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Population Health Management Arrangements: What’s Working and Why?

Joseph F. Damore, FACHE

Vice President, Population Health Management

Premier, Inc.

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Today’s Agenda & Learning Objectives

• Introduction/Purpose

• Why Population Health Management Now?

– Gain a greater understanding of the changing health care environment in the U.S.

• The Current Population Health Environment

– Gain an understanding of the current population health management environment

• What’s working and Why

– New Care Models

– New Payment Models

• Summary

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2

INTRODUCTION / PURPOSE

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The Transformation to Population Health Management

FAD2010

TREND2012

REALITY2015

Population Health Management “The coordination of care delivery across a population to improve clinical and financial outcomes, through disease management, case management and demand management”

McGraw-Hill Concise Dictionary of Modern Medicine. © 2002 by The McGraw-Hill Companies, Inc.

Population Health “… the health outcomes of a group of individuals, including the distribution of such outcomes within the group.”

Wikipedia, the free encyclopedia

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“WHEN WE ARE NO LONGER ABLE TO CHANGE A SITUATION – WE ARE CHALLENGED TO CHANGE OURSELVES.”

VIKTOR E. FRANKL“MAN’S SEARCH FOR MEANING”

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WHY POPULATION HEALTH MANAGEMENT?WHY NOW?

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Increasing Market Pressure

Federal State

Employee / Commercial• Current Medicare enrollment is

projected to increase from approximately 54M today, to 85M by 2035

• Dramatic projected growth of all major chronic diseases

• FFS payment cuts

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ACO Development Accelerating NationwideNumber of ACOs

50+

30 ‐ 49

20 ‐ 29

10 ‐ 19

5 ‐ 10

3 ‐ 4

0 ‐ 2

Percent of population covered by an ACO

>50%

10 ‐ 15%

6 ‐ 10%

4 ‐ 6%

2 ‐ 4%

0 ‐ 2%

• Nearly 700 public and private ACOs in every state and 7.8M Medicare lives in MSSPs

• Medicare-specific ACOs:– 32 CMMI “Pioneer” participants, program

began 1/1/2012; 9 dropped out with 7 converting to MSSP 1/1/2013; 4 dropped in 2014 with 2 converting to MSSP

– Medicare Shared Savings Program• 4/1/2012: 27 ACOs added

• 7/1/2012: 89 ACOs added

• 1/1/2013: 106 ACOs added

• 1/1/2014: 123 ACOs added

• 1/1/2015: 89 ACOs added

Composition of ACOsPhysician Group

Hospital

InsurerOther

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THE CURRENT POPULATION HEALTHMANAGEMENT ENVIRONMENT

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Market Developments• Growing movement to population health arrangements

• Multi-owner regional population health entities

• Growth/interest in provider sponsored health plans

• Medicare Shared Savings participation growth (over 400)

• CVS converts from retail Rx to population health

• MSSP Mergers/consolidation/growth

• State Medicaid models– ACO models (Oregon, Alabama, etc.)

– Episode of Care/Bundled Payment models (AR, TN, OH)

– DSRIP model (TX, CA, NJ, NY)

– Commercial Medicaid expansion (AK, IA, UT, PA)

• Commercial Payor developments– Shared Savings models (Aetna, Cigna, Humana, Anthem, UHC, and

multiple BC plans)

– Direct contracting shared savings models (Aetna)

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Market Response• Growth in Consumer Driven Health Plans and commercial shared

saving agreements continuing (2nd wave)

• Emerging application of accountable care principles to Medicaid programs (e.g., Maryland, Alabama, Arkansas, Illinois, NY, Oregon, NC, etc.)

• Significant growth in the number of MSSP applicants for 1/01/15 start date (89 new participants)

• Declining hospital inpatient admissions due to care management programs (e.g., 6% decrease in the Chicago market over the past 48 months)

• Growth in Patient Centered Medical Homes (30,000+ primary care physicians participating to date)

• Implementation of state health insurance exchanges (over 7.5 Million)

• 10 Million newly insured (Uninsured rate dropped from 17.5% to 12.4%)

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Early Results Indicate the Effectiveness of ACOs

• Medicare costs per capita grew 0.8% in 2012 (while Pioneers grew at 0.3%)

• Physician Group Practice (PGP) Demonstration Project reduces cost of Dual Eligibles by $532 per year

• All 32 initial Pioneer ACOs achieved quality improvements

• 2/3 of Pioneer ACOs achieved cost savings in 2012

• Group Health and Geisinger report findings that team-based medical homes reduced per capita spending 7-8%

• Montefiore achieved $14M in shared savings in 2011, due in large part to a 10% decline in hospital admissions

• Mosaic Life, Hackensack, Banner Health, and WellStar generate significant shared savings in MSSP by reducing cost per capita

• Oregon’s new Medicaid program reports early success (1% decline in per capital costs in first year)

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WHAT’S WORKING AND WHY:BUILDING NEW CARE MODELS

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Four Stages in the Journey to Population Health Management

1. Preparatory1. Preparatory 2. Transformational2. Transformational 3. Implementation3. Implementation 3. Expansion3. Expansion

• Education• Assessment• Gap analysis• Operational

plan

• Primary care• Patient Centered

Medical Home• Clinical

integration• Care

management• Network

development• Health

informatics

• Defined population

• Payor partner• Post-acute

• Employee health plan

• Commercial arrangement

• Medicare• Medicaid• Employer

contracting• Uninsured

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Integrating New Care Models and New Payment Models

Care Redesign

• Patient-Centered Medical Home• Clinical Integration• Care Management• Post-Acute Care• Electronic Health Record• Data analytics

Care redesign must not outpace changes in payment

Care redesign must not outpace changes in payment

New Payment Arrangements

• Care Transformation Costs• Care Management Payment• Shared Savings• Episodes of Care Payment• Global Payment

Population Health

Transformation

Population Health

Transformation

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Care Transformation: Creating Alignment/Integration

• Primary Care Network Development

• Physician Led Clinical Integration

• Patient Centered Medical Home

• Care Network Development/Alignment

• Care Management Program– High Risk Population

– Chronic Disease Management

– Care Transitions/Post-acute care

– Episodes of Care

• Health Information Tools– EMR

– HIE / Interface Engine

– Claims Analytics / Predictive Modeling

– Care Management (Evidence-Based)

• Patient Engagement / Satisfaction

• Triple Aim-based Metrics

• Leadership / Cultural Transformation

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Patient Centered Medical Home Model

Patient Centered

Medical Home(PCMH)

Comprehensive Care

Enhanced Access to Delivery System

CoordinatedCare

Team-BasedApproach

DiseaseRegistry

PatientEngagement

PCMH Expected Attributes:• NCQA / other certification• Adoption of standard IT

system• Use of care

coordinators/managers• Focus on team-based

approach to care

Health System Support:• Provide access/support of

IT adoption within PCP office

• Educate and provide training to PCP’s regarding PCMH adoption

• Assist with care redesign• Jointly hire and train care

coordinators/managers • Collaborate across

practices to develop performance based metrics focused on quality, safety, care coordination and costs

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PCMH – Success Stories• Hill Air Force Base of Utah improved blood sugar control for 77% of their

diabetic population, reduced cost increases by approximately 10%, and improved patient satisfaction to 95%

• CareFirst Blue Cross Blue Shield of Maryland yielded an estimated 15% PMPM savings in the first year and $98 million in savings over two years

• Group Health of Washington reported overall cost savings of $17 PMPM including 29% fewer ER visits and 11% reduction in hospitalizations for ambulatory sensitive conditions

• Oklahoma Medicaid reported $29 PMPM savings

• HealthPartners in Minnesota reported 39% reduction in ER visits, 24% fewer hospitalizations, 40% reduction in readmission rates and 20% reduction in inpatient costs

• United Healthcare (UHC) reported an average 6.2% reduction in cost per capita in four states

• Michigan Blues (BCBS) reported $155M in savings over the first three years of the program. They also estimate, 3.5% higher quality measures, 5.1% higher preventive care measures, $26.35 lower PMPM cost.

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Population-Based Care Management Framework

Case Management

Disease Management

Prevention

Well & Low Risk Members

(Prevention)

Low Risk Members (Prevention and

Disease Management)

Moderate Risk Members (Disease

Management)

High Risk, Chronic, Multiple Disease

States (Episodic Case Management-

Inpatient Clinical Guidelines)

Complex Catastrophic Care(Inpatient - LTC)

End of Life

Increasing Health Risk

Decreasing Health Risk

1 2 3 4 5

Source: Paul H. Keckley, Executive Director, Deloitte Center for Health Solutions, Washington DCPhD, 2007 National Predictive Modeling Summit: The Landscape for Predictive Models

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Care Management: Target PopulationsComplex Individual Case

Management (40% of cost)

Complex Disease Management –Embedded/Primary Care

Disease Management –Virtual/Telephonic

Wellness/Prevention

2-3% of Population

5-7% of Population

20-25% of Population

100% of Population

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Care Management – Success Stories• Swedish Covenant Hospital of Chicago lowered readmissions of chronically ill

patients from 27% to 16%. The aggressive care management effort included 1,800 follow-up phone calls, 175 home visits, and 88% of patients scheduling an appointment with their physician within 14 days of discharge.

• Princeton Healthcare System decreased hospitalizations amongst their high risk patients by approximately 30% by increasing immediate post-discharge follow-up to 100%, standardizing patient follow-up appointments to be within 7-14 of discharge, and using IT systems to proactively address concerns.

• UCSF Medical Center achieved a 46% decrease (over two years) in 30-day all-cause heart failure readmissions by enhancing patient education, arranging follow-up care, and improving transitions of care amongst their care team.

• Visiting Nurse Service of NY reduced hospitalizations by 54%, readmissions by 24%, and ED visits by 27% for frail elderly patients by improving transitional care.

• Cincinnati Children’s hospital lengthened time between hospital encounters to 100 days for asthma patients by helping families over-come barriers to effective self-care.

Sources: Commonwealth Fund; HealthIT.gov; Swedish Covenant Hospital

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– LTACH-$42,500

– Inpatient Rehab Facility-$17,500

– Skilled Nursing Facility-$11,500

– Home Health-$5200

Managing the cost of Post-Acute Care: Case Example of Episode of Care/Payment for Post-Acute

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Summary of ACO expenditures

Home health alone could generate over 3x the savings as inpatient expenses

NOTE: Client example; costs not severity adjusted

Expense for ACO Assigned Beneficiaries

All MSSP ACOs

Impact of 5% Cost

Reduction

Impact of Reaching

MSSP Average

Total $11,494 $9,824 $7,308,138 $21,236,584

ERSD $69,541 $65,029 $740,612 $961,103

Inpatient $3,550 $3,200 $2,257,328 $4,458,411

Skilled Nursing $1,088 $891 $692,058 $2,609,422

Home Health $1,664 $527 $1,012,427 $14,462,779

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WHAT’S WORKING AND WHY:BUILDING NEW PAYMENT ARRANGEMENTS

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Population Health Market Segments

Employee Health Plan

Self-funded Employers

Private Health Plans

Medicaid Program

Medicare Program

Uninsured

Retail Health Insurance

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Projected spending

Actual spendingShared savingsConfidence interval

ACO Launched

Source: Lewis, Julie. “What Could be Next for Health Reform? The Debate In Washington” Presentation. The Dartmouth Institute for Health Policy & Clinical Practice. 2009-07-02.

The Medicare Shared Savings Model

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• Medicare Shared Savings Program– Held spending $652M below targets

– Earned shared savings over $300M• One ACO in Track 2 overspent target by

$10M and owed shared losses of $4M

– Saved Medicare Trust Funds ≈$345 M

– Improved on 30 of 33 quality measures

– Surpassed other Medicare FFS providers' performance on 17 of the 22 GPRO Web Interface measures

• Pioneer shared savings:– $96M (saved Medicare Trust Fund

≈$41M)

– Showed improvements in 28 of 33 quality measures and experienced average improvements of 14.8% across all quality measures

Medicare ACO program

Performance year results

24%

24%

52%

MSSP PY1 Financial Results

Earned sharedSavings

Generatedsavings but didnot pass MSR

Did notgeneratesavings

48%

13%

26%

13%

Pioneer PY2 Financial Results

Earned sharedsavings

Generated sharedlosses

Did not surpassMSR

Deferedreconciliation

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Washington

Oregon

California

Nevada

Idaho

Montana

Wyoming

ColoradoUtah

New Mexico

Arizona

Texas

Oklahoma

Kansas

Nebraska

South Dakota

North Dakota Minnesota

Wisconsin

Illinois

Iowa

Missouri

Arkansas

Louisiana

Alabama

Tennessee

Michigan

Pennsylvania

New York

Vermont

Georgia

Florida

Mississippi

Kentucky

South Carolina

North Carolina

MarylandOhio

Delaware

Indiana West Virginia

New JerseyConnecticut

Massachusetts

Maine

Rhode Island

Virginia

New Hampshire

Alaska

Hawaii

As of 8/04/2014

ACOs: 14

Bundled Payment: 3

DSRIP: 8

Only Colorado and Oregon have statewide Medicaid ACO models

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Medicaid ACO Market & ResultsColorado’s Accountable Care Collaborative• Generated gross savings of $44M, returning $6M to

the state after expenses• Has 350K members (roughly ½ of the state’s Medicaid

population),

Utah’s Medicaid ACOs• On track to save the state $2.5B over the

next seven years • Representation of 85% of the state’s

Medicaid population

Oregon’s ACO model • Covers 93% of the state’s Medicaid population• Decreased ED visits by 13% & hospital admissions for

chronic conditions by 18% - 36%• Increase primary care spending by 18%• Expected to save the state $3.0B over the next 5 years

Source: Electronic Health Reporter, June 10, 2014

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• Rapid movement toward consumer driven health plans and new payment arrangements

• Components of new payment models to IDNs/CINs– Transformational funding– Care management – Episodes of Care– Shared Savings

• Early adopters include the following– Regional Blue Cross plans (MN, MA, IL, HA, etc.)– Commercial Health Plans (Aetna, Cigna, Humana, etc.)

• Partnering with MSSP ACOs– Universal American (34/28 MSSPs)– Walgreens (3)– CVS/Caremark (Part D shared savings model)– Suppliers (Rx)

• Building delivery systems– Highmark purchases seven hospitals/physician practices– Cigna – Primary Care Network (PCMH) – Phoenix– United Healthcare-Monarch physicians group (2,300 physicians) and Optum– Aetna purchases Active Health– DaVita acquires Healthcare Partners and other physician groups

Major Commercial Health Plan Trends

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Chasing Quality Improvements / Inefficiencies across the continuum

• Bundled payment is a reimbursement model that covers multiple health care services within a specific episode of care for an agreed upon amount (e.g., a target price).

• Goal - to improve patient outcomes while reducing the average cost of episodes.

• Results - Bundled payment has shown the potential for the greatest reduction in health care spending according to a study in the New England Journal of Medicine (NEJM).

Bundled Payment / Episodes of Care Overview

Hussey P., et al. New England Journal of Medicine 2009;361:2109-2111

Estimated Cumulative Percentage Changes in National Health Care Expenditures, 2010 through 2019, Given

Implementation of Possible Approaches to Spending Reform.

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Direct Contracting

11% of employers are engaging in some form of direct contracting with employers, while another 28% expect to do

so within the next 3-5 years (Aon Hewitt, 2014 p. 33)

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• Commercial insurers are experimenting with Bundled Payments• Payors can benefit from a discounted fee arrangement and the chance to

partner with a provider willing to work to improve care delivery to the payor’s beneficiaries

• Commercial bundled payment agreements have the potential to increase volume

Direct Contracting & Commercial Bundles

• Jackson Laboratory joined the Maine Health Management Coalition 6 years ago and reported in October of 2014, maintaining flat healthcare cost since 2007, reducing hospitalization by 43% and halving claims above $50,000

• Aon Hewitt reports in its “2014 Health Care Survey” that 11% of employers are engaging in some sort of direct health contracting program and that they expect this to increase to 28% in the next 3-5 years

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Population Health Management Arrangements: What’s Working and Why?

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