Accountable Care Fundamentals for Medical Practice Executives

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1 Accountable Care Fundamentals for Medical Practice Executives Nathan Anspach, FACMPE Senior Vice President and Chief Executive Officer John C. Lincoln Accountable Care Organization and John C. Lincoln Physician Network

2 The Patient Protection and Affordable Care Act of 2010 Significant event timeline Accountable Care Organizations Definition, Requirements, Structure Patient Attribution Shared Savings Quality Cost Medical Homes Impact of Accountable Care on Physician Practices Risk Adjustment Factor Scoring Data analysis Collection of quality data Emphasis on achieving savings Conclusions

3

4 Current Debt and Unfunded Federal Obligations by Category ($ Trillions) Social Security Total National Debt Medicare Source: Office of Management and Budget, May, 2011

5 Affordable Care Act Significant Milestones 2010/2011 Federal Excise tax on tanning salons Pre-existing condition coverage No lifetime limit for children with genetic conditions 2012/2013 Accountable Care Organizations Bundled payments Value Based Purchasing Readmission penalties 2014/2015 Individual mandate Insurance exchanges

6 Accountable Care Organizations aka, Medicare Shared Savings Program

7 What is an ACO? An Accountable Care Organization... 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. (Centers for Medicare and Medicaid Services, 2010.)

8 Organization of Health Care Providers Primary care and subspecialty physicians Hospitals Acute care Rehabilitation Post acute providers Home health organizations Disease management Mental health Health and wellness Patient engagement

9 Organization of Health Care Providers Legal & governance structure Ability to contract with & manage health care & business entities Provider management Performance management Disease management Method for distributing potential awards or penalties Knowledge & clinical management infrastructure Robust EMR Integrate financial and clinical performance

10 Reimbursement in a Medicare ACO All participating providers in a Medicare ACO continue to be reimbursed by Medicare on a fee-for-service basis Patients assigned to an ACO can continue to seek care from any Medicare participating physician, hospital or other provider If a Medicare ACO is able to reduce the cost of caring for assigned Medicare patients and meet required quality standards, a possibility of shared savings exists

11 Two options for Medicare ACO shared savings Tier 1 Limited risk ACO participates in savings, but is not liable if savings are not achieved Tier 2 Risk bearing ACO must pay CMS if savings are not achieved, but potential exists for greater share of savings In either risk model, all providers continue to bill Medicare fee-forservice using the normal Medicare fee schedule. 11

12 Keys to ACO Success Focus on primary care Medical homes Implement EMR that can facilitate care and knowledge across the continuum Engage the continuum in chronic care and disease management Create meaningful incentives for improved care processes and behavior changes

13 How Medicare Assigns Patients to Medicare ACO s

14 Calculate Shared Savings Step One Determine Base Spending Level 1. Determine the number of Medicare beneficiaries in the ACO. We will use 15,000 in our example. 2. Determine the average annual spend per beneficiary. In Phoenix that figure is approximately $9, Multiply 1 times 2 and the result is a very large number - $135M. This is the base spending level.

15 Calculate Shared Savings Step Two Reducing Cost 1. Hypothetical average cost is reduced by 7.5% to $8,333 per beneficiary. 2. Multiply $8,333 times same number of members. Total Spend is now $125M 2. Subtract $125M from $135 and savings are $10M. The ACO takes half, or $5M, up to a maximum amount.

16 Shared Savings Possible, Not Easy Requires reporting performance on 33 quality measures At least 50% of participating primary care physicians using an electronic health record Costs of care have to be reduced, but beneficiaries are not limited to ACO partners

17 Four Domains of Quality Measures Patient, Caregiver Experience of Care 7 measures Patient Safety/Care Coordination 6 measures including electronic health record At-Risk Population 12 measures, focused on diabetes, heart failure, hypertension and coronary artery disease Preventive Health 8 measures, include a variety of screenings

18 Legal Structure Board appointed to monitor quality, utilization and performance of accountable effort Board must include physicians and at least one member who is a Medicare consumer of ACO services

19 ACO Governance: Key Responsibilities of the Board Strategy and vision Payment methodology guidance Development of risk guidelines Income distribution methodology Clinical protocol guidelines/standards Clinical & financial performance guidelines Strategic technology guidelines and support Partnership/JV formation

20 The ACO receives CMS data for beneficiaries assigned (3 years of all acute, post-acute, physician and pharmacy information) Disease Registries CMS Data Transmission Third Party Data Analysis Tool High cost Beneficiaries High ER Utilizers Using a third party data analysis tool, the ACO will populate disease registries, identify high cost beneficiaries and heavy ER utilizers.

21 Disease registries will be created for the most prevalent and potentially costly conditions CHF, COPD, CAD, Diabetes Disease Registry Disease registry contains patient contact information, diagnosis, all encounters, CHF Disease prescriptions Registry and costs for past three years for each patient with chronic disease Groups of clinicians will work to create new disease management programs to provide new resources for managing the care of patients with chronic illnesses.

22 Initially, ACO Patient Navigators will make contact with patients on disease registries to arrange primary care physician visits and insure a current HCC form is filed with CMS PCP office visit Patient Information Disease Registry Create and file HCC HCC forms are used to collect information regarding the different illnesses of patients. The medical spending baseline for a patient varies depending upon the patient s overall health.

23 Patients who over-utilize emergency department services (more than two ER encounters in a 12 month period) will be contacted by telephone and mail to make them aware of available extended hours and urgent care programs. High ER Utilizers

24 The Medicare Shared Savings Program provides encounter data on a quarterly basis to ACO s. Disease registries will be re-populated and analyzed on a quarterly basis using a third party data analysis tool

25 Risk Adjustment Factor Scoring CMS spending targets for ACO s are based on relative patient acuity Risk Adjustment Factors or HCC s Formula for calculating CMS ACO Medical spending is Risk Adjustment Factor multiplied by community spending target For Phoenix, community spending target is about $9,000 per patient per year The spending target for a patient with a RAF score of 1 is $9,000, a RAF score of 2 would equal $18,000

26

27

28

29 Male patient, aged 65 to 71, typical baseline RAF score of.6 RAF Score of.6 = Medicare premium of.6 x $9,000 = $5,400 Same patient, but capture metastatic cancer diagnosis RAF Score = = Medicare premium is now x $9,000 = $25,884

30 How do Physician Practices Participate in an ACO?

31 Primary Care Can only join one ACO Most likely to be able to share savings Patient attribution Subspecialists Can join multiple ACO s Shared savings unlikely when joining multiple ACO s Institutional jealosy

32 ACO Provider Agreement Specifies physician qualifications Lists quality reporting measures Proscribes communication infrastructure and protection of patient information

33 Why should a physician practice join an ACO? For Primary Care Physicians Opportunity for significant shared savings Other potential benefits For Subspecialist Physicians Opportunity for increased primary care referrals Limited opportunity for shared savings Other potential benefits

34 Recommendations for further personal exploration Risk adjustment factor scoring Population health management Patient Centered Medical Homes

35 Questions?

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