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MACRA & ACOS David Muhlestein, PhD JD Vice President of Research Leavitt Partners @David Muhlestein December 1, 2016

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Page 1: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

MACRA & ACOS

David Muhlestein, PhD JDVice President of Research

Leavitt Partners@David Muhlestein

December 1, 2016

Page 2: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

PRESENTATION OVERVIEW

2

• ACO Growth Update• ACOs and MACRA• Implications• Preparation

Page 3: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

ACO GROWTH UPDATE Who’s participating?

Page 4: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

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

Page 5: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

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

Page 6: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

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

Page 7: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

WHERE ARE THEY FORMING?

Source: Leavitt Partners Center for Accountable Care Intelligence 7

Page 8: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

ACO PENETRATION OF LIVES OVER TIME

Source: Leavitt Partners Center for Accountable Care Intelligence 8

Page 9: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

HOSPITALS IN ACOS OVER TIME

Source: Leavitt Partners Center for Accountable Care Intelligence 9

Page 10: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

COMMERCIAL ACO PROGRAMS

Source: Leavitt Partners Center for Accountable Care Intelligence 10

AETNA

UNITED HEALTHCARE

CIGNA

Page 11: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

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

Page 12: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

MACRA & ACOS

12

Page 13: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

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

Page 14: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

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

Page 15: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

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

Page 16: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

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

Page 17: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

MACRA INCENTS APM PARTICIPATION

17

Medical home modelsPopulation-based models (ACOs)Episode-based models (bundled payments)

Page 18: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

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+

Page 19: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

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

Page 20: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

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)

Page 21: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

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

Page 22: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

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

Page 23: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

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

Page 24: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

IMPLICATIONS

24

Page 25: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

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

Page 26: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

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

Page 27: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

PREPARATION

Page 28: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

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.

Page 29: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

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

Page 30: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

DELIVERY REFORM NEEDED

Health systems need to incorporate new competencies to align with value-based care

initiatives

Page 31: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

MORE THAN EVER, PROVIDERS ARE PARTNERING

31

Why do ACOs need partnerships? Manage services across the continuum of careShare risk Build infrastructure Aggregate lives

Page 32: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

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

Page 33: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

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

Page 34: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

QUESTIONS?

Page 35: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

APPENDIX

35

Page 36: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

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

Page 37: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

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

Page 38: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

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

Page 39: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

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

Page 40: MACRA & ACOS - Global Health Care · MACRA & ACOS 12. DRIVERS OF ACO GROWTH Early Growth • Altruism • Experimentation • Expansion • Defense • FFS Failure 13 Growth Under

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