HIDA Webinar Series - Streamlining Healthcare · HIDA Webinar Series ... achieved by each ACO if...

ACOs and Acute Care Reimbursement Trends

HIDA Webinar Series

© 2013 Copyright Health Industry Distributors Association. All rights reserved.

Agenda

Healthcare reform update: acute careStatus of the main provisionsKey changes for hospitals

Accountable care organizationsTypesQuality measuresTrends

Key to success in this changing environmentImpact on the supply chain: big picture


What Is Healthcare Reform, Anyway?

1,000 Pages of Changes – Hard to See the Whole Picture© 2013 Copyright Health Industry Distributors Association. All rights reserved.

Status of Healthcare Reform Provisions


Reform Was Built on Promise of An Insured Population

29-30 Million

Medicaid Expansion

State‐based Insurance Exchanges

Federal Insurance Exchange

Employee Mandates

Individual Mandate

Business Co‐ops



Medicaid Expansion – State Perspective


Insurance Exchanges – State Perspective


Deadline for Employer Health Insurance Mandate Pushed Back a Year


Emphasis on quality

Skin in the game

Reduced costs

MandatoryComing to a market near you!

Value-based purchasingReadmissions policyInfection policies

VoluntaryAccountable care organizations (ACOs)Bundled payment pilot program

Payment Drivers Are Changing


Hospitals – Key Changes


Hospital Payment Tied to Performance

% of hospital pay tied to performance

ACO amount is unknown and depends on physician participation/ pay model



VBP - 1,427 Hospitals Penalized This Year

Value-based Purchasing (VBP) –Ties pay to performance on quality measures

Rolling out in acute care firstStarts with measures for heart attack, heart failure, pneumonia, certain surgeries, six infections and patient experiencePlan to implement VBP in skilled nursing facilities, ASCs

Hospitals can earn back more than their share or lose it by not meeting performance benchmarks


CMS’s Proposed Changes to VBP for 2016

1 new process measure: flu immunization2 new HAIs: catheter-associated urinary tract infection and surgical site infection3 process measures removed: coronary intervention w/in 90 min, discharge instructions for heart failure, and blood cultures for pneumonia patients prior to antibioticNew “floor” for all patient satisfaction measuresReweighting the four measure domains – clinical process, patient experience, outcomes, and efficiency –to increase weight of outcomes and efficiency


Hospital Readmissions Reduction Program -1% Cut in 2013

Hospital payments reduced for excess readmission rates within 30 days of discharge:

Heart attack, heart failure, and pneumoniaFY2014 – 2% cutFY2015 – 3% cut


Other Providers are on The Hook for Readmissions

More than 2000 hospitals penalized in FY2013Hospitals hit hardest in NJ, NY, DC, AR, KY, MS, IL, and MASafety-net hospitals hit harder than others

Smooth transitions in care Mandates: 30 Day Hospital Readmission PolicyPressure to perform on other providersFuture referrals at risk!

Pressure to move to electronic medical records


CMS’s Proposed Changes to Readmissions Policy

Penalty increases up to 2% for FY 2014

Revised methodology to account for planning readmissions

2 new readmission measures for 2015 penalties:Hip/knee arthroplastyCOPD


Infections: Multiple Programs Could Lead to Multiple Penalties

■ Medicare and Medicaid do not reimburse for preventable health-acquired conditions

■ FY2015 – 1% cut for hospitals in top quartile for infection rates

Multiple penalties


CMS’s Proposed Changes to Infections Policy

Domain #1 – patient safety indicators (PSIs):Pressure ulcer rateVolume of foreign object left in bodyIiatrogenic pneumothorax ratePostoperative physiologic and metabolic derangement ratePostoperative pulmonary embolism or deep vein thrombosis rateAccidental puncture and laceration rate

Domain #2: HAIsCentral line-associated blood stream infectionCatheter-associated urinary tract infection


■ Pilot project where payments are bundled for acute inpatient, physician, outpatient, post-acute services

■ 2 Payment Types, 4 ModelsCMS has suspended further implementation of Model 1 due to lack of participation.

2010 2011 2012 2013 2014 2015 2016 2017

January 1, 2013, national voluntary pilot program begins

HHS report to Congress on program -2015

HHS report to Congress on final results of program, as well as a plan for expansion -2016

Bundled Payments – Another Step Away From FFS


A group of healthcare providers that contracts with Medicare (or another payor) to coordinate care for beneficiaries and reduce the overall costs associated with delivering the care.

Specifically ACO providers agree to work together to:

What is an ACO?

Coordinate patient care Share in achieved

cost savings by reducing cost to

deliver carePerform well on quality measures

Reduce costs


Various Types of ACOs

Medicare Shared Savings Program (MSSP)

Built into healthcare reform lawThree-year participation agreement221 ACOs selected

Medicare Pioneer ACOsDemonstration projectSimilar emphasis on quality and savings, but with more flexibility in programSame quality measures

Private sector ACOsVary widely


The Rulebook Depends on Who Makes the Rules

221 - Medicare Shared Savings Program

32 - Pioneer ACO Demo

PRIVATE SECTOR ACOS

FEDERAL ACO PROGRAMS

10 - Physician Group Practice Demo Advanced Payment

Model ACOs

Healthcare Providers

Insurers

The framework, or rules, for each ACO depends on the “payer”


Does ACO Formation = Ownership Consolidation?

Not necessarily ACOs need a formal legal structure to receive and distribute payments for shared savings to participating providers Separate entities may participate, such as hospitals and physician practicesOne provider organization serves as “convener”

Medicare Shared Savings Program

Pioneer ACOs Private sector

ACOs

Medicare Sharing Savings Program


Share in the SAVINGS, and in some cases RISKAt least 5,000 Medicare beneficiariesParticipate for three yearsMedicare beneficiaries must be informed, they retain the option to decline participation33 quality measuresGovernance requirements

The Basics


Approved Medicare Shared Savings ACOs have two track options:

■ One-sided risk model Share in savings all three yearsMust first meet a minimum savings rate of between 2% and3.9% (depends on population size)Then, they can share up to 50% of first dollar savingsdepending on quality scores

■ Two-sided risk model Share in savings or losses all three years Must first meet 2% saving/loss rateShare up to 60% of savings/losses depending on qualityscores

How Does the Money Work?


How Will Doctors in an ACO be Paid?

Medicare will continue to pay individual providers for specific services as it currently doesCMS will develop a benchmark for savings to be achieved by each ACO if the ACO is to receive shared savings The amount of an ACO’s shared savings or losses depends on its performance on quality standardsACOs must develop their own legal structure to share any savings with its affiliated providers


How ACOs Work


Bumpy Road for Pioneer ACOs

Pioneers balk at level of riskUp to 9 expected to shift to MSSP program


Pioneer ACOs Include Many Leading Systems

Organization Service Area

1. Allina Hospitals & Clinics Minnesota and Western Wisconsin

2. Atrius Health Eastern and Central Massachusetts

3. Banner Health NetworkPhoenix, Arizona Metropolitan Area (Maricopa and Pinal Counties)

4. Bellin-Thedacare Healthcare Partners Northeast Wisconsin

5. Beth Israel Deaconess Physician Organization Eastern Massachusetts

6. Bronx Accountable Healthcare Network (BAHN) New York City (the Bronx) and lower Westchester County, NY

7. Brown & Toland Physicians San Francisco Bay Area, CA

8. Dartmouth-Hitchcock ACO New Hampshire and Eastern Vermont

9. Eastern Maine Healthcare System Central, Eastern, and Northern Maine

10. Fairview Health Systems Minneapolis, MN Metropolitan Area

11. Franciscan Alliance Indianapolis and Central Indiana


Pioneer ACOs Include Many Leading Systems (cont’d)


12. Genesys PHO Southeastern Michigan

13. Healthcare Partners Medical Group Los Angeles and Orange Counties, CA

14. Healthcare Partners of Nevada Clark and Nye Counties, NV

15. Heritage California ACO Southern, Central, and Costal California

16. JSA Medical Group, a division of HealthCare Partners Orlando, Tampa Bay, and surrounding South Florida

17. Michigan Pioneer ACO Southeastern Michigan

18. Monarch Healthcare Orange County, CA

19. Mount Auburn Cambridge Independent Practice Association (MACIPA)

Eastern Massachusetts

20. North Texas ACO Tarrant, Johnson and Parker counties in North Texas

21. OSF Healthcare System Central Illinois

22. Park Nicollet Health Services Minneapolis, MN Metropolitan Area


Pioneer ACOs Include Many Leading Systems (cont’d)


23. Partners Healthcare Eastern Massachusetts

24. Physician Health Partners Denver, CO Metropolitan Area

25. Presbyterian Healthcare Services – Central New Mexico Pioneer Accountable Care Organization

Central New Mexico

26. Primecare Medical Network Southern California (San Bernardino and Riverside Counties)

27. Renaissance Medical Management Company Southeastern Pennsylvania

28. Seton Health Alliance Central Texas (11 county area including Austin)

29. Sharp Healthcare System San Diego County

30. Steward Health Care System Eastern Massachusetts

31. TriHealth, Inc. Northwest Central Iowa

32. University of Michigan Southeastern Michigan

Quality Measures for Medicare ACOs

(Both MSSP and Pioneer)


Quality performance standards must be met in order for an ACO to share in any savings

Year 1 Year 2 Year 3

Completely & AccuratelyReport

33 33 33

Meet Performance Minimums

0 25 32

**EHR “meaningful use” participation is a performance measure, not a 50% requirement

Shared Savings Tied to Quality Measures

Providers in an ACO are still subject to additional health reform policies on infections, readmissions, and value-based purchasing!


The Challenge: Improve Quality, Reduce Spending

Four groups of quality measures:Patient experienceCare coordination and patient safety Preventive healthCaring for at-risk populations

CMS will develop spending benchmark for each ACO, every year to gauge financial performance


In the first year, providers must fully and accurately report on all four quality measure domains. In the second and third years, the share of savings will be tied to performance on quality measures.

Points are assigned to each measure, and ACOs must attain a minimum of 30% on each measure for 70% of the measures in each domain. The benchmark is reset each year based on previous year’s data.

The Challenge: Improve Quality, Reduce Spending


Quality Measures in Final ACO Rule


Healthcare Providers Form an LLC to Contract with Medicare


Providers Bill CMS Separately for Services; Also Submit Performance Data


CMS Determines Whether ACO Has Met Quality Benchmarks and Reduced Total Costs


CMS Shares Any Savings Above Minimum Rate

Shared SavingsSavings above the “minimum savings rate,” 2‐3.9% depending on ACO size and risk model, go to the LLC, which distributes them to participating providers

Private Sector ACOs


Major Private Sector ACO Initiatives

■ Cigna: collaborative accountable care (CAC) program with 32 CACs serving 300,000 patients in 16 states

Aims to have 100 CACs covering one million patients by 2014

Aetna: 10 ACO-like agreements with providers in place, 14 more in the works

Investing $1B+ in a capabilities to support ACO program, including acquiring a health IT services firm

Blue Cross Blue Shield Massachusetts: ACO-like contracts “Alternative Quality Contracts” with 11 provider organizations established in 2009-2010, produced savings and quality improvements


Comparing Medicare and Private Programs

Providers participating in ACO agreements with private payers may also choose to participate in the national MSSP program – however, private sector agreements may have significant differences in terms of patient volume, eligible participants, financial incentives, and clinical/quality.


Comparing Medicare and Private Programs

4 “ACO Providers Fact Sheet,” Centers for Medicare & Medicaid Services, October 2011.5 “Premier accountable care organizations – Driving to a people-centered health system,” Premier, Inc. 2011.

Key to Success in Your Changing Environment


Find the Pain and Take It Away

■ Preventing infections■ Reducing readmissions■ Patient satisfaction■ Key clinical areas: heart

attack, heart failure, pneumonia


Tie Your Marketing to New Quality Metrics

For example:■ Patient Experience■ Care Coordination and Patient Safety

COPDEHR Implementation by Primary Care ProvidersScreening for Risk of Falls

■ Preventive HealthFlu and Pneumonia Vaccination RatesColorectal Cancer ScreeningBlood Pressure Screening

■ Caring for At-Risk PopulationsDiabetes Control (SEVERAL measures)Blood Pressure Control


Plenty of Pain and Challenge on the Non-Acute Side Too

Example: reducing readmissionsMajor opportunity to both improve quality of care and lower costs

Majority are chronic disease patientsDepends on primary care support

Requires a strong primary care infrastructureACO might decide to incentivize primary care physicians to spend more time on chronic disease management

Requires trusted extended care relationships


Cost Pressures Create Enormous Customer Pain

Being cheaper isn’t the only way to reduce this pain

Providers won’t succeed if they cut spending in one area only to add costs in anotherACOs won’t succeed if they cut spending and quality declines

Show Customers Why Spending for Your Product or Service Will Reduce

System-Wide Costs

“Hospitals of all sizes are generally willing to pay a 10-15% premium on average for disposables that demonstrate an ability to reduce errors and infection rates.”

--Stuart Jackson and Bob LavoieL.E.K. Consulting

“Healthcare Reform Shifts Hospital Priorities, Creates New Opportunities for MedTech Companies,” Executive Insights Vol. XIII, Issue 4, June 2011


Bring Data

Providers are demanding data for “evidence-based product and service selection”Many distributors have more data than their customers do – great source of competitive advantage

“Progressive providers and supplier organizations are preparing for this new era by expanding their talent pools with

experienced data analysts who can conduct “deeper dives” into cost analytics to discover cost per case, cost per patient,

and other needed metrics.”

New Integrated Delivery Models, ACOs, and the Healthcare Supply Chain, March

2012, Strategic Marketplace Initiative (SMI)


Speak the Language: Population Health

Current State:Volume-Based Reimbursement(Fee-for-Service)

Future State:Risk-Based Reimbursement(ACO/Shared Savings/ Capitationand Quality-Oriented)

Low financial accountability for cost of care High accountability for cost of care

Defines population as patients who present at the doctor’s office

Defines population as every patient in the provider organization panel, regardless of whether they present at the doctor’s office

Minimal infrastructure (technology, staff, data, etc.) to manage more than the sickest/most complex patients

Must have infrastructure to manage the entire population

Culture rewards volume and operational efficiency

Culture rewards optimization of cost and quality

Source: ACOs and Population Health Management, American Medical Group Association


Speak the Language: Clinical Integration

Generic meaning: clinical providers across a continuum of services work together to better care for patients

More specific meaning: a legal arrangement to create the incentives, management, and infrastructure for physicians and health systems to improve quality and efficiency

“With a looming mandate to manage total‐cost risk for patients, hospitals must make physicians true partners in delivery system redesign. Yet, for most organizations,

current physician relationships are inadequate to create this level of alignment. As a result, many are now looking to clinical integration (CI) as a strategy to align both

employed and independent physicians around performance improvement.” – The Advisory Board


Speak the Language: Standardization

Taking on a larger meaningProceduresProcessesProducts

Providers focus on reducing variation to increase predictability of outcomes AND standardize products and suppliersStandardization efforts will be driven by evidence based data such as clinical outcomes, comparative effectiveness, and operational costs.

“Within the healthcare supply chain, variability equates to costs. As such, in order to improve costs, efforts to standardize on clinical practice, processes, products and suppliers will increase.”

New Integrated Delivery Models, ACOs, and the Healthcare Supply Chain, SMI, 2012


Speak the Language: Value Analysis

The process of evaluating products based on cost, quality, contribution to patient outcomesOften done through “value analysis teams“ or VATs

VATs usually organized by supply chain dept. but made up primarily of clinical personnelPhysician participation increasingBecoming more formalized in most health systems

Tends to focus on highest-cost physician preference items (PPI)Roles are evolving fast:

Expanding beyond evaluation of products into processes and clinical proceduresIncreasing emphasis on life cycle costs, patient outcomes, metrics


Source: Strategies for Medical Device Manufacturers to Address Hospital Value Analysis, Medical Device and Diagnostic Industry, May 2013

Common Features of Value Analysis Teams

© 2013 Copyright Health Industry Distributors Association All rights reserved


Speak the Language: Utilization Management

Continual process of managing, benchmarking and controlling day-to-day product consumption

“We evaluate, select, and contract for a product, service or technology and then we turn it over to our hospital staff who use too many, employ the wrong products, choose feature-rich products, unknowingly waste products, or vendors upsell new higher-cost products inside your new contract.”

Why supply utilization management is significantly different than value analysis, Robert Yokl, Value Analysis Magazine, 2013


Take More of a Team Approach Than Ever

At the field level, reps still need strong relationships with clinicians, doctors, purchasing agents, and practice administratorsAt the ACO or IDN level, key decision-makers may include:

The materials management or supply chain departmentValue analysis committeesClinical leaders in areas such as infection controlThe leader of “physician alignment” or “physician integration” efforts

Coordination among levels of the sales force is critical


Ask Questions

Is your organization part of an ACO?If yes, with what partners? What type of affiliation? Now or how soon?

What changes are you making in your practice as a result of healthcare reform?How can I help?

How Will Accountable Care Impact the Supply Chain?


More Focus on…

Standardization of procedures and processesEvidence-based medicineData analyticsPhysician engagementPatient engagementService line management (example: spine care)Cost reduction

Where do they start first? Supply chain!

A reduction of two percent in supply chain spending (operating expenses) would require an average hospital to increase revenue by 30 to 40 percent to have the same

impact. (Navigant Pulse, Winter 2011)

Important to all acute care customers, with ACOs

leading the way.


Some Will Look at Consolidating Purchasing Across the Continuum

Integrated delivery network (IDN)Types of providers included is driven by system goals

Most typically, common ownership, possible some joint ventures

Greater likelihood of consolidated supply chain strategy

Accountable care organization (ACO)Types of providers included is driven by program rules or payer agreements

Much looser affiliations likely

Consolidating the supply chain strategy more challenging

IDNs

IDN-led ACOs

ACOs


Some Will Look at Self-distribution

1. Control2. Improved service3. Product standardization4. Reduce distributor costs5. Collect administrative/manufacturer fees6. Disaster preparedness

Source: Cardinal phone survey of 17 self-distributors

Used with permission

Survey of Supply Chain Executives: Reasons for Self-distribution (ranked):


Fee-for-Service

ACOs

Volume Value

Healthcare at a Tipping Point

Patient Satisfaction

Physician Employment

HIDA Webinar Series - Streamlining Healthcare · HIDA Webinar Series ... achieved by each ACO if...

Documents

Transcript of HIDA Webinar Series - Streamlining Healthcare · HIDA Webinar Series ... achieved by each ACO if...