Imagination at work.

Moving from Volume to Value – an industry update on the changing reimbursement landscape.

Maine HFMASeptember 15, 2016

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General Electric Company, by and through its GE Healthcare division.

Today’s Presenters

3

Jim FrankelSegment Specialist, Integrated CareGE HealthcareJim.Frankel@ge.com

Michael MonahanSolutions Enablement ManagerGE HealthcareMichael.Monahan@ge.com

Agenda

• Movement from Volume to Value – what is driving the change

• Problems and opportunities for providers• Q&A

Movement from Volume to Value

The new reality: Provider organizations must manage “risk”

• Market forces driving a heightened need for financial accountability

• Insurers seeking to transfer the financial risk of clinical service

• The risk-transference is taking the form of payment-for-value arrangements

• Entrepreneurial provider-sponsored organizations are well positioned

• Organizations may lack technology and solutions infrastructure to transform their business models

The Triple Aim in Healthcare

Triple Aim

Reduce Cost

Improve Outcomes

Improve Patient

Satisfaction

The Triple Aim in Healthcare DefinedObjectives• Lower Cost• Improve Quality• Improve Customer Satisfaction

• Improve Patient Care Experience, Improve Overall Health of our Communities, Reduce the Cost of Care

• Shapes the Affordable Care Act and its implementation

For more information go to: http://www.ihi.org/Engage/Initiatives/TripleAim/Pages/default.aspx

Healthcare is experiencing massive change driven by healthcare payment reform

Source: GE Analysis, OECD, LeavittSource: Becker’s Hospital Review: 2014 CFO Survey

141 146

193

199201

259 266 268273

146158

184

195 201

238 244 249256

31 3748 54 55 60 60 60 60

11 1230 33 34

52 53 53 56

0

50

100

150

200

250

300

Q22011

Q32011

Q42011

Q12012

Q22012

Q32012

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

#of A

CO

s

Physician Group Hospital System

Population covered under risk contract

25%30%

37%

44%

53%

65%

0%

10%

20%

30%

40%

50%

60%

70%

0

50

100

150

200

250

2013 2014 2015 2016 2017 2018

Comm NonMedicareMSSP

Medicaid MCO

Emergence of ACOs

Shift in focus from volume of services to value of services, consequently shifting the risk to the providers

Today Tomorrow

Fee For Service

Provider financial risk

Pay

ersa

ving

s

Shared Savings

Bundled Payments

Partial Capitation

Global Capitation

Savings shared between provider and payer

Single payment for a group of services

• Reimbursement for specific, individual services provided to a patient

• Little or no incentive to deliver efficient care or prevent unnecessary care

Certain services are paid on a capitated basis

All care is covered under one capitated PMPM basis

Challenges• Volume based reimbursement• 30 million uninsured• Disconnected silos• Lack of care coordination• Duplicate testing• Lack of data for decision making

Benefits• Value based reimbursement• Care coordination• Clinically integrated networks• Population management• Reduction in duplicate testing• Data available for decision making at point

of care

PHYSICIANGROUPS

SPECIALIZED

HOSPITALS

CONSOLIDATING

HEALTHPLANS

SHIFTING RISK

PATIENTS

RESPONSIBLE

“The VBR Numbers” to Keep at the Top of Your Mind

Percentage of Medicare payments that will be based on Value-Based Reimbursement by 201890% of all Medicare payments will be tied to quality or valueThe Healthcare Transformation Task Force plan to have 75% of their business come from risk-based contractsPercent of Aetna’s medical spend on value-based contracting by the end of the decade

Value shift that will take place in the next five – 10 years

11

50%

2018

2020

75%

$1 trillion

12WRUG - GE Healthcare

JB18537US

Volume to value migration accelerating

Long-term future

Key driver – upside-down costs

Oliver Wyman 2012

Risk shift

ACO growth

Leavitt Partners 2013

% of Portfolio in Risk-Based Contracts

Porter Research Study 2013

% o

f R

espo

nden

ts

Problems and Opportunities

What is Value Based Reimbursement?

Member and Benefits

Management

Medical Management

Network Adequacy

Transaction Processing

Risk Management

Value Based Reimbursement (VBR) is the practice of accepting value based payments for the provision of care for a specified population.

To be successful with VBR, an organization must be able to provide consistent and high quality care at a consistent and reasonable cost. When care provided is great, and the expenses are predictable, financial rewards will be realized.

VBR encompasses operational and transaction processing functions as described to the right.

Why Consider Risk Arrangements?

Predictable Revenue

Comprehensive Service

OfferingsWell Controlled

CostsFinancial Success

Value based payments (i.e. Capitation) enable greater financial control when the population has access to

comprehensive services and the provider(s) have well

controlled costs.

They tried this with Capitation in the 1990s and it failed so why do people think it will work this time?

• Focus is on cost, quality and patient satisfaction

• Industry goal in the new world is to provide better, less costly care and to ensure a positive patient experience (the triple AIM)

The structure of risk based agreements has changed to include not only ‘cost’ but ‘quality’ and ‘patient satisfaction’ metrics in important ways that may enable risk based arrangements to work this time

16

Triple Aim

Reduce Cost

Improve Outcomes

Improve Patient

Satisfaction

Episodic Management

Contracting / Sales

Benefit Plan Design

Member Enrollment

Member Risk Management

Member/ Employer/ Payer• Shared Savings• Bundled

Payments• Full/Partial

Capitation

Administrative• Load/build

Benefit Plans• Load member

demographics• Match Benefit

Plans & Members

• Assign & select PCP

Foundational Benefit Plan• Connecting with

Payers• Benefit Plan(s)

build• Provider Network

development

Administrative• Benefits used• Money paid in &

out• Demographic

changes• PCP assignmentHealth Management• Chronic Care• Wellness• Health Education• Referral

Management

Clinical care• Appropriateness• Care & treatment

management• Referral

managementAdministrative• Claim

acceptance• Claim review• Benefits to Policy

matching• Payment

Components of Managing Risk

Elements of Value Based Arrangements

• Referral Management• Utilization Management• Risk Stratification• Network Management• Predictive Modeling

• Patient & ProviderIncentive Management

• Member Claims View• Member Benefits View• Provider Financial

and Performance Views

• Patient Registries• Cohort Development• Orders and Gaps in Care Alerts• Education and Awareness• Collaborative Care

Value Based Reimbursement• Administration

Simplification• Enrollment• Claims Adjudication• Premium Billing

• Practice Performance Mgmt.• Contracts/Reimbursements• Customer Service• Capitation

Management

Provider/PatientEngagement• Constituent Self Service Apps• Wellness/Disease Mgmt. Prog.• Social

Media/Games/Challenges• Patient Surveys

Care Management• Disease and Care Mgmt.• Care Gaps and Clinical Pathways• Provider Profiles• Predictive Analytics• Pharmacy Adherence• Quality Metrics: Stars, P4P,

HEDIS

Types of Risk Bearing Entities

Health Plan

Underwrites and markets insurance plans; Premiums from Individuals and employersBuilds provider networks and managed administrative workflows (or delegates these)

Del. Groups

Receives capitation, build networks and sub-contracts to these networksManages care for the population including administrative workflows (delegation)

MSO Processes administrative transactions such as claims and enrollmentSometimes can act as a contracting body for the providers with the payers

ACO Focused on care management for a populationShares in savings, but more likely bundled payments

Hospitals &

Practices

Entering into capitated agreements with multiple payers. Agreements can range from shared savings, to partial capitation, bundled payments, to global capitation.

The Value Based Reimbursement journey – where are you?

20

Trailblazers

• Independent physician groups

• Mainly CA/West Coast

Experts

• Larger IDNs• Risk

contracts significant portion of revenue

Payers

• Regional health plans paying claims for large member populations

Examples of success

• Health system in San Diego• 15,000 employees, 2,600 affiliated

physicians, 2,300 volunteers• 2 affiliated medical groups, 7

hospitals, a health plan, 21 outpatient clinics, 5 urgent care

Sharp Healthcare• Market share leader and only

health care system that increased market share each of the past 11 years

• Average enrollment of 143,000 and 1.2 million physician visits in fiscal 2012

• Over 300,000 patients under risk• 35,000 Senior Enrollees• 246,000 Commercial Enrollees• 20,000 Commercial ACO Members• 32,000 Pioneer ACO Beneficiaries

• Founded in 1994, based in Southern California

• Part of St. Joseph Health-14 hospitals, 2 home health agencies and provider organizations

• Manage 8 Medical Group Professional Services Agreements

St. Joseph Heritage Healthcare

• St. Joseph Heritage Healthcare prides itself in the formation of a high performing, regional, narrow network Accountable Care Organization

• Support 4 distinct "Affiliated Networks" in Southern California

• More than 1.5 million patient encounters per year in group models

• 170,000 capitated assigned HMO lives in Orange County

• Healthcare system based in Southern California

• Greater than 1200 primary care physicians and 3000 specialists

• Includes 50 group owned medical offices and 750 IPA

HealthCare Partners

• Founded in 1992, HealthCare Partners is committed to developing innovative models of care delivery that improve patients’ quality of life while containing costs

• Manages over 750,00 managed care patients

• One of five providers taking part in the Brookings Dartmouth ACO Initiative

Thank you for joining.

Questions

Presenter Bios

Jim Frankel

Over the last twenty eight years Jim Frankel has held various management and senior management positions in the Healthcare Industry revolving around ‘Managed Care’. Frankel was involved in and witnessed firsthand the original evolution of Managed Care in the late 1980’s and 1990’s in California and the evolution toward Value Based Reimbursement.

27

Jim FrankelSegment Specialist, Integrated CareGE HealthcareJim.Frankel@ge.com

Michael Monahan

Mike has over 35 years of healthcare financial experience as a controller, hospital CFO, auditor, management consultant, business development and a software developer. He has held various positions at Mede Analytics, Dell/Perot Services, Cerner Revenue Cycle Solutions, Deloitte & Touche and Pannell Kerr Forster. Mike’s direct hospital finance background was as a controller for two community hospitals and CFO at two hospitals in New Jersey. Mike is a Fellow in the HFMA and is the past president of the NJ Chapter of HFMA. He is a frequent speaker at various organizations meeting including HFMA, AAHAM and HIMSS.

28

Michael MonahanSolutions Enablement ManagerGE HealthcareMichael.Monahan@ge.com

Appendix