Overview

Market Innovations in an Era of Unprecedented Reform

Course Three – April 8, 2011Presented by Patrick Gauthier,

Director

Learning Objectives

1. Understanding what is meant by “innovations” and “market”

2. Appreciating the scope and magnitude of the opportunities before us

3. Becoming conversant with Accountable Care Organizations (ACOs)

4. Recognizing the prerequisites of readiness and capabilities in order to ride the wave of change

5. Declaring and committing to next steps

What is Innovation?Two Types:

– Sustaining Innovations allow you to make incremental changes in order to do what you’ve been doing more efficiently or to produce a better outcome doing it. Adding correction ribbon to the typewriter is an example. Also allows you to maintain market share.

– Disruptive Innovations are fostered by outsiders who want to upend markets and the way things are done thereby totally transforming the business model. Napster (pre-iTunes), NetFlix, and Craigslist are good examples.

What’s a Business Model?

Four Dimensions:• Customer Value Proposition (what are you

doing for whom that they cannot do for themselves for less and why you?)

• Financial Model (how will you ensure profits) • Key Business Processes ( what is your

“special sauce” in terms of how you do things?)

• Key Resources (what are your unique assets, technology, and who are your key people?)

Elements of Disruptive Innovation

• Technology simplifies what has previously been complex

• Lower-cost financial model

• Value Network is economically coherent (mutually reinforcing)

Source: C. Christensen

Business Model Innovations• Solution Shop – fee-for-service expertise to diagnose and solve

unstructured problems (imaging centers, law firms, consultants). Charge for cost of inputs (expert time). Focus on diagnosis.

• Value-Add Process (VAP) – assembling solutions of higher value (restaurants, retailers, auto-makers). Charge for value of outputs (assembled products). Focus on treatment after diagnosis. Clinics and the use of less expensive “experts” are good examples of VAP.

• Facilitated Networks – models wherein people exchange things with one another (insurance, mutual funds, eBay and WebMD are examples). WebMD has begun building communities of people with certain chronic conditions like diabetes. These models harness vast amounts of data and technology architecture.

From

To

Source: C. Christensen

Examples of Health Care Innovations

• Reforming health care financing (pricing, premiums, policies, coinsurance, financial eligibility, FFS, capitation, episode and case rates, etc.)

• Health information technology (EMR, HIE, MU, PHR, etc.)

• Internet and facilitated networks• Pharmaceuticals and medical devices• Medical education (behavioral medicine)

Examples of Health Care Innovations

• Neuro-Tech

• Bio-Tech

• Mobile Devices

• Retail (Minute-Clinics, Wal-Mart)

• Tele-Medicine

• Web-based Providers

What is “The Market”?• For our purposes, “the market” consists of

(though is certainly not limited to) the following:• Block Grants• Drug Courts• Corrections• Medicare• Medicaid• S-CHIP• Commercial Health Insurance• Self-Insured Employers and Unions• Managed Care Organizations• Private Pay

Market Shift

Commercial

Insurance

Public Financing

Federal Agencies

State Agencies

Counties and Cities

Insurance

Managed Care

Employers

Networks

Brokers

DOI

Managed Care

Networks

Corrections & Courts

Prevention

Housing & Jobs

Standards & Science

75% - 90%

10% -25%

32+ Million Uninsured

Health Insurance

Exchanges

Medicaid Managed Care

Plans

Types of Plans• Self-Insured Plans (ERISA)• Traditional Indemnity (fully-insured)

– Open access, higher coinsurance

• Managed Care Plans– MBHO (carve-out)– HMO (network-centric, referral-based)– PPO (wider network, medical necessity standards)– POS (combines HMO and PPO with coinsurance differentials)

• Consumer-Directed Health Plans– High deductible, catastrophic claims– Health Savings Accounts (HSA), Health Reimbursement Accounts

(HRA) and Flexible Spending Accounts (FSA)

Innovations in Health Insurance• Personal Spending Accounts (debit cards)• Hospital and Provider Quality Comparisons online• Hospital and Provider Cost Comparisons online• Personal Health Records (PHR) • Coverage Advisors• Treatment Advisors• Treatment Cost Advisors• Nurse Line• Health Risk Assessments and Health Risk Management Programs with Incentives ($)• Disease Management Programs• Choice of Networks• Defined, Exclusive Provider Networks• Prevention Benefits and Services• Accountable Care Organizations• Patient-Centered Medical Homes• Value-Based Insurance Design (VBID)

Top 10 Issues/Opportunities 2011-2014

1.  Administrative Mandates (HIPAA 5010, ICD-10, etc.)  

2.  Care Management, Data Analytics, and Informatics.  

3.  Health Insurance Exchanges and Individual Markets.

4.  New Provider Payment & Delivery Systems (ACOs, PCMHs, etc.)

5.  Bending the Cost Curve.

6.  Medicare and Medicaid.

7.  Health Information Exchanges and EMRs.

8.  Consumer's Role in the Modernization of Healthcare (social networking, incentives, CDHP, etc.)

9.  Reform Uncertainties.

10.Payer / Provider Interoperability.

(Source: Managed Care Executives Group, March, 2011)

Health Care Reform

The Act Does Several Things:•Expands Insurance Coverage•Institutes Insurance Reforms•Builds Infrastructure to Provide Improved Health Outcomes•Puts In Motion Structural Changes to how Healthcare Delivery is Structured & FinancedGoals of the Act:•Increase Access•Provide Comprehensive Care Better Health Outcomes•Control Costs

Patient Protection and Patient Protection and Affordable Care Act (ACA)Affordable Care Act (ACA)

Phased Implementation Is Needed To:Build Needed InfrastructurePlan and Implement Provisions Well

Changes To Benefits and Insurance Reforms Began To Be Implemented In 2010

Some Provisions Must Be Implemented Over Several Years

Major Coverage Expansion Occurs in 2014Longer-term Benefits Result From Sum of Structural and

Cultural Changes

Most Provisions of ACA Are Implemented Over The Next Four Years

Insurance Coverage Expands From 83% to 94%Individual Mandate AppliesSubsidies For Those Under 400% FPLMedicaid Eligibility Set At 133% FPLMedicaid Expands from 34 to 50 Million25 Million Get Insurance Through State Exchanges

Expanded Health Insurance Coverage - 2014

Result of Change in Coverage for non-elderly individuals (by 2019)158 M will have coverage through employers50 M will have coverage through Medicaid/CHIP25 M will have coverage through exchanges26 M will have coverage through non-group plans26 M will remain uninsured

Source: Congressional Budget Office

Market Results of Coverage Expansion

Prior to implementation of coverage expansion:39% of individuals served by State Mental Health Authorities

have no insurance61% of the individuals served by State Substance Abuse

Agencies have no insurance

Many of these individuals will be covered in 2014 (or sooner)—most likely by the expansion in Medicaid

Impact on Coverage Expansion

Impact of Affordable Care Act

Focus on coordination between primary care and specialty care:Significant enhancements to primary care

Workforce enhancements Increased funding to SAMHSA, HRSA and IHS Bi-directional

MH/SUD in primary care through FQHCs Primary care in MH/SUD settings through CMHCs and other

agencies Services and technical assistance

Health Homes and Accountable Care Organizations

Changes To Medicaid Medicaid Expansion to Childless Adults under 133% FPL

Increased FMAP amounts for expansion population 2014 – 2016 100% FMAP 2017 95% 2018 94% 2019 and thereafter 90%

Benchmark Plans: Mental Health/Substance Use Disorder at Parity - 1/1/2014

Amendment to Rehabilitation Option under Medicaid - 1/1/2013 Expand Home and Community-Based Services

FY2011 enacted State can participate for a five year period and can renew for an additional five

years Continued Medicaid Coverage for Foster Children – Expires 1/1/2019 Reduction in Medicaid DSH – 10/1/2011

- Reductions based on State uninsured levels

Timelines for Provisions of Interest

2010

Provisions of Health Reform In Place Now

Consumer Protections Protect 194 million Americans with private insurance :

Insurers can no longer deny children under 19 coverage for a preexisting conditionInsurance companies can’t cancel your policy if you get sick or have not committed fraudno more lifetime caps on how much insurers will payYou have a right to appeal, including external appeal

Implications For States & ProvidersNeed For Infrastructure To Work With InsuranceGrant Funds Re-conceptualized in order not to Duplicate

Insured Benefits (look for braiding and blending)Medicaid Changes and State Insurance MandatesIntegration of MH/SU with Primary CareHealth Homes and Accountable Care OrganizationsElectronic Health RecordsPayment Reform Pilot ProgramsEvidence Based PracticesLicensure and Credentialing Standards

One of the Most Important Innovations you can Implement this

Year (if you haven’t already)

The market not only

supports this change,

in many cases it will be required

What are the Opportunities for Innovation in the Market Today?1. Managing Multiple Chronic Conditions (MCC)2. Educating the Public3. Medication Assisted Treatment4. Population Mgmt5. Accountable Care Organizations (ACO)6. Patient-Centered Medical Home Model (PCMH) – Primary Care

Integration7. Value-Based Insurance Design (VBID) and Evidence-Based Practices

(EBPs)8. Behavioral Medicine9. Pay-for-Recovery Outcomes/Quality/Value10. Prevention11. “Blending and Braiding” Systems of Care12. Joint Ventures13. Increased Competition

Accountable Care Organizations (ACO)

Proposed Federal Regulations Released April 1, 2011 by HHS

Background: The Triple Aim

1. Improving health (outcomes)

2. Improving patient experience

3.Reducing per capita costs

Value

Accountable Care OrganizationWhat is an Accountable Care Organization (ACO)?• A group that would include a hospital, primary care

physicians, specialists, and possibly others involved in coordinating care for shared (Medicare, Medicaid, or other insurance) patients.

• The ACO's goal would be to ensure that the care provided meets or exceeds quality benchmarks within the fee-for-service structure.

• ACO members would share in resulting cost savings.

• Reform provided for the recently established Center for Medicare and Medicaid Innovation, which is tasked in part with developing new payment models that support ACOs and health homes. Reform also requires CMS to create a Medicare shared savings plan for ACOs by January 1, 2012.

• Reform specifies several key elements and principles of ACOs that will have to be included. – An ACO’s service population must consist of at least 5,000 fee-

for-service Medicare beneficiaries.– MH/SU providers and others participating in ACOs must deliver

patient-centered, evidence-based care and promote patient engagement.

– They must also develop the ability to report on quality and cost measures, which will be used as the basis for determining the distribution of shared savings.

ACO: Core Capabilities• Per NCQA

– Program Structure Operations: Clearly defined organizational and leadership structure. The ACO arranges for pertinent healthcare services and determines payment arrangements and contracting.

– Access and Availability: The organization ensures that it has sufficient numbers and types of practitioners who provide primary and specialty care.

– Primary Care: Primary care practices within the ACO provide patient-centered care.

– Care Management: • The organization collects and integrates data from various sources, including,

but not limited to electronic sources for clinical and administrative purposes. • The organization conducts an initial assessment of new patients’ health. • The organization uses appropriate data to identify population health needs and

implements programs as necessary. • The organization provides resources for, or supports, the use of patient care

registries, electronic prescribing and patient self-management.

ACO: Core Capabilities• Per NCQA

– Care Coordination and Transitions: The organization can facilitate timely information exchange between primary care, specialty care and hospitals for care coordination and transitions.

– Patient Rights and Responsibilities: The organization has a policy that states its commitment to treating patients in a manner that respects their rights, its expectations of patients’ responsibilities, and privacy. A method is provided to handle complaints and to maintain privacy of sensitive information.

– Performance Reporting: The organization measures and reports clinical quality of care, patient experience, and cost. At least annually, the organization measures and analyzes the areas of performance and takes action to improve effectiveness in key areas.

Goals & Objectives

Improve InpatientCare Efficiency

Use Lower CostTreatments

Reduce Adverse Events

Reduce PreventableReadmissions

Improve Prevention& Early

Diagnosis

Improve PracticeEfficiencies

Reduce Unnecessary

Testing & Referrals

Reduce PreventableER Visits &Admissions

Hospitals & Specialists

Primary Care

Improve Management of Complex Cases

Use Lowest-CostSettings and

Providers

Lower TotalHealthcare

Costs

Improve HealthOutcomes

Four Levels of ACO• Level 1 ACO: Primary care practices functioning together through

an IPA or other organizational mechanism and focusing on prevention and improvement of care for ambulatory care-sensitive conditions.

• Level 2 ACO: Primary care practices and frequently-used specialties, working together through an IPA or multi-specialty group practice, and focusing on prevention and improvement of care for ambulatory care-sensitive conditions and common specialty procedures.

• Level 3 ACO: Primary care practices, specialists, and hospitals, working together through an integrated delivery system or other organizational mechanism, and focusing on all or most opportunities for cost reduction and quality improvement.

• Level 4 ACO: Healthcare providers, public health agencies, and social service organizations working jointly to improve outcomes for a very broad patient population, including homeless individuals and the uninsured.

ACO: Reimbursement Innovations• Revised Capitation (Global Payment

Systems or Comprehensive Care Payment Systems)

• Episode of Care Payment System

• Administrative Fees

• Net Savings

• Hybrid Models

Population Health Management• ACOs must develop a process for identifying patients

who have complex needs (multiple chronic conditions) or are at high risk of developing such needs and provide them with wellness and prevention programs, disease management, and complex case management, as indicated

• ACOs must make available or support providers’ use of electronic prescribing, electronic health records systems, registries, and self-management tools

• MH/SUD providers must be prepared to work in this environment and develop the necessary tools and resources

Incentives to Participate in an ACO• Identified population/market share

• Administrative fees for administrative duties

• Reliable referral sources within network

• Common values and objectives (coordination, cooperation, collaboration)

• Shared information (whole health)

• Shared savings (financial incentives)

Establishing Readiness and Capabilities for ACOs

• Financial Infrastructure – track performance and payments

• Reporting Infrastructure – UM, DM, CM as well as utilization and practice trends

• Performance Management – disease-specific dashboards, baselines, benchmarks and adherence to best practices

• Data Aggregation – data warehousing, interoperability, shared disease registries

• Clinical Data Exchange – shared procedures, discharge plans, history

• Security – secure access to administrative and clinical data based on authorized “roles” and authentication protocols

Establishing Readiness and Capabilities for Market Innovations

Information Technology Components

• EMR, EHR

• Pervasive Connectivity/Networking

• Data Analytics and Predictive Modeling

• Disease and Case Management Software Applications (clinical decision support)

Next Steps• Enable your organization for change

– Develop a strategic plan, business plan, and *especially* a marketing plan that enables growth in terms of market share and revenue

– Commit capital, develop a budget, and find investors or partners if you need them

– Address staffing, outsourcing, and the need for periodic expertise

– Plan for and implement your technology infrastructure

– Commit to Performance Mgmt

Next Steps

• Manage your organization through change– Set the course– Establish and measure your expectations– Keep distractions and competing priorities to a

minimum– Hold people (including yourselves) accountable– Align efforts so time and energy are not wasted– Provide reinforcements, encouragement and rewards

(recognition)

Next Steps• Manage your organization through change

– Become Learning Organizations (there is a lot to learn!)

– Recruit, retain and train the right people in administrative as well as clinical areas

– Innovate and grow from your Core Competencies– Encourage some risk-taking, experimentation and

tolerate mistakes– Conduct market research – what you don’t know can

hurt you– Invest in your brand image and “dress the part”– Use thoughtful scenario-based business modeling

and business case approaches to innovations

Thank You! Questions and Contact

Patrick Gauthier, Director

AHP Healthcare Solutions

888-898-3280 ext. 802

pgauthier@ahpnet.com