What’s Next for Value Based Care?4.26.19

Dave Spalding

• 2017 co- Founded TMA

Specialty Services

• CEO TMA Specialty Services

• Has co-founded 3 value based

care companies, including TMA

PracticeEdge

• HCSC/Blue Cross Executive

Introductions

Erica Maltby

• 2017 co- Founded TMA Specialty

Services

• VP Operations TMA Specialty

Services

• Consultant developing payer data

strategies around Value Based

Care

• Innovation team at Optum

developing analytic products

1. Current state of Value

Based Care

2. Emerging Models

3. How to Prepare

Agenda

A Brief History of Value Based Care

• Value Based Care is the shift from payment based on Volume to Value

• Driven by MACRA legislation in 2015, which introduced MIPs and APMs to

Medicare payments

• MIPs and APMs seek to measure Value and incentivize lowering cost and

improving quality

• Objective of this shift is to align incentives of the entire healthcare system-

payers, providers, device makers, drug manufacturers, etc.

“Never, ever, think about something else when you should be thinking about the power of incentives”

- Charlie Munger

The Bad

• 1/5 dollars are spent on healthcare-

patients should expect Value

• Increased use of data and comfort

with reporting

• Bonus opportunity for APM

participation

The Good

• Investment required to stay

compliant is forcing out

independent physicians

• Measures of value lack clinical

value

25% 25%

50% 50%

75% 75%

20% 20%

35% 35%

50% 50%

0%

20%

40%

60%

80%

2017 2018 2019 2020 2021 2022

Required Payments of Patients Thresholds per Program Year

Payments through APMs Patients in APMs

Value Based SpectrumHow is VBC defined?

Fee for Service

Performance Bonus (P4P)

Shared Savings

Shared Risk

Pay for Volume

Bonuses for hitting Quality targets• Defined measures in commercial contracts

• Device and drug manufacturers included

• “The agreement ties a component of our reimbursement to successfully meeting clinical improvement thresholds”

- Medtronic and Aetna

Upside-only cost arrangements for beating benchmarks• ACOs

• PCMHs

• ESCO

Upside / downside cost arrangements for beating benchmarks • BPCIA

• ACO tracks 1+ - 3

• Capitation

APM Adoption Trends

TRENDS 2015-17• Since 2015, the FFS-only (category 1) has

decreased from 63% of payments to 41%

• Shared savings and risk-based payments

(categories 3 & 4) have increased from 23% to

34% since 2015

• In 2017, Medicare Advantage led APM

adoption with 49.5% of payments in savings / risk

models, including 15% in specialty episodes.

Category 1

Category 2

Category 3 & 4

0

20

40

60

80

100

2015 2016 2017

HCP&LAN Payment Categories 2015-2017Health Care Payment & Learning Action Network Annual Survey• Data submitted by CMS, BCBSA, AHIP• Over 82-84% of covered lives nationally

Category 1 – FFS Category 2 – Quality / P4PCategory 3 – APM with FFS architectureCategory 4 – Population-based risk

The commercial market lagged Medicare with 28% of payments in category 3 & 4 in 2017. Specialty

episodes represented less than 8.5% of

commercial VBC payments.

2019-20Cost shifting benefits from high deductible plans are tapped out and employers are

accelerating private sector adoption of APMs going in 2019-20. Large employers and purchasing coalitions are contracting directly with providers for specialty episodes and total

cost of care deals.

ACO Model

• 10+ million Medicare

beneficiaries in ACO

models

• Success in physician- led

ACOs

• Moving ACOs out of track 1

in 2019

• Can this model be used

more broadly in

healthcare?

-$200

-$150

-$100

-$50

$0

$50

$100

$150

$200

$250

MD-owned Hospital

Savings vs. Benchmark Additional Savings

ACO Payments Net Benefit/Loss to Medicare

2016 MSSP Results

• Primary care spend estimated at

10% of total healthcare spend

• High pricing is the driver behind

high costs- and specialists are in the

driver’s seat

• CMS establishing Value- based

programs for specialists

• These programs focus on

team- care & cost

containment of an area within

specialists’ control

• BPCIA

• ESCOs

What about specialists?

CMS: Chronic Conditions Among Beneficiaries

Emerging Opportunities for Specialists

MEDICARE

BPCIA

• 29 inpatient / 3 outpatient procedure

bundles• Savings opportunity focused on post-

acute care re-design and efficiency• Qualified APM at 20% upside /

downside risk

End Stage Renal “ESCO”• ESRD ‘ACO’ • $51,000,000+ in shared savings

Oncology OCM• Commercial payers invited to

participate

COMMERCIAL

Currently limited to procedures such

as colonoscopy and ortho. Most

programs lack scalability and very

few organizations are tackling

chronic conditions

Spotlight on Texas

• 1,500 BPCIA bundles approved

• Participants• All major hospitals (UT led with 150+

bundles)• Most regional medical centers• Independent groups at less than 5%

• Convening organizations include:

Fusion5, Encompass, Remedy

Partners and UnitedHealthcare

Challenges with Current Models

MEDICARE

• 90 days ‘all in’

• Focused on procedures

• Site of service opportunities neutralized

• Participation requires a convener

• Access to capital for risk

COMMERCIAL

• Very limited opportunities, focused on procedures

• Challenges with data sharing

• Upside only

• Undecided on which program to adopt

Our Proposal

• Follows the principal of shifting

payment from volume to value

• Synergy with existing ACO models

• For specialists, VBC will carve out

episodes- both procedures and

chronic conditions- to manage

• Continue to align incentives

across the care continuum

Specialist Contract Methodologies

PROCEDURE EPISODES CONDITION EPISODES

Objectives

• Surgical quality & efficiency

• Managing pre/post procedure outcomes

• Identifying efficient provider partners

• Lowering procedure cost

Examples

Colonoscopy, Joint Replacement, Coronary Bypass

Cost Levers

▪ Unplanned event mitigation

▪ Site-of-service

▪ In-patient utilization

▪ In-network specialists

▪ Tools and techniques

Immediate Opportunity

Opportunities abound to lower costs by shifting site

of service, reevaluating ancillary provider partners,

and changing clinical workflow patterns.

Objectives

• Clinical quality & efficiency

• Early intervention and disease

management

• Coordination / Transitions of Care

• Patient experience

• Patient Education

Examples

Heart Failure, Diabetes, COPD, CKD

Cost Levers

▪ Care coordination with PCPs

▪ Patient compliance

▪ ER utilization

▪ Standards of care

Immediate Opportunity

Given the right data, specialists will be able

to squeeze out unnecessary utilization of the

healthcare system.

Case Study: Colonoscopy

Benchmark established by market average

Case Study: Colonoscopy

1 Identify cost buckets within a procedure

Case Study: Colonoscopy

2 Break down bucket 1: average pathology costs

Case Study: Colonoscopy

3 Break down bucket 2: average anesthesia costs

$1,900

$323

Case Study: Colonoscopy

4 Break down bucket 3: average facility fees

Case Study: Colonoscopy

5 Understand each individual physician’s provider mix for actionable conversations

Why does this matter for Value Based Care?• This data set contained 378 scopes,

with anesthesia costs of $250,000

• Average anesthesia cost per scope

is $662, mostly with MDs

• Average CRNA cost per scope is

$323

• This analysis can help practices

choose efficient provider partners,

helping the practice win in Value

Based Care models

378 x $662 =

$250,236

378 patients x $323 =

$122,094

$128,142 in potential episode savings

*Guroo

ACO has $10,000 to manage this patient’s total cost of care

An aligned specialist is beating the Houston benchmark ($2,743*) by $1,000

Colonoscopy Episode

▪ A recent study from the Deloitte Center for Health Solutions found that access to

cost information may drive more behavior change toward value-based care

among physicians.

▪ The study also found that two-thirds of physicians have access to their own

productivity and quality performance data, but cost information is less common.

Cost Data and Physician Performance

Source: Deloitte 2018 Survey of US Physicians

Which of the following types of performance information would compel you to reconsider how you practice?

For each of the types of information you receive, can you recall an instance when the information made you

reconsider or change how you practice?

Not Implemented Implemented

My own performance on quality measures 65% 71%

My own productivity measures 51% 57%

Estimated patient out-of-pocket costs for

different treatment options

39% 62%

Cost or resource use for attributed patients 36% 53%

Performance on quality measures for

physicians/ facilities to which I refer

32% 59%

Cost or resource use of physicians/ facilities to

which I refer

23% 60%

None of the above 26% N/A

How to Prepare

Specialists

✓ Get on the treadmill

✓ Work with payers and provider partners to obtain your data

✓ Participate in existing opportunities

PCPs/ACOs

✓ Identify specialty partners who have aligned incentives

✓ Share data and clinical strategies with specialists

Payers

✓ New world- price transparency

✓ Create opportunities for lowering cost and improving quality

Hospitals

✓ Leverage data advantage to change clinical workflow models

✓ Use this adoption time to determine new revenue models

Thank You

Erica MaltbyVP, Operations

erica.maltby@texmed.org

Dave SpaldingCEO

Dave.spalding@texmed.org