April 20th Distribution Copy of Slides€¦ · discharge. – Bundled payment for eight conditions. – Payment is comprehensive, more than just medical services, also covers Qcare

©2012 Foley & Lardner LLP11

Overview of Care Transformation:Developing the Population Health Systems of the Future

Friday, April 20, 2012

©2012 Foley & Lardner LLP • Attorney Advertising • Prior results do not guarantee a similar outcome • Models used are not clients but may be representative of clients • 321 N. Clark Street, Suite 2800, Chicago, IL 60654 • 312.832.4500


Housekeeping Tips

Live questions will be taken at the end of the program and questions can also be asked during the program by clicking on the Q&A tab above.

Your feedback is greatly appreciated, so we ask that you take a few minutes and complete the survey that will appear on your screen after the Q&A session.

Foley will apply for 2.5 general CLE credits for today’s program. All New York attendees applying for CLE credit must fill out an Attorney Affirmation form and insert the two course codes that will be given during today’s web conference. If you have any questions please contact [email protected]


Presenters

Larry VernagliaPartnerFoley & Lardner [email protected]

Paul H. Keckley, Ph.D.Executive Director Deloitte Center for Health Solutions Deloitte [email protected]

Theodore A. Praxel, M.D., MMM, FACPMedical Director Institute of Quality,Innovation and Patient SafetyMarshfield [email protected]

Robert James CimasiPresidentHealth Capital [email protected]

Lisa M. McDonnel Senior Vice PresidentNetwork Strategy & InnovationUnited [email protected]

Guest Speakers:

Moderator:


Discussion so far . . .

The economics of health care are requiring fundamental change to the health care delivery system.– Health care spending continuing to rise – and rise as % of GDP

New Value Proposition: Transition away from volume-based, fee for service payment to a value-based, cost containing (reducing?) system is happening.Not “whether” but “when”.Doesn't matter who wins in Supreme Court or next election.


Warning: Oversimplification Approaching!

We elected to move in this direction incrementally.

1980s/1990s:– Governmental payors moved from Cost/reasonable charge

to PPS/RBRVS.– Commercial Payors experimented with (and failed at)

"managed care". (Massachusetts stuck with it better than most).

1990s/2000s:– Rate reductions; no fundamental change;

mandated benefits.

Costs continued to rise.


Today

Governmental payors (CMS and States e.g. Mass): – Health Reform.

Commercial payors: – tiered networks; – modest cost shifting; – rate pressure; – a few bold initiatives:

BCBSMA AQC; HPHC beneficiary incentives


Health Reform

Larger background:– P4P; P4Q.– Value Based Purchasing.– HAC/POA; never events; other baby steps.


Where is “Health Reform” (Payment Reform) taking us?

PPACA - not a fundamental change to Medicare/MedicaidBecause no clear “winner,” a variety of demonstration projectsCongress and CMS offered a shopping cart of experiments?



Commonalities in Operations: – EHR & other technologies; – “accountability;”– change payment to incent better care not more care

(though maybe/likely less care) – Evaluation of effectiveness;– Transparency;– “Patient-centeredness” (really???)



Commonalities in Payment Modalities:– Shift risk to the Providers (many flavors)– Shift risk (or another type of accountability) to the

patient/beneficiary/consumer (a couple of flavors)– Reward positive outcomes– Punish negative outcomes



What’s in the current shopping cart?Necessary to understand if you want to predict which product (or group of products) is ultimately the winner/winners


Where is “Health Reform” taking us?

PPACA Hospital Value-Based Purchasing Program– Incentive payments to hospitals that meet (or exceed)

performance standards – Begin in FY 2013– Measures that cover at least the following five specific

conditions or procedures: (1) acute myocardial infarction (AMI); (2) heart failure; (3) pneumonia; (4) surgeries; and (5) health care-associated infections.



Value-Based Payment Modifier Under the Physician-Fee Schedule

– Risk-adjusted measures of the quality of care furnished by a physician or group of physicians to individuals such as measures that reflect health outcomes.

– Begin on January 1, 2015



Payment Adjustment for Conditions Acquired in Hospitals —Now Applicable to Both Medicare and Medicaid

– Medicare will reduce payment for discharges by 1%– CMS will study expanding the HAC policy to other facilities:

inpatient rehabilitation facilities, long-term care hospitals, skilled nursing facilities (SNFs), ambulatory surgical centers (ASCs), and health clinics.

– Medicaid PPACA prohibits Medicaid payment for HACs– Begin in 2015



Reporting Requirements– Improvements to the Physician Quality Reporting (PQR) Program

– Quality Reporting for LTCH, IRF, Psych Hospitals and Hospice

– Quality Reporting for Cancer Hospitals

– Data Collection and Public Reporting

– Improvements to the Physician Feedback Program

– Adult Health Quality Measures

Theory: (1) empower consumers; (2) shame providers into improvement



National Pilot Program on Payment Bundling

– Hospitals, physicians, and post-acute providers to provide integrated care.

– Jointly accountable for an episode of carebeginning three days prior to, an inpatient admission and continuing for 30 days following discharge.

– Bundled payment for eight conditions.

– Payment is comprehensive, more than just medical services, also covers care coordination, medication reconciliation, discharge planning, transitional care services, and other patient-centered activities.

– Participants must report quality measures– Begins January 1, 2013

CMS/CMMI Bundled Payment Initiative (LOIs already out)States already looking at this. Commercial payors may be interested



Center for Medicare and Medicaid Innovation (CMI)– Testing innovative payment and service delivery. Initial models:

Patient-centered medical homes with comprehensive payment or salary-based payment Direct contracting with provider groups to promote innovative care delivery models Geriatric assessments and comprehensive care plans Care coordination for chronically ill patients through Health IT and telehealthCommunity-based health teams to support small-practice medical homes by assisting primary care practitioners in chronic care management Assisting individuals in making informed health care choices by paying providers for using patient decision support tools Allowing states to test and evaluate systems of all-payer payment reform for the medical care of residents Aligning evidence-based guidelines of cancer care with payment incentives Improving post-acute care through continuing care hospitals Funding home health care providers for chronic care management in cooperation with interdisciplinary teams The development of a collaborative of high-quality, low-cost health care institutions responsible for developing, documenting, and disseminating best practices and proven care methods and implementing and assisting other institutions in implementing such best practices and care methods

– Innovations to be tested (including expanding pilot programs) do not require Congressional approval

– Began January 1, 2011, allotted $10 billion over the next 10 years



ACO Models Broadly:– Medicare Shared Savings Program —

Accountable Care Organizations (ACOs). – Advance Payment– Pioneer ACO – 32 participants (Dec. 19, 2012)– Medicare SSP – 27 participants (April 12, 2010)– State ACOs (Gov. Patrick)– Commercial ACOs (AQC)


Where is “Health Reform”taking us?

Each of these experiments has common goal - use payment reform to change provider (maybe even beneficiary) behavior. – Dr. David Blumenthal, Partners HealthCare / Former

National Coordinator for Health Information Technology, US Department of Health and Human Services

Wean providers from volume (heads and beds), fee for service, bricks & mortar.Reduce cost (cost increases) without sacrificing quality.


Health Reform: Executive BriefingGuy Carpenter Client SummitLas Vegas, NevadaApril 14, 2011

Presented By:Paul H. Keckley, Ph.D., Executive Director

Deloitte Center for Health [email protected]

202-220-2150

Visit our website to subscribe to our content:www.deloitte.com/CenterforHealthSolutions/subscribe

Health reform:Where are we? What’s next?


Context: the U.S. health system: fragmented, expensive, complex:labor intense, capital intense, and highly regulated

Compound annual growth rate (CAGR) +7% per year, 17.6% of the U.S. gross domestic product (GDP); 19.8% of household discretionary spending, 23% of federal budget

BIOTECH

Innovators

Administrators/Watchdogs

Service Providers

Physicians

HCIT

Pharma

Device

HospitalsOutpatientFacilities

Insurers

Regulators

Long TermCare

BioTech

ProfessionalSocieties/

Special Interests

Accrediting Agencies

DiseaseManagement

Employers

CAM

Media

AcademicMedicine

Consumers

Allied HealthProfessionals

Disruptors

Sources: Centers for Medicare & Medicaid Services, NHE Tables; Congressional Research Service, Mandatory Spending Since 1962


Current issue: Industry competition, expectations and realities

Moving to the “New Normal”

Economic constraints

Consumer expectations

Clinical innovation

$$

$$$$$$

$$

$

Industry consolidation


Context: reduced private insurance coverage, increased spending for provider services/

hospital care: notable trends

Year

Peop

le (i

n m

illio

ns)

Year

Nat

iona

l Hea

lth

Expe

nditu

res

(in

$bill

ions

)

Source: Centers for Medicare & Medicaid Services, National Healthcare Expenditures Data


Delivery system changes• Increased linkage between

performance (outcomes, costs) and payments/incentives

• Increased integration of physicians, hospitals and long term care providers

• Increased access to health services by under-served populations

• Increased alignment of coverage with evidence

Current issue: ACA impact on insurance, providersThree core strategies:

(1) replace fee for service incentives, (2) leverage information technology to reduce cost and improve quality, (3) increase integration/coordination

Insurance system changes•Elimination of pre-existing condition, lifetime and annual limits for insurance plans•Required coverage of preventive health services without co-payments•Creation of health insurance exchanges in each state to facilitate access to affordable insurance and manage subsidized purchases by individuals and employers•Federal-state regulation of insurance plan coverage, premiums, and medical expenditures

ConsumerismEngaged,

accountable, Preventive health, individual

insurance, PHR

Comparative EffectivenessWhat works best, at what cost?

Personalized medicine, bundled payments, provider adherence/performance-based payments liability reforms

Health Information TechnologyInformation driven health: cost, quality, safety

Electronic medical records, health information exchanges, fraud detection, administrative simplification, clinical data ware-housing, ICD-10, direct to consumer e-medicine

Primary Care 2.0The front door and “home”

Home monitoring, retail medicine, LTC, medical homes, retail medicine, medical homes, health

coaching

The Anticipated “New Normal” Delivery System


Rules, Regulations & New Funding

2010 - 2013 2014 - 2016 2017 +

Mandates, Pilots & Exchanges

“New Normal”

• Individual mandate

• Health exchanges

• Employer pay or play

• Independent Payment Advisory Board (IPAB)

• Accountable Care Organizations (ACOs)

• Value-based purchasing

• Episode based payments

• Medical home

• Self referral limits

• Transparency (Physician Quality Reporting Initiative [PQRI] etc.)

• Comparative effectiveness

• Delivery system re-alignment

• Value not volume

• Convergence: Public health & delivery system

• Retail insurance market

• Consumerism

• Insurance compliance: medical loss ratio (MLR), premiums, coverage

• Coordination: state-federal governments, agencies

• Rules, guidelines, task forces, agencies

• Excise taxes—insurance, medical devices, drug companies

• Patient Centered Outcomes Research Institute (PCORI)

ICD-10, Electronic Medical Records, Comparative Effectiveness Implementation

Budget Control Act, HITECH, Sustainable Growth Rate (SGR) Fix

Current issue: ACA implementation in the context of election cycles, economic volatility


Current issue: three new entities that play key roles in in budgeting, coverage health care

2010 2012 2013 2014

IPAB begins to propose changes to limit Medicare spending

CMS Innovation Center established

2011

Patient-Centered Outcomes Research

Trust Fund created

CMS Innovation Center IPAB PCORI

• Test innovative payment and service delivery models

• Broad authority to determine what models will be tested, in what populations, and for how long, with a preference for models that address deficits in care leading to poor clinical outcomes or potentially avoidable expenditures

• The purpose is to reduce the per capita rate of growth in Medicare spending

• Operates independently of MedPAC

• Recommendations take effect absent Congressional action

• May recommend changes to Part D to generate required savings

• Broad scope of research (drugs, devices, procedures, delivery system) with a focus on clinical effectiveness research

• Findings are not coverage/ payment recommendations, but can be used by HHS to inform coverage


Current issue: "clinical integration"

Physician-Hospital Alignment

ACOs(Sec. 3022, 01/01/2012) (Sec. 2706,

3021,01/01/2012)

Avoidable readmissions

(Sec. 3025, 10/1/2012)

Episode-based payments

(Sec. 2704, 1/1/2012)

Medical home(Sec. 3502, no effective

date) (Sec. 2703, 1/2/2011)

Avoidable readmissions

(Sec. 3025, 10/1/2012)

Value -based purchasing(Sec. 3001, 10/1/2011)(Sec. 3006, 10/1/2011)(Sec. 3006, 1/1/2011)

(Sec. 10326, 1/1/2016)

Physician Ownership(Sec. 6001, 09/23/2011)(Sec. 6002, 3/23/2013)

Clinical Integration Operational Competencies Risk-based Contracting Operational Competencies

Evidence-based guidelines embedded in clinical IT applications system wideQuality management and measurement: safety, outcomes, efficacyShared governance: physician-hospital alignmentGain-sharing-based compensation for providers

Contract negotiation, adjudication and distribution of fundsMedical management: provider credentialing and performance reviewsProvider disciplineQuality, cost reportingPatient adherence management

all section numbers provided refer to the ACA legislation


CBO estimates:

Industry opinions:

What’s ahead: costs of ACA and the FY13 budget

FY 2013 budgetOverall cost•In 2013, deficit will fall to approximately $977 billion (6.1% of the GDP)•Deficit levels will fall over the next several years, reaching a low of approximately 2.5% of GDP by 2017, but then begin to increasing until it reaches approximately 3% of GDP in 2022•Cumulative deficits from 2013 to 2022 will amount to approximately $2.9 trillion

ACAOverall cost• Implementation to cost $930 billion 2012 – 2021 (per the February 2011 baseline), reducing the federal deficit by approximately $210 billion over the decadeCoverage expansion•March 2012 cost projections lowered for ACA insurance coverage provisions by approximately $50 million (from March 2011) to approximately $1.1 trillion for 2012 –2021

Sources: CBO and JCT, Baseline Budget Projections for 2011 and 2012

CBO, Budget and Economic Outlook FY2012 – 2022, January 2012“Outlays in the baseline projections decline modestly relative to GDP over the next several years before turning up again later in the decade. The modest declines are the result of an expanding economy and statutory caps on discretionary appropriations. The aging of the population and rising costs for health care drive increases in spending in later years.”

Bipartisan Policy Center, Testimony by Pete V. Domenici and Dr. Alice Rivlin, November 2011“The principal driver of future federal deficits is the rapidly mounting cost of Medicare…without a significant change in this trend, the cost of Medicare will continue to rise faster than the economy can possibly grow.”

American Health Insurance Plans, Statement on the Two Year Anniversary of ACA, March 2012“There are challenges coming in 2014 that policy makers need to address now to prevent cost increases and disruptions for consumers, including: a new $70 billion health insurance tax that CBO says will increase the cost of coverage for families and small businesses; age-rating restrictions that will cause premiums to significantly increase for young adults; and minimum benefit requirements that will force many individuals and small employers to ‘buy up’ and purchase additional coverage beyond what they have today.”


What’s ahead: volatility in the insurance market

Projected enrollment in millions (% of total) under scenarios A–D in year 2020

Health insurance market segment

2010Actual†

Scenarios Range

A B1 B2 B3 C D1 D2 D3

Employer sponsored: Group excluding SHOP

169 128 118 104 76 124 129 132 133 76–133

SHOP 0 21 19 18 13 20 21 21 21 13–21

Individual excluding HIX 30 3 4 5 7 3 4 3 4 3–7

HIX 0 27 35 45 65 23 31 24 28 23–65

Medicaid 49 51 51 51 51 51 51 51 51 51

Medicare 44 51 51 51 51 51 51 51 51 51

Uninsured 50 34 38 43 53 44 29 33 29 29–53†2010 Census Data, http://www.census.gov/prod/2011pubs/p60-239.pdf

• In our view, employers likely to exit from coverage after 2014 if state health insurance exchanges will impact the future of insurance coverage substantially

• Legislators might stiffen individual mandate and/or employer penalties

• Major elements of ACA might NOT be implemented or funded thus limiting/delaying impact

Source: Deloitte Center for Health Solutions’ Impact of Health Reform on Insurance Coverage, www.deloitte.com/us/coveragemodel

Scenario A — “Intended results”: Baseline

Scenario B — “Unintended results”: Employers drop coverage– B1: 5% of large and 10% of small employers– B2: 10% of large and 25% of small employers– B3: 25% of large and 50% of small employers

Scenario C — “Unintended results”: No individual penalty

Scenario D — “Unintended results”: Delays/changes to original legislation

– D1: Individual penalty tripled (to 3% of income from 1%) and faster phase-in (to 2 years from 3)

– D2: Employer penalty tripled (to $6,000 from $2,000)– D3: Combination of D1 and D2 with exchanges and mandates

delayed until 2016


What's potentially ahead: Supreme Court challenge to ACA

• Arguments were made by the National Federation of Independent Businesses (NFIB), 26 states, the DOJ, and court appointed lawyers on the following key issues:

• What to watch for: – Impacts to the Presidential campaign

– State implementation

– Alternatives to the individual mandate

– Employer activity

– Industry reaction

The U.S. Supreme Court heard six hours of arguments March 26 – 28, 2012 and will issue an opinion in June 2012

Issue Highlights

March 26: is the Anti-Injunction Act applicable to ACA?

Focused on whether the fine associated with the individual mandate is a tax versus a penalty

March 27: is the individual mandate Constitutional under Congress’ power to regulate commerce?

Focused on the limit of Congress’ power if the mandate goes forward and the concept that mostly everyone goes into the health care market

March 28: is the law severable from the individual mandate?; does the Medicaid expansion coerce states into expansion?

Debated how much of the ACA is severable without the mandate


The business imperatives…

Performance excellenceTargeted growthStrategic innovation

The essentials to implementation…Clinical-administrative data convergenceCapitalScale


DisclaimerThis publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.

Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

About DeloitteDeloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.

About the CenterThe Deloitte Center for Health Solutions (DCHS) is the health services

research arm of Deloitte LLP. Our goal is to inform all stakeholders in the health care system about emerging trends, challenges and opportunities using rigorous research. Through our research, roundtables and other forms of engagement, we seek to be a trusted source for relevant, timely and reliable insights.

To learn more about the DCHS, its research projects and events, please visit:www.deloitte.com/centerforhealthsolutions

Copyright © 2012 Deloitte Development LLC. All rights reserved.Member of Deloitte Touche Tohmatsu Limited


Physician Group Practice Demonstration Program Experience

Presented By:Theodore A. Praxel, MD, MMM, FACP

Medical DirectorInstitute for Quality, Innovation and Patient Safety

Marshfield Clinic - Marshfield, [email protected]


Marshfield Clinic

34

Formed 1916Physician led – 501(c)3783 physicians in 86 specialties6,450 employees56 regional sites 374,468 unique patients/year76K Medicare, 58K Medicaid3,767,3003 patient encounters/yrOver $1 billion in annual revenueSecurity Health Plan (170,000 Member

HMO)Division of Laboratory MedicineEducation FoundationResearch FoundationFamily Health Center – FQHC (76K patients,

443K encounters annually)Seven Dental Clinics in underserved areasAn Academic Campus of UW School of

Medicine and Public Health


Marshfield Clinic

MISSIONThe mission of Marshfield Clinic is to serve patients through accessible, high quality health care, research

and education

VISIONMarshfield Clinic will be the preferred system of cost‐

effective, evidence‐based, quality health care. Through research, education and standardization of

quality, we will reduce the burden of disease, disability and the cost for our patients and communities.

35


Centers for Medicare and Medicaid Services Physician Group Practice Demonstration Project

First value based purchasing demonstration applied to providersGoals – Improve efficiency (decrease costs) while improving quality (measured on 32 quality metrics) for assigned vs. comparison group of Medicare beneficiaries in the same geographic location getting care from non-site providers.– Improve coordination b/t Part A & Part B expenditures– Align reimbursement with quality– Reward for improving health outcomes


Centers for Medicare and Medicaid Services Physician Group Practice Demonstration Project

Marshfield Clinic selected as 1 of 10 participating sites nationallyAll are groups of > 200 physiciansLong term commitment –– Application 2003– Baseline data 2004– Originally 3 years starting 4/1 annually– Extended to 5 years (5th year completed 3/31/2010)


One of Ten in the Nation

• Dartmouth-Hitchcock Clinic– Hanover, NH• Deaconess Billings Clinic- Billings, MT• Forsyth Medical Group– Winston-Salem, NC• Geisinger Clinic– Danville, PA• Integrated Resources for Middlesex Area– Middletown, CT

• Marshfield Clinic– Marshfield, WI• Park Nicollet Health Services– St. Louis Park, MN• St. John’s Health System– Springfield, MO• The Everett Clinic– Everett, WA• University of Michigan Faculty Group Practice– Ann Arbor, MI


Shared Savings Methodology

If assigned beneficiary total Medicare expenditure risk adjusted growth rate is > two percentage points below local market growth rateThen Groups Share up to 80%

above the 2% threshold– Performance Payments

Earned for Efficiency & Quality

– Increasing Percentage of Performance Payments Linked to Quality

Maximum Annual Performance Payment Capped at 5% of Medicare Part A & Part B Target

0%

20%

40%

60%

80%

100%

1 2 3 4 5Performance Year

Shar

ed S

avin

gs

Quality Financial Medicare


Thirty-two Quality Measures

Diabetes MellitusDiabetes Mellitus

PY 1, 2, 3, 4, 5PY 1, 2, 3, 4, 5

Congestive Heart FailureCongestive Heart Failure

PY 2, 3, 4, 5PY 2, 3, 4, 5

Coronary Artery DiseaseCoronary Artery Disease

PY 2, 3 ,4, 5PY 2, 3 ,4, 5

Hypertension & Cancer Hypertension & Cancer ScreeningScreening

PY 3, 4, 5PY 3, 4, 5

HbA1c Management LVEF Assessment Antiplatelet Therapy Blood Pressure Screening

HbA1c Control LVEF TestingDrug Therapy for Lowering LDL

CholesterolBlood Pressure Control

Blood Pressure Management Weight Measurement Blood Pressure Blood Pressure Plan of Care

Lipid Measurement Blood Pressure Screening Lipid Profile Breast Cancer Screening

LDL Cholesterol Level Patient Education LDL Cholesterol Level Colorectal Cancer Screening

Urine Protein Testing Beta‐Blocker Therapy Ace Inhibitor Therapy

Eye Exam Ace Inhibitor Therapy

Foot Exam Warfarin Therapy

Influenza Vaccination Influenza Vaccination

Pneumonia Vaccination Pneumonia Vaccination


Chronic Disease Management

• More than 75% of Medicare spending occurs in patients with 4 or more chronic diseases. (CB0)

• 25% of Medicare beneficiaries consume 85% of the Medicare expenditures. (CBO)


How did Marshfield Clinic intervene for the PGP project?

Multiple simultaneous interventions – there is no silver bullet !– Best practice models developed for core conditions,

ongoing guideline development– Computer based Continuing Medical Education

opportunities– Care management programs– Population based feedback to providers– Health Information Technology – Chartless since

2007– Physician/Clinical Nurse Specialist regional teams

ALL interventions for the CMS PGP demo are applied toALL Marshfield Clinic patients.


Interventions

• Care Management – team based care for populations of patients– Anticoagulation System – Telephonic heart failure care management– Dyslipidemia program– NurseLine

24/7/365 – 100+K calls/yr– *all of the above are currently non-reimbursed

services



•CMS PGP version 1 ‐ ~$56 M•Exceeded 130 of 133 metrics over 5 years

Marshfield Clinic PGP Results


6/23/10 BOD Approval

6/23/11 Last application submitted

NCQA Recognition Achieved August 2011 – Level 3 (highest level)

• 34 primary care sites • Last RN care coordinators to be hired April 2012

Patient Centered Medical Home

ACOAccountable Care Organizations

Primary Care

Specialty Care Coordination

Health Information Technology

Quality Measures

Patient Experience

Better Care


Patient Care

External influences –• Public Reporting

• Health Care Reform•Payer Requirements

Education• Guidelines

• Computer based CME

Feedback• Dashboards

• Population based• Patient Lists

• By Condition• Physician practice

Applications• Point of Care

• Patient Dashboard•PreServ

•Planned Visits

Patients Entering the Care System

Better Value

•Improved Patient Outcomes

•Decreased Costs

New Models of Care• Patient Centered Medical Home

• Care Coordination•Accountable Care Organizations

•Proactively reaching out to patients


Next Steps

Further development of analyticsFull implementation of nurse care coordinators in PCMHParticipation in CMS PGP Transition Demonstration Project – currently in Performance Year TwoNegotiating with private payers on alternative reimbursement mechanismsAwait outcome of Supreme Court decision

48


© HEALTH CAPITAL CONSULTANTS

Care Transformation at the Hospital/Physician Interface

Presented By:

Robert James Cimasi, MHA, ASA, FRICS, AVA, CM&AA

PresidentHealth Capital Consultants

[email protected]



History of Hospital-Physician Alignment

“The only thing new in the world is the history you don’t know.”-Harry S. Truman

Incentives for hospitals and physicians are finally aligning

“The End of Us vs. Them” By Philip Betbeze, HealthLeaders, April 2012, p. 11.


Drivers of Emerging Trends in Alignment

The Four Pillars of the Healthcare IndustryThe Four Pillars of the Healthcare Industry



Drivers of Emerging Trends in AlignmentRestructuring Reimbursement

52

Two Revenue Streams in Healthcare


There has been a persistent effort to restrict physician ownership/investment in ASTC revenue stream enterprises



53

The Sustainable Growth Rate


Avg. Formula Update 1997-2011: -6.0%

Avg. CF Update 1997-2011: 0.5%“Estimated Sustainable Growth Rate and Conversion Factor, for Medicare Payments to Physicians in 2012” Centers for Medicare and Medicaid Services, http://www.cms.gov/SustainableGRatesConFact/Downloads/sgr2012p.pdf (Accessed 11/07/11)

1997-2010: Proposed and Actual Updates to the MPFS Conversion Factor (CF)



54

Medicare Reimbursement vs. Operating Costs

Operating Cost per FTE Physician for Multispecialty Practices1

Annual Consumer Price Index (CPI)2

Medicare Reimbursement3

1. “Cost Survey for Multispecialty Practices”, 2010 Report Based on 2009 Data, Medical Group Management Association;“ Cost Survey for Multispecialty Practices”, 2009 Report Based on 2008 Data, Medical Group Management Association.

2. “Consumer Price Index” U.S. Department of Labor, Bureau of Labor Statistics, Washington D.C., ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt, (Accessed 8/9/2011).3. “History of Medicare Conversion Factors” American Medical Association, http://www.ama-assn.org/ama1/pub/upload/mm/380/cfhistory.pdf (Accessed 8/9/2011).



Drivers of Emerging Trends in AlignmentIncreasing Regulatory Procedures

Increased Rate of Payment Recapture Audits– Process of identifying improper payments made to contractors or

other entities, in which third-party private companies receive a percentage of the improper payments they recover

RACs, MICs, MACs, and ZPICsComprehensive Error Rate Testing (CERT)

Increased Enforcement of Key Regulations– Anti-Kickback Statute– Stark Law– False Claims Act– Fraud Enforcement and Recovery Act

55

Increased Fraud and Abuse Activities



Drivers of Emerging Trends in AlignmentChanging Competitive Landscape

56

Porter’s Five Forces


“Competitive Strategy” By Michal Porter, The Free Press, New York (1980), p. 49-67.



Direct employment model• Physicians have standard employment agreement with the hospital

• Physicians and hospital use separate legal entity to manage the practice

Captive-group or equity and foundation models

• Physicians are employees of hospital subsidiary

• Physicians and hospital use separate legal entity to manage the practice;

Hospital-owned clinic staffing model

• Physicians maintain ownership of practice

• Physicians create professional Services Agreement with the hospital

Co-Management / Joint ventures • Hospital enters into agreement with an organization that is either

jointly or wholly owned by a physician to provide the daily management services for the inpatient and/or outpatient components of a medical specialty service line

Accountable Care Organizations / Bundled Payments

• Health care organizations in which a set of providers, usually physicians and hospitals, are held accountable for the cost and quality of care delivered to a specific local population

57

Emerging Trends in Alignment, Consolidation, and Integration




Shortages in physician supplyCap on medical school enrollmentAging physicians– One-third of all physicians are 55 and older

Young physicians less likely to:– Take call coverage– Work longer hours– Undertake the entrepreneurial challenge of opening private

practice vs. collecting a salary

58

Healthcare Provider Manpower

“Physician Characteristics and Distribution in the US” American Medical Association, 2010 edition , p. 1-5.




59“Physician Characteristics and Distribution in the US” American Medical Association, 2002-2003 edition (p. 329); 2003-2004 edition (p. 320); 2004 edition (p. 322); 2005 edition (p. 311); 2006 edition (p. 311); 2007 edition (p. 311); 2008 edition (p. 403); 2009 edition (p. 406); 2010 edition (p. 438); 2011 edition (p. 436).


Physician Practice Setting



60© HEALTH CAPITAL CONSULTANTS

The Four Phases of Managed Competition


Drivers of Emerging Trends in AlignmentTechnological and Clinical Innovation

Advancements seen in several areas of clinical technology– Genetics, Genomics, and Genome Technology– Stem Cell Research– Diagnostic Technology - Molecular Diagnostics and Personalized

Medicine, Imaging Technology– Therapeutic Technology – Molecular Pharmacology, Radiation

Therapy– Robotics and Surgical Technology - Laparoscopic Surgery,

Minimally Invasive Surgery, Robotics (The Da Vinci System)While contributing to a higher quality of care, advances in pharmaceutical (e.g., Purple Pill), surgical, and management technology (e.g., EHRs) may drive up healthcare costs

61

Clinical Advancements




Changes in Technology are driven by initiatives toward evidence-based medicine and value-based reimbursement that utilize quality metricsElectronic Health Records (EHR)– Significant investment required to implement– Help eliminate silos and increase continuity of care– Must meet “Meaningful Use” standards

62

Healthcare Information Technology




Used in conjunction with Computerized Physician Order Entry (CPOE)– Allows electronic ordering of lab, pharmacy, and radiology services– Goal of minimizing ambiguity, inefficiency, and errors associated with

hand-written ordersUtilizes quality metrics and clinical data to facilitate patient careEHR, CPOE, and CDS integration and alignment among integrated model participants is critical to ensure benefits of HIT utilization are obtained

63

Clinical Decision Support Systems



Drivers of Emerging Trends in Alignment

Who will pay for hospital-physician alignment– Government Funds

ARRAHITECHACA financial incentives (i.e., Value-based Purchasing, ACOs, etc.)

– InsurersPay-for-Performance initiativesCommercial ACO incentivesTransition from fee-for-service reimbursement models

– HospitalsCapital Infusions

64

“No Bucks, No Buck Rogers”- Tom Wolfe


“The Right Stuff” By Tom Wolfe, New York, NY: Picador, 1979


Overview of Alignment Models

Vertical Integration: “[T]he aggregation of dissimilar but related business units, companies, or organizations under a single ownership or management in order to provide a full range of related products and services.”Horizontal Integration: “[T]he acquisition and consolidation of the organizations or business ventures under a single corporate management, in order to produce synergy, reduce redundancies andduplication of efforts or products, and achieve economies of scale while increasing market share.”In the current healthcare climate, horizontal arrangements are necessary alongside the vertical integration of condition-specific healthcare organizations and entities

65“The Capitation Sourcebook” By Peter Boland, Boland Healthcare, 1996, p. 629.


Types of Integration


Different Approaches to Managing theEntire Continuum of Care

Resistors Cost Containers True Integrators

Horizontal Integrators

Independent Practice

Associations

Physician Practice

Management Companies

Fully-Integrated Medical Groups

Vertical Integrators

Physician Hospital

Organizations

Managed Service Organizations

Integrated Delivery Systems

66

Organizational Models

“A Guide to Consulting Services for Emerging Healthcare Organizations” By Robert James Cimasi, John Wiley & Sons, Inc. 1999.



Key Strategic Considerations


Critical Requirements




Physician Integration Strategies



69

The Four Phases of Physician Integration



Implications of Alignment

70

Hospital-Physician Alignment


Benefits of Hospital-Physician Alignment


Value, either to society or to providers, must be weighed against the prospective costs

71sing Healthcare Costs May Be Impervious to Courts, Regulators” By Philip Betbeze, Media, July 1, 2011, http://www.healthleadersmedia.com/print/LED-268129/Rising-Healthcare-Costs-May-

be-Impervious-to-Courts-Regulators (Accessed 7/1/2011).




Target SpendingProjected Spending

Actual SpendingVALUE

“AC0 Model Principles,” The Accountable Care Organization Learning Network, http://www.acolearningnetwork.org/why-we-exist/aco-model-principles (Accessed 09/16/2011); ACO Toolkit, Accountable Care Organization Learning Network ; “How to Create Accountable Care Organizations,” Howard D. Miller, Center for Healthcare Quality and Payment Reform, 2009.




Regulation ImplicationFederal Anti-Kickback Statute

Current safe harbors to potentially shield from possible violations Direct employment Co-management arrangements Gainsharing

Federal Physician Self-Referral Law (Stark Law)

Compliance with the AKS and Stark may be waived, “as may be necessary,” to conduct: Any payment model for ACOs that the Secretary determines will improve the quality and efficiency of items and services furnished under the Medicare program The bundled payment/episode of care pilot

Federal Civil Monetary Penalty

HHS has provided a waiver similar to those given for Stark Law and the AKS.

Federal Antitrust Law FTC and DOJ released proposed rules governing mandatory antitrust monitoring, based on the percentage of market share an ACO has for any specific service line

Federal Tax Law Tax-exempt participants in Integrated Alignment models should be able to remain that way as long as organization furthers charitable purposes

State Regulations

State “Corporate Practice of Medicine” (CPOM) laws prohibit the practice of medicine or the employment of physicians by business corporationsA variety of care models and structures for hospital-physician relationships have been developed to comply with state statutes, which may not fit easily with the structure or goals of an integrated modelCPOM laws could prevent some organizations from hiring physicians to work directly with provider participants in managing and better coordinating the provision of health services




Demonstration projects formed under the ACA have not shown promise for lowering costs– Disease management and care coordination demonstration– Value-based purchasing demonstration

Efficiencies achieved through care coordination may offer better outcomes – Best outcomes achieved when managers are in direct contact with

physicians

Physicians and Hospitals will need to work together to overcome initial setbacks

74


Healthcare Reform Initiatives

“Lessons from Medicare’s Demonstration Projects on Disease Management, Care Coordination, and Value-Based Payment” By Lyle Nelson, Congressional Budget Office, Issue Brief, January 2012, p. 1, 4, 7.



The Future of Hospital-Physician Alignment

Healthcare reform is already driving changes in both the operational and financial aspects of healthcare enterprisesNew healthcare delivery models and payment reforms induced by the ACA necessitate hospital-physician alignment and will demand a level of cooperation never before expected of healthcare providersThe once well-defined, relatively stable business landscape of U.S. healthcare delivery now presents an unpredictable milieu ofnew provider configurations, strategies, and tacticsAdvisors should keep abreast of The Four Pillars in order to assist individuals and businesses in navigating the unique complexities of an increasingly volatile healthcare marketplace



Care Transformation Payor Perspective

Presented By:

Lisa M. McDonnel Senior Vice President

Network Strategy & InnovationUnited Healthcare

[email protected]


Confidential Property of UnitedHealth Group. Do not distribute or reproduce without express permission of UnitedHealth Group.

Network Strategy & InnovationA shift toward increased collaboration between payors and providers, outcome-based payment and new benefit design is driving innovation in payment models and delivery system configuration.

We are developing and implementing a suite of value-based incentive programs that reward care providers for improvements in quality and efficiency.

We are supporting delivery systems as they become more integrated and accountable for cost, quality and experience outcomes.

Alignment across our Network, Product and Clinical innovations allows us to increase value for customers and consumers.

Payment Reform StrategyPayment Reform Strategy

Delivery System StrategyDelivery System Strategy

Aligned Product StrategyAligned Product Strategy


Value-based Continuum

Leve

l of F

inan

cial

Ris

k

Degree of Provider Integration

Fee-for-service

Performance-based Contracts (PBC)

Bundled/Episode Payments

Shared Savings

Shared Risk

Capitation

Capitation + PBCOur modular set of value-based payment models align with a

provider’s risk readiness.



Payment Reform Strategy



Delivery System Innovation


Proprietary Information of UnitedHealth Group. Do not distribute or reproduce without express permission of UnitedHealth Group.

Accountable Care Dynamics• The overwhelming majority of potential accountable care / shared risk partners

are led by hospitals and/or health systems

• Of those, there are two types of ACOs emerging:

– Those that are employing physician practices to capture volume and protect their revenue stream vs. becoming truly accountable

– Transformative players who want to be part of an accountable care solution targeting quality and cost improvements

Our Partners

ACO Criteria for Success– Physician leadership with clear, unambiguous governance– Robust end-to-end clinical programs based on evidence-based

guidelines– Ability to coordinate care across all care settings– HIT that can identify missed opportunities, inefficiencies and can

report on quality, cost and physician performance– Disciplined financial accounting and systems– Mechanisms to distribute funds to providers based on

performance– Ability to manage and willingness to accept risk– Tools for patient activation and engagement


Proprietary Information of UnitedHealth Group. Do not distribute or reproduce without express permission of UnitedHealth Group.

How United Supports ACOs

Reduce Medical Costs/Trend

• Membership (volume, products, multiple lines of business)• Contracting evolution based on provider readiness: (Performance-

based contracting → shared savings → Risk sharing)

• Comprehensive performance measurement and reporting

• Member empowerment strategies including benefit plan incentives

• Clinical consultation to help improve performance

• Robust suite of tools offered by Optum including HIT

• Mechanism to administer incentive programs

• Physician and patient portals; transparency tools

• Option to apply ACO to the delivery system’s employee lives as a

means of gaining experience and lowering their own healthcare costs


Alignment Drives Value

High Quality

Low Cost

VV

AA

LL

UU

EE

Care Management Programs

Transparency and Premium Designation Program

High Performing Preferred Networks

Value-based Benefits

Value-based Contracting

Integration across our Network, Product and Clinical Programs and Innovations Drives Value for our Customers and Consumers.


Q&A Session

Larry Vernaglia, Foley & Lardner – [email protected]

Paul Keckley, Deloitte - [email protected]

Theodore A. Praxel, Marshfield Clinic [email protected]

Robert James Cimasi, Health Capital Consultants [email protected]

Lisa McDonnel, United HealthCare - [email protected]

Documents

April 20th Distribution Copy of Slides€¦ · discharge. – Bundled payment for eight conditions. – Payment is comprehensive, more than just medical services, also covers Qcare