Update on Accountable CareGulf Coast MGMA MeetingSeptember 14, 2011

John Watson, MS, CMPEJonathan Ishee, JD, MPH, MS, LLMNorthwest Diagnostic Clinic, PA and

Access Health Providers

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This information is provided for educational use only. Individuals should seek the advice of an experienced attorney before participating in an ACO or other shared savings program to ensure compliance with applicable law.

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Disclaimer

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Payment Reform Initiatives◦ Federal

ACOs Patient Centered Medical Home CMMI

Bundled Payment Other Initiatives

◦ State SB8 - Health Care Collaborative (HCC)

Implications for Practices Questions

Overview

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Background◦ Established under the Patient Protection and

Affordable Care Act (“PPACA”)◦ An ACO is an organization of physicians and other

health care providers accountable for the overall care of traditional fee-for-service Medicare beneficiaries who are assigned by CMS to an ACO

◦ ACOs will be financially incentivized to provide higher quality care and overall cost savings

Accountable Care Organizations

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Required Processes◦ An ACO must provide CMS with documentation of

its plans to:

Promote evidence-based medicine (EBM) Promote beneficiary engagement Internally report quality and cost metrics Coordinate care

Accountable Care Organizations

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Patient Centered◦ The ACO must have a mechanism in place for the coordination of care,

e.g. via use of enabling technologies or care coordinators

◦ An ACO is required to describe its mechanisms for coordinating care for Medicare beneficiaries.

◦ An ACO should have a process in place to exchange summary of care information when patients transition to another provider or setting of care, both within and outside the ACO.

Accountable Care Organizations

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CMS proposes retrospective assignment based on primary care utilization

Two Track Model Track One

◦ One-Sided Model (with a twist)◦ No Downside Years 1 and 2◦ Year 3: add Risk (Loss) and higher reimbursement

Two Sided◦ Two-Sided Model◦ Upside and downside Risk starting Year 1

ACO accepts downside risk for Losses once the Minimum Loss Rate (MLR) is exceeded

◦ Higher reimbursement starting Year 1

Accountable Care Organizations

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To be eligible for shared savings, ACOs must:◦ Meet all contractual requirements of the ACO

Agreement◦ Meet the quality performance standards◦ Realize savings compared to the Expenditure

Benchmark that exceed the Minimum Savings Rate

Accountable Care Organizations

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Medicare’s Portion of Shared Savings

ACO’s Portion of Shared Savings

Minimum Savings Rate

ACO’s Actual Per Capita Expenditure

Expenditure Benchmark

Actual Expenditures

Determined based upon the Sharing Rate }

Subject to Sharing Cap & Withhold

2% Threshold (If applicable)

Accountable Care Organizations

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Statutory Mandates:◦ Estimate Expenditure Benchmark and update for each

agreement period◦ Using most recent available 3 years of per beneficiary

expenditures for Part A and B services for Medicare FFS beneficiaries assigned to ACO

◦ Adjust Expenditure Benchmark for beneficiary characteristics and such other factors as the Secretary determines appropriate

◦ Update the Expenditure Benchmark by the projected absolute amount of growth in the national per capita Part A and B expenditures for Medicare FFS beneficiaries

Accountable Care Organizations

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Adjustment for beneficiary characteristics◦ Propose using CMS-HCC, which uses beneficiary diagnostic

information◦ Considered just using beneficiary demographic information

and/or coding intensity cap Propose no adjustments for IME and DSH Propose retaining geographic payment adjustments in

calculating Expenditure Benchmark Propose different treatment for bonus payments/penalties

depending on statutory source

In Years 2 and 3 of the Agreement Period, the Expenditure Benchmark is adjusted using a flat dollar increase amount to take into account the absolute amount

ACOs - Adjusting the Expenditure Benchmark

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CMMI Initiatives

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Must Apply to Participate Four Model Approach

◦ Three models involve a retrospective bundled payment arrangement, and one model would pay providers prospectively.  

Structure must be in compliance with state laws

Bundled Payment

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Models based on Retrospective Payment:◦ Model :1define the episode of care as the acute care

hospital stay only ◦ Model 2: the acute care hospital stay plus post-acute

care associated with the stay◦ Model 3: or just the post-acute care, beginning with

the initiation of post-acute care services after discharge from an acute inpatient stay.

Model Based on Prospective Payment◦ CMS would make a single, prospective bundled

payment that would encompass all services furnished during an inpatient stay by the hospital, physicians and other practitioners.

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Bundled Payments

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Application Deadlines:◦Letter of Intent

Model 1: September 22, 2011 Models 2-4: November 4, 2011

◦Final Application Model 1: October 21, 2011 Models 2-4: March 15, 2012

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Bundled Payments

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What is an HCC?◦ that undertakes to arrange for medical and health

care services for insurers, HMOs, and other payors; ◦ that accepts and distributes payments for medical

and health care services; ◦ that consists of physicians, physicians and other

health care providers, or physicians, other health care providers and HMOs or insurers; and 

◦ that is certified by the commissioner to lawfully accept and distribute payments to physicians and other providers using the reimbursement methodologies authorized by this chapter.

SB8 – Health Care Collaborative

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Allows for certified HCCs to arrange to provide health care services under contract with governmental or private entities.

HCC must demonstrate:◦ Increases collaboration among health care providers and integrates

services; ◦ Promotes improvement in quality based health care outcomes; ◦ Reduces the occurrence of potentially preventable events; ◦ Includes processes that contain health care costs; 

Contains governance requirements, including an even number of physician board members if the governing board is composed of both physicians and other providers.

Requires the HCC governing board to establish a compensation advisory committee to develop and make compensation related recommendations.

Health Care Collaborative

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The commissioner of insurance must also conduct an initial antitrust review to determine: ◦ The HCC is not likely to reduce competition in any

market for physician, hospital, or ancillary health care services due to the size or composition of the HCC; 

◦ The pro-competitive benefits of the applicants proposed HCC are likely to substantially outweigh the anticompetitive effects of any increase in market power.

Health Care Collaborative

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What does this mean for…?

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Primary Care Physicians

…need respect…

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Pick your partner carefully…one shot◦ Hospital◦ Health plan◦ Other entity (e.g. 5.01(a) or IPA)

Referral management◦ Directed vs. self-referrals◦ Tight networks mean more consistency

Know your patients and manage expectations

How much say do you want?◦ Governance issues

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PCPs should be driving

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“Retrospective attribution”

Self-referral

Specialist “network”

Patient non-compliance

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This isn’t an HMO

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(Choices apply to almost all specialties)

FFS

Bundled payments

Full risk

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Reimbursement alternatives

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Specialists…need referrals…

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Generally not limited to a single ACO Become the “go to” group for referrals Track and benchmark outcomes Understand the cost of providing care Bundled payments vs. capitation

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Outcomes and evidence

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Hospitals…need admissions…

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Some hospital systems very well positioned

Using EMR as leverage to elicit physician enrollment

Will they convert to a cost-based system, or continue to rely on admissions to drive profits?

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The 500-pound gorilla

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Health Plans…need premiums…

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…and a provider network…

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Chronic condition programs◦ Token payments for meeting objectives

Emphasis on patient-centered medical home initiatives

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Most are still acting like payers

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Access to capital & systems, but…

Can this model work with other payers, or are you limited to Medicare?

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What happens if you partner?

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After a disappointing launch, CMS appears to be seeking innovative proposals that have more opportunities

ACO selection is more critical for primary care than specialist practices

If you’re not moving towards a specialty-specific PCMH strategy, you should be

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Takeaways

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Please Contact:John Watson: jwatson@nwdc.comJonathan Ishee: jisheejd@nwdc.com

Questions

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Appendix- Shared SavingsDesign Element One-Sided (Yr 1&2) Two-Sided

Maximum Sharing Rate 52.5% 65%

Quality Scoring Sharing Rate up to 50% based on quality performance

Sharing Rate up to 60% based on quality

FQHC/RHC Participation Rate

Up to 2.5% Up to 5%

Minimum Savings Rate Varies by Population (Table 6: 3.9%-2.0%)

Flat 2% regardless of size

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AppendixDesign Element One-Sided (Yr 1&2) Two-Sided

Minimum Loss Rate None Flat 2% -regardless of size

Maximum Sharing Cap Payment Capped @ 7.5% of ACO’s Benchmark

Payments capped @ 10% of ACO’s Benchmark

Shared Savings SS once Min Sav Rate (MSR) exceeded; unless exempted, share in Savings net of a 2% threshold; up to 52.5% of Net Savings up to Cap

Savings shared once MSR is exceeded; up to 65% of Gross Savings up to Cap.

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Appendix

Design Element One-Sided (Yr 1&2) Two-Sided

Shared Losses None

(***Year 3, Max Shared Loss is 5%, as if Year 1 of Two-Sided)

1st dollar Shared Losses once MLR exceeded. Cap on am’t of Losses to be shared phased in over 3 years starting at 5% in Yr 1; 7.5% in Yr 2; and 10% in Yr 3. Losses in excess of the annual Cap would NOT be shared. Actual am’t of Shared Losses to be based on Final Sharing Rate that reflects ACO quality performance and any add’l incentives for including FQHC and RHCs using the following methodology (1 minus Final Sharing Rate).

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