How Payment Reforms Can Help Achieve a

High Performance Health System

LHCO 215Dec. 01, 2011Robert Kaplan

Second National ACO CongressNovember 1, 2011

Karen DavisPresident

The Commonwealth Fund www.commonwealthfund.org

kd@cmwf.org

Payment and Delivery System Reforms that

Contribute to High Performance Health System

Accountable care organizations (ACOs) Medical homes Value-based purchasing Enhanced care coordination/chronic disease

management; bundled payment Health information technology; Beacon communities Combination strategy in innovator communities

Timeline for Payment and System Innovation

2010

ProductivityImprovement

  

Patient Centered Outcomes

Research

2011

10% Medicare Primary Care Increase

Innovation Center CMMI)

All-Payer Demos and Health Innovation

Zones

2012

Medicare SharedSavings (ACOs)

  

 Pioneer ACOs  Bundled Payment

for Care Improvement

Initiative 

 Value-based

Purchasing for Hospitals

2013

National Medicare Payment

Bundling Pilot 

 Medicaid Primary Care up to

Medicare Levels

Timeline for Payment and System Innovation-Cont.

2014

Independent PaymentAdvisory Board (IPAB)

2015

Value-based Purchasing for Physicians

   Reduce Payment for

Hospital Acquired Infections

Accountable Care Organizations

Key Elements of Success forAccountable Care Organizations

1. Strong Primary Care Foundation 2. Accountability for Quality of Care, Patient Care

Experiences, Population Outcomes, and Total Costs 3. Informed and Engaged Patients4. Multi-Payer Alignment5. Calculation of Shared Savings and Payment of ACOs6. Innovative Payment Methods and Organizational

Models7. Balanced Physician Compensation Incentives8. Timely Monitoring and Support9. Criteria for Entry and Continued Participation10. Mission

Recent ACO Development

Medicare Shared Savings Program

in ACA

Pioneer ACO Model

through CMMI

Physician GroupPractice TransitionDemonstration

Shared Savings Payments 2-3.9 percent minimumsavings threshold

1 percent minimum savingsthreshold

Minimum savings thresholdcalculated using a slidingscale based on the numberof assigned beneficiaries

Patient Assignement Retrospective; 5,000 patient minimum

Retrospective orprospective; 15,000 patient minimum except in rural areas

Retrospective based onservices by PCPs; 8,383 to 44,609 patients in original PGP demo base year

Provider ParticipationLimited to primary carephysicians; FQHCs andCAHs must partner witheligible providers

Primary care physicians,non-physician clinicians,certain specialists all eligible;FQHCs and CAHs eligible

10 large, multi-specialtygroups that participated inprevious 5-year PhysicianGroup Practice demo

Contract Period Three periods: CY2012,2013, 2014

Three periods: CY2012,2013, 2014

CY2011, 2012

Governing Board75 percent of the board must be representatives ofparticipating provider groups

More lenient More lenient

Multi-Payer Alignment More lenient50 percent of ACO revenuemust come from outcomes-basedcontracts, includingcontracts with private payers

More lenient

Source: M. Zezza, The Pioneer Accountable Care Organization Model: An Alternative to the Medicare Shared SavingsProgram, (New York: The Commonwealth Fund, forthcoming 2011).

Brookings-Dartmouth ACO Pilot Site Program: HealthCare Partners

Large medical group and independent practice association (IPA) in

Los Angeles, CA

Developing an ACO with Anthem to provide care coordination for

50,000

Anthem preferred provider organization (PPO) members

ACO is physician-owned and governed, and will include 1,000

primary care physicians and 1,700 specialists

Success factors Stable leadership Consistent emphasis on prevention and health promotion  Integrated health information technology (HIT) infrastructure Use of effective care coordination and care management Extensive experience taking on full risk capitation Solid payer-provider relationship (including active involvement in a joint

implementation committee)

Brookings-Dartmouth ACO Pilot Site: Monarch HealthCare

Large independent practice association (IPA) located in the Southern, Northern, and Coastal regions of Orange County, California

Developing an ACO with Anthem to provide care coordination and care navigation support for 25,000 Anthem PPO members in Orange County

ACO is physician-owned and governed, and will include approximately 500 of its 850 primary care physicians

Success factors Strong executive leadership Trust and transparency in partnerships   Extensive experience taking on full risk capitation  Solid payer-provider relationship (including active involvement in a

joint implementation committee)

Mercy Health System Improving Coordination Of

Care For Medicaid Beneficiaries

Improved care coordination by placing care managers in provider settings affiliated with Mercy Health System

Cost savings of $37.70 PMPM for the patient population that received improved care coordination

Rate of hospital admissions per 1,000 members per year was reduced 17 percent among treatment group; length-of-stay dropped 37 percent

Hospital Admission Rate Per 1,000 Members Per Year, Before And After Coordinated Care Management, 2008 And 2009

Mount Auburn Cambridge Independent Practice

Association

Boston-area independent practice association (IPA) forged relationships among physicians and a hospital to share in savings generated by improved quality and lower costs

High-risk case management program for patients at Mount Auburn Hospital and in the community, discharge planning, pharmacy management, referral management, utilization review, and related information services including performance reporting to physicians on utilization and quality improvement

Participating physicians encouraged to adopt a common electronic health record (EHR) system that interconnects with the hospital's clinical information system to share laboratory and radiology results

Physicians in the IPA have achieved notable results on 12 of 23 measures of ambulatory care quality on which they were rated by the Massachusetts Health Quality Partners (MHQP)

Exceed both state and national benchmarks for the care of diabetic adults, preventive care for children and adults, and appropriate use of imaging tests for lower back pain.

GRACE’ Model Leads To Better Care For Dual Eligibles

Geriatric Resources for Assessment and Care of Elders (GRACE) is an integrated care model targeting low-income seniors, many dually eligible and most with multiple chronic conditions

Utilizes in-home assessments by a team consisting of a nurse practitioner and a social worker to develop an individualized plan of care

High-risk patients enrolled in GRACE had fewer visits to emergency departments, hospitalizations, and readmissions and reduced hospital costs compared to control group

Two-year GRACE intervention saved

$1,500 per enrolled high-risk patient by the second year

Average Total Health Care Costs Among GRACE Intervention And Usual Care (Comparison) Patients In High-Risk Group, Years 1–3

INTERACT Collaborative Quality Improvement Project

Interventions to Reduce Acute Care

Transfers (INTERACT) II helps

nursing home staff identify, assess, communicate, and document changes in residents' status

Three strategies: identifying, assessing, and

managing conditions to prevent them from becoming severe enough to require hospitalization;

managing selected conditions, such as respiratory and urinary tract infections, in the nursing home itself; and,

improving advance care planning and developing palliative care plans as an alternative to acute hospitalization for residents at the end of life

INTERACT II Shows Potential to Reduce Hospital Admissions

Hospitalizations per 1,000 resident days

What’s Next? Implementation and

the Path Ahead

Strategic Implementation of Reforms

Payment models are complimentary - ACOs – Accountability of all services for an entire population, which helps ensure no cost-

shifting and overall policy goals of better health and lower total costs are being met Bundled Payments – Accountability for select services and conditions, which helps ensure

important gaps in care are addressed and specialists are included in efforts to better coordinate care

Leveraging other payment initiatives (medical home, meaningful use, P4P payments, etc) can help finance start- up costs and maximize returns on clinical transformation efforts

Need to experiment with different approaches Not sure what works best Vary with local market characteristics and provider experience with care management

Early evidence shows that most successful innovators are those with multiple initiatives

Culture Change

Early and critical step for accepting accountability Requires evolution in relationship between providers,

payers and patients  Providers and payers must move beyond adversarial negotiations around payment rates

toward collaborations for more efficient care. Not only about payment reform, but also data analytics and benefit redesign to support higher-value care.

Providers and other providers need to become better at working with each other to coordinate care – includes engaging in best practice sessions, sharing expert opinions and synthesizing patient-centered outcomes research to develop practice-changing innovations.

Providers and patients also need to work better together. Requires time to equip patients, and their care support team, with the information needed to feel confident about making efficient and effective health care decisions.

ACO movement is a great signal that the cultural change is happening

Will not be easy, there will be failures as well as success Need strong commitment and vision

A New Era in Health Care Delivery:How Payers and Providers Can Help

The U.S. has passed historic legislation that will help usher in a new era in American health care

Will make major strides toward achievement of goals of affordable coverage for all while slowing cost growth

 However, realizing the potential is not assured Oversight and system of tracking health system performance will be needed Effective implementation is a big hurdle Stakeholders need to work together toward success of reform  Learning rapidly as innovation is tested and experience is gained and applying that

knowledge to spread successful innovation are essential  

Providers and payers to come together and help make it work Active participation in innovative payment pilots

ACOs: California Style

ACO Congress

John E. Jenrette, M.D.Chief Executive Officer

Sharp Community Medical GroupNovember 2, 2011

Accountable Care Organizations (ACO) Working Definition

A provider led organization whose mission is to manage the full continuum of care and be

accountable for the overall costs and quality of care and be accountable for the overall costs and

quality of care for a defined population

Goals Of Accountable Care Organizations

Reduce, or at least, control the growth of health care costs

Maintain or improve health of a population Improve in both clinical quality and patient

experience and satisfaction

Opportunities for Improvement

Improved prevention and early diagnosis  Reductions in unnecessary testing, procedures, and referrals Reductions in preventable Emergency Department visits and

hospitalizations  Reductions in infections and adverse events in the hospital  Reductions in preventable readmissions  Use of lower cost treatments, settings, and providers

CMG Care Transformation ModelClinical and Operational Systems

Accountable Care Organization

Medical Group& Enterprise Level Activities

Advanced Primary Care Under

Patient-Centered Medical Home

Patient & Family

SMG Care Transformation Model Clinical Systems

Accountable Care organizationSkilled Nursing Facilities Hospitals-SNFists -Service Line Integration-On-site Case Management -Medical Staff Alignment-Efficiency Rating Systems -Incentives for Efficiency “Preferred Facilities” -Quality (SCIP, Leap Frog)

-Safety

Ancillary Services-Free-Standing ASC & Diagnostic Testing Centers

Home Care-Home Safety-Post Discharge visits-Home Health

Hospice-Home Palliative Care

-Outcomes & Evidence Based Medicine-Call Coverage

Medical Group & Enterprise Level Activities

-ER Avoidance Programs-Urgent Care-End of Life (Palliative Care) -Transition of Care

-Coordination of Behavioral & Mental Health Services

DME-Integration & Oversight by Care Management

-PCP/SCP IncentivesPay for PerformanceHospitalist, Post Discharge follow-up

-Care management (Acute, Chronic, Inpatient, SNF)-Health Coaching (Shared Decision Making)

Advanced Primary Care Under patient-Centered Medical Home

-Prevention & Wellness-Point of Care Analytics & Clinical Decision Support -Gaps in Care-Population Mgmt & chronic Care Prescribing Program

-Cost Effective Medical Mgmt & Utilization of Services (SCP, Ancillary)-Access, Same Day Appointments, e-Visits-Patient Satisfaction & Loyalty-Provider & Office Staff SatisfactionPatient & Family

-Personal Health Record-Patient Portal-Health Risk Assessment-Patient Engagement & Activation

SMG Care Transformation ModelOperational Systems and Structure

Accountable Care organization

-Medical Group-Hospital -Governance & Legal Structure “Systemness” & Network -Financial Incentives & Alignment Development (Shared Savings, Bundled payments,

Partial Cap, Full Cap)

-Contracting (Evaluate Ancillary Services; SNFs,

Home Care-Facility Evaluation (ASCs)

-”Sales” & Marketing-Strategic Planning

-Measurements Sets & TargetsHealth Plan role for Incentives, Payment Models and Data Exchange

Medical Group & Enterprise Level Activities

-Clinical Support Infrastructure of Care Mgmnt Teams & Programs-IT Infrastructure (HER, Care Mgmnt Platform Analytics . Clinical Decision support, E-Prescribing, Predictive Modeling tools)

-Network Development-Contracts (PCP/SCP)-Participation Criteria,Report Cards,Monitoring & Corrective Action Plans-Health Care TeamEducation

Advanced Primary Care Under patient-Centered Medical Home

-Work flow Redesign & Process Changes-Education of Staff, PCPs, Team-Measurement Sets, Dashboards

-Point of Care analytics-Job Descriptions for Additional Staffing-Adequate primary Are Base-Financial Modeling

Patient & Family-Value Based Benefit Design-Benefit and Product to Steer Patients-Enrollment in Model (Attribution)-Communication Strategy

-Financial Incentives-Measurement Sets & Operational Tools

Pioneer ACO

3 year agreement, can be extended 2 more 15,000 Medicare FFS beneficiaries Must demonstrate ability to take risk “hit the ground running” 30 pilots June 28 – Letter of Intent August 19 – Application September 19 – Interview at HHS

Health Information Technology

Coordination of Care Reminders/outreach Team/care plan coordination / transitions

of care Referral management Diagnostic results management Shared decision support

Access Secure messaging Care teams Remote monitoring PHR/EHR access Patient engagement

tools

Payment Reform Efficiency measurements Pay for performance and

quality Gain sharing contribution

tracking Risk and acuity

measurement Predictive modeling Comparative effectiveness

analytics

Using Individualized Guidelines to Op4mize Cost and Quality for

Accountable Care Organiza4ons

David Eddy, MD PhD Founder and Chief Medical Officer Emeritus Archimedes

Keys to success for ACOs

ACOs need to optimize health outcomes while keeping costs within a defined budget

 A significant portion of the savings must come from reducing preventable hospitalizations

 Preventable hospitalizations are responsible for one out of every 10 health care dollars spent

Preventing these hospitalizations will require: Physicians identifying and delivering the right preventive treatments for the right patents Activating patents to take the suggested treatments, based on their preferences

The current situation

Physicians decisions determine how the vast majority of healthcare dollars are spent

Which people get which tests and treatments These decisions are determined largely by population- ‐based

guidelines Example: JNC 7 guideline for hypertension

“Treat if SBP > 140” “If have diabetes or renal failure, treat if SBP > 130”

To improve the efficiency of healthcare we need to improve guidelines

Fortunately, this is possible

There are inherent limitations in how guidelines are currently designed and applied

Focus on one variable at a time (e.g., BP) Understate the importance of other risk factors

Use sharp thresholds (e.g., SBP > 140) Ignore the continuous nature of risk factors

Are qualitative, not quantitative Assume all guidelines are equally important No information to aid MD-patent decision making

It is possible to do better

It is possible to do better

“Individualized Guidelines” Take into account all the important information about a patent Consider all the risk factors simultaneously Take into account the continuous nature of risk factors Consider all potential treatments simultaneously One- ‐by- ‐one and in all combinations Develop a prioritized list, in order of expected Benefit Can identify thresholds to achieve desired objectives for quality and cost  Present information on actual risks and benefits to each patient

                  

                  

 Individualized guidelines can improve quality

and lower costs                                      

Example: JNC- ‐7 guideline for blood pressure Treaperson’s BP > 140/90 If they have t if a diabetes or chronic kidney disease, < 130/80

Use ARIC population “Atherosclerotc Risk In Communities” 12,000+ people age 45- ‐65 at start of observation Followed for 12+ years 2710 eligible for new hypertension treatment at start Recorded MIs, strokes and other outcomes

Can use observed MIs and strokes to determine benefit of different management strategies for hypertension

Superiority of Individualizedguidelines

Absolute magnitudes of events prevented and costs saved depend on many factors

Risk of CVD in population Electiveness of BP treatments Cost of hypertension medications, visits, tests Cost of treating MI’s strokes

But relative superiority of Individualized guidelines is not sensitive to these

Approximately 45% greater benefit at same cost Approximately 65% greater savings at same benefit

Requirements for using individualizedguidelines

Electronic access to person- ‐specific data Basic data every physician already uses

Risk/benefit calculator Spans all the important risk factors, treatments, and outcomes Accurately calculates risks, and effects of treatments

Incentive to both increase quality and control costs Accountable Care Organizations are ideally positioned to

implement individualized guidelines

Four ways ACOs can use Individualized guidelines

Identify individuals who will benefit considerably from treatment but are currently missed

 Identified by traditional guidelines, but currently untreated Give physicians and patents quantitative information about risks

of adverse events and benefits of treatments Identify priorities for outreach programs Calculate incentives for physicians and patents

Bottom line for users

Improved health outcomes For every 1 million members, an estimated 1400 heart attacks and strokes

would be averted annually Reduced costs

An estimated $98 million saved annually

Summary and conclusions

Traditional guidelines have served us well Evidence- ‐based Easy to remember, use, explain, and apply Appropriate for the technology of the time

Guidelines were new, records were all on paper But they have limitations Now possible to move to next generation

Better data, information systems, validated mathematical models

ACOs can use individualized guidelines to help improve outcomes and reduce costs

Disclosure

Archimedes is a healthcare modeling company based in San Francisco

Archimedes is a subsidiary of Kaiser Permanente I will describe

An application developed by Archimedes (IndiGO) An implementation of IndiGO by Kaiser Permanente An evaluation by KP Care Management Institute

The application is available to any health system, health plan, or medical group