HEALTH CARE REFORMNow What Do We Do?

Indiana Cancer ConsortiumMay 19, 2011

William H. Thompson, Esq.Hall, Render, Killian, Heath & Lyman, P.C.One American Square, Suite 2000Indianapolis, Indiana 46282Phone: (317) 977-1424FAX: (317) 633-4878E-mail: bthompson@hallrender.com

PRESENTATION OUTLINE

I. High Level Review of Affordable Care Act

II. The New Proposition: Value Not Volume

III. New Models of Care

– ACOs

– Medical Homes

– Others

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PATIENT PROTECTION

AND

AFFORDABLE CARE ACT

JOURNEY TO HEALTH CARE REFORM

• A long process since early 2009 (some say since 1912)

• Patient Protection and Affordable Care Act (March 23, 2010)

– 906 pages

• Health Care Education Reconciliation Act of 2010

– 150 pages

• When read together, they constitute the single largest overhaul of our nation's health care system

• And this isn't counting the thousands of pages in regulations just around the corner

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AFFORDABLE CARE ACT AT 30,000 FEET• Gross cost at approx. $940 billion over 10 years; reducing budget deficit by

$124 billion over 10 years

• Central Budget Office projects that the bill will reduce the number of uninsured by 31 million by 2019 w/23 million nonelderly Americans remaining uninsured 94% of the nonelderly population

• In a nutshell:– It requires most U.S. citizens and legal residents to have health insurance

– It creates state-based Health Benefit Exchanges through which individuals can purchase coverage, with premium and cost-sharing credits available to individuals/families with income between 133-400% of the federal poverty level (about $18,000 for a family of three)

– It creates separate Exchanges through which small businesses can purchase coverage

– It requires employers to pay penalties for employees who receive tax credits for health insurance through an Exchange, with exceptions for small employers

– It imposes new regulations on health plans in the Exchanges and in the individual and small group markets

– It expands Medicaid to 133% of the federal poverty level

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But that's what the news has reported, it also provides:

• While most of the press and public focus on reform has been on increasing access and how to pay for it, much of the reform law is about payment and delivery system reform in order to drive down cost through better quality and greater cost-efficiency:

– Hospital Payment Updates: reduces Medicare payment updates by $112 billion over 10 years; and

– Significant focus on payment reform activities, e.g., bundled payment and similar reimbursement reform programs

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NEW MODELS OF CARE

PRETTY MUCH GIVENS• Reimbursement will be increasingly tied to quality and

outcomes

• Cost reduction pressures will increase

• Restrictions on physician self-referral will continue

• Data will be king

• Little or no new money under the Physician Fee Schedule

• Shortage of physicians as boomers age

• Bond rating agencies are increasingly focused on how hospitals pursue physician strategies

• Hospitals will still need doctors and doctors will still need hospitals

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THE NEW PROPOSITION

Less About Volume, More About VALUE

Quality

Cost Effectiveness

Patient Experience

= Value

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Changing Care to Create Value . . .Changing Payment to Recognize Return for New Value

Care

Delive

ryValue-driven

coordinated

care

Volume-driven

fragmented

care

Discounted

fee-for-service

XToday

Episode

payment

Shared savings

models

Partial

capitation

Global

payment

Payment

KEY ELEMENTS OF A REFORMED SYSTEM

• Reform will be driven by reimbursement policy

• Patient-centric, not provider-centric

• Coordinated care, particularly within specific disease states

• Shift away from fragmented, volume-based payments (i.e., "bundled" or "global" payments)

• Aligned incentives among care-givers around quality, cost reduction and efficiency

• Heavy reliance of HIT

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OLD VERSUS NEW MODELS OF DELIVERY

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OLD• PHOs

• IPAs

• Independent Practices

• Ancillary Joint Ventures

• Medical Staff Organization

• Clinical Departments

• Open Employment Offers

• Lip Service to Physician Leadership

NEW• Patient Centered Medical Homes

• Accountable Care Organizations

• Co-Management of Service Lines

• Centers of Excellence

• Employer-Based Clinics

• Clinical Integration

• Medical Foundations

• Clinical Service Lines

• Refined Employment Models

• Real Physician Leadership

ELEMENTS OF NEW MODELS(Center for Medicare and Medicaid Innovation)

• Facilitate alignment among care-givers around quality, cost, efficiency and patient satisfaction

• Care is coordinated within disease states; clinical integration– Evidence-based medicine driven by payment reform

• Driven by physician leadership / control

• Structure to intake and then allocate reimbursement

• Supported by HIT

• Flexible / Adaptable13

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ACCOUNTABLE CARE ORGANIZATIONS

ACCOUNTABLE CARE ORGANIZATIONS(PHOs all over again?)

An organization of hospitals, physicians, and other providers that accepts responsibility for the quality

and cost of care delivered to a defined population of patients.

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TRIPLE AIM

1. Better Care for Individuals

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2. Better Health for Population

3. Lower Growth in Expenditures

– Safety– Effectiveness– Patient-Centeredness

– Timeliness– Efficiency– Equity

– Nutrition– Physical Activity– Substance Abuse

– Economic Disparities– Preventive Services

+ Annual Physicals+ Flu Shots

– Eliminate Waste and Inefficiencies

WHY AN ACO STRATEGY ?

"ACOs do not represent a significant paradigm shift inU.S. Health Care; rather, they are a compilation ofintegration tactics that have been tried at differenttimes and in different systems. Their success,therefore, will depend on how well providers, payersand patients navigate the challenges that limited theeffectiveness of previous integration and accountabilityefforts."

Source: Deloitte Center for Health Solutions, Accountable Care Organizations: A New Model for Sustainable Innovation.

New Beginning or Back to the Future ?

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WHY AN ACO STRATEGY ?

• Statutory requirements for Medicare Shared Savings Program:

– Formal legal structure that permits the receipt and distribution of payments

– Shared governance

– PCPs with 5,000 Medicare beneficiaries

– Report quality and cost measures

– Coordinate care

– Patient-centered approach and evidence-based medicine

– 3-year agreement

PPACA Provisions

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WHY AN ACO STRATEGY ?

• PPACA authorizes Secretary to utilize specified paymentmodels other than SSP

– Bundled payments

– Partial capitation where ACO at financial risk for some, butnot all, of Part A and Part B services (such as all physicianservices provided to a set population over a set time)

– Secretary may substitute any payment model that theSecretary determines will improve quality and efficiency

• Secretary may waive certain federal laws

• Demonstration and Pilot Programs

PPACA Provisions

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PHO / ACO COMPARISON

PHO ACO

Insurance Risk Performance Risk

Panel of Patients Population of Patients

Scrum for Share of Revenue Rational Allocation of Revenue

Charge-Based Value-Based

Managed Care Leverage Care Coordination

Pay for Quantity (Covered Lives) Pay for Quality

Episode-of-Care-Focused Patient-Centric

Split Control and Governance Physician Leadership

Do More Do Less

Intervention Prevention

Clinical Integration to Achieve Antitrust Compliance

Clinical Integration to Achieve Efficiencies and Quality Improvement

Source: MWE Newsletter, April 14, 2010, Health Care Reform: ACOs and Developments in Coordinated Care Delivery, Shared Savings and Bundled Payments.

The ACO is dedicated to the principle of improved value for the patient. Thus, the organization must encompass the desire by the participants to create a

system of care based on optimizing health care value over production.

WHY AN ACO STRATEGY ?

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The Vision for ACO Performance

WHY AN ACO STRATEGY ?

Source: SG2: On the Road to ACO21

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PATIENT-CENTEREDMEDICAL HOMES

Patient-Centered Medical Homes

• "Joint Principles" of the Patient-Centered Medical Home– Personal physician who coordinates all care for patients and leads the

team

– Physician-directed medical practice acting as a coordinated team ofprofessionals who work collectively to care for patients

– Whole person orientation – personal physician responsible forproviding or arranging for comprehensive care

– Coordinated/Integrated Care that incorporates all components ofhealth care delivery

– Quality and safety assured by care planning, evidence-based medicine,IT, active patient participation, QI

– Enhanced access – open scheduling, expanded hours

– Payment – recognize value-added

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*Source: American Academy of Family Physicians, American Academy of Pediatrics,

American College of Physicians, and American Osteopathic Association

PATIENT-CENTERED MEDICAL HOME

Care

Coordination

Connect to

Community /

Social Support

Use of Nurse

Practitioners

Continuous

Access to

Primary Care

Responsible for all

Health Care Needs

Technology

Connects Services

Use of Evidence-

Based Guidelines

Patient

Support Patient

Self Management

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Michigan Blue Cross PCMH Program

• Capability to report practice- and physician-level patient outcomes,efficiency of service and patient satisfaction

• Discuss with the patient the roles and responsibilities of the doctor andpatient, and documenting this discussion

• Offer 24-hour patient access to a clinical decision-maker, with a multi-lingual approach to care. Access may include extended office hours,telephone access, linkage to urgent care, or a combination

• Work with each patient to set individualized health goals; and using ateam-focused systematic approach to track appointments and ensurefollow-up on needed services

• Provide effective and timely follow-up with patients on their test results

• Coordinate patients' care across the health system through a process ofactive collaboration and communication between providers, caregivers andthe patient

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Michigan Blue Cross PCMH Program

• Provide patients with active counseling, screening and education onpreventive care

• Coordinate referrals to specialists, and provide specialists with patientinformation needed for proper care, such as lab work and test results

• Offer patients connections to community services, in coordination with thehealth system, community services agencies, family, caregivers and thepatient

• Provide self-management education and support to patients with chronicconditions

• Develop patient registries to track and monitor patients' care over thelong-term

• Provide an online patient portal system that allows for electroniccommunication and provides patients with greater access to medicalinformation and technical tools

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CLINICAL INTEGRATION

CONTINUUM OF INTEGRATION

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Strategic / Coordinated

Employment

•Quality Incentives

•Referral Coordination

•Individual / Collective Incentives

Employment

•Primary Care

•Specialists

JointVentures

•ASCs•Cath Labs

•Specialty Hospitals

Service LineManagement

•CV•Ortho

•Surgery

•Oncology

ProfessionalServices

•Coverage•On-Call

MedicalDirector

•Departments

What is Clinical Integration?Interaction/Interdependence is Key

• Antitrust Concept– Clinical integration in a physician/hospital

network involves creating a degree of interactionand interdependence among the physicians and the hospital in order to achieve cost efficiencies and quality improvements in providing medical services, both individually and as a group.

• Practical Application– Align incentives around quality, efficiency, cost,

and patient safety

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Ref: Statement 8, DOJ/FTC, Statements of Antitrust Enforcement Policy in Health Care (1996).

What is Clinical Integration?Interaction/Interdependence is Key

• Efforts to integrate clinically evidenced by:

– Establishing mechanisms to monitor and control utilization and costs, and assure quality of care

– Selectively choosing physicians likely to further efficiency objectives

– Significant investment of financial and human capital in the infrastructure and capabilities necessary to realize claimed efficiencies

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Ref: Statement 8, DOJ/FTC, Statements of Antitrust Enforcement Policy in Health Care (1996).

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CLINICAL INTEGRATION MODEL

Clinical Integration

PRACTICE SUPPORT• Guideline Adoption/Distribution

• Clinical• Preventative Health

• Credentialing• Best Practice Education

• Billing & Coding• Clinical Updates• Pharmacy Issues• Medical Error Prevention

QUALITY MANAGEMENT• Baseline Monitoring (Pre-Intervention) of:

• Measures Selected from Adopted Guidelines• Utilization Measures Relevant to Disease Management

• Patient Satisfaction Monitoring & Evaluation• For PCP Feedback, Trend Analysis & Systems Improvements

• Provider Performance Monitoring & Evaluation• Consistent with Clinical & Preventive Health Guidelines

• Clinical Outcomes Monitoring & Evaluation• To Evaluate Effectiveness of PCP and Disease Management

• ED/Inpatient Utilization & Functional Status Measures• Quality Initiatives

• As Needed in Response to Monitoring & Evaluation Findings

INTEGRATION OBJECTIVES• Enhance Quality of Care/Improve Patient Outcomes• Share Best Clinical Practices• Promote Safe Medical Practices• Ensure Appropriate Utilization of Services• Create Process Efficiencies

MEDICAL MANAGEMENT• Health Promotion

• Preventive Health Screening• Lifestyle Changes

• Utilization Management• Pharmacy Management• Care Management

• Case/Disease/Population Management• Referral Coordination• Telephonic Outreach• Collaborative Care Plan Development• Functional Status Assessment

Tools• Patient Registries

• Disease• Preventive Health

• Electronic Medical Records• Long Range Goal

Follow-Up• Practice Support• Provider Performance Reports• Incentive Program

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OTHERALIGNMENT STRATEGIES

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OTHER ALIGNMENT STRATEGIES

• Professional Service Agreements

• Service Line Co-Management

• Employment

• Physician Involvement in Decision-Making

• Chief Medical Officer

• Vice President for Medical Affairs

• Physician Leadership Development

• Communication Forums

• Council of Physician Advisors

• Access to Senior Executive Team

• Expressions of Appreciation

• Imaging / Branding Support1085719v1; 04-22-11