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MACRA & ACOS
David Muhlestein, PhD JDVice President of Research
Leavitt Partners@David Muhlestein
December 1, 2016
PRESENTATION OVERVIEW
2
• ACO Growth Update• ACOs and MACRA• Implications• Preparation
ACO GROWTH UPDATE Who’s participating?
ACO GROWTH
Num
ber of Lives Covered (Millions)
4
81 85 102157
207
306 323
421 448 460
572 592 600 624 635
730 738 761 783841 847 857 860
0
5
10
15
20
25
30
0
100
200
300
400
500
600
700
800
900
1000
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Q4 2016
Num
ber o
f ACO
s
# of ACOs # of Covered Lives
28.6 Million Lives
81 85 102157
207
306 323
421 448 460521
592 600 624 635
730 738 761 783841 847 857 860
81 83 95
203254
374 391
536 558 591640
770 803855
891
1031 1053 10801128
1199 1230 1254 1266
0
200
400
600
800
1000
1200
1400
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Q4 2016
# of ACOs
# of Payment Arrangements
Source: Leavitt Partners Center for Accountable Care Intelligence
[VALUE]
[VALUE]
[VALUE]
[VALUE]
[VALUE][VALUE]
[VALUE]
0 1 2 3 4 5 >5
# of Payment Arrangements per ACO
CONTRACT GROWTH OUTPACING ACO GROWTHN
umbe
r of P
aym
ent A
rran
gem
ents
5
ACO GROWTH BY PAYER
1266
474
707
850
200
400
600
800
1000
1200
1400
Total Medicare Commercial Medicaid
Source: Leavitt Partners Center for Accountable Care Intelligence
Paym
ent A
rran
gem
ents
Payment Arrangement Growth by Payer Type
17.5
8.8
2.5
ACO Lives Per Payer (in Millions)
ACO GROWTH BY PAYER
6
WHERE ARE THEY FORMING?
Source: Leavitt Partners Center for Accountable Care Intelligence 7
ACO PENETRATION OF LIVES OVER TIME
Source: Leavitt Partners Center for Accountable Care Intelligence 8
HOSPITALS IN ACOS OVER TIME
Source: Leavitt Partners Center for Accountable Care Intelligence 9
COMMERCIAL ACO PROGRAMS
Source: Leavitt Partners Center for Accountable Care Intelligence 10
AETNA
UNITED HEALTHCARE
CIGNA
41Million
020406080
100120140160180200
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Live
s Co
vere
d (M
illio
ns)
FINANCIAL FAILURE SCENARIO
177Million
0
20
40
60
80
100
120
140
160
180
200
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Li
ves
Cove
red
(Mill
ions
)
WIDESPREAD SUPPORT SCENARIO
Predicted Actual
68Million
020406080
100120140160180200
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Live
s Co
vere
d (M
illio
ns)
BASELINE SCENARIO WITHOUT MACRA
Source: Leavitt Partners Center for Accountable Care Intelligence
105Million
020406080
100120140160180200
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Live
s Co
vere
d (M
illio
ns)
BASELINE SCENARIO
PROJECTED ACO-COVERED LIVES
11
MACRA & ACOS
12
DRIVERS OF ACO GROWTH
Early Growth • Altruism• Experimentation• Expansion• Defense• FFS Failure
13
Growth Under MACRA• Success of current ACOs• Flexibility of regulatory action • Fear of MIPS• Long-term strategy of public
and private payers• Response to competitors
14
HHS GOAL: BETTER, SMARTER, HEALTHIER Goal #1: Tie 30% of all Medicare provider payments to value through alternative payment models by the end of 2016 (achieved March, 2016); 50% by 2018.
Goal #2: Tie 85% of all Medicare FFS payments to quality and value by 2016; 90% by 2018.
Source: healthit.gov 14
MACRA: A BIPARTISAN LEVER FOR CHANGE
92%
8%
91%
9% 1%
91% of House in favor of MACRA
92% of Senate in favor of MACRA
15
WHAT DOES MACRA DO?
Replaces the Sustainable Growth Rate (SGR) Formula
16
Alters Medicare physician reimbursement to reward value, rather than volume
Streamlines multiple physician quality incentive programs
MACRA INCENTS APM PARTICIPATION
17
Medical home modelsPopulation-based models (ACOs)Episode-based models (bundled payments)
MEDICAL HOME MODELS
1818
A primary care delivery model that focuses on strengthening care through long-term relationships between the patient and care team through coordination of care across the medical neighborhood.
Characteristics:• Primary care-centric• Focused on patient and caregiver engagement• Coordinate care across the continuum• Payment mechanisms vary; all offer new financial flexibilities for PCPs
MACRA APMs of this type:• CPC+
POPULATION-BASED MODELS (ACOS)
1919
A group of providers responsible for the cost and quality outcomes of a defined population.
Characteristics:• Providers accountable for total cost of care• Coordinate care across the continuum • Payment mechanisms vary (care management fee, shared savings/losses, capitation)• Largest of CMS’ value-based portfolio
MACRA APMs of this type:• MSSP• Next Generation ACO • Comprehensive ESRD Care • Oncology Care Model
EPISODE-BASED MODELS (BUNDLED PAYMENTS)
2020
Providers receive a single payment that covers defined services to treat a given clinical condition.
Characteristics:• Specific episode length (30, 60, 90-day most common)• Responsible for limited or total cost of care; performance measured against a target
price for the episode• Prospective vs. retrospective payment• Voluntary and mandatory models
MACRA APMs of this type:• Comprehensive Care for Joint Replacement (CJR) (CEHRT Track)• Voluntary Bundle (to be announced)
21
MACRA’S ADVANCED APMS
• MSSP Tracks 2 & 3
• Next Generation ACO Model• Comprehensive ESRD Care (LDO & non-LDO
2-side risk arrangements)• Comprehensive Primary Care Plus
• Oncology Care Model (two-sided risk arrangement)
• Medicare ACO Track 1+
• Advancing Care Coordination through Episode Payment Models (Tracks 1&2)
• Cardiac Rehabilitation (CR) Incentive Payment Model
• Maryland All-Payer Model
• Medicare Diabetes Prevention Program• Chronic Care for Joint Replacement (CJR)• Vermont All-Payer ACO Model
2017 2018
VARYING LEVELS OF APM PARTICIPATION
22
Advanced APM Qualification:• Provider receives 25% of Medicare Part B
payments through the Advanced APM
OR
• Provider sees 20% of Medicare patients through the Advanced APM
MIPS APM Qualification:• Provider receives 20% of Medicare Part B
payments through the MIPS APM
OR
• Provider sees 10% of Medicare patients through the MIPS APM
THE ALL-PAYER OPTION
Starting in 2021, clinicians can be considered a qualified provider through commercial if the arrangement criteria is similar to those of Advanced APMs.
Increased role and responsibility of commercial and Medicaid payersAggressive growth of lives covered by the Advanced APMsIncreased number of qualifying alternative payment models
IMPLICATIONS
24
QPP PAYMENT MODEL TIMELINE
20172018
• Performance year(min.90 days – full CY)
• Eligible clinician determination(Dec 2016/Dec 2017)
• QP performance year (Full CY)
• Participation list submission(Mar, Jun, Aug)
• QP determination(Jul, Oct, Dec)
• Data reporting(Jan – Mar)
• 2018 claims determine amount of 5% bonus(Full CY)
2019
• Paymentadjustment(Jan)
• 5% bonus(~Jun – Dec)
Timeline: 2019 Payment Year
MIPS Advanced APM
25
26
QPP PAYMENT MODEL TIMELINE
Performance year 1 begins*
Data reporting for year 1*
QP determination
for year 1*
PQRS, VM, & EHR MU end
MIPS payment adjustments
begin
Advanced APM payment
incentive begins
2017 2018 2019
±4%
+5%
±5%
+5%
±7%
+5%
±9%
+5%
Paym
ent
Ope
ratio
ns
2020
.5%.5%
Adv. APM all-payer combo
option begins
2021
0% 0% 0%
2022-2024 2025
±9%
0%
0%
2026+
±9%
0%
.25% MIPS
.75% APM
Virtual groups begin
MIP
SAd
vAP
MO
ther
MIPS adjustment
APM bonus
Physician Fee Schedule increase
PREPARATION
28
CMS ACCELERATES APM ADOPTION
0%
10%
20%
30%
40%
50%
60%
70%
80%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Key Componentsa. APMs (ACOs, Bundled
Payments, Medical Homes)b. Integrated Care
Demonstrationsc. Value-Based Purchasing
Models
Goal #1: Tie 30% of all Medicare provider payments to value through alternative payment models by the end of 2016; 50% by 2018.
Goal #2: Tie 85% of all Medicare FFS payments to quality and value by 2016; 90% by 2018.
29
HELPING PROVIDERS TRANSITION
Many providers are unprepared• Changing the care delivery system takes time
• There is no clear path to follow
• Adopting APMs without changing care delivery may hurt providers and patients
For delivery reform to succeed, health care professionals need support in identifying and defining essential competencies
• Competencies are the distinct skills necessary for a risk-bearing entity
• When clearly defined, organizations can assess their ability and work to achieve the Triple Aim
DELIVERY REFORM NEEDED
Health systems need to incorporate new competencies to align with value-based care
initiatives
MORE THAN EVER, PROVIDERS ARE PARTNERING
31
Why do ACOs need partnerships? Manage services across the continuum of careShare risk Build infrastructure Aggregate lives
DECISION-MAKING FRAMEWORK
32
1. An assessment of the needs of the population for which the ACO is taking responsibility
Intervention Opportunities
Population Needs
Partner Needs
2. An assessment of opportunities to eliminate or address any risks the population faces
3. An evaluation of the sophistication level in the partner and assessment of possible partners in the market
PROVIDER CHARACTERISTICS
High Value CulturePatient-CenterednessSystem & Public AccountabilityTeam-Based CareHIT SystemsPerformance Improvement SystemsFinancial Readiness
Regardless of type, all providers should have the characteristics of High Value
33
QUESTIONS?
APPENDIX
35
Duration• Started 3/1/2012• 3-year agreement periods
Participants• 434 active participants• 6 rounds• 74% renewal ra
Beneficiary Assignment• Retrospective – Tracks 1 & 2• Prospective – Track 3
Risk• Track 1
• One-sided risk • Up to 50% of savings
• Track 2 • Two-sided risk• Up to 60% of savings / No less than 40% of
losses
• Track 3• Two-sided risk• Up to 75% of savings / 40%-75% of losses • Additional waivers (SNF, home health, telehealth)
MSSP ProgramMSSP: The Basics
412
6 16
Track 1
Track 2
Track 3
Duration• Started 1/1/2012• 3-year program with optional
extensions
Participants• More experienced• 32 original, 9 active• Of the 23 drop-outs:
- 9 moved to MSSP- 7 moved to NGACO- 5 left Medicare ACO programs but kept commercial
arrangements- 2 dropped ACO concept entirely
Beneficiary Assignment• Retrospective
Risk• Two-sided risk• Multiple models• Higher savings/loss rate
MSSP ProgramPioneer Program: The Basics
Duration• Started 1/1/2016• 3-year agreement with option for 2
additional years
Participants• 21 original, 18 active• Second and final cohort to begin 2017
Beneficiary Assignment• Prospective• Elective
Other• Financial incentives for beneficiaries • Waiver access
Risk• Two risk arrangements 80%-100%• Prospective benchmark• Multiple payment mechanisms
– FFS– FFS + infrastructure– Population based payment– Capitation
MSSP ProgramNext Generation ACO Program: The Basics
Comprehensive ESRD Care Initiative• ESRD Seamless Care Organization (ESCO)• 13 participants• Separate tracks for large and small
organizations• Accountable for all costs• First touch attribution• Multiple delays
Oncology Care Model• 195 practices and 16 payers• All cancers treated by chemotherapy• “Episode based” – all costs for 6 month
period• Accountable for all Parts A & B costs• $160 PMPM Care Management• 100% of savings after discount• Multi-payer component
Other ACO-Like Medicare Programs
40
Delivery Reform Needed
Health IT
Care Coordination
Patient Risk Assessment
QualityFinancial Readiness
Governance & Culture
Patient Centeredness
Patient Assessment
Data
Platform for Patient
Assessment
Patient Assessment
Process
Population Risk
Assessment Dashboard
Support use of multiple common analytics tools via an open API
Enable user defined variable weights & models for multiple care programs
Support a wide diversity of the population
Support multiple risk assessment models based on business need
Categories
Competencies