© 2015 American Hospital Association

Facing the Challenge of

Population Health

Small and Rural Hospital ConferenceNovember 10, 2015

John R. Combes, MDChief Medical Officer and Senior Vice President

American Hospital Association

Overview

• Health Care Trends: A Time of Uncertainty

• Health Care Systems in Transition

• Moving Toward Population Health

• Hospitals’ Response to Population Health

• Payment Reform Supporting Population Health

• Achieving the Triple Aim

Health Care Trends: A Time of Uncertainty

Health Care: Time of Uncertainty

• What’s driving uncertainty?– Economic needs

– Demographic shifts

– Purchaser value expectations

• What has the ACA accomplished?₋ Greater focus on coverage and costs, performance-based

payment

₋ Created new insurance market options

₋ Spurred some new delivery/payment model development and experimentation (e.g., ACOs)

4

Healthcare Costs Will Resume their Rise

Sources: Centers for Medicare and Medicaid Services, Office of the Actuary

17.5

18

18.5

19

19.5

20

20.5

1

2

3

4

5

6

2014 2015 2016 2017 2018 2019 2020 2021 2022

Projected % Change in Per Capita Year over Year

National Health Expenditures

Healthcare Spending

Healthcare Spending is projected to grow at an average annual rate

of ~5.35% beyond 2016 due to

improving economic conditions, the Affordable Care Act (ACA) coverage expansions, and the aging of the U.S. population.

Healthcare costs are rising and industry spending is projected to grow at an annual rate of

~5.35% beyond 2016.

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

1960 1970 1980 1990 2000 2006 2007 2008 2009 2010 2011 2012 2013 2015 2020

U.S. health care spending (in billions of dollars)2013, 2015, 2020 projected

Source: Centers for Medicare and Medicaid Services, July 2014

How Much We Spend in U.S.

6

Forces of Change• Evolution of the payment system:

– Reimbursement based on cost of care to

– Reimbursement based on diagnoses and groups of services to

– Payment system driven by value (quality & cost performance) with prospect of fixed payment based on groups of people (populations)

• Fixed payment systems requires a focus on outcomes, efficient care processes, lower cost treatment options and overall appropriateness of care.

• Fundamental changes in insurance market

– Markets (e.g., public and private exchanges)

– Products (e.g., HDHPs, tiered plans)

– Incentives (e.g., shared risk, capitation)

– Provider sponsored plans

• The rise of:

– Consumerism

– Retail

– New Entrants

Migration of the Site of Care

Evolution of the Delivery Model

1st Stage 2nd Stage 3rd Stage

ModelInstitutional Community Person

Organization

Hospital NetworksSelf-Directed

Virtual

Payor

GovernmentInsurers

ProvidersGovernment

Insurers

GovernmentInsurers/Providers

Patients/Consumers

Patient

PassiveReceiver

ActivatedConsumer

QuantifiedInformedPurchaser

Locus of Control Organizational

RetailersNew Entrants

Individuals

Institutional-based

Community-based

Person-based

Migration of the Source of Care

Predictable Outcomes

• Lower relative and (absolute) costs

• Meaningful clinical integration and coordination

• Continued migration of care to outpatient/ ambulatory settings

• Greater risk associated with performance and populations

Quality and cost performance and transparency

• More patient-oriented and consumer-driven

• Consolidation (read bigger “Health Care Companies”)

• More competition and blurring of lines

• ROI-based technology and capital decisions

11

Health Care Systems in Transition

Strategic Directions

IN 5 YEARS, OVERALL FORECAST

• Movement away from fee-for-

service …toward ‘integration”

• Emphasis on value vs. volume

• Emphasis on quality vs.

quantity

• From illness to health

In 5 years what will the field look like?

ACA or Not: Needs and Trends Continue

More INTEGRATIONacross the “silos”

More AT-RISK FUNDING

More PUBLIC ACCOUNTABILITY and

reporting

Increased coverage

Delivery system reforms

Payment reforms

Increased transparency

Adoption of health IT

Physicians Hospitals Insurance Plans

Primary

Mission

Manage patient care Accommodate medical needs of

the community

Manage cost, hold providers

accountable

View of the

Other

‘Hospitals are our

lab’;

‘Plans are a

nuisance, adding no

value’

‘Physicians are central to care

and our natural partners’

‘Plans are a nuisance and add

limited value’

‘Physicians are important

but need discipline, tools

and sensitivity to costs’

‘Hospitals are inefficient,

non-transparent and the

root cause of high costs’

Major Concern Protection of clinical

autonomy, patient trust

& economic security

Sustainability: protection of

operating margin as bad debt

and operating costs increase

and plans negotiate more

aggressively

Capital: to transition from acute

to population-health focus

Protection of role as

organizer of health services,

driver of cost accountability

Key Asset 1) Patient Trust

2) Clinical Knowledge

Local reputation

Technology

Access to Capital (declining)

1) Data (clinical, financial)

2) Capital

3) Relationships with group

purchasers

Key

Vulnerabilities

1) Data

2) Leadership

3) Capital

4) Scale

1) Cost structure

2) Transparency

3) Physician resistance to change

1) Trust

2) Differentiation

Source: Paul H. Keckley, PhD; Navigant Healthcare Insights, August 2014

Leverage: Physicians, Hospitals, and Insurers

Path to the Second Curve

16

What paths are hospitals/systems pursuing?

33%

29%

19%

14%5%

PARTNER EXPERIMENT INTEGRATE REDEFINE SPECIALIZE

Clinical

Patient management

Institutional management

Administrative

Care System of the Future

Clinical

Patient management

Institutional management

Environmental Pressures

Environmental Pressures

Transformed Vision

Clinical Management

Population management

Administrative

Vision of Transformation

• Providers taking responsibility for populations

• Better coordination across care settings and providers

• More effective management of chronic disease by both providers and patients

• Greater role for primary care

• Support from both provider and payer leadership

Greater Integration

Moving Toward Population Health

Source: Milliman USA Healthcare Cost Guidelines, 2001 Claims

Probability Distribution, non-KP.

0%

20%

40%

60%

80%

100%

0% 20% 40% 60% 80% 100%

% of Membership

% of Costs

0% total

cost

10% total cost

30% total cost

% of People

1% of people

70% of people20% of people

% of

Healthcare

Expenditures

Health Care Cost Continuum

23

ABCDs of chronic disease . . .

• Asthma

• Blood pressure control (hypertension)

• Coronary artery disease / Congestive heart failure

• Diabetes

• DepressionModifiable risk factors:

All heavily impacted by weight,

diet, smoking, adherence to

treatment plans, and physical

activity.

America’s Big Cost Drivers in Health Care

24

Defining Population HealthWhat is population health?Population health is the health outcomes of a defined group of people, including the distribution of such outcomes within the group.

What is population health management?Population health management is a strategic, clinical approach to improve outcomes by managing the health of a defined group of people while also reducing costs.

What is population health improvement?Population health improvement is a strategy to improve the health outcomes of and to eliminate health inequities among a defined group of people.

Implementing Population Health

What processes should be considered when implementing a population health improvement strategy?

Population health improvement is achieved through a focus on three interrelated processes:

1. Identify and analyze the distribution of specific health statuses and outcomes;

2. Evaluate the clinical, social, behavioral and environmental factors associated with the outcomes; and

3. Implement a broad scope of interventions to modify the correlates of health outcomes.

26

Primary Population Health GoalsWhat are the primary goals hospitals and care systems should include in their population health improvement strategies?

Hospitals and care systems should include these four distinct goals in their population health improvement strategies:

1. Coordinate hospital-based interventions with community stakeholders and other key partners through mature collaborations;

2. Increase preventive health services through coordinated care across the health care continuum;

3. Provide culturally and linguistically appropriate care;4. Promote healthy behaviors; and5. Track population health metrics against dashboard

targets.

Source: Minnesota Dept. of Public Health

http://www.health.state.mn.us/divs/opi/gov/chsadmin/intro.html

Creating Health

28

Source: Dahlgren, G. and Whitehead, M. (1993) Tackling inequalities in health: what can

we learn from what has been tried? Via http://www.kingsfund.org.uk/time-to-think-

differently/trends/broader-determinants-health ?

Social Determinants of Health

29

Impacting Health

Hospitals’ efforts to impact health can be categorized at three levels:

1.Individual

2.Defined population

3.Geographic populationDefined Population

Individual

Geographic Population

30

Hospitals’ Response to Population Health

Survey Overview• Mailed to 6,365 hospitals.

• In the field from January to May 2015.

• N = 1,418

• Response rate = 22%

• Sample population:– Midwest overrepresented, Southeast and Southwest

underrepresented.

– Large hospitals and teaching hospitals overrepresented.

– Not-for-profit hospitals overrepresented.

• Areas Covered– Population Health Structure

– Partnerships

– CHNAs

85.4 percent are committed a population health plan

Population Health Structure

3.4%

11.1% 23.6% 30.8% 31.0%

COMMITMENT TO POPULATION HEALTHNo commitment Some commitment Reflected in vision statement

Strong commitment Total commitment

Population Health Structure

69.7% 68.7%59.2%

47.4%

10.5%

Individuals usingthe hospital or

health caresystem

Individuals in aspecified

geographic areaor community

Individualsexperiencing a

certain disease orcondition

Individuals forwhom the

hospital hasfinancial risk

Other

"POPULATION" DESCRIPTION

Population Health Structure

0% 20% 40% 60% 80% 100%

Population health aligned with mission

Strong collaborations with community organizations

Population health aligned with clinical integration strategy

Focus on a broad range of population health issues

Priorities aligned with public health department's priorities

Financial resources available for population health initiatives

Programs address socioeconomic determinants of health

POPULATION HEALTH ALIGNMENT

Strongly disagree Disagree Neutral Agree Strongly agree

Population Health Structure

Rank Most Needed Skills or Backgrounds

1 Physicians

2 Nurses

3 Behavioral health

4 Needs assessment/strategic planning

5 Clinicians (not nurses or physicians)

6 Change management

7 Community health/organizing

8 Public health

Partnerships

12.8%

0.4%

23.0% 43.5% 20.3%

PARTNERSHIPS WITH OTHER HOSPITALS

Not involved Funding Networking Collaboration Alliance

Partnerships

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

FQHC, community health center, etc.

Health insurance companies

Postsecondary education (colleges, universities)

Healthy communities coalitions

School districts

Retail clinics

Faith-based organizations

Chamber of commerce

Federal government programs (e.g., nutrition)

United Way

Local businesses

YMCA/YWCA

National health associations

Early childhood education

Service leagues

Neighborhood organizations

PARTNERSHIPS WITH OTHER AGENCIES

Not involved Funding Networking Collaboration Alliance

Partnerships

Yes69%

No31%

PARTICIPATION IN REGIONAL HEALTH PROMOTION COLLABORATIVE

CHNAs

33%

23%

17%

17%

11%

Outside resource contributed to someaspects of the assessment (e.g., data

analysis, community engagement)

Partnered with other hospitals ororganizations (e.g., health departments,

public health institutes, etc.) for the…

An outside resource exclusively developedand executed the assessment

Organization conducted the assessmentindependently

The assessment was developed and executedas a community collaboration

CHNA CREATION APPROACH

CHNAs

Rank Most Important Uses for CHNA

1 Integrate population health into the hospital’s strategic or operational plan

2 Target programs or services to improve population health

3 Increase collaboration with community partnerships to address identified needs

4 Target programs or services to improve population health in collaboration with local public health departments

5 Assess the impact of hospital resources and community readiness to address health needs

6 Use baseline data to inform future assessments

Key Findings• 85% of hospitals reported strong or total commitment to

population health or have population health in their vision statement.

• 87% of hospitals reported having some degree of working relationship with other local hospitals.

• The most common partnerships were with public health departments, chambers of commerce, health insurance companies and FQHCs/community clinics.

– Housing/community development and transportation authorities were the least likely partners.

• 23% of hospitals partnered with an outside organization (e.g., other hospital, public health department) for the CHNA.

– 17% of hospitals conducted their CHNAs independently.

Payment Reform Supporting Population

Health

HHS Announcement • Triple Aim:

– Better Care

– Smarter Spending

– Healthier People

• Moving from volume to value

– Pay-for-performance initiatives

– Alternative payment models

Target percentage of payments in ‘FFS linked to quality’ and ‘alternative payment models’ by

2016 and 2018

CMS Framework

Traditional FFS

Value-Based(Link to Quality)

• Hospital VBP• Physician VM• Readmissions• HACs• Quality Reporting

Alternative

Delivery

Models

• ACOs• Medical homes• Bundled payment• Comprehensive

Primary Care initiative

• Comprehensive ESRD

Population

Health/

At Risk

• Eligible Pioneer ACOs in years 3-5

• Maryland hospitals

Volume Value

New: Payment Provisions

2015 2016 202017 18 19

0% .5% .5% annually

MIPS APM

-21%

2422 2321 25 2026

MIPS: 0.25%

APM: 0.75%

0% annually

APM: Bonus of 5% of PFS payments annually

Merit-based Incentive Payment System

• Default payment system

• MIPS unless

– Qualified APM participants

– Low-volume threshold

• Composite Score of 0 to 100 based on:

– Quality measures

– Resource Use measures

– Clinical Practice Improvement activities

– Meaningful Use of EHRs

Payment Under MIPS

MIPS: Bonus for high performers (<10%)

2019 2020 2021 20252022 2023 2024

0.5%

2026

0.0% annually

+4 +5 +7 +9

MIPS Composite Score WeightingCategory CY 2019 CY 2020 CY 2021 and

beyond

Quality 50% 45 % 30%

Resource Use 10% 15 % 30%

Clinical Practice Improvement

15 % 15 % 15 %

Meaningful Use 25 % 25 % 25 %

• CMS can vary the percentages based on factors like EHR adoption, or lack of appropriate measures or activities

• Providers failing to report required data receive zero pointsfor the applicable category

Translating the MIPS Composite into Incentives and Penalties

Performance Threshold (Determined annually)

Positive adjustment on

sliding scale

Negative adjustment on

sliding scale

Exceptional performance threshold (2019 – 2024 only)

25 percent of performance threshold Maximum

Negative Adjustment

Exceptional performance bonus (up

to 1 percent)

MIPS Composite Score

0

100

Alternative Payment Models

An eligible APM entity must:

• Require use of certified EHR technology

• Bear financial risk or be a medical home

• Link payment to quality

APMs are defined as:

• A model tested by the CMMI

• An ACO under the Medicare Shared Savings Program

• Certain other demonstrations

Comprehensive Care for Joint Replacement

• Final Rule Nov 1, start January 1

• IPPS hospitals are responsible

• Required of hospitals in 75 markets

• Includes both elective and traumatic hip and knee patients

• 90-day episode

• Includes all related Part A & B care

• Retrospective methodology

NEW: Bundled Payment Example

Comprehensive Care for Joint Replacement

• Retrospective payment methodology

FFS payments continue

Settle up to 2-percent discount

Quality measure requirements

Proposed Rule: Hip & Knee Bundled Payment

Payment Under CCJR

Quality performance?

&Less than 98% of what otherwise would have paid?

Yes = CMS to pay hospital savings; might be able to share with partners

No = CMS to collect excess from hospitals

CMS$

$

$

Comprehensive Care for Joint Replacement

Proposed Rule: Hip & Knee Bundled Payment

Waived Not Waived

Physician “incident to” rule Stark

SNF 3-day rule ** Anti-kickback

Telehealth 60% Rule/3-hour Rule

HH homebound rule

Patient steering

CMS Bundling Initiative

• BPCI program began in 2013

– Model 1: Acute care hospital/gainsharing

– Model 2: Acute care hospital + MD + PAC

– Model 3: PAC only

– Model 4: Acute care hospital + MD

105

Participants

360

Participants

JulyMarch

Achieving the Triple Aim

The Target: The Triple Aim

Triple Aim

Improved Health

Spending per Capita

Experience of Care

58

Better Health

• Extent of commitment

• Leadership vs. participation vs. facilitator/convener

• Understanding and planning for community health needs

• Health Improvement measuring and monitoring

• Strategic collaboration/partnerships

• Population health infrastructure

– Expertise

– Data analytics

– Community-based interventions

59

Better Health Care

• Patient and family engagement

– System design

– Safety analysis

– Self-care

• Harm free environments

• Convenient access

• Customer vs. patient

– Consumer strategy

– Retail strategy

– Patient and provider strategy

60

Lower Costs

• Lean processes

• Eliminating non value-added care

• Eliminating HACs

• Reducing readmissions

• Transparent pricing

• Total cost of care metrics

61

Issues to Consider in a Rapidly Changing Environment

Managing variation in the pace of change

Adapting to new payment and delivery system models with little

experience and knowledge about intended and unintended

consequences

Confronting the challenge of disruptive innovators who offer

convenience and reduced complexity for the consumer

Managing new and sometimes difficult partnerships where cultures

clash and missions don’t align

Ensuring sustainability in an evolving business model

Assembling and developing the right talent in both the hospital and

community

Assuring diversity of age, gender, race and ethnicity at all levels of the

organization from the board to management to frontlines staff that

reflects the community

Developing a deep understanding of the community’s level of health and

wellness, their burden of disease and their needs to achieve the health

status they deserve18

Focus Today Future

Board Fiduciary Generative

Leadership Hospital Health across continuum

Operations Procedure-based Outcome-based

Physicians Productivity Quality

Risk Conservative Proactive

Accountability Assumed Transparent to public

The Changing Nature of the Health System

63

Questions/Comments

John R. Combes, MDChief Medical Officer and Senior Vice President

American Hospital AssociationChicago, IL

312-422-2117jcombes@aha.org

www.aha.orgwww.ahaphysicianforum.org