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Population Health: The journey to value-based care and payment models
Seth Edwards, Director
August 18, 2016
©2016 Premier Inc. Proprietary and confidential
AGENDA
Introduction / purpose
The burning platform
The evolving marketplace
Positioning your organization for success
Questions
INTRODUCTIONS / PURPOSE
4
SCALE
Alliance of ~3,600 hospitals – 74% of U.S. community
hospitals – and ~120,000 other providers
Integrated clinical, financial, operational data – insights
into ~40% of U.S. health system discharges
Approximately $44 billion in supply chain spend
Manage ~2,000 contracts from ~1,100 suppliers
ALIGNMENT
Members own ~68% of equity*
10 health system board members
Premier field force embedded in member hospitals
COMMITMENT
Member owner average tenure ~15 years (80% at 10+)
Members view Premier as strategic partner
CO-INNOVATION
Co-develop solutions with members
Committees composed of ~163 member hospitals
~1,200 hospitals in performance improvement
collaboratives Note: Data as of June 30, 2015.
Premier is a provider-driven healthcare performance improvement company. We co-innovate
solutions with our members to reduce costs, improve quality, and produce better patient
outcomes.
TRANSFORMING HEALTHCARE TOGETHER
4
THE BURNING PLATFORM
BURNING PLATFORMDRIVERS CREATING URGENCY FOR POPULATION HEALTH MANAGEMENT
• Insurers and area providers aligning with independent physicians
• Exclusive contracts precluding partnerships with health system
Competition, Mergers & Acquisitions, Narrow Networks
• Employment of providers is expensive
• Large physicians groups or independent providers want the choice to participate (or not) in population health management activities while remaining independent
Provider Alignment
• MSSP numbers growing rapidly
• PCMH™ numbers growing
• Physician reimbursement shift to VBP
• MACRA and alternative payment models
• CMS’ CCJR and OCM programs
Health Care Reform Progression
(beginning with CMS and Commercial is expected to follow)
HEALTHCARE SPENDING IS INCREASING
NATIONAL HEALTH EXPENDITURES PER CAPITA, 1960-2010
Notes: According to CMS, population is the U.S. Bureau of the Census resident-based population, less armed forces overseas.
Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2010; file nhegdp10.zip).
5.2% 7.2% 9.2% 12.5% 13.8% 14.5% 15.4% 15.9% 16.0% 16.1% 16.2% 16.4% 16.8% 17.9% 17.9%
NHE as a Share of GDP
MEDICARE ENROLLMENT CONTINUES TO GROW
48.3 50.355.3
63.7
72.8
80.685.2
0
10
20
30
40
50
60
70
80
90
2011 2012 2015 2020 2025 2030 2035
Projected Medicare Enrollment
Projected Medicareenrollment (inmillions)
Source: 2012 Annual Report of the Boards of Trustees for the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds
THE CHANGING HEALTH CARE ENVIRONMENT
Population Health
ManagementValue-Based Care/Payment
VALUE EQUATION
WHAT IS…Population Health Management
• …managing the care for a defined set of individuals with the goal of improving the quality, efficiency and patient satisfaction (the Triple Aim™) and lowering the cost trend for the overall group.
Value-Based care (VBC)
• …health care that is based on the value a service provides rather than volume of services.
• Using evidenced-based care while taking into account patient preferences
Value-Based payment (VBP)
• …a fundamental shift from fee-for-service, which is volume based, to payments related to outcomes, or the value provided.
• It is a strategy used to promote quality and value of health care services with a goal to slow the total cost of care. Examples of such payments include pay-for-performance programs that reward improvements in quality metrics; bundled payments that incentivize reducing avoidable complications; shared savings models that reward better care and lower per capita cost, global trend rate targets that tie upside and downside payments to specific quality scorecards in addition to actual to target cost trend rate.
BETTER CARE. SMARTER SPENDING. HEALTHIER PEOPLE
Encourage the integration and coordination of clinical care services
Improve population health
Promote patient engagement through shared decision making
Volume
to
ValueTrack 2:
Alternative payment models*
Track 1:
Value-based payments 85% of all Medicare payments 90% of all Medicare payments
30% of all Medicare payments 50% of all Medicare payments
2016 2018
Focus Areas Description
Incentives
Promote value-based payment systems
– Test new alternative payment models
– Increase linkage of Medicaid, Medicare FFS, and other payments to value
Bring proven payment models to scale
Care Delivery
Information Create transparency on cost and quality information
Bring electronic health information to the point of care for meaningful use
Fee-for-service
•Paid for each service they give through a percent-of-charges or a fee schedule.
Pay for performance
•An adjustment to payment for high quality of care, and occasionally downward adjustments for lower quality care.
Shared Savings
•Provider reimbursed using FFS, measured against a benchmark, and paid a percentage of the savings
•Usually includes a quality target threshold.
Case rate
•Combines all of the hospital services related to a single admission.
Bundled Payments
•Combines payments for an episode of care, usually a specific DRG, and extended to include time prior to admission and post discharge.
Global capitation
•Paid a capitation (or fixed) rate for each member they agree to services
VALUE-BASED CARE AND PAYMENT MODELSDEVELOPMENT OF A COMMON UNDERSTANDING OF THE PRINCIPLES
Source: Society of Actuaries. “Provider Payment Arrangements, Provider Risk, and Their Relationship with the Cost of Health Care.” 2015. Access via web here.
VALUE-BASED REIMBURSEMENT ACROSS PAYMENT SILOS
Tra
ck
2T
rac
k 1
Traditional Payment Models
Physician Outpatient
Hospital and
ASCs
Inpatient
Acute Care
Long Term
Acute Care
Inpatient
Rehab
SNFs Home
Health
Care
RBRVS APC MS-DRG MS-DRG RICs RUGs HHRGs
FY2013 PFS-Value modifier;FY2015 - P4R;
FY 2019 – MIPS
P4R in FY2013; ASC VBP impl.
plan submitted to Congress on
4/18/11
VBP commenced
10/1/12
P4R in FY14: VBP test pilot by
1/1/16
VBP test pilot by 1/1/16
VBP starting 10/1/18
VBP impl. plan sent to
Congress3/12. CMS proposes 2016 start
Alternative Payment Models
Post-Acute Care Episode Bundling
Acute Care Bundling
Medical Home
Acute and Post-Acute Care Episode Bundling
Accountable Care Organizations
(2014) (2015) (2008) (2015)
5-STAR RATINGS ROLLOUT ACROSS MEDICARE PAYMENT SILOS
Health Inspections
Staffing
Quality Measures
2008Nursing Home Compare
Performance scores on each measure
Group practices 100+
Expands to all eligible professionals in 2016
2014Physician Compare
HCAHPS Star Rating- 11 measures
Overall Hospital Quality Star Rating- 62 measures (+April 2016)
2015Hospital Compare9 quality measures
2015Dialysis Compare
9 quality measures
HHCAHPS (+Jan 2016)
2015Home Health Compare
BENEFICIARIES MOVING TO MA PLANS WITH HIGH QUALITY SCORES
14%9% 5% 1%
70%
59%56%
43%
16%
19%28%
43%
9% 9% 9%
2009 2012 2013 2014
Medicare Advantage (MA) Enrollment Rating Distribution
2-Star 3-Star 4-Star 5-Star
4 or 5 Stars 16% 29% 37% 55%
2 or 3 Stars 84% 71% 63% 45%
National Policy Developments
• HHS Announcement – Better Care. Smarter Spending. Healthier People
• Next Generation ACO Model
• MACRA implementation
• Oncology Care Model (OCM) participants announced 4/2016 (7/2016 start date)
• Continued evolution of MSSP
• CJR required bundled payment started 04/2016
• Additional bundles / expansion of BPCI?
State Reform Developments
• SIM state planning grants (VA, ID, MI, WV, etc.)
• Expansion of private Medicaid model (IA, PA, AR, UT)
• Episodes of Care model (AR, TN, OH)
• ACO Model (OR, CO, AL, and proposed for NC)
• DSRIP Model (TX, CA, NJ, NY)
GOVERNMENT DEVELOPMENTS
INPATIENT VALUE-BASED PURCHASING (VBP)
FY 2013
FY 2014
FY 2015
FY 2016
FY 2017
1% 1.25% 1.5% 1.75% 2%A percent of inpatient
base operating
payments are at risk
based on quality and
efficiency metric
performance. This
amount increases
from 1 % up to 2% in
2017.
25%
5%
25%25%
20%
FY 2017 Finalized Revision• Clinical Care
• Process (5%)
• Outcomes (25%)
• Patient and Caregiver Experience
• Efficiency and Cost Reduction
• Safety (20%)
Domains
EFFICIENCY MEASURE: MEDICARE SPENDING PER BENEFICIARY
Total risk-adjusted spending per beneficiary between 3 prior to inpatient admission and 30 days post discharge
Hospital’s Medicare spending per beneficiary
National Median Medicare spending per beneficiary
Physician testing
3 days priorHospital
Readmissions post-acute care
30 days post discharge
Implication: Hospitals must use their leverage to reduce spending
outside of the hospital
$
MEDICARE ACCESS AND CHIP REAUTHORIZATION ACT OF 2015
The formula does not incentivize high-quality, high-value care
Most of $170B in ‘patches’ financed by
health systems
SGR creates uncertainty and disruption for
physicians and other providersOn 3/26/15, the House passed H.R. 2 by 392-37
vote.
On 4/14/15, the Senate passed the House bill by
a vote of 92-8, and the President signed the bill.
Since 2003, Congress has passed 17 laws
to override SGR cuts
Created in 1997, the SGR capped
Medicare physician spending per
beneficiary at the growth in GDP
MACRA REFORM TIMELINE2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Permanent repeal of SGR
Updates in physician payments
APM participating providers exempt from MIPS; receive annual 5% bonus (2019-2024)
Merit-Based Incentive Payment System (MIPS) adjustments 2019
+/-4%
2020
+/- 5%
2021
+/- 7%
Tra
ck
1
2022 & beyond
+/- 9%
2018
4%
PQRS pay for reporting2015
-1.5%2016 & beyond
-2.0%
Meaningful Use Penalty (up to %)2015
-1.0%
2016
-2.0%
2017
-3.0%
2018
-4.0%
Value-based Payment Modifier 2015
+/-1.0%
2016
+/-2.0%
2017
+/-4.0%
MIPS exceptional performance adjustment; ≤ 10% Medicare payment (2019-2024)
2026
0.5% (7/2015-2019) 0% (2020-2025)
0.75% update
2017
-3.0%
2018 +/- 4%
Tra
ck
2
Measurement period
Measurement period
0.25% update
MIPS OVERVIEW
50%
10%
15%
25%
45%
15%
15%
25%
2019
30%
30%
15%
25%
Quality — PQRS Measures, PQIs (Acute and Chronic), Readmissions
Resource use — MSPB, Total Per Capita Cost, Episode Payment
Advancing care information — Meaningful Use Objectives and Measures
Clinical practice improvement activities — Expanded access,
population management, care coordination, beneficiary engagement, patient safety, and
Alternative payment models.
• Sets performance targets in
advance, when feasible
• Sets performance threshold at
median.
• Seeking input on how to consider
improvement in year 2
Merit-Based Incentive Payment System (MIPS) adjustments 2019
+/-4%
2020
+/- 5%
2021
+/- 7%
2022 & beyond
+/- 9%
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Measurement
period
MIPS exceptional performance adjustment; ≤ 10% Medicare payment (2019-2024)
2020 2021
Jan 1- Dec 31, 2017 is the
performance period for
2019 payment
5% BONUS FOR ADVANCED APMS
Inclusion in
Advanced APMs
triggers exclusion
from MIPS.
Advanced APM participating providers exempt from MIPS; receive annual 5% bonus (2019-2024)
.75% update (2026 ) T
ra
ck
2
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
CMS Innovation
Center modelMedicare ACO
Health Care Quality
Demonstration
Demo required by
federal law
1 | Submit MIPS comparable measures,
2 | Use certified EHR technology, and
25%
50%
75%
2019-20
2021-22
2023 +
Medicare only
Medicare* and all-payer
Medicare* and all-payer
• Total payments exclude payments made by the Secretaries of
Defense/Veterans Affairs and Medicaid payments in states without
medical home programs or Medicaid APMs.
* Minimum of 25% of Medicare payments must be in APM, unless partial
qualifying at 20% with no 5% bonus and a choice of MIPS
Threshold of payments in an Advanced APM
Measurement periodGreater update vs.
Track 1 program
3 | Bear more than “nominal”
financial risk for losses
Advanced Alternative Payment Models (APM) Entities must:
Expanded medical
home model
Alternative Payment
Models (APM) are
defined in MACRA as:
THE ACCOUNTABLE CARE ORGANIZATION MODEL
Accountable Care Organizations (ACOs) are groups of doctors, hospitals, and other health
care providers, who come together voluntarily to give coordinated high quality care to patients.
Core Components:
• People Centered
Foundation
• Patient Centered Medical
Home
• High Value Network
• Population Health
Informatics & Technology
• Governance & Operations
• Payor Partnerships
Governance & Operations
Population Health
Informatics and Technology
Patient Centered
Medical Home
High Value
Network
Pharmacy
Behavioral
Health
Ancillary
Providers
Long-term Care Public Health
Agencies
Hospice
Hospitals
Post-acute
Care
Specialists
Payor
Partnerships
Insurers
Employers
States
CMS
MEDICARE SHARED SAVINGS INITIATIVES CONTINUE TO GROW
Medicare Shared Savings Program
• 434 ACOs, over 180,000 physicians serving 7.7 Million beneficiaries
• 2016 New participants – 100
• 2016 Renewing participants – 147 (75 ACOs either did not renew, merged or joined a different model)
• $656 million in shared savings earned across all performance years
Next Generation ACO model
• Started in 01/2016 with 21 participants.
• Currently 18 participants
ACO Pioneer program
• 9 ACOs currently participating
• 20 ACO Pioneers in 2014 cared for 622,265 beneficiaries
• Total savings across all performance years of $304 million
Medicare ACO programs in total
• Nearly 8.9 million beneficiaries served (an increase of over 1 million new beneficiaries added for PY2016)
• A total of 477 ACOs across SSP, Pioneer ACO Model, Next Generation ACO Model, and Comprehensive ESRD Care Model
• 64 ACOs are in a risk-bearing track including SSP, Pioneer ACO Model, NGACO Model , and Comprehensive ESRD Care Model
• Pioneer and MSSP generated a total of $411 million in savings in 2014
BUNDLED PAYMENT GROWING ACROSS THE COUNTRY
Over 7,000 organizations exploring CMS’ BPCI
CMS Oncology Bundle
IPPS Proposed Rule-CMS Oncology Bundle
IPPS Proposed Rule-Expanding BPCI
Mandatory CCJR Bundle
Diane Black- Permanent Voluntary BP Program
Expanding BP
National Market
Private Market
Commercial payers
adopting BP
arrangements
Employers are
entering BP
arrangements
directly with
providers
State
• Arkansas, Tennessee,
Ohio Medicaid
Bundles
State Market
Medicaid Bundles
Arkansas
Tennessee
Ohio
• Testing bundled payment for hip and knee replacement with hospitals as the only initiator
• DRGs 469 and 470
• 90-day episode
• Medicare Part A & B services
• Mandatory participation for a broad cross-section of hospitals within select geographic areas (67 MSAs)
• Five-year performance period began April 1, 2016
• Promotes high quality care and financial accountability
• Expected Medicare savings of $343M over 5 years
COMPREHENSIVE CARE FOR JOINT REPLACEMENT (CJR) MODEL
TREND: FEE FOR SERVICEPOPULATION MANAGEMENT
23.6% 24.2%25.6% 27.5% 29.1% 30.9% 33.3%
0.0% 0.4%6.5% 7.7% 9.2%
14.4%15.6%
76.4% 75.4%
67.9%64.8%
61.7%
54.7%
51.1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2010 2011 2012 2013 2014 2015 2016
MA
ACO
Trad
THE NEW WAVE OF STATE REFORMS
Washington
Oregon
California
Nevada
Idaho
Montana
Wyoming
ColoradoUtah
New MexicoArizona
Texas
Oklahoma
Kansas
Nebraska
South Dakota
North Dakota Minnesota
Wisconsin
Illinois
Iowa
Missouri
Arkansas
Louisiana
Alabama
Tennessee
Michigan
Pennsylvania
New York
Vermont
Georgia
Florida
Mississippi
Kentucky
South Carolina
North Carolina
Maryland
Delaware
New Jersey
Connecticut
Maine
Virginia
New Hampshire
W.
Virginia
MassachusettsRhode Island
IndianaOhio
Hawaii
Only Colorado & Oregon have statewide Medicaid ACO models
Bundled payment: 3
DSRIP: 2
ACOs: 11
DSRIP & ACOs: 5
Planning Reform 15
Hospital Rate Setting 1
Commercial Health Plans
•Aetna Health / Provider Sponsored Health Plan Joint Ventures
•United Healthcare (WellMed) Primary care acquisition (over 3000 physicians)
•Proposed Aetna / Humana and Anthem / Cigna mergers
Provider Sponsored Health Plan
growth
•Inova
•Aurora
•SummaCare
•Texas Health Resources
•Sutter
•Indiana University Health Plans
Integration of delivery
systems / health plans
•Highmark Blue Cross bundled payment program
•Humana building MSO and employing primary care physicians
Regional Population
Health efforts / PHSOs under development /
Super CINs
•Delaware Valley ACO (4 Philadelphia systems)
•Maryland Advanced Health Collaborative (8 organizations)
•South Carolina Collaborative
Major employers / Employer Groups
•Pacific Business Group on Health (Centers of Excellence, ACO, PCMH)
•Boeing, Lowe’s, Walmart, etc.
New disruptive entries /
technology
•Brighton Health/ Previa
•Aledade
Retail Health Care
•CVS / Walgreens
•Aon Hewitt (private exchanges)
COMMERCIAL DEVELOPMENTS
COMMERCIAL PAYERS ARE MOVING TO VBP/C MODELS
• Anthem – 50% shared savings/risk by 2018
• Aetna – 50% shared savings/risk by 2018
• Humana – 75% of MA under value-based (with and without shared risk) by 2017
• Cigna – 50% share savings/risk by 2018
• United – Committed to VBP but did not provide specifics. Presented a payment transition strategy, which included capitated payment models.
Focus/Goal
• Anthem – Collaboration / meet you where you are
• Aetna – Provider sponsored health plans, provider partnerships & JVs
• Humana – Focus is Medicare Advantage vs Medicare FFS/MSSP
• Cigna – Prefer to provide supporting tools, data, and services and moving to arrangements with CINs/IDNs
• United – Overall focus to AC arrangements for commercial, Medicaid, and Medicare (very few CIN arrangements)
Consistent message – Each payor stated that they are aggressively
transitioning to value-based arrangements. Since 2015 each payor’s has
developed a VBP strategy and has begun to implement in selected markets.
KEY THEMES FROM OUR 2016 COMMERCIAL PAYER SESSION
Global Strategy
WHAT’S NEXT?• Growth in the Medicare Shared Savings Program/Medicare Advantage/Bundled Payment
• New rules for the Medicare Shared Savings Program (target setting)
• Shifting greater economic risk to delivery system
• Medicaid reform increasingly integrating accountable care principles
• Value-Based payment arrangements moving to outcomes based
• Impact of state insurance exchanges (such as narrow network products)
• Development/growth of private exchanges
• Continued movement from defined benefits to defined contribution health benefits
• Increased competition for primary care physicians & other providers
• Virtual office visits and “hospital in the home” model will expand/grow
• Continued movement to lower cost locations for care (home care)
POSITION YOUR ORGANIZATION FOR SUCCESS
VALUE-BASED CARE REDESIGN AND NEW PAYMENT MODELS MUST BE PACED IN TANDEM
Care Redesign
• Patient Centered Medical Home
• Clinical Integration
• Care Management
• Post-Acute Care
• Electronic Health Record
• Data analytics
New Payment Arrangements
• Care Transformation Costs
• Care Management Payment
• Shared Savings
• Episodes of Care Payment
• Global Payment
Population Health
TransformationCare redesign must not outpace
reimbursement changes
36 PROPRIETARY & CONFIDENTIAL – © 2016 PREMIER INC.
Partnership - A Clinically Integrated Network (CIN) is a partnership between physicians and the health system that is collectively committed to improving the quality and efficiency of care
delivered to the patient population it serves
Leadership - A CIN is led by physicians and often supported by infrastructure investments and professional management resources provided by the health system
Regulatory - CINs that meet criteria promulgated by the FTC can negotiate contracts directly with payors on a single signature basis on behalf of physicians and the health system
Foundational - A CIN is a foundational platform that allows physicians and health systems to prosper as the payment and reimbursement environment evolves
TRANSFORMATIONAL PLATFORM-CLINICALLY INTEGRATED NETWORK
37 PROPRIETARY & CONFIDENTIAL – © 2016 PREMIER INC.
CIN VALUE PROPOSITION FOR PHYSICIANS
Physician Led, Professionally Managed• Board and committees with physician majority and chairs
• Business, operational and financial decisions influenced by physicians
• Management support services provided/funded by health system
Ability to Enter New and Enhanced Payment Models• Contracting ability allows for unique way to engage payers
• Streamlined access to value-based payment models (shared savings/P4P)
• Incentivized fee schedules for performance, care management payments
and shared savings may be available
Access to Additional Clinical Resources• Funding available for care managers, PCMH development
• Focus on support services for high-risk, chronic/complex patients
• Support for PQRS and MACRA reporting
Robust IT Platform & Capabilities• Leverages health system capital and current practice EMR’s
• Invest in applications capable of population health (integrates EMR’s and
claims data) and predictive modeling (risk stratifies population)
• Apply business intelligence applications to care provided (cost/quality)
WHAT DO SUCCESSFUL ORGANIZATIONS LOOK LIKE?
Focused
Leadership
Culture shifts towards
pop health reward
system
Led by
Physicians
Engaged clinical
leadership is critical
Robust Primary
Care Network
Team based PCMH
model in place
Clear
Communication
Transparency on
priorities and builds upon
successes
Care
Coordination
Development of High
Value Network and
Integrated Care across
the network
Data and
Analytics
Access to information
across the continuum;
able to take action
Patient
Engagement
Patients engaged with the
care plan and wellness
Aligned
Compensation
With models to measures
performance and share
savings
Common characteristics of successful population health organizations
