22% 25% 26% 27% 36% 46% 17% 5% 18% 35% 23% 16% 7% 8% DC 10% < 10% 10% 19% 20% 29% 30% (6 states) (14 states + DC) (15 states) (15 states) NOTE: Includes MSAs, cost plans and demonstrations. Includes Special Needs Plans as well as other Medicare Advantage plans. Source: MPR/Kaiser Family Foundation analysis of CMS State/County Market Penetration Files, ACOs Today 38 19

20 NRACO Participants October How does it work? Beneficiary Attribution Beneficiaries are assigned (5,000 needed per ACO) Beneficiary must have a record of enrollment At least 1 month of Part A and Part B enrollment and no months with Part A only or Part B only No months of Medicare group (private) health plan enrollment Assigned to only one Medicare shared savings initiative Must live in the United States or U.S. territories and possessions Must have a primary care service with a physician at the ACO Must have received the largest share of primary care services from the participating ACO 40 20

21 How does it work? Providers continue to get normal Medicare reimbursement (PPS or cost) during the year Benchmarked cost based on historical cost of patients attributed Savings/losses are calculated after the fact with the appropriate settlement Do not anticipate large savings early on Comparison on how you did last year Comparison on how you compare to others 41 How does it work? New way of doing business Value versus Volume Care coordination Chronic Care Patients Chronic Care Management Two or more chronic conditions Approximately $40 per month fee schedule payment (RHCs will be reimbursed effective 1/1/16) CPT Medicare Only? 1 coordinator per patients $100,000 - $150,000 annually in revenue??? Team effort Primary Care Physicians Specialists Mid-levels Pharmacy Therapies Home Health Nursing Home Social Services More. Care coordination all other patients Team effort 42 21

22 How does it work? Source: The Advisory Board 43 How does it work? New way of doing business Value versus Volume Need to add data integrity/analytics An immense amount of new data Must improve utilization of your EHR Monitor and improve coding Reimbursement impact versus future impact Must be open to standardization Clinical pathways Processes 44 22

23 Does it work? 45 Does is work? 46 23

24 What is in it for community and hospital? Community Improved health Reduced cost to maintain health status Improved life style 47 What is in it for community and hospital? Hospital It is a question of when, not if, some form of population health will penetrate your market Early adopters will have opportunity to develop competitive advantage Cost Profitability Health of community Public relations It fits in our mission 48 24

25 What is in it for community and hospital? 49 Factors to Consider in Selecting an ACO Population size Beneficiary assignment The balance of risk and reward Confidence in savings potential Available investment assistance Regulatory waivers Source: The Advisory Board 6 factors providers need to consider when choosing an ACO model 50 25

26 Non-Medicare Accountable Care Organizations Numerous payers are exploring ACO like arrangements with providers Providers are creating shared savings programs with Medicare Advantage payers Large physician groups are playing very aggressively on the ACO front in some markets Providers are identifying specific populations to create into ACOs employees, large employer groups 51 Questions? This presentation is presented with the understanding that the information contained does not constitute legal, accounting or other professional advice. It is not intended to be responsive to any individual situation or concerns, as the contents of this presentation are intended for general informational purposes only. Viewers are urged not to act upon the information contained in this presentation without first consulting competent legal, accounting or other professional advice regarding implications of a particular factual situation. Questions and additional information can be submitted to your Eide Bailly representative, or to the presenter of this session

27 Thank You! Chris Champ Principal

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