Health Service Board Rates and Benefits Committee Meeting

Transcription

1 Health Service Board Rates and Benefits Committee Meeting Blue Shield Medical Group ACO Review April 10, 2014 Prepared by Aon Hewitt Health and Benefits

2 Contents History ACO Overview Evaluation Framework and Program Management Approach Recent Experience Claims Targets/Financial Incentives Initiatives Summary 1

3 History In 2010, HSS recognized that Blue Shield was in a death spiral. In response, the Director promoted patient centered medical homes to improve care by coordinating care, planning hospital discharges, avoiding emergency department (ED also called ER) visits if emergency care was not required, etc. CalPERS had initial success with an ACO pilot in the Sacramento area. Based on the success, the 2010 HSS RFP included a provision for the non-staff model HMO: patient centered medical homes. Blue Shield was selected as the vendor and two ACOs were piloted with the partners being the insurer, the medical groups (Brown & Toland and Hill Physicians), the hospitals, and HSS. In March 2011, HSS and the ACO partners announced that the implementation of the new model of coordinated care would be effective in the July 2011 contract renewal. HSS continues to participate in the early planning and monitoring meetings. 2

4 History (cont d) The contribution model further exacerbated the Blue Shield death spiral. At that time, active singles for both Kaiser and Blue Shield paid nothing. For E+1 s and E+2 s, the bargained employer contribution was capped at the Kaiser pickup, giving Kaiser a distinct advantage. As a result, the employee share for Blue Shield increased. If all of the employee unions adopt the 93/93/83 contribution model, the rate disparity will be closer than it has been in many years. This presentation will discuss how the disparity in rates has been mitigated by the implementation of ACOs. As the cost of care is reduced, Blue Shield will be able to maintain a competitive offering. 3

5 ACOs Accountable Care Organizations ACOs are designed to eliminate overutilization of healthcare services. The basic ACO structure was brought to the HMO Bay Area marketplace as a HSS pilot project to drive down utilization while maintaining quality of care for Blue Shield CCSF members and their families. Among the first accomplishments was the creation of patient care focused partnerships between the hospitals and the physicians. This required new communication strategies between the physician groups and the hospitals. Second, Blue Shield made it clear that the primary care physician must drive the ACOs by monitoring the direction and amount of services rendered to their ACO member base. Examples of this are: Paying close attention to the number of people with readmission rates Tracking Average length of stay (ALOS) Examining catastrophic cases Monitoring Emergency Department Visits (ED) Analyzing overall drug spend, number and type prescribed To date all of the above metrics have improved. 4

6 ACOs Accountable Care Organizations The influence of the ACOs is clear. Blue Shield, for the 2013 fully insured renewal, requested a 13% increase. In 2012, the HS Board decided to go Flex Funded and set the rate at a 2.5% increase. An additional benefit of the Flex Funded model was that it brought HSS closer to the medical groups whose capitation was previously negotiated as part of the fully insured model. The rationale for lowering the premium to such an extent was a conviction that the ACOs would accomplish their goals and lower the cost of the program. On March 13, 2014, Aon Hewitt presented the 2013 claims experience and concluded the lowered premium equivalents were sufficient to cover all healthcare costs and fund all required reserves for This is a good indication of the impact of the ACOs. Now that we have framed where we are with the ACOs, we will review the parameters of the standard ACO model structure. 5

7 The ACO Model The ACO care delivery model works to improve the alignment between the health plan, medical group, and hospital. With aligned incentives, all organizations are able to break down traditional silos and develop integrated care processes across the continuum to improve efficiency and patient outcomes. Through this arrangement, partner organizations are able to share and analyze data to identify clinical best practices to achieve the greatest impact to cost and quality of care delivered to CCSF members. As of Dec. 2013, there were approximately 18,400 members in the Brown & Toland ACO and 4,700 members in the Hill ACO. network integrated delivery model Blue Shield of California Medical Group Hospital integrated processes clinical best practices data integration metrics and reporting aligned Incentives: each partner contributes to cost savings and receives a financial incentive for positive variance from cost reduction goals 6

8 Evaluation Framework and Program Management Approach The program commences with contract negotiations to align the incentives of each partner organization. Once the contract is signed, the organizations work together to establish the right governance structure to ensure executive support and engagement from all levels of the organization to help drive change. A data driven approach is used to understand the health status of the population, assess opportunities, and identify clinical best practices to improve care coordination, efficiency, and quality. Physician, member, and employer engagement has been a cornerstone of best practice implementation, as establishing buy-in from these groups is imperative to long-term adoption and sustainability of the clinical interventions. 7

9 Evaluation Framework and Program Management Approach Once initiatives are implemented, outcome and process measures are tracked on an ongoing basis to ensure achievement of the goal and allow adjustments to be made on an ongoing basis. Phase 1: Negotiation, Contracting & Set Up Phase 2: Collaboration Planning & Analytics Phase 3: Program Initiation Phase 4: Program Execution & Monitoring Phase 5: Adjustment & Improvement strengths, experience and capabilities of each partner must be assessed and leveraged Governance and Leadership Care Delivery Population Health Management Employer, Member & Physician Engagement Measurement & Tracking Data Exchange establish the right governance structure to drive change assess gaps and redundancies redesign processes to be proactive & efficient and build continuity & coordination evaluate each organization s capability strengths and how to collectively leverage engage members, physicians and the employer collectively monitor outcomes and process measures assess how to share data to build integration evaluate the challenges of implementing clinical change 8

10 Recent Experience Based on several criteria including the member base roughly 18,400 and the stability of data, we will discuss the Brown and Toland ACO rather than Hill. The following list compares the change in key metrics between July 2010 June 2011 and Dec Nov. 2013: Admits per 1,000 members: 2.2% Days per 1,000 members: -8.1% Average Length of Stay (ALOS): -10.1% 30-day Readmission Rate: -7.2% ER Visits per 1,000 members: -7.7% The decrease in ED/ER visits was directly related to the creation of after hours urgent care services. San Francisco had no after hours care besides the ER/ED and the ACO model required that care Outpatient Surgeries per 1,000: 1.2% Generic Utilization: 12.4% 9

11 Recent Experience (cont d) All of the metrics on the previous slide have improved since the inception of the ACO, except admits per 1,000 members. The reason this metric has not improved is the higher number of hospital admits in Jan. March 2013 due to the worse than normal flu season in that San Francisco. It is imperative to understand that the ACO committee at Brown and Toland is diligently working to improve their ability to further affect these metrics going forward. The initiatives will be highlighted later in this presentation. Both Brown and Toland and Hill ACOs have successfully reduced the cost of healthcare trend. Since the inception of the ACO, on average the cost of healthcare trend has been approximately half of the projected trend had the ACO not been in place. 10

12 Claims Targets Financial Incentives In negotiating with the medical groups, claims targets must be agreed on. Claims targets are generally set at a cost per insured person. The level of the target is below the current cost per person. Providers are incentivized to attain these cost levels and are awarded bonus dollars for this accomplishment. The bonus payouts are generally paid over a period of 1 year and are built into the rates. Provider incentives are based on a 2 tier structure: If actual experience exceeds the Tier 1 target PMPM individually for each ACO, no incentives will be paid to providers If actual experience falls below the Tier 1 targets, but is greater than or equal to Tier 2 targets, savings will be split per the Tier 1 incentive structure If actual experience falls below the Tier 2 stretch targets, savings between the Tier 1 targets and the Tier 2 stretch target will be split per the Tier 1 incentive structure. Savings beyond the Tier 2 stretch targets will be split per the Tier 2 incentive structure Total incentives shall not exceed the maximum incentive payout limit for each provider 11

13 Claims Targets Financial Incentives An example follows: Assume the following: Top end tier 1 target is $550 PMPM Tier 2 target (stretch target) is $510 PMPM Final payout level: $490 PMPM For this financial target to pay, monies would generally be split 50%/50% between HSS, the medical group, and associated hospitals. An example of a payout would be as follows: Actual claims for a given year are $530. Assume 20,000 members. Payout would be as follows: Total amount to be paid out $550 - $530 = $20 PMPM x 20,000 x 12 x 50% = $2.4M The payout allocation between the medical group and associated facilities is negotiated by Blue Shield and HSS 12

14 Objectives of Financial Incentives The primary reason for offering financial incentives is to encourage the participating ACO physicians and hospitals to lower costs, while maintaining or improving the quality of care. They receive direct payments from HSS if they perform at the levels of the targets or better. Generally speaking, this will work depending on whether or not the associated providers and hospitals have downside risk meaning they will have to pay if they do not hit the target. Since our targets are soft targets, they are aggressive but there is no financial incentive outside of receiving payments. They will not be required to pay anything if they do not hit the targets. Although the anticipated run rates were set such that they would pay under reasonable experience levels, the HSS Trust will not be paying anything for This is largely due to an abnormally high level of hospital admits which was previously discussed. However, the 2014 experience is better. Hospital use for the first 3 months is between 60% and 70% of 2013 levels and below historical average run rates. If this pattern continues, it is highly likely that HSS will issue incentive target payments. 13

15 Focus for 2014 and beyond Brown & Toland Initiatives Overall: Continue to mature and refine interventions in progress Outpatient Population Management: Develop Clinical protocols for chronic conditions Educate patients on end of life decision making Inpatient Management: Implement a standardized approach to discharge planning by reengineering the discharge process Case Review to identify avoidable days Care managers in the ED to prevent avoidable admissions ED Utilization: Continue to expand and proactively market the comprehensive After Hours Care Network in the inpatient/outpatient settings, as well as through targeted mailings and patient communications Expand the use of analytics to outreach to frequent ED utilizers Member Engagement/Wellness: Enhance member engagement strategies, especially in the area of wellness Medication Management: Utilize a dedicated pharmacist to design and implement a comprehensive medication management strategy Partner with retail pharmacies on medication therapy management initiatives 14

16 Focus for 2014 and beyond Hill Initiatives Overall: Continue to mature and refine interventions in progress Explore options for palliative care expansion Continue to focus on co-morbidities, such as behavioral health Care Transitions Manager/Inpatient Care: Mature and refine CTM role, focus on enhancing linkages to palliative care, symptom management and home care programs Use of case management at non-partner facilities to address LOS opportunities ED Utilization Management/Ambulatory Care: Enhance ambulatory care for complex patients; better coordinate disease management across the care continuum Continue to expand urgent care center network and after-hours clinics Implement processes to coordinate PCP follow-up for members accessing the services outside of the PCPs office Member Engagement/Wellness: Enhance member engagement strategies, especially in the area of wellness Medication Management: Increase generic medication utilization Partner with retail pharmacies on medication management initiatives Quality Improvement Initiatives to address medication adherence, polypharmacy and gaps in care Virtual pharmacists to provide real-time integration into physicians EHR 15

17 Recommendation Aon Hewitt recommends that the Health Service Board direct HSS staff to develop a policy for reserving excess underwriting gains for the ACO incentive payments. Any unused funds will be release to the Stabilization Reserve for Blue Shield if the ACO targets are not met. 16