Reimbursement, Healthcare Reform and ACOs: Navigating the Changes

Transcription

1 Reimbursement, Healthcare Reform and ACOs:

2 A Precedent for Change 2 U.S. healthcare system is unique! Private and Federal Payors In 2013, 13.4% of million 1 of U.S Population were uninsured In 2011, average American spent $8,508 on healthcare, or 17.7% of GDP compared to $3,322average and 9.3% GDP In 2012, 32% of uninsured adults reported not getting or delaying medical care because of cost, compared to five percent of privately insured adults and 27 percent of those on public insurance, including Medicaid/CHIP and Medicare 2 In 2013, three out of five bankruptcy filings in the U.S. were linked to expenses from medical bills At illness onset, in 77.9 percent of these cases the bankrupt party had some form of insurance 1

3 A Precedent for Change 3 Contributing cost drivers: Cost for new technologies Cost for new drugs not necessarily being used in a cost effective manner Rise in chronic diseases such as obesity, end of life care results in 32% of total Medicare spending in last two years of life, (hospital readmissions) Administrative costs U.S Leader in this category From Insurance Premiums increased by 62% The Center for American Progress estimated in 2009 that the lack of health insurance in the U.S. cost society between $124 billion and $248 billion per year.

4 Road to Reform White House Intervenes 4 PPACA- Patient Protection and Affordable Care Act Federal Statute March 23, 2010 MSSP- Medicare Shared Savings/Accountable Care Program Mandated through PPACA for start date of 2012 Improve coordination and cooperation among providers Improve the quality of care for Medicare fee-for-service beneficiaries Reduce unnecessary costs State and Federal Health Insurance Exchanges established to expand insurance coverage to public and private sector Insurance Company mandates including pre-existing conditions

5 Road to Reform is Through CMS June 28, 2012 United States Supreme Court upholds constitutionality of Individual Mandate HHS in January 2015 announced: Goal of tying 30 percent of traditional, or fee-for-service, Medicare payments to quality or value through alternative payment models: ACOs Bundled payment arrangements by the end of 2016 Medical Homes 50 percent of payments to these models by the end of 2018 HHS also set a goal of tying 85 percent of all traditional Medicare payments to quality or value by percent by 2018 through programs such as the Hospital Value Based Purchasing and the Hospital Readmissions Reduction Programs

6 Road to Reform is Through CMS 6 ACA Results to Date: As of May 2014, about 20 million Americans had gained health insurance coverage under the ACA Percentage of uninsured Americans dropped from 18% in 2013 to 13.4% More than 600 ACOs operating across the U.S. as of ACOs received $126 Million, and created $128 in Medicare Savings As of Aug. 5, 2014, more than 2,000 providers had applied to participate in the program MSSP Shared Savings Program Financial Results through Spent Under Budget Shared Savings Spent Under Budget Spent Over Budget Spent Over Budget Shared Losses

7 Road to Reform is Through CMS 7 As of million Americans enrolled in Medicare 40 million adults >65 years old 8 million young people with disabilities $15.3 Million IP stays in 2011 representing $182.7 billion Medicare spending totaled $560 billion In 2011, Medicare represented 15% of the Federal Budget and 17% by 2020 In 2014, 15.6% of Americans covered by Medicare, expected to increase to 95.8 million by 2050 Baby Boomers will expand enrollment from 48 million to 80 million 20% have 5 or more chronic conditions # of workers per enrollee declines from 3.7 to 2.4

8 CMS Next Steps Efforts under way to develop and implement more ambitious valuebased payment models, including episode-of-care payment for chronic illnesses and oncology care that will require providers to shoulder a significant level of cost risk. The reform initiative calls for Medicare fee-for-service payments through APMs to rise from the current 20% level to 30% by the end of The percentage is slated to rise to 50% by the end of Increase in the percentage of Medicare payments that are linked to quality and value to reach 85% by 2016 and 90% by Existing Medicare quality and value linked payment programs include the Hospital Value-Based Purchasing (VBP) program and the Hospital Readmission Reduction Program (HRRP). Unprecedented commitment to move Medicare away from fee-forservice payments to value-based payments.

9 Healthcare Reimbursement Transition 9 Fee-for-Service Value-Based 1 2 Risk-Based 3

10 Healthcare Reimbursement Transition 10 Fee-for-Service Volume-over-Value Hospital/Physician Alignment PHO IPA Fee-for-Service Employed Value-based Value-Based PATIENT DATA Improved Outcomes Clinical Integration Risk-Based Shift to performance Per-member-per-month (PMPM) Efficiency (MCR/MLR) Shared Savings

11 Healthcare Reimbursement Transition 11 Risk-Based 500 Total Cost of Care Covered Lives Cost 450 Quality Outcomes 400 PMPM/Capitation Clinical Services 350 Payor vs. Provider Place of service shifts Reimbursement Models PMPM (Capitation) Bundled Payments Underlying FFS Direct-to-Employer Qtr Qtr Paid PMPM Target PMPM Qtr Qtr

12 Transition to Value 12 Time frame not entirely clear- commercial payors are ready to move to risk Internal alignment between physician and hospital leadership is critical Shift from hospital centric to a more global view focused heavily on moving services to the ambulatory space Access to capital required to invest in IT systems, care coordination capabilities, financial modeling and actuarial resources Requires a restructuring of the relationship between the provider system and the payors A commitment to drive towards efficiency and cost reductions

13 Commercial Insurance Market Response Strategic Assumptions: Adoption of population management principles will drive the market configuration Two delivery system models will dominate Clinical Integration Vertical Integration Payors will transfer risk to delivery systems Direct Employer contracting will develop Narrow (Tiered) Networks will become a viable alternative Bundled Payment/Alternative Reimbursement Systems will develop

14 Delivery System Models Clinical Integration: the purposeful fostering of collaboration among independent doctors and hospitals in a way that increases both the quality and efficiency of patient care 1 FTC and Justice Department requires Clinical Integration in order for entities such as PHO and health systems to contract active and ongoing program to evaluate and modify practice patterns by the network s physician participants and create a high degree of interdependence and cooperation among the physicians to control costs and ensure quality Vertical Integration: Restructuring of health delivery system to improve quality and reduce costs Primary focus on physician organization, moving toward large multi-specialty groups or hospital-physician systems or payor-physician systems that focus on integrated and coordinated patient care, e.g. Accountable Care Organizations 1 Babbo, T.J., Marren, J.P., Deady, P.E.: Clinical Integration: A Physician and Hospital Strategy for Better Quality, Enhanced Competition, and Collective Contracting.

15 Commercial Insurance Market Response Market Factors at work: Greater urgency in transitioning from FFS to Risk Payors partnering with providers Plan redesign higher deductible plans, CDHPs Opportunities for co-branded Insurance Products Provider-side innovations like ACOs Incentivizing providers to give care more efficiently Narrow networks Shifting Population Management activities Patient Centered Care Shared Savings Components

16 Commercial Insurance Market Response 16 Value-Based Models: Pay for Performance layers onto an existing fee for service schedule potential bonus payments based upon defined metrics Bundled Payments episode of care payments or case rates for a specific condition and typically includes multiple components for a predetermined price. Typically includes strict program criteria, quality tracking mechanism and a warranty period Upside Only Shared Savings contracts intended as a transitional model to downside risk contracts. Typically includes a set of quality metrics that must be achieved for a defined population (attribution model) as well as specific cost targets. Providers have opportunity to share in savings with no, or limited downside risk (risk corridors) for failure of meeting the targets Downside Shared Savings contracts similar to above with an added component of defined percentage (corridors or risk bands) of downside risk for the provider Fully-Capitated or percent of premium contracts- varied in structure, fundamentally the provider system accepts full financial responsibility for the total cost of care for the population attributed

17 Local Market Trends Plan Design When people have more responsibility for healthcare they are more sensitive to the price of care and use less care Providers being incentivized to have their patients use care differently [such as by using more cost-effective settings] Widespread Benefit Design Changes Increase Cost Sharing Utilization Rates

18 Local Market Trends Development of Medicare ACOs Expansion of Commercial ACO contracts M&A s/development of Health Systems/Networks Hartford Healthcare Western CT Health Network Yale New Haven Health Systems Saint Francis/Trinity Introduction of Health Insurance Exchange products HealthyCT ConnectiCare Benefits Inc. UnitedHealthcare Anthem

19 Local Market Trends Direct Primary Care: This is a direct contract between the patient and the physician, cutting out the insurance company and paying directly to the physician for care. This also applies to employers as well that have employees on a health plan. By paying a monthly fee or quarterly fee the patient gets direct care. This does not include Medicare patients. Discussion of the fees and details of this potential service. Patient must have a wrap-around insurance plan to cover other expenses that are not primary care. Discussion of the shortage of primary care physicians and causes.

20 Accountable Care Organization Model The shared savings reimbursement model is used by 60% of accountable care organizations (ACOs) 1 Medicare and commercial payers use different shared savings formulas involving various cost and quality components 51% of U.S. ACOs were led by physicians and another 33% were coled by physicians and hospital leaders 33% jointly led by physicians and hospitals In 78 % of ACOs, physicians constituted a majority of the governing board, and physicians owned 40 % of ACOs Physician leadership will influence how clinicians and patients perceive the ACO model and how effective these organizations are at improving clinical outcomes, quality and costs Healthcare Intelligence Network survey

21 Engagement in Population Health Management 21 Value Based Benefit Plan Design Consumer Driven Health Plans (CDHPs) Network Steerage to low cost, high quality Tiered or Narrow Network Goals Member Engagement Improved Health Outcomes Medical Expense Control Provider Engagement Clinical Management Expanded Incentives Readmission Management Health Coaching Gaps in Care Notification Health Assessments an Biometrics Complex and Chronic Condition Pre-Diabetes Screenings Management Gaps in Care Care Management Team Approach

22 Population Health Management 22 Components Patient Engagement Provider Engagement Case Management Risk Stratification Data Warehouse Data Analytics

23 Key Performance Metrics 23 Employer Cost PMPY Member Cost PMPY $6,000 $5,000 $900 $800 $700 $4,000 $3,000 $600 $500 $400 $2,000 $1,000 $300 $200 $100 $0 Current Prior Norm $0 Current Prior Norm

24 Population Management Today, patients in high-risk populations face two difficult challenges: High cost of care Health care system that is not adequately designed to meet their complex, multi-dimensional health care needs. Clearly, it is essential to redesign care and drive down costs in the process. But how? Cost accountability models Today, half of American adults have at least one chronic condition and half of those have poor rates of medication adherence. Success is increasingly tied to the quality outcomes and cost reductions

25 Population Management Challenges A recent Harris Poll conducted on behalf of SCIO Health Analytics found that 1 in 5 insured Americans avoided a care due to fear of costs and uncertainty on benefits coverage Avoiding medical treatment due to lack of knowledge and cost fears can lead to an increase in avoidable ER visits, inpatient hospitalization, labs, high-tech imaging and work absenteeism

26 Why Will it Work This Time? Improved data Cost data more readily available EMR s New technology allows for the data that physicians are compiling especially unstructured notes or case not histories can be mined, insights can be drawn, and patients can be put in risk pools that can be better managed Interoperability Venture Capital Funding for digital health companies surpassed $4.1 billion in 2014, representing 125% growth from previous year 1 New digital business capabilities to enrich the consumer experience and drive better outcomes 1 Erin McCann Healthcare IT News March 2015

27 Consumerism Retails Response to Reform: Retail Clinics Urgent Care Centers Explosion of healthcare apps for i- Phone and Droid Devices Single Most unused thing in healthcare people! Digitally empowered patients will truly take charge of their own health care. Consumers who utilize internet-based cost transparency tools are more likely to choose physicians designated as high quality

28 Consumerism 28 Price and Quality Tools Provides personalized cost estimates for members. The tool shows pricing by episode of treatment alongside provider quality and cost information, and also assigns a designation to physicians based on an analysis of their quality and cost efficiency Centers of Excellence CJRI Tiered Networks Steerage Campaigns Plan Design Consumers who utilize internet-based cost transparency tools are more likely to choose physicians designated as high quality UnitedHealthcare s myhealthcare Cost Estimator (myhce)

29 Consumerism 29 UnitedHealthcare Case Study Those members who had used myhce had higher odds of seeking out Q &E physicians compared to their counterparts. This effect is also seen among plans with and without higher cost-sharing. MyHCE users had a 9 percent and 7 percent higher odds of using Q &E physicians for orthopedics and primary care, respectively; MyHCE users tended to be younger, female and enrolled in consumer-driven health plans; and MyHCE users were younger in age with 50 percent aged 40 or younger compared to 40 percent of the nonusers. Price and quality transparency tools delivered to consumers via the internet may be an effective way to engage consumers in seeking quality and costeffective treatments. Future research should focus on examining changes in outcomes through a robust pre-post study design, concluded the authors.

30 New Technology Wireless Bluetooth technology - Glucose meters now at our fingertips can instantly send blood sugar results to a smartphone or tablet, with no need for manual re-entry Pregnancy apps on i-phone Fitbits tracking activity, sending to cloud based applications Video consults Medical devices will capture more data Better identification of risk due to data within patient populations with increased opportunity to mitigate that risk

31 Future of Technology Smartphones Access to EMR Generate own medical data Increase access to results White house announced that as a part of its nearly $4 Trillion 2016 budget, it will carve out a sizable portion for a new initiative dedicated to precision medicine, which officials say will even include interoperability standards Obama administration has put aside $215 million of the 2016 budget for the Precision Medicine initiative, a project that officials say will pioneer a new model of patient powered research MIT Technology Review, argues that the patient is the single most unused person in health care.

32 CMS Results Due to Reform Solvency of Medicare Trust Funds was extended until percent reduction in hospital acquired conditions saving an estimated 50,000 lives and $12 billion in healthcare costs over the past 5 years Accelerated the development and expansion of innovative new healthcare and payment delivery models 16.4 million U.S. residents have gained health insurance since the law was signed White house announced that as a part of its nearly $4 Trillion 2016 budget, it will carve out $215 million for a new initiative dedicated to precision medicine, which officials say will even include interoperability standards

33 Remaining Challenges - Address Defensive Medicine Care delivered in response to a fear of malpractice lawsuits, accounted for about 28 percent of tests, procedures and hospitalizations at three hospitals 1 Defensive medicine has been estimated to cost $46 billion annually in the U.S., although those costs have been measured directly, according to the study. Cleveland Clinic researchers assessed the cost of defense medicine for these services by asking physicians to estimate the defensiveness of their own orders. For the study, the 36 hospitalist physicians rated 4,215 orders for 769 patients. Of the orders, 28 percent were rated as at least partially defensive and the mean cost was $1,695 per patient, of which $226 was defensive. Completely defensive orders represented about 2.9 percent of costs, mostly because of additional hospital days, the researchers found. Although a large portion of hospital orders had some defensive component, the study found that few orders were completely defensive and that physicians attitudes about defensive medicine did not correlate with cost. Their findings suggest that only a small portion of medical costs might be reduced by tort reform, 2 1 JAMA Internal Medicine 2 Michael B. Rothberg, MD, MPH, Cleveland Clinic

34 Remaining Challenges - SGR Sustainable Growth Rate (SGR) and its threatened 24 percent reduction in physician reimbursement. Congress continues to struggle with how to avoid cutting physician reimbursement for Medicare recipients every year This Spring of 2014 was different. While the end result was with another SGR fix thru March 2015, the negotiations focused on a real solution. A proposed bill passed by the House would repeal the SGR and institute value-based reimbursement options with opportunities for pilot programs for innovative models.

35 Conclusion - Next Steps 35 Providers groups should be able to assess their cost structure in preparation for risk-based contracts Changing trends in healthcare mean providers need to consider how to best deliver value to their patients. For a healthcare provider, delivering value means improving patient outcomes at the lowest cost Digitalize 65% of patients surveyed wanted physicians to embrace technology in their offices 1 Need for clinical and claims based data- data allows frontline physicians, nurses and other caregivers to see a patient's experience and outcome over time Determine your practice s readiness to participate in value-based reimbursement programs Organizations must proactively assess which path is best for them Improving physician documentation and coding performance

36 Conclusion - Next Steps 36 To successfully shift the entire healthcare industry from volume to value, providers, commercial payers, regulators and all major stakeholder will have to have to work together Use current data to create performance benchmarks to determine the reasonableness of goals Design a compensation plan based on practice goals and create alternate compensation methods for discussion and physician buyin Implement and finalize a compensation plan that incorporates continual monitoring Implement a compensation plan to drive desired behaviors.