operating an aco - part 2 june 23, 2011. speakers david jones – cureis healthcare, inc....

Operating an ACO - Part 2June 23, 2011

Speakers

• David Jones – CureIS Healthcare, Inc. (Minneapolis, MN)

• Michael Kosir – Initiate Consulting (St. Paul, MN)

612.834.4544djones@cureis.com

612.247.9728mkosir@getideasmoving.com

Presentation Overview

1. What got us here2. Why ACO | Why Now3. Commercial vs Government ACOs4. Medicare Shared Savings5. Governance6. Data Driven7. Care Management8. Financial Formula9. Summary

Texas Workers Compensation Research Institute33% expenditure difference across state…with near-equal outcomes.

Striking the Balance: An Analysis of the Cost and Quality of Medical Care in the Texas Workers’ Compensation System

Global The Commonwealth FundU.S. = highest cost but last in outcomes.2007 study of 6 industrialized countries

Texas New Yorker 50% Medicare expenditure difference between

similar health populations of El Paso & McAllen.

A Cost Conundrum: What a Texas Town can teach us about health care

What Got Us Here

Runaway Inflation

What Got Us Here

Spending on Health Care ServicesIn 2005 dollars

1965$187 Billion

2005$1.9 Trillion

4.9%

Source: Congressional Budget Office based on health services and supplies, as defined in CMS national health expenditure accounts.

Average Annual Growth

Average annual GDP growth2.1%

5.1%of GDP

17.6%of GDP2009

EvolutionWhy ACO | Why Now

Fee For ServiceInsurers pay for transactions

HMOControlled reimbursement | some quality

Domestic Medicine1:1 doctor – patient relationship

Employer-based CareEmployed physicians serving employees

Medical HomeMedical team

ACOPatient-centered care controlled by medical professionals

Commercial• Patients Assigned

• Patients Free to Roam

• Patients Stay in Medicare

• Payment/Penalty Terms Set

• Quality Measures in Place

• Pioneer Option

• Patients Engaged

• Patients Corralled

• Patients Change

Jobs/Plans

• Payment/Penalty Terms Negotiated

• Quality Measures

Similar

ACO Differences

Medicare

Medicare Shared Savings Program

Objectives (3 Part Aim)

1 Better Care for Individuals

2 Improved Health for Populations

3 Lower Growth in Expenditures

Qualified & Quantified!Data Information Data Information Data Information Data Information Data Information Data

Medicare Shared Savings ProgramRequirements

• Minimum term 3 years

• Financial means to repay losses & facilitate receipt/distribution of savings

• Minimum Medicare beneficiaries 5,000

• Leadership & management for both clinical and administrative activities

• Information Infrastructure ability to evaluate data & give feedback to

organization

• Shared governance representing beneficiaries, community partners, and

provider/suppliers

• Provider Driven 75% of governing body must be ACO participants

• Public reporting of ACO performance and operational metrics

and more…

Technology Component Definition Examples

Financial Infrastructure

Ability to accept, track allocate payments associated with performance results

•Validate budget goals based on beneficiary population•Track performance payments received•Administer payment to participants

Reporting Infrastructure

System to share performance data with payer, management and participants

•Monthly performance reports•Population management trends (disease/case management)•Utilization practice variance reports

Performance Management

Dynamic reports and dashboards supported with proactive alerts and tasks.

•Disease-specific reports/alerts (CHF, COPD)•Actual results vs. benchmarks (ALOS, readmissions)•Adherence to evidence-based medicine

Data Aggregation

Meaningful joining of all data to create a holistic view of population’s care experience

•Sharing all data (Lab, radiology, pharmacy, etc.)•Disease Registry

Data & Information Drive Success

Governance – It REALLY Matters

A commitment by leadership to improve value as a top priority + a system of operational accountability to improve performance at the following levels:

– Care Management• Total Medical Leadership Commitment

– Administrative • Active Medical Leadership Participation

– Marketing• Active Medical Leadership Participation

– All Else• Active Medical Leadership Participation

If not engaged

nothing else matters

Care Management

Critical Aspects• Early diagnosis & intervention diabetes, CHF, COPD, etc.

• Active application of best practices alerts, etc.

• Peer review participating providers

• Reduction of unnecessary ER visits

• Reductions of hospital readmissions alerts, etc.

• Creative patient education services e-mail, text, etc.

Opportunities are endless…

Patient Satisfaction

Build it… they may not comeOne of the 5 quality domains is Patient/Caregiver Experience. Simple

Patient surveys assess the following:• Getting Timely Care, Appointments, and Information• How Well Your Doctors Communicate• Helpful, Courteous, Respectful Office Staff• Patients' Rating of Doctor• Health Promotion and Education• Shared Decision Making• Health Status/Functional Status

Imagine if 20% of your shared savings were determined simply by

measuring patient satisfaction.

Quality

• 65 Measures• 5 Domains includes patient/caregiver experience

• 6 Core disease states• PQRI limits• EHR Meaningful use

and more…

Medicare Shared Savings ProgramThe Basic Formula

FFSMinimum Quality

Minimum Savings

+ [ + = $

How It Works

Intent: increased quality and increased savings equals increased

sharing.

]

Formula: Components

One Sided• Shared savings payments for achieving cost

saving benchmarks

Two Sided• Shared savings payments (higher percentage)

for achieving cost saving benchmarks• Repayment of shared losses

All ACOs will operate under the two sided model in year 3 of the initial contract period and thereafter.

Formula: Components

Number Beneficiaries One Sided Two Sided

MSRSliding Scale

Set @ 2%

FQHC/RHCUp to 2.5%

Up to 5%

Savings Share Maximum 7.5% of

benchmark

10% of

benchmark

Shared Savings50% 60%

Shared Losses Greater than 2% of benchmark NA Maximum – 10%

Minimum savings rate for each one sided ACO based on the number of beneficiaries assigned. MSR calculated as follows:

Number Beneficiaries

MSR (low end)

MSR (high end)

5,000 - 5,999 3.9% 3.6%

6,000 - 6,999 3.6% 3.4%

7,000 - 7,999 3.4% 3.2%

8,000 - 8,999 3.2% 3.1%

9,000 - 9,999 3.1% 3.0%

10,000 - 14,999 3.0% 2.7%

15,000 - 19,999 2.7% 2.5%

20,000 – 49,999 2.5% 2.2%

50,000 – 59,999 2.2% 2.0%

60,000 + 2.0%

Formula: Components

Formula: Components

• Retrospective benchmarks = 3 years of data (weighted 60%. 30%, 10%)

• No prescribed payments

• Payments to TIN

• Forfeit savings if ACO departs program early

• 25% withhold of shared savings payment to offset possible future losses (2-sided only)

Formula: An Example

New Way ACO 1-Sided Model

20,000 patients @ $8K average cost/yr (3 yr historic avg.)

Benchmark = $160M2.5% MSR = $4M

Target Spend = $156M

Performance Year 1 = $140MNet Savings = $20M

50% of Savings = $10MFQHC/RHC 2.5% Credit = $0.5M

Total Savings Share = $10.5MMaximum = 7.5% of benchmark ($12M).

New Way keeps everything.

Sharing

Sharing the Savings

You Decide!

Summary

If You Remember Nothing,Remember This:

• Medical Leadership Engagement• Data & Information• Quality Care• Patient Satisfaction• Know Your Formula

Upcoming Webinars

Understanding Regulations of ACOsJuly 14, 2011

For more information and to register, visit www.aaacountablecare.org

For More Information