Session 125 L, The Emergence of Accountable Care in U.S. & U.K. Health Markets: An 

Examination of Converging Health Systems  

Moderator: Jeremiah D. Reuter, ASA, MAAA 

 Presenters: Chris Pallot 

Jeremiah D. Reuter, ASA, MAAA       

SOA Antitrust Disclaimer SOA Presentation Disclaimer 

Chris PallotDirector of Strategy & Partnerships

Northampton General Hospital NHS Trust

chris.pallot@ngh.nhs.uk

The NHS• Established on 5 July 1948

• Founded by the post-war Labour government

• Funded through general taxation

• Free at the point of delivery

• Since then, charges for prescriptions and some dental treatment commenced

• Primary care physician and all hospital treatment is free

Northampton General Hospital

• Founded in 1744

• On present site since 1793

• 700 beds

• Serves population of 400,000 (880,000 for specialist services)

• 4,897 staff

• Income £290m (c$385m) in 2015/16

The Standard Acute Contract

• Nationally mandated

• Some elements varied locally

• Payment activity generated mainly for outpatients, diagnostic and admissions

• Elective and Non-Elective patients are coded to Health Resource Groups (HRGs)

• Each HRG attracts a set level of income for the hospital (the “tariff”)

• Demand increasing 3-10% per year

• Set nationally, no negotiation, deflated by 3% annually

• Example tariff prices

‒ Carpal tunnel surgery - £849 ($1275) – $1252

‒ Cataract surgery - £762 ($1143) - $2146

‒ C-section delivery - £3,250 ($4712) - $9,000

‒ Varicose vein surgery - £1083 ($1624) - $3660

The National Tariff

N.B. U.S. values derived from Medicare FFS reimbursement

Extremely Challenging Times

Total Attendances at A&EAccident and Emergency Attendances -England

Emergency Admissions from A&E

AE Attendance Growth - NGH

7,500

8,000

8,500

9,000

9,500

10,000

10,500

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Atte

ndan

ces

2013-14 2014-15 2015-16

Source: Unify data submissions

Proportion of Patients Spending 4 Hours or Less in AE

Source: Dept of Health

Delayed Transfers of Care

Focus on Finance

World-Wide GDP Percentage Spend (2013)

NHS Trust End-of-Year Financial Results

2016/16 Q1 Surplus / Deficit Position

Ref: NHS Providers, 2016

Surplus / Deficit Position by Type

Ref: NHS Providers, 2016

Confidence in Delivering £ Target

Ref: NHS Providers, 2016

But Despite This, the NHS is Efficient….“Gross Value Added Per Hours Worked”

Ref: Centre for Health Economics; ONS

The Challenge Will Only Increase

Ref: Growing Old Together, NHS Confederation

Increase in Dementia

Ref: Growing Old Together, NHS Confederation

Public Health Projections

What is the NHS Doing About This?

NHS-Wide Initiatives

Lord Carter Report – February 2015

Source: Dept of Health

New Models of Care

Source: Dept of Health

NHS Learning from ACOs in the US

• Focus on the small numbers of patients who consume the most healthcare

• Introduce standardised care management and care co-ordination

• Sustained increase in IT investment

• Support patients to self-care

Ref: Stephen Shortell, Rachael Addicott, Nicola Walsh, Chris Ham. Kings Fund 2014

Has the ACO experiment been successful?

Reassessing ACOs and Health Care Reform: Schulman and Richman, 08/16/16

The ACO Experiment in Infancy – Looking Back and Looking Forward, Song and Fisher, 08/16/16

Ref: The Journal of the American Medical Association, August 16 2016, Vol 316, No.7

“The ACO contracts motivate participants to eliminate unnecessary care, reduce hospital and nursing home capacity, improve safety and quality, and promote effective coordination…… of care.”

“Why then would the nation give the keys to reform to hospital-led delivery systems, the organizations with the most capital intensive and costly infrastructure?”

Enablers for Integrated Care

• Align payment systems and incentives

• System-wide improvement measures and targets

• Networks and alliances replace competition with strong clinical leadership

• Commissioners using leverage to support the emerge of ICOs via contracts

Ref: Stephen Shortell, Rachael Addicott, Nicola Walsh, Chris Ham. Kings Fund 2014

The Future

• £22bn of recurrent savings required

• Growing demand and expectation

• Pressure on the funding mechanism

• Structural change is inevitable

• Sustainability and Transformation Plans

2016 SOA Annual Meeting & Exhibit – Session 125October 2016

The United States and England:United in the Pursuit of Value in Health Care

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Healthcare Expenditures as a Percent of GDP

Source: The World Bank

0%2%4%6%8%

10%12%14%16%18%

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Argentina AustraliaAustria BelgiumBulgaria Bosnia and HerzegovinaBelarus BrazilCanada SwitzerlandChile ChinaCzech Republic GermanyDenmark SpainFinland FranceGreece CroatiaHungary IndiaIreland IcelandIsrael ItalyJapan Korea, Rep.Luxembourg MexicoNetherlands NorwayNew Zealand PhilippinesPoland PortugalRussian Federation Saudi ArabiaSerbia SloveniaSweden ThailandTurkey UkraineUnited States South AfricaUnited Kingdom

3

Healthcare Financial Deficit in the United Kingdom

4

Misaligned Stakeholder Incentives (UK)

Providers, payers and patients have not historically shared aligned incentives:

• Regulators – Focus on implementing government policy and integrated care models

• Commissioners - worried about limited budgets with escalating medical expenses

• Providers – Payment by results incentivises outputs rather than outcomes. Innovations which achieve better outcomes while also increasing efficiency are disincentivised.

• Patients - typically do not make decisions on affordability as care is free at the point of use

5

Misaligned Stakeholder Incentives (US)

Providers, payers and patients have not historically shared aligned incentives:

• Private payers - worried about ACA, Health Benefit Exchanges, MLR requirements, etc. and impacts to PMPMs and bottom-line

• Government payers - worried about limited budgets with escalating medical expenses & expanding covered populations (baby boomers, Medicaid)

• Providers - worried about market share, medical care (as opposed to health care) and payment reform

• Patients - typically worried about affordability and “make me better…fast” rather than staying healthy

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Reduce Per

Capita CostImprove

Population HealthPatient Care Experience

Triple Aim

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NHS England Move to Value Based Care: Health and Social Care Act of 2012

Health and Social Care Act of 2012

CCGs

Health and

Wellbeing Boards

Economic Regulation

Public Health

Quality Regulation

Providers

8

NHS England Case Study: Milton Keynes: Capitated Outcomes Based Incentivised Commissioning (COBIC)

PROBLEM RESULTAPPROACH

In Milton Keynes (population 250,000) substance abuse services were provided by multiple providers, coordination was poor, and users found the service complex to navigate and often dropped out of treatment.

Better coordinated services

Lower cost

Better outcomes

1) Milton Keynes PCT and Milton Keynes local authority devised and developed a new form of contract to align financial incentives with system goals;

2) Multi-year contracts as opposed to annual;

3) Based on capitation payments versus fee for service;

4) Outcome indicators tied to payments of up to 20% for improved performance

9

“We need clinical commissioning groups to become accountable care organisations”

-Jeremy Hunt, Secretary of State for Health (UK)

The Future

10

NHS England Future of Value Based Care

• Accountable Care (Kaiser Permanente, Intermountain)• New Care Models

• Multispecialty Community Provider (MCP)• Primary and Acute Care Systems (PACS)

• Sustainability and Transformation Plans (STPs)• Acute Care Collaboration (ACC)

• Ultimate goal is Population Health Systems• Coordination between health and social care systems and public health• Macro, Meso, Micro

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NHS England Case Study: New Models of Care: South Somerset’s Symphony Project

PROBLEM RESULTAPPROACH

Yeovil District Hospital NHS Foundation Trust, primary care in South Somerset and other organisations aim to work in partnership to oversee a single budget for the population. Goals are to shift resourcing and services into the community by developing enhanced primary care services and establishing integrated care hubs for people with long-term conditions.

Single Budget for the population to deliver a range of primary care, community health, mental health, and hospital services, with the intention to move over time to cover almost the entire health and care budget.

Goal to establish a county-wide Accountable Care Organization by 2019.

1) Yeovil NHS Foundation Trust created Symphony Healthcare Services to deliver core and additional primary care services.

2) Creation of Symphony Care Hub with care coordinators and multidisciplinary teams for people with three or more chronic conditions.

3) Established an enhanced primary care model that sees additional roles, particularly health coaches, introduced into practice teams.

Collins, Ben (October 2014). New Care Models: Emerging innovations in governance and organisational form. London: The Kings Fund. Available at: http://www.kingsfund.org.uk/sites/files/kf/media/the-kings-fund-house-style-references_0.pdf (accessed on October 18, 2016).

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Typical text slide title Arial 20pt

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NHS EnglandChallenges

• Data• Information technology infrastructure• Coordination across providers of care• Patient engagement

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United StatesValue Based Care Programs

• The Innovation Center (CMMI)• Accountable Care Organizations • Bundled Payments for Care Improvement (BPCI)• Mandatory Bundles (CJR, Cardiac)• MACRA• Specialty programs (ESRD (CEC), Oncology (OCM), etc.)

• Medicaid• Accountable Care Organizations• Bundled Payment Programs• DSRIP

• Commercial

15

United States:Current ACO Prevalence and Geographic Distribution

782 Total ACOs

464 Medicare ACOs

23 million covered lives 50 million patients

served by ACO providers

8 million covered lives

Number of ACOs by Hospital Referral Region, December 2015 Source: Leavitt Partners Center for Accountable Care Intelligence

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Medicare FFSQuality and Alternative Payment Models

Source: Centers of Medicare and Medicaid Services

Target percentage of Medicare FFS payments linked to quality and alternative payment models in 2016 and 2018

All Medicare FFS All Medicare FFS

85%

30%

2016

90%

50%

2018

All Medicare FFS (Categories 1−4)

FFS linked to quality (Categories 2−4)

Alternative payment models (Categories 3−4)

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United StatesAcceleration of Value Based Care Programs

“…this proposed rule raises serious concerns about the agency’s pace of change, as well as its ability to accurately track and process the outcomes of its myriad increasingly complex alternative payment models. As such, we urge CMS, in the strongest possible terms, to refrain from expanding mandatory bundled payment models to other geographic areas or conditions before there has been enough time to assess the lessons learned under the existing models.”

“We urge the agency to proceed at a more deliberate pace and simplify the rule”

“Hospitals strongly support CMS’s push for adoption of alternative payment models and are working to help ensure these complex models work for patients. However, if the agency does not, in turn, support hospitals by recognizing the significant investments of time, effort and finances that these models require, neither we nor the agency will find success.”

-Letter from the American Hospital Association to Centers for Medicare & Medicaid Services

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What can we learn?Cost and Quality

• Mixed results is success of Medicare ACOs:

Source: Leavitt Partners

• Important features of PCMHs– Individualized care for patients with

chronic conditions– Efficient service provision with

standardized practices and staff training– Cost effective specialists for referral– Strong leadership with a tolerance for

risk and personal accountability

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• NHS (UK)– Quality and Outcomes Framework (QOF)

• The Quality and Outcomes Framework (QOF) is the annual reward and incentive programme detailing GP practice achievement results.

• It rewards practices for the provision of quality care and helps standardise improvement in the delivery of primary medical services.

– Commissioning for Quality and Innovation (CQUIN)• Rewards excellence by linking a proportion of English healthcare providers' income to the achievement of local quality improvement goals

• Medicare ACOs– 34 quality metrics

• Patient / caregiver experience, care coordination / patient safety, preventive health, at-risk population

• Medicare Advantage– STARS

• Medicare FFS– Value Based Purchasing, Readmission Penalties, Hospital Acquired Conditions, MACRA

Reimbursement for Quality

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Type of value-based payment

Value-based payments tied to quality and risk

53% 47%

Value-based payments by provider type38%

24%10%

Source: Catalyst for Payment Reform

Value-based payments2015 National scorecard for commercial market

Value-based payments

40% Tied to quality

Not tied to quality

Hospital Outpatient PCP Outpatient specialist

At risk Not at risk

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What can we learn?Key Issues

Size and scale

Care management

New working arrangements

New support tools are required

Patient engagement

Cost and quality

measures

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What can we learn?Transformation to Accountable Care

Need to focus on small population of people who account for high proportion of use and cost through risk stratification.

Case management and care coordination

Support development of integrated care through information sharing and investment in information technology

Need to engage patients

Payment systems and incentives that are aligned

Networks and provider partnerships

Contact information

Jeremiah Reuter, ASA, MAAADirector, Provider Risk Advisory303-714-3873Jeremiah.Reuter@Optum.com

Thank you

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