Eastern Massachusetts Healthcare Initiative Payment Reform Recommendations

8/3/2019 Eastern Massachusetts Healthcare Initiative Payment Reform Recommendations

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EMHI Payment ReformRecommendations


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General Structure of Recommendations

Oversight

Transparency

Spending Targets

Requirements during a Transition Period


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OVERSIGHT

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Independent Oversight Mechanism What should it look like?

Entity should be organized as an IndependentCommission of approximately 9-12 members, with amajority of members being independent experts anda minority of members representing stakeholders.

Stakeholder groups could nominate individuals formembership, but final selection of members shouldbe made by the Governor, with the Legislaturesapproval.

The Chair of the Independent Commission shouldnot be from a state agency or any payer or providergroup.


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Independent Commission Functions

Develop payment methodologies for public payers(Medicaid, Medicare, GIC and Connector) (Year 1).

Develop broad outlines for what constitutesalternative payment methodologies in the private

sector and review and approve such models(by Year 3).

Have access to the data that other state agencies

collect in this area, with the power to requestadditional data from those agencies (Years 1+).


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Independent Commission Functions(Cont.)

Along with the state, where feasible, developrecommendations for payers and providers to commitupfront funding, including from reserves, to developnew primary care delivery systems, with funds to berepaid from future savings (Year 1).

Develop recommendations on significant administrativesimplification initiatives at both provider and payer levels

and explore the possibility of establishing a commonpipeline for providers to submit claims (Years 1+).


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Independent Commission Functions(Cont.)

Report annually to both the Governor and theLegislature, with its own staff and a multi-year budgetappropriation sufficient to support the staff andanalytical research necessary to carry out its dutieseffectively.

Develop enforcement mechanisms for: 1) failure tomeet recommended benchmarks for using alternativepayment methods; and 2) failure to reach spending

targets. These mechanisms would not be imposedduring the three-year transition period, but would beimposed after that time if the Commission findsbenchmarks are not being met.


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TRANSPARENCY

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Reporting and Transparency

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Independent Commission should collect and publicize

information reported by plans and providers, including:

The breakdown of payer contracts by payment modeland risk model;

Total spending and total at-risk spending for payers; Information on which providers are participating in

ACO-type arrangements; Relative growth in total medical expenses; Spending trends for the state;

Specific standardizedquality measures as determinedby the Commission; and

Other information the Commission deems necessaryto ensure a successful transition.


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SPENDING TARGETS

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The current situation, as best we know it

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Measure of Spending

Approximate

magnitude

Premiums 8.0%

Forecast medical spending per capita 5.5% - 6.0%

Forecast GSP per capita 4.0%

Inflation rate 2.0%

Cost increases are about 2.0 percentage points abovepotential GSP growth.

Potential Gross State Product is a measurement of the

economic output of a state if the state was not moving into or out of

a recession.


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Proposed Spending Target

Achieve potential GSP* + 1% by 3 years.

Achieve potential GSP* by 5 years.

Reset to potential GSP* + 1% at 10 years.

*Adjusted for unforeseen medical circumstances and

stage of business cycle.

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Proposed Spending Target (cont.)

Target relates to total spending.

Target relates to in-state spending for state residents.

The Independent Commission should be mindful ofprice variations when tracking spending.

Spending targets could be applied differentially forexample, looser targets for groups choosingalternative payment arrangements.

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What this means

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$0 $0 $0 $1 $1 $2 $3 $5 $7 $8 $10 $13 $15 $17 $20 $23Savings


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Public Payers

Medicaid: Assuming appropriate rate structure,asspending increases fall below GSP growth, 75% ofsuch savings should be dedicated to rate increasesthe following year.

Medicare: Pursue waiver for payment reforms similarto Medicaid recommendations.

Ideal: share Medicare savings 60-40 relative tobenchmark CMS cost increase (higher providerpercentage to compensate for up-front spending).

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PAYMENT TRANSITION

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Transition Period

Providers and payers should be encouraged to meettargets on alternative payment methodologies during athree-year, penalty-free transition period.

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Goal for Payment Models

Accountable Care Organization

Organization that accepts global payment for theentirety of the care it receives, with some degree ofprofit/loss sharing.

Non-ACO Patient-Centered Medical Home +

Partly risk-based payment for primary care wherethe primary care is provided outside of an ACO.

Bundled Episode Payment

Partly risk-based payment for an episode under thecontrol of one or more specialists.

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Examples

ACO A patient goes to ACO

XXX, using theirphysicians and hospitals.

ACO XXX is paid on acapitated basis for thatcare.

Episode A patient goes to Medical

Associates of XXX, astand-alone facility of 5PCPs.

These PCPs are amedical home andaccept some risk.

The patient is referred toBWH for specialty cardiaccare.

BWH is paid on abundled episode basis

for the care. 19

P R i t D i


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Payer Requirements DuringTransition Period

At the end of each year, payers should report on the

breakdown of their contracts by payment model and riskmodel, and their total expenditures and at-riskexpenditures in spending for that previous year.

By end of Year 3, payers should document/attest that

contracts covering a majority of the claims they pay useany of:

Bundled payments

Risk sharing around total costs (e.g., AQC, other

shared savings), full risk Pay-for-performance in which cost or utilization can

move at least 25% of revenue

Mixed payment (e.g., Non-ACO medical homes)

As on the previous slide 20

P id R i t D i


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Provider Requirements DuringTransition Period

By the end of Year 3, hospitals and physiciangroups with 25 providers should document/attest

that at least 50% of their revenues have upside ordownside risk of at least 25%.

At risk payments include the payment types notedabove.

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Alternative Plan Types

Payers should be encouraged to develop, andshould be required to report data on, networkdesigns that encourage enrollees to seek care atlower-cost institutions / with lower cost physicians

(tiered or limited networks).

Such plans should be offered by the GIC and theConnector.

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Referral Institutions

Referral institutions treating patients enrolled in ACOsshould get credit for participating in alternativearrangements regardless of how they are actually paidby the ACO/payer.

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Eastern Massachusetts Healthcare Initiative Payment Reform Recommendations

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