Gulf Coast and LA HFMA Payer Summit Value-based contracts same healthcare business?
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1 Gulf Coast and LA HFMA Payer Summit Value-based contracts same healthcare business? Richard R. Vath, MD FMOLHS SVP/Chief Clinical Transformation Officer President Health Leaders Network and Medicare ACO
2 Universal Belief The current cost of acute, post-acute, outpatient, and ambulatory healthcare is not sustainable for patients, employers and payers. Healthcare value is being questioned by all. Providers must compete on their ability to deliver predictable, high quality care at predictable costs and with a better patient experience. Confidential Do Not Distribute
3 Managing risks for the health of a population
4 Strategic Path to Risk-based Care Roadmap Features Three-year contracting strategy High-level plan, plus actionable plans across four capabilities categories* Sequencing and cost estimates High-priority recommendations to close capabilities gaps Care management staffing projections Care Continuum Future State Physician Alignment Key Considerations Current capabilities and readiness Existing gaps Organizational goals and mission Pace and sequencing of risk approach Priority populations Unique sub-markets Roadmap Implementation IT and Data Analytics Organizational Capacity Risk-based Care Market Leader *Categories depicted in figure on the right, and include Care Continuum, Physician Alignment, Organizational Capacity and IT and Data Analytics. 4
5 Clinical Integration - Foundation for Risk Capabilities Network Development Stakeholder Engagement Value Proposition Participation Criteria Physician Leadership Incentive Design IT Infrastructure and Capability EMR and EHR Clinical and Financial Patient Engagement Tools Integration with Existing Systems CLINICAL INTEGRATION Cross-continuum Coordination Strong Primary Care Communication Referral Management Population-Based Programs Shift to Ambulatory Management Transitions of Care Organizational Structure & Planning Payor Contracting Strategy Physician Governance Committees and Decision-Making Financial Structure Organizational Incentive Alignment Analytics Clinical Metrics and Results Cost Analytics Standard vs. Ad-hoc Reporting Risk Identification Regulatory vs. Operational Collaboration Platform Common Protocols Physician-Guided Quality Best Practice Dissemination Clinical Metric Selection Peer Review; Transparency Build Network Culture Confidential Do Not Distribute
6 The Case for Clinical Integration Movement towards Value-based Care CMS set a goal - 50% of Medicare payments in valuebased models by 2018 MACRA accelerated this with an incentive-based payment system (MIPS) starting 1/1/17 MACRA created more global risk models for providers with 5% bonus in years APMs CMS creates Advanced Bundles for specialists What CMS does, commercial plans eventually follow Benefits of Clinical Integration Provider-organized networks can coordinate delivery and management of care through Clinical Integration and succeed in value based contracts Use of technology to measure and track quality improvements and demonstrate value Proactive-approach to evidenced-based quality practices driven by physicians Characteristic Current System Future System Care Delivery Model Care Management Infrastructure Focus Fragmented care delivery; focus on treatment and sick care Aligned around care episodes; acute focus Bricks and mortar Coordinated, cross-continuum care; focus on wellness, prevention and patient engagement Aligned around managing populations and conditions; ambulatory focus Technology and data integration (data -> information -> knowledge) Payment Based on quantity of services rendered Rewarded for quality of care Strategic Orientation Maximize volume Maximize value Confidential Do Not Distribute
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8 Increasing risk allows clinical/financial benefits Health Plan Full Risk Clinical and Economic Opportunity Shared Risk Bundled Payments Population Health Management Clinical Integration P4P Fee For Service 2014 Valence Health. All rights reserved. 8
9 Level of Infrastructure & Transformation The Next Generation ACO Model Offers A Financial Construct Similar To That Of A Health Plan PSHP Next Gen ACO Level of Financial Risk Track 3 MSSP High Typical Payer Deal Medium Track 1 MSSP Low Bundled Payments Potential Financial Return and Risk Per Life 9
10 What is the currency of value based contracts? Attributed lives are the currency for value based contracts. Primary care providers, not specialists, determine attributed lives. 10
11 Value based Contracting Steps - Financial 1. Clinically Integrated Network (CIN) determines which Primary Care Providers will participate in contract 2. Payer applies attribution methodology to define CIN population under contract 3. Actuaries project total costs for medical care and Rx and assign benchmarks for each 4. CIN negotiates shared savings/shared loss tiers based on degree below or above cost targets 11
12 Key Differentiators Exist Between Medicare Programs MSSP ACO Next Generation ACO Medicare Advantage Network Open with retrospective attribution Open with retrospective but includes voluntary patient alignment option Benchmark Historical expenditures Historical expenditures adjusted for regional trending Minimum Savings Rate or Discount Risk Adjustment Methodology Quality Program Upside/Downside Risk Supplemental Benefits Minimum # Beneficiaries Achievement of 2.0% - 3.9% minimum savings rate triggers shared savings Fixed for entire three year agreement Quality acts as trigger for participation in savings 50% shared savings OR 60-75% shared risk None Discount of 0.5% to 4.5% applied to benchmark Adjusted annually with +/- 3% annual limits Achievement of quality target equates to 1% lift 5,000 General: 10,000 Rural: 7,500 80% shared risk OR 100% risk for Parts A and B; option to build contracted network and pay claims (Health Plan like option) Beneficiary coordinated care reward $50 annually; other limited Closed HMO or Controlled PPO County based benchmarks None Annually adjusted Stars quality metrics drive ~5% bonus to benchmarks for 4+ Star rating (out of 5 Stars) 100% risk for Parts A and B Various product enhancements available None for risk based contract 2014 Valence Health. All rights reserved. 12
13 Success In Risk Contracts Is Driven By 5 Value Levers Value Levers Risk Adjustment Increase benchmark by up to 3% by accurately capturing patient acuity through ICD10 coding Quality Achieve 30 Centers for Medicare & Medicaid Services (CMS) established quality metric thresholds to improve benchmark by up to 1% Clinical Programs Drive medical savings through clinical interventions to drive down total medical expense Transitions, Complex Care, and Advanced Illness Programs Network Align process and strategic goals across the network by bringing together primary care and specialties, and leverage provider networks to achieve savings Pharmacy, Post-acute Technology Technology solutions that aggregate data and identify impactable opportunities, drive engagement and management of high risk populations, and support robust tracking and measuring of performance
14 Funds Flow Framework When Successful Shared Savings Funds from Payor Up to 30%* retained to fund ACO operations At least 60% allocated to physician incentives Physicians 10% allocated to system/hospital System/Hospitals Health Leaders Network Operations *If 30% retained revenue exceeds operating expenses, the Board shall determine how to allocate surplus between reserves for future expenditures and the physician incentive pool Allocate at least 60% of shared savings funds Distribution based on participation and quality criteria determined by Quality and Care Management Committee and approved by the Board Receive 10% of shared savings funds for their involvement and engagement to improve quality and reduce costs, as well as repayment of initial investment Represents the incentive pool, which shall include at minimum 70% of all shared savings funds
15 HLN Today PARTICIPATING PROVIDERS COVERED LIVES 1105 Total Employed Independent SCP AHP Adult Primary Care Pediatrics Specialists ,273 Total Next Gen ~22,000 MA 14,294 Commercial 80,551 Negotiating CONTRACT PIPELINE and CURRENT CONTRACTS Finalizing Signed Blue Cross/Blue Shield Covered Lives Providers Contract Type 50,571 FMOLHS only Shared Savings/Risk FMOLHS Health Plan Covered Lives Providers Contract Type 16,477 HLN Shared Savings Humana MA Covered Lives Providers Contract Type 14,294 FMOLHS only Shared Savings/Risk United ACO Covered Lives Providers Contract Type 13,503 HLN Shared Savings Updated: January 2018 Next Generation ACO Covered Lives Providers Contract Type ~22,000 FMOLHS/BRC Risk
16 Health Leaders Alliance Strategic Roadmap Confidential Do Not Distribute
17 Existing Network Structures Within Current CINs OR HLA Network Current State Specialty TOTAL Family Practice 164 Internal Medicine 265 Internal Medicine and Pediatrics 6 Pediatrics 322 Pediatrics/Internal Medicine 12 Geriatric Medicine 5 Emergency Medicine 183 Radiology 165 OB/GYN 155 Neurology 116 Hospitalist PCPs Top 5 Specialties account for 733 physicians; Across all 121 specialties there are 2,823 specialists Confidential Do Not Distribute
18 Questions 18
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