volume to value september 10 th, 2015 troy trejo senior consultant
TRANSCRIPT
Volume to Value
September 10th, 2015
Troy TrejoSenior Consultant
22
Volume to Value Transition
How Are We Capturing Value?
Positioning for the Future
33
Volume to Value: Context
4
• Outlook negative
• “$3 trillion healthcare industry is in the midst of the most far reaching changes it has seen”
• Not-for-profit hospitals exhausting methods to maintain operating margins
• Not-for-profit hospitals at a “tipping point” facing decreasing ability to offset changes and negative trends
• Outlook negative (since 2008)
• Low revenue growth and shrinking volumes
• Expenses growing faster than revenues
• Outlook negative
• Uncertainty and challenges from payment reform and reduced volumes
The Outlook for Not-for-Profit Healthcare
5
IP and ER Utilization in Decline
6
Distressed Operating Performance
Median: -1.2% Average: -3%
Source: 2013 and 2014 Medicare Cost Report Data, AHD.com
7
Uninsured Rates Dropping in WV
Source: Gallup-Healthways Well-Being Index, August 10, 2015 Survey
8
Any arrangement between a provider and a payer in which the provider:• Agrees to furnish care to a defined group of the payer’s members
(a.k.a. the population) • Accomplishes three things:
1. Improve the member’s medical outcomes 2. Reduce the group’s per-capita costs3. Contractually capture the bulk of the savings from the value created in
numbers 1 and 2
ACOs are a population health arrangement.
Volume to Value: What Is Population Health?
9
Two Out of Three Is Bad
Case Studies 1. Improve Outcomes
2. Reduce Costs
3. Capture Savings
AbsoluteCARE Multiple Chronic Illness-PCMH Pilot
Reduced complications and hospitalizations
66% reduction in cost of care for target population
Pilot program in partnership with commercial insurer
Geisinger Health System Medical Home Model 5-year study
Decreased acute admissions and readmissions
Reduced total cost of care over 5 year study period
Savings accrete to Geisinger Health Plan (GHP), system benefits
Duke University CHF Disease Management Program
Reduced complications and hospitalizations
Reduced total cost by 40% or $8,600 per patient
Independent program created net operating loss
Duke: Archives of Internal Medicine, 2001 Oct 8;161(18):2223-8; Harvard Business Review, Why Innovation in Health Care Is So Hard, Regina Herzlinger, May 2006
AbsoluteCare: http://absolutecarehealth.com/Atlanta/News.aspx?year=2012&month=7&day=16&label=pilot-projectsGeisinger: American Journal of Managed Care, March 2012, Reducing Long-Term Cost by Transforming Primary Care: Evidence
From Geisinger's Medical Home Model
10
3rd Pty FFS
PCP/PCMH Care-Mgt
Fees
Quality-Based Revenue
Enhancement
Shared Savings
Shared Risk/Reward
Capitation/% Premium
Prov
ider
Fin
anci
al R
isk/
Rew
ard
Time
Non-Savings Incentive Payments
Risk/Reward-Based Payments
TraditionalPayments
Value-Based Payment Pathway
1111
Volume to Value: Commitment to Change
12
Population Health: All Things to All People
“We’re focused on population health as opposed to fee-for-service medicine”
“Our Mobile Acute Care Team will treat patients
at home…”
“[The] Preventable Admissions Care Team
provides transitional care services to high
readmission risk patients”
13
“The system includes 6,600 primary care and
specialty physicians”
“…45 ambulatory practices, 31 affiliated
health centers and more than 40 relationships with local physicians”
“Ironically, Mount Sinai’s number one mission is to
keep people out of the hospital”
Population Health: All Things to All People
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• “[7 year old] Heather had a baseball-sized, cancerous tumor lodged among her major organs”
• “In a 23-hour surgery, Dr. Tomoaki Kato temporarily removed 6 major organs in order to remove the tumor”
Population Health: Specialty Focus
15
Mount Sinai: CFO Wants 2nd Opinion!
• Significant from a hospital of this stature (Nationally ranked in 16 specialties—national top 10 ranking in 3 specialties)
• Commitment to change—now what?• The challenge to specialty-focused systems:
• Reconciling scale and historic investment focus with requirements of value-based care payment and delivery
Net Revenue: $1.9B Operating Margin: -0.8%
Clinics & Health Centers: 76 System Physicians: 6,600
Inpatient Beds: 1,171 Annual ER Visits: 100k+
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Population Health Commitment Scale
• How to ‘manage down’ inpatient utilization with existing resources while depending on inpatient for survival?
• Mount Sinai decided they were not able to accomplish population health goals alone, and grew• Invested $4.8M in continuum merger, alone
• “Bigger is better as hospitals and doctors take on more financial risk under contracts that offer more incentives for quality and efficiency” – Dr. Kenneth Davis, Mount Sinai CEO
2012 2013 2014 2015
Public commitment to population health
Continuum merger (adds 3 hospitals)
25k+ member MSSP ACO
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Population Health Commitment Scale
• Bundled-payment—small scale population health commitment• Medicare BPCI Model 2,
“Retrospective Acute and Post Acute Care Episode”
• 48 clinical episode options• Episode includes inpatient
stay, post acute care and related services during 30/60/90 day episode length
• Model 2 payment methodology:
$15,000
$17,000
$1,500
$3,500
• Small scale commitment, but significant relative risk!• Majority of costs incurred
outside the hospital (avg. 70%)!• Cost reduction and care
management understanding gained via analysis of self- insured health plan claims
Hospital (domestic)
Outside hospital (in network)
Outside hospital (out of network)
Target Episode Price ($)
Actual Price ($)
Actual Price ($)
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Population Health Commitment Scale
• Massachusetts Hospital CEO/CFO:
• “We didn’t analyze the impact, but we can’t afford not to do it…”
• “We feel it’s a manageable risk”• “…we need to learn care
management—even if we lose money.”
• 170 bed, $200M+ Net Rev.• Example clinical episodes:
• Acute myocardial infarction• AICD generator or lead• Amputation• Atherosclerosis• Cardiac arrhythmia• Cellulitis• Cervical spinal fusion
Massachusetts Medicare BPCI Models 1-4 Participants
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• 470 bed regional referral center, 270-physician medical group• Goal: “…transform the health system from fee for service to
population health based payment and care delivery.”• 2014, developed a comprehensive population health strategy:
• Designed a clinically integrated network (CIN) to support the population health transition
• Supported leadership and staff in making the CIN operational• Developed care management and clinical informatics infrastructure
to support future development of the CIN and pursuit of population health care delivery and payment
Population Health Commitment Scale
2020
Capturing Value: Making the Transition
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3rd Pty FFS
PCP/PCMH Care-Mgt
Fees
Quality-Based Revenue
Enhancement
Shared Savings
Shared Risk/Reward
Capitation/% Premium
Prov
ider
Fin
anci
al R
isk/
Rew
ard
Time
Non-Savings Incentive Payments
Risk/Reward-Based Payments
TraditionalPayments
Value-Based Payment Pathway
HDHP and Care Coordination
22
Value Capture for Beginners
• HDHP Redesign and Care Coordination• Self Insured Employee Health Plan HDHP redesign
• Benefit improvement for most members• Lower health care costs• Lower workers’ comp premiums, costs• Lower lost and modified-duty workdays• Lower employee turnover• Improved employee morale
• Intensive Care Coordination with Self Insured Population• Addresses neediest patient population first• Develops higher quality and more cost effective interventions• Potential to predict and prevent complex chronic disease• Laboratory for care coordination• Develops PCMH and ACO-relevant capabilities• Grows understanding of staffing and technology needs
23
HDHP Growth
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• “HDHPs with at least a $1,000 deductible significantly reduced healthcare spending”
• “Families enrolling in HDHPs or CDHPs for the first time spent 14% less than similar families enrolled in conventional plans”
• Care management is critical: “…reduced the use of
preventive care in the first year”
• “[The study] analyzed claims data for 800k+ households from 53 large US employers”
HDHP Behavior Change Cost Reduction
25
HDHP RedesignCLAIMS DATA COMPARISON
2014 2016 Projected Increase(Savings)Total Plan Paid Claims 6,338,607$ 4,071,496$ (2,267,111)Total Mbr Paid Claims 449,448$ 1,861,264$ 1,411,816Total Paid Plan+Member Paid Claims 6,788,055$ 5,932,760$ (855,295)Employer HSA Contribution 1,321,500$ 1,321,500Total Employer Expense 6,338,607$ 5,392,996$ (945,611)Net Member Impact 449,448$ 539,764$ 90,316 Number of mbrs with no additional cost 303 Number of mbrs with additional cost 288
WHAT IF ASSUMPTIONSDeductible Tier 1 Tier 2 Tier 3Single 1,500$ 1,500$ 3,000$ Family 3,000$ 3,000$ 6,000$ Two-Party 3,000$ 3,000$ 6,000$ Coinsurance 10% 20% 50%OOP MaxSingle 6,550$ 6,550$ 15,200$ Family 13,100$ 13,100$ 30,400$ Two-Party 13,100$ 13,100$ 30,400$ Behavior-Change Utilization Reduction 12.6%Employer HSA Contributions EachIndividual HSA contribution/yr 1,500$ Family/Two-party HSA contributionion/yr 3,000$
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Care Management ROI
• MD Anderson employee case management program (6 years)• Lost work days declined by 80%• Modified-duty days declined by 64%• Cost savings from lost work day prevention = $1.5m• Workers’ comp insurance premiums declined by 50%
• Controlled trial of high-risk patients• 57% converted to low-risk (6 months)• $1,421/participant claims reduction (1 year)• $6 savings per $1 invested (1 year)
• J&J wellness program • Reduced smoking >67%• Hypertension reduced >50%• Physical activity increased >50%• $2.70 savings per $1 invested (5 years)
• Voluntary employee turnover improvement• 9% vs 15% (Towers Perrin)• 9% vs 19% (Biltmore)
Source: HBR Dec ‘10, Berry, Marabiito, & Baun , “What’s the Hard Return on Employee Wellness Programs?”
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Intensive Care Coordination
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• The 10% group medical claims cost by service line demonstrates the wide range of services utilized throughout the plan network by a small portion of the plan member population
Service Line Claim CostCARDIOVASCULAR 1,380,827 ONCOLOGY 549,456 MUSCULOSKELETAL 423,267 OTHER 331,252 DIGESTIVE 232,466 UROGENITAL 229,223 PSYCHIATRY 226,886 NERVOUS 206,974 ENDOCRINE 178,650 MATERNAL 172,097 TRAUMA 121,390 INTEGUMENT 85,496 PULMONARY 47,755 IMMUNOLOGY 27,268 HEMATOLOGY 20,632 N/A 3,680 NEONATOLOGY 1,700 TRANSPLANT 1,328 10% Total 4,240,346 90% Total 1,862,649 Grand Total 6,102,995
Intensive Care Coordination Costs
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• The coverage of costs incurred by the 10% group falls largely within the 2nd network tier; non-domestic, participating providers
Tier 275%
$3.2M
Tier 121%$881k
Tier 34%, $163k
Insured Network Distribution
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• Identifying cardiac disease management focus areas based on potential for outcomes improvement and cost savings:
Plan Tier Cardiovascular Disease Type Plan Cost1 PULMONARY HEART DISEASE 25,209
ISCHEMIC HEART DISEASE 14,412 HEART FAILURE 10,008 CARDIAC DYSRHYTHMIA 7,892 HYPERTENSION 5,376 CEREBROVASCULAR DISEASE 3,770 OTHER CIRCULATORY DISEASE 849 ARRHYTHMIA 35 Total 67,551
2 HEART FAILURE 534,004 ISCHEMIC HEART DISEASE 380,344 ARRHYTHMIA 226,341 CARDIAC DYSRHYTHMIA 111,344 CEREBROVASCULAR DISEASE 30,363 HYPERTENSION 11,824 PULMONARY HEART DISEASE 8,531 OTHER CIRCULATORY DISEASE 8,452 OTHER HEART DISEASE 418 RHEUMATIC HEART DISEASE 47 Total 1,311,666
3 CARDIAC DYSRHYTHMIA 1,610 Total 1,610
Grand Total 1,380,827
Care Coordination Opportunities
31
Out of 51 unique plan members receiving hypertension and ischemic heart disease treatment in 2014:
• 34 of the 51 unique plan members incurred hypertension related service costs in 2014, without ischemic heart disease-related treatment
• 24 members sought hypertension treatment from a single provider
• 10 members sought hypertension treatment from multiple providers• 8 out of these 10 members were aged 45+ and therefore entering an advanced
average risk stage for heart disease• Combining this information with prior personal and family medical history
(including smoking history) could be predictive• Assuming a high risk level, and historical tier 2 ischemic heart disease cost of
approx. $22k (from previous slide), these 10 members could incur an additional combined $179k in annual ischemic heart disease-related care if not managed
Identifying Patients in Need
32
Health Plan Value Capture
• Operate primary and specialty care clinics and two health plan products (Medicare Advantage and a TRICARE plan)
• Support of strategic goals for business growth and product development
• Mission: provider better care at lower cost to the communities served by its providers and plan products.• Pursuing 3x overall enterprise economic scale growth• Grow Medicare Advantage plan business• Improve business line operating and financial performance
• Growth through greater plan covered lives and capture of savings
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• Collaborate in future population-based payment and delivery
• 5 hospitals formed the Maine Rural Health Collaborative (MRHC) to pursue this strategic imperative
• Developed business plan to leverage combined strengths in primary care, quality and collective covered lives to pursue syndicated funding sources for investment in cost and quality improvement
• Pursuit of other joint operating and quality improvement initiatives
Network Value Capture
• Collaboration between three rural community hospitals and one academic medical center partner
• Ensure access to quality care within the communities in which our patients live
• Provide local and high quality care with positive outcomes to our patients in Coos County
• Control the cost of care by through innovative programs and the use of shared resources
3434
Positioning for the Future: ACOs
35
National ACO Growth
• Nationally, 426 MSSP ACOs as of January 2015• 70% of the U.S.
population now live in localities served by ACOs and almost
• 44% percent of the U.S. population live in areas served by two or more ACOs
• 16% of total Medicare fee-for-service beneficiaries in MSSP ACOs
Source: Oliver Wyman, ACO Update: A Slower Pace of Growth in 2014, via healthcare-executive-insight.advanceweb.comhttp://www.kaiserhealthnews.org/stories/2011/january/13/aco-accountable-care-organization-faq.aspxhttp://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/News.html
36
WV ACO Growth
ACOs per State1-5
6-10
11-20
21-30
31-40
41+
<25% of WV residents have access to an ACO or receive care
from an ACO
WV ACOs: Loudoun Medical, THP-Meritus, Care Coordination
Services and Aledade
Aledade is a PCP-led ACO in partnership with the WV
Medical Institute
37
New ACO Models
ACO Model Goal Benefits Eligibility
ACO Investment Model (AIM)October 15, 2014
• Help providers offset MSSP ACO operating cost
• Upfront payment (recovered out of shared savings with potential forgiveness after 3 years)
• Attributed beneficiary payment
• Monthly attributed beneficiary payment
• Less than 10K lives• No hospitals unless
CAH or rural hospital < 100 beds
• Competitive grant with points for providers willing to take downside risk
Next Generation ACO ModelMarch 10, 2015
• Test ACO capacity to take on near-complete financial risk in combination with a stable, predictable benchmark and payment mechanism
• Performance benchmark will incorporate regional trends, patient acuity, and quality/efficiency
• 4 payment options• 2 risk sharing
arrangement options
• Minimum of 10k attributed beneficiaries (7.5k minimum beneficiaries if deemed rural)
38
ACO Outcomes
The
GOOD
The
BADand The
UGLY
39
ACO Outcomes
• CMS 2014 Medicare ACO performance outcomes (August 2015)• Pioneer ACOs
• Generated total savings of $120 million in year 3 (2014)• Total per ACO savings increased from $4.2M in year 2, to $6.0M in year 3• Mean total quality score increased to 87% year 3 from 85% in year 2
• MSSP ACOs• For 92 MSSP ACOs (out of 391 in 2014, or 27%):
• Spending reduced total of $806M below target ($8.4M per)• Earned performance payments of $341M ($3.5M per)
• Showed improvements in 28 of 33 quality measures• Average improvements of 3.6% across all quality measures
4040
Positioning for the Future: Beyond ACOs
41
3rd Pty FFS
PCP/PCMH Care-Mgt
Fees
Quality-Based Revenue
Enhancement
Shared Savings
Shared Risk/Reward
Capitation/% Premium
Prov
ider
Fin
anci
al R
isk/
Rew
ard
Time
Non-Savings Incentive Payments
Risk/Reward-Based Payments
TraditionalPayments
Payment Evolution
42
Changing Delivery and Access
Clinic Staffing Clinic ServicesClinic
Payer/Pricing
RNsPatient assignment, some primary care
(partnering with CVS and Walmart
Blue Cross Blue Shield of Florida
NPsOpen 7 days/nights;
walk-ins; no peds.; on-site Rx; labs, exams,
procedures
Most payers accepted; menu pricing
NPs Open 7 days; walk-ins; Most payers accepted; menu pricing; online
payment
NPsOpen 7 days; walk-ins;
limited labs, screenings, exams,
procedures
Insurance accepted at most locations; menu
pricing
43
Disrupting Payment-Delivery Relationships
27,000 Employees
ACO
44
Technology Innovation
4545
Volume to Value TransitionImprove outcomes & cost, capture savingsBegin the value based payment pathway
How Are We Capturing Value?Commitment to changeUse existing models, but don’t fear invention Appropriate scale, resources and risk assessment
Positioning for the FuturePayment, delivery and technology
4646
About Stroudwater
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About Stroudwater
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Stroudwater Services
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Regional and Local Experience
• Recent experience with hospital clients in the Southeastern United States
• Personal experience serving hospital clients in West Virginia
