Delivery System Reform The ACA and Beyond:

ChallengesStrategiesSuccesses FailuresFuture

Arnold EpsteinMSU 2018 Health Care Policy Conference

April 6, 2018

The Good Ole Days

2

Centers for Medicare & Medicaid Services

Per Capita National Healthcare Expenditures2000-2014

5300

6500

79008700

9650

3000

4000

5000

6000

7000

8000

9000

10000

McGlynn et al reviewed charts of 6,712 patients in 12 American Cities

4

Patients received the proper diagnosis and care only 55% of the time

McGlynn, et al, N Engl J Med 2003

Overuse, Underuse

and Misuse of Services

45%

Recommended Care55%

Medical Error is the 8th Leading Cause of Death

Who is the Culprit?

• Unfettered Fee-for-Service• Fragmented, uncoordinated care• Inadequate competition• Excessive competition• Inadequate incentives for patients

Evolution in the Health Care Delivery System

Traditional Care

Characteristics of Care Fragmented Care Producer Centered

Payment and Policies Fee-For-Service Payment

Systems

Characteristics of Care Coordinated Care Patient-centered

Payment and Policies Episode-based payments

Alternative payment models Incentives for quality—value based

payments

Evolving future state

The delivery system is moving from fragmented quantity-based care towards coordinated value-based care

Affordable Care Act—2010 (ACA)

8

The ACA is Not Just About Coverage Expansion

9

Affordable Care Act

Insurance Market Reform

Coverage Expansion

Medicaid Marketplace

Delivery System Reform

Delivery System Reform Through the ACA (CMMI)

• Changing Payment Systems– Hospital Readmissions – Value Based Purchasing

• Holding Providers Accountable – Accountable care organizations ACOs – Bundled Payments for Care Improvement (BPCI)

• Tools to Improve Care – Incentives for HIT – Technical Assistance– Patient Centered Outcome Research Institute (PCORI)

10

ACA Programs

• Hospital Readmission Reduction Program

• Hospital Value Based Purchasing

• Accountable Care Organizations

• Bundled Payments for Care Improvement

11

Hospital Readmissions Reduction Program (HRRP)

• Established by the ACA (2010), Penalties initiated FY 2013

• Up to 3% penalty for high readmission rate (“excess” readmissions)

• Initially three conditions: AMI, pneumonia, heart failure

• Roughly two thirds of hospitals penalized each year

Did the Hospital Readmissions Reductions Program (HRRP) Catalyze Changes in Behavior

and Lower Readmissions?

Hospital Readmissions Have Declined Since the ACA

14

21.5%

17.8%

15.3%

13.1%12%

13%

14%

15%

16%

17%

18%

19%

20%

21%

22%

Read

miss

ion

Rate

Trends in Readmission within 30 Days of Discharge

HRRP* Conditions (heart attack, heart failure,

pneumonia)

Other Admissions

Affordable Care Act Passed HRRP Penalties Began

*HRRP: Hospital Readmissions Reduction Program. Heart attack, heart failure, and pneumonia were used in the program beginning in October 2013. Chronic obstructive pulmonary disease and hip and knee replacement were added in October 2015 and are not included in this graph.Zuckerman et al, N Engl J Med, 2016

What Are the Worries?

15

Comorbidity Count Increased in HRRP Hospitals After Start of the HRRP in April 2010

Source: Ibrahim et al. JAMA Internal Medicine 2017.1/08 to 4/10 vs. 4/10 to 12/14

63% of the Reduction in Risk-Adjusted Readmissions After HRRP Was Due to Increases in Comorbidities

Hospitals With More Minorities, Less Educated and Poorer Patients are More likely to be Penalized?

Barnett et al., JAMA IM 2015. Courtesy Ashish Jha

6.3%

20.9%23.4%

16.0%

30.4%

37.1%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Percentage Black Less than High School Diploma Lowest Quartile of HouseholdIncome

Low readmission rate hospital High readmission rate hospital

ACA Programs

• Hospital Readmission Reduction Program

• Hospital Value Based Purchasing

• Accountable Care Organizations

• Bundled Payments for Care Improvement

19

Hospital Value Based Payment (HVBP, formerly known as P4P)

• Established in FY 13

• Budget Neutral: 1% of Medicare payment going to 2% in FY 17

• Broad set of quality metrics

– Clinical Process (5%):

– Patient experience (25%)

– Outcomes (25%) e.g. CHF mortality

– Safety (20%) e.g. Hospital acquired infections

– Efficiency (25%)

Has Hospital VBP Been Successful in Improving

Quality?

Ryan AM et al. N Engl J Med 2017;376:2358-2366.

Standardized Clinical-Process and Patient-Experience Performance among Matched Exposed and Matched

Control Hospitals, 2008–2015.

Ryan AM et al. N Engl J Med 2017;376:2358-2366.

30-Day Risk-Standardized Mortality among Hospitalized Patients With Acute Myocardial Infarction (MI), Heart Failure, or Pneumonia in

Exposed and Matched Control Hospitals, 2008-2014.

What About Unintended Consequences?

Unintended Consequences: Penalizing Hospitals Caring for Indigent Patients

0.06%

-0.02%-0.03%

-0.10%-0.10%

-0.08%

-0.06%

-0.04%

-0.02%

0.00%

0.02%

0.04%

0.06%

Lowest DSH Low DSH Medium DSH High DSH

Net

VBP

Bon

us /

Pen

alty

Jha, Online Blog, 2014

ACO Programs

• Hospital Readmission Reduction Program

• Hospital Value Based Purchasing

• Accountable Care Organizations

• Bundled Payments for Care Improvement

26

Accountable Care Organizations (ACOs)

• Groups of providers that take responsibility for care of a population

• If medical expenditures are below the benchmark providers get a share of the savings; if above the benchmark may have to pay a penalty

• Financial incentives for meeting various quality standards• Medicare Shared Savings Program and Pioneer established by the

ACA

How are ACOs doing?

The Medicare Shared Savings Program is Growing

15-20% of Medicare beneficiaries is in an ACO

146

252

366

424477

0

100

200

300

400

500

600

2012 2013 2014 2015 2016

Medicare Shared Savings Program(Almost all one sided risk)

Quality Results- positive ACOs that reported in both 2013 and 2014 improved average

performance on 27 of 33 quality measures

Financial Results- mixed to weakly positive In 2015: 203 ACOs (52%) held spending $1.56 billion below their

targets 189 ACOs (48%) spent more than their targets by 1.13 billion Initial Savings to CMS $429 million, cost CMS shared savings

$645 million, Net impact to CMS: loss of $216 millionSource: Ashish Jha Blog, August 2016; CMS fact sheet 2015

ACOs in the program for longer are doing better(2015 Data)

Net Per Capita SavingsInitial Year

2015

2014

2013

2012 $46

-$60

-$83

-$33

ACA/CMMI Program

• Hospital Readmission Reduction Program

• Hospital Value Based Purchasing

• Accountable Care Organizations

• Bundled Payments for Care Improvement (BPCI)

32

Bundled Payments for Care Improvement Initiative is Sizeable

33

The bundled payment model targets 48 conditions with a single payment for an episode of care

In the most popular version hospitals or physician group practices are accountable for initial hospitalization and all care received in the following 90 days and share in any gains or shortfalls Provides incentives for quality of care as well

More than 2000 organizations participating as awardees or episode initiators by July 2015

* Current until July 2015 Source:CMS Fact Sheet, August, 2015

Despite Little Information on BPCI, It Has and Will be Expanding

• Preliminary evaluation by the Lewin group examined 11 of 48 conditions and found savings for one: total hip or knee replacement.

Nonetheless• Mandatory bundle for total joint replacement began in 8

states in April, 2016• New version of voluntary BPCI due to start in October, 2018

for 27 Conditions and 3 procedures

34

To Summarize---The ACA and Other Forces Kindled Lots of Activity

• Some of it seems helpful• Several programs show promise• Further adjustments and additional time may help• Overall is it winner—at this point, not so clear• No home runs yet

35

35

35

B-

5951

57 58 6052

72

90

107

88100

112102

0

20

40

60

80

100

120

Hospital Mergers and Acquisitions, 2004-2016

Source: American Hospital Association, Modern HealthCare

The Delivery System is Consolidating

76.1%

53.2% 50.8% 47.1%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

1983 2012 2014 2016

Percentage of Physicians Who Were Owners of Their Practices

Percentage ofPhysicians whowere owners oftheir practices

Source AMA 2017 Updated data on physician practice arrangements

Independent Physicians are Steadily Disappearing

Goals for Medicare

Alternative Payment Models

FFS Linked to Quality or Value

2016 2018

20182016

Federal targets for moving towards value-based payments in Medicare FFS system

What to Expect Going Forward

• An oasis of partisan support remains for delivery system reform

• Continued evolution in payment systems with more risk to providers

• More emphasis on efficiency and costs• Further integration and consolidation• Expansion of activity to aid practice transformation

– More IT, practice facilitators, management partners• A long journey ahead

40

We Have Made Progress – But it is a Long Way to the Finish Line

41

End of Presentation

42