Governance Role in Advancing New Approaches to Care Delivery and Payment Webinar

January 12, 2017

Welcome

Amber McEwenCalifornia Hospital Association

Peggy Broussard Wheeler serves as CHA’s vice president of rural health care and governance. She is responsible for advocating on behalf of small and rural hospitals at the state and national levels. Peggy also staffs CHA’s Governance Forum Advisory Board, which promotes opportunities for hospital and health system trustee involvement in policy formulation, and political and legislative activities.

CHA Staff

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Faculty

Anne McLeod, MPH, is CHA’s senior vice president for health policy and innovation. She provides leadership in the development of CHA’s public policy objectives and develops innovative policy solutions for CHA’s members. Using her experience and extensive knowledge of federal and state health policies, Anne represents hospitals’ interests and supports their future growth and success as they respond to the challenges they face going forward.

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Today’s Topics

• Environmental Scan• Health Policy Outlook 2017• Changing Health Care Delivery and

Payment Model

Environmental Scan

Environmental Scan

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“The [federal] budget deficit for 2016 will be about one-third larger than last year’s.”— Congressional Budget Office (August 2016, Budget Update and Economic Outlook)

Environmental Scan (cont.)

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“Growing deficits projected through 2026 would drive up debt.”— Congressional Budget Office (August 2016, Budget Update and Economic Outlook)

Environmental Scan (cont.)

Source: McDermott. Zimmerman. Center of Budget and Policy Priorities. 2015 OMB.

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Medicare is always a target for deficit reduction legislation:

• 25% of federal spending – $938B –went to Medicare, Medicaid and subsidies for the federal exchange marketplace

• Medicare accounted for 2/3 of that amount, or $546B

Environmental Scan (cont.)

Source: U.S. Census Bureau, 2010 Census, 2012 National Population Projections and MedPAC.

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Environmental Scan (cont.)

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Environmental Scan (cont.)

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Health Policy Outlook 2017

Health Policy Outlook 2017

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Election outcome may impact the “how,” but the “what will remain largely the same

Health Policy Outlook 2017 (cont.)

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Current HHS Goals on Value-Based Payment:

Health Policy Outlook 2017 (cont.)

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Health Policy Outlook 2017 (cont.)

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Delivery system reform requires focusing on the way we pay providers, deliver care and distribute information

Health Policy Outlook 2017 (cont.)

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CMS is rapidly expanding its portfolio of new payment models …

… But it’s too early to know if models reduce cost and improve quality over time

Health Policy Outlook 2017 (cont.)

• Consumers’ involvement increasing• Bundled, global and risk-based payments will grow• Consolidation of payers and providers• Transparency and data enhanced• Boundary erosion• Increased risk arrangements• Team-based, whole-person care• Technology and “big data” necessary

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Health Policy Outlook 2017 (cont.)

CMS estimates that about $17 billion in Medicare spending annually is due to preventable readmissions.

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Health Policy Outlook 2017 (cont.)

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The Changing Health Care Delivery and Payment Model

Through Disruption, A New Business Model Emerges

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Fee-for-Service Model Fee-for-Value Model

Population Health Management – What is it?

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Population Health Management vs. Community Health

Managing and being financially responsible for the overall health, health outcomes and well-being of a contracted or attributed population under risk-bearing arrangements. Typically individuals have a common bond such as an employer or a health plan. Individuals receive care within a defined health system of providers.

The health status of a group of individuals within a geographically common area, such as a community. These individuals may receive care from a variety of providers or may not be connected to care. They may or may not be uninsured and there generally are no financial resources.

Population Health Management Community Health

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Observations on the Early Stages of PHM

• California providers have more experience with managed care models

• California has seen more proof of concept and large-scale benefit of PHM

• Many California markets are ahead of national benchmarks, but California is still evolving

• California-based PHM models also have been exported to new markets

• Sustainable improvements in population health have yet to be quantified on a large scale

• Early stage investments often take 5+ years to show positive ROI

• Behavior change among stakeholders (physicians, hospitals, purchasers, patients) takes time to occur and stabilize

• New partnerships likely will be required to cover new services and/or geographies; establishing such arrangements will take time

National California

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8%

California Health Care Cost and GrowthCalifornia per capita costs are historically below many other states –8% below the U.S. average and growing at slower rate

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California Utilization Rates

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Consistently lower utilization levels have been a major contributorto California’s health care cost advantage

Polling Question #1

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A Framework for the Pursuit of Population Health Management

Effective Care Management Has Clinical and Business Components

Clinical Components

Business Components

Care Management

Utilization Management

Care Management

Information Technology Services

Network Services

Care Navigation

• Leveling of Care• Patient Status• Denials• Clinical Coding/Documenting

• Wellness/Prevention/Outreach• Care Coordination• Care Transitions• Care Gap Identification

• Referral Management• Case Management

• EMR (hospital and ambulatory)• Business & Clinical Intelligence• Health Information Exchange

• Network Management• Managed Care Contracting• Actuarial Services• Claims Management

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Despite Advancements, There is Room for Improvement in Cost and Quality

Source: Yegian, J., Yanagihara, D.: “Value-Based Pay for Performance in California.” Issue Brief (No. 8), Integrated Healthcare Association, Sept. 2013.

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Early Models

Developed in 2009

Included in 2011 expansion

Spending reduction achieved:Year one: $20 millionYear two: $17 millionYear three: $22 million

Source: Cohen, A., Klein, S., McCarthy, D. “Hill Physicians Medical Group: A Market-Driven Approach to Accountable Care for Commercially Insured Patients.” The Commonwealth Fund, Oct. 2014.

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Evolving Model with Hospitals and Health Systems Organizing Care Delivery

Narrow network HMO product priced 10-20% below current

market premiums

Customers

Public Employers

LargeGroup

Other

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Characteristics ContractedParticipant

Single Product

Participant

Multiproduct Participant

Population Co-manager

Population Manager

Risk/Payment Model None, FFS payment Blend/episodic Blend/episodic

Full or partial provider risk; unlikely

to assume health plan risk

Full provider risk; may take health plan

risk

Clinical Integration No Maybe Likely Yes Yes

Network Adequacy/Market Essentiality Low Low Low to

moderate Moderate High

Insurance License Ownership No No No Maybe, but not

requiredLimited or regular

license

Membership Ownership No No No Maybe, but unlikely Yes

Examples

• Critical access hospitals

• Safety net hospitals

• Community hospitals

• Academic medical centers• Children’s hospitals• Specialty hospitals• Senior independent practice

associations (IPAs) • Community health systems

• Integrated delivery networks • IPAs• Clinically integrated networks

Key Characteristics of Future Roles

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Leadership Imperative: Define the Strategic Roadmap

Context-SettingValue

Proposition The PHM Plan

1. Understand and Organize Around PHM

2. Determine Market Stage

3. Evaluate Position and

Gaps

5. Determine Scope of PHM Network/Role

6. Define PHM Contracting

Strategy

4. Identify PHM Market

Opportunities

7. Identify Path – Build, Buy

and/or Partner

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• Build competencies and capabilities internally• Buy or purchase access to certain competencies or services from

another entity• Partner with another entity to gain access to required competencies

To participate in PHM in a significant way, most hospitals and health systems will need

to use the latter two approaches.

Identify Path – Build, Buy and/or Partner

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1. Physician and clinical alignment2. Contracting strategy 3. Network optimization 4. Operational efficiency5. Enabling infrastructure

Five Interrelated Business Imperatives Need to Be Addressed

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At-Risk & Stable

Healthy

• Home monitoring• Extended team care planning, medication compliance, scheduled reviews

and tracking of interventions• Patient and family member contribution to care team notes• Predictive and prescriptive views of outcomes and cost

• Health risk assessments, targeted calls, emails, text invitationsand routinized contact

• Online education, health coaching and group initiatives prediabetes, blood pressure control, weight management, etc.

• Wearable health monitoring technologies, mobile, smartphone-enableddevices

• Reminders for annual wellness check-ups and cancer screening services • Telehealth services provide easy access and routine interventions• Patient portals and personal health records – results review and tracking

• 24/7 services needed to keep patients in their home, avoid unnecessaryhospitalizations, support family caregivers and reduce the burdenon family physicians

• Patients and caregivers benefit from electronic communications of Advance Directives and Powers of Attorney, specialized care pathways, pain management protocols, etc.

• New initiatives examining the role of tele-hospice

Critical

Chronic Simple&

Complex

Interventions by Population Segment

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Interventions Need to Be Targeted Across the Care Continuum

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Population Segments

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Enterprise strategy varies by market stage, competitive positioning, history,collaboration among key players, new entrants, organizational competencies, etc.

2010 2015 2020

Fee-for-Service PaymentHospital ConsolidationPractice Aquisition

Clinical IntegrationPatient EngagementCross-Venue Process RedesignPerformance MeasurementEarly-Stage Population Stratification

Risk ManagementPopulation Health ManagementRetail CareVirtual CareConsumer Behavior Management

© Copyright Maestro Strategies, LLC 2015

Transformation to High-Value Health Care

Bricks & Mortar Health Care

Transition Digital Health & Health Care

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“The future will be about getting the right information to the right person at the right time to make the right decision to create value.”

Transformation to High-Value Health Care: The Role of IT

© Copyright Maestro Strategies, LLC 2015

Implement EHR systems and align lean with traditional quality

functions

Build new informatics, analytics, transformation

and innovation capabilities

Rethink IT and quality operating models

Weave digital capabilties into the

fabric of new business, care delivery and payment models

2010 2015 2020

Bricks & Mortar Health Care

Transition Digital Health & Health Care

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Provider Investment Will Depend on Provider PHM Role

Prepaid

FFS

Futu

re P

aym

ent M

odel

The extent of investment will depend on the PHM role

• Most Advanced: Population Health Manager in All Markets –Responsible for defining all aspects of IT strategy – consumer engagement, care management, analytics, interoperability, EHRs

• Advanced: Population Health Co-Manager – Will partner to deliver key components depending on specifics of market requirements

• Less Advanced: Population Health Multiproduct, Single Product, Contracting Participant – Will ensure EHRs and interoperability with more advanced population health management leaders

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Polling Question #2

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Leadership Mindset: 4 Key Attributes

1. Committed to a new view of health care2. Agile3. Willing to experiment and innovate4. Commitment to planning

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• Chief Transformation Officer

• Chief Medical Informatics Officer

• Chief Innovation Officer

• Senior Health Care Economist

• SVP, Pharmaceutical Management

• SVP, Managed Care Pricing

• SVP, Health Plan and Managed Care

• SVP, Actuarial Services and Predictive/Risk Modeling

• SVP, Product and Benefit Design

• EVP, Consumer Solutions

• EVP, Advanced Analytics

• EVP, Network Partnerships and Management

• COO, Network Operations and Development

• Endless physician and clinical leadership, and councils in key areas such as primary care, ED, hospitalist and post-acute

• University, research institutes and other partnerships

New Roles

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Polling Question #3

Thank You

Anne McLeod, MPHSenior Vice PresidentHealth Policy & InnovationCalifornia Hospital Association(916) 552-7536amcleod@calhospital.org

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Questions

Online questions:Type your question in the Q & A box, press enter

Phone questions:To ask a question, press *1

Health Policy Legislative DayMarch 14 & 15, 2017, Sacramento

Make plans now to join us in Sacramento. This annual advocacy event is an opportunity for hospital executives to share with California lawmakers the impact of proposed legislation on their hospitals, communities and the patients they serve.

Upcoming Programs

Upcoming Programs

California Congressional Action ProgramMay 7 – 10, 2017, Washington, D.C.

Mark your calendar for this important annual event in our nation’s capital. With the new presidential administration, the potential for major policy changes is significant. Gather together with fellow hospital executives and ensure the voice of California hospitals is heard.

Thank You and Evaluation

Thank you for participating in today’s seminar. An online evaluation will be sent to you shortly.

A recording of this program will be available to all CHA members.

For education questions, contact Amber McEwen at (916) 552-7578 or amcewen@calhospital.org.