0
©2011 THE ADVISORY BOARD COMPANY • 23508A                                            1
The New Performance Standard                                             Responding to the Changes Reshaping Health System...
3                                            Road Map                                                 1     Health Care on...
4                                            Meet Your Newest Medicare Beneficiaries                                      ...
5                                            Universal Access: The Boomers’ American Dream                                ...
6                                            An Industry Preparing For Fundamental Change                                 ...
7                                            Before 2014, 2012                                            Future of Afford...
8                                            (As Always) It’s The Economy, Stupid                                         ...
9                                            Washington’s Newfound Budget Discipline                                      ...
10                                                  No Blank Check From Employers Either                                  ...
11                                            The New Great Depression Generation?                                        ...
12                                            Getting Paid Less to Do Less                                            New ...
13                                            Seeking Shelter in Scale                                            Market P...
14                                            Defining an Expanded Value Proposition                                      ...
15                                            Health Care’s Identity Crisis                                            Tra...
16                                            Road Map                                                 1       Health Care...
17                                            Four Forces Shaping Future Margins                                          ...
Force #1: Decelerating Price Growth                                                                                       ...
19                                                    Health Care Likely On the Chopping Block                            ...
20                                                  Sequestration the Lesser of Two Evils?                                ...
21                                            Medicaid Payment Cuts Across the Country                                    ...
22                                            Medicaid Budget Crisis Forcing Innovation                                   ...
23                                            Some Moving Beyond Traditional Cuts                                         ...
24                                                  Future Payments Depend on Performance                                 ...
25                                                  Picking Winners, Losers Based on Performance                          ...
26                                            Redefining the Acute Care Episode                                           ...
27                                                  All Models Require Discount of FFS1 Pricing                           ...
28                                                  Bundling Not Limited to the Medicare Program                          ...
29                                            Shared Savings Options Taking Shape                                         ...
30                                            Mechanics of Shared Savings                                            Apply...
31                                            Final Rules for Medicare Shared Savings                                     ...
32                                            CMS Re-Calibrates SSP in Response to Providers                              ...
33                                               Rule Update Warrants a Second Look                                       ...
34                                            Reality Check: Success Remains a Heavy Lift                                 ...
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Mercy Community Leader Breakfast
Upcoming SlideShare
Loading in...5
×

Mercy Community Leader Breakfast

2,070

Published on

Bradford S. Koles Jr. presentation for Mercy Community Leader Breakfast on February 7, 2012

Published in: Business, News & Politics
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
2,070
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
14
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Transcript of "Mercy Community Leader Breakfast"

  1. 1. ©2011 THE ADVISORY BOARD COMPANY • 23508A 1
  2. 2. The New Performance Standard Responding to the Changes Reshaping Health System Economics©2011 THE ADVISORY BOARD COMPANY • 23508A
  3. 3. 3 Road Map 1 Health Care on a Budget 2 Four Forces Shaping Future Margins©2011 THE ADVISORY BOARD COMPANY • 23508A 3 Closing Remarks
  4. 4. 4 Meet Your Newest Medicare Beneficiaries Happy 65th Birthday! Donald Trump Cher Sylvester Stallone©2011 THE ADVISORY BOARD COMPANY • 23508A Liza Minnelli Dolly Parton Pat Sajak Source: Health Care Advisory Board interviews and analysis.
  5. 5. 5 Universal Access: The Boomers’ American Dream Baby Boomers Redefining American Industries ” From Opportunity to Entitlement? 1960s Education Transformative at All Stages of Life • Expansion of public “Baby boomers didn’t just eat food; they university systems transformed the snack, restaurant and supermarket industries. They didn’t just wear 1970s Employment clothes; they transformed the fashion industry. They didn’t just buy cars; they • Greater integration of transformed the auto industry. They didn’t women into workforce just date; they transformed sex roles and • Rise of part-time practices. They didn’t just go to work; they employment transformed the workplace. They didn’t just get married; they transformed relationships 1980s Homeownership and the institution of the family. They didn’t • Mortgage interest©2011 THE ADVISORY BOARD COMPANY • 23508A just borrow money; they transformed the deductions debt market. They didn’t just go to the doctor; • Homeowner subsidies they transformed health care. They didn’t just Health Care use computers; they transformed technology. 2010s • How will Medicare balance They didn’t just invest in stocks; they entitlement with solvency? transformed the investment marketplace.” • Will choice, access be Ken Dychtwald preserved? Gerontologist Zinkewicz P, “Baby Boomers ‘boom’ their way toward golden years,” available at: http://www.roughnotes.com/rnmagazine/2005/july05/07p106.htm, accessed September 23, 2011; Health Care Advisory Board interviews and analysis.
  6. 6. 6 An Industry Preparing For Fundamental Change Coverage Expansion, Payment Reform Reshaping Health Care Timeline of Health Reform Developments Patient Protection HHS releases President CMS issues and Affordable Care Meaningful Use Obama repeals provisions to Hospital Act (PPACA) passes regulations 1099 reporting Readmissions House of requirement Reduction Program Representatives from PPACA IMAGE CREDIT: SHUTTERSTOCK. VA Attorney CMS releases HHS releases General files first proposed rule for Medicare©2011 THE ADVISORY BOARD COMPANY • 23508A lawsuit against Medicare Shared Value-Based individual mandate Savings Program Purchasing Program final rule Source: Health Care Advisory Board interviews and analysis.
  7. 7. 7 Before 2014, 2012 Future of Affordable Care Act Still in Doubt Three Competing Visions IMAGE CREDIT: GOVERNOR.STATE.TX.US. IMAGE CREDIT: MITT ROMNEY MEDIA IMAGE CREDIT: WHITEHOUSE.GOV. © JESSICA RINALDI. “I am not the first “If I were President, on “On day one, as the©2011 THE ADVISORY BOARD COMPANY • 23508A President to take up day one I would issue President, the executive this cause, but I am an executive order order will be signed and determined to be paving the way for Obamacare will be the last.” Obamacare waivers to wiped out as much as it all 50 states.” can be.” Source: White House, available at: www.whitehouse.gov, accessed September 21, 2011; Mitt Romney Media, available at: http://en.wikipedia.org/wiki/File:Mitt_Romney.jpg, Office of the Governor Rick Perry, available at: www.governor.state.tx.us/about; Health Care Advisory Board interviews and analysis.
  8. 8. 8 (As Always) It’s The Economy, Stupid Policy Debate Dominated by Economy, Deficit, Debt September 21, 2011 September 9, 2011 Los Angeles Times International Business Times “Six in 10 Americans Don’t “Bank of America Layoffs: The See Economy Improving Soon” Industry Bloodbath Continues” September 16, 2011 August 5, 2011 January 16, 2011 Washington Post Washington Post Richmond Times-Dispatch “Jobless Rate Climbs in “S&P Downgrades U.S. “Debt Soars to All-Time High D.C., Maryland, Virginia” Credit Rating for First Time” of $14 Trillion”©2011 THE ADVISORY BOARD COMPANY • 23508A Source: “Debt Soars to All-Time High of $14 Trillion,” Richmond Times-Dispatch, January 16, 2011; Goldfarb Z, “S&P Downgrades U.S. Credit Rating for First Time,” Washington Post, August 5, 2011; Haynes V, “Jobless Rate Climbs in D.C., Maryland, Virginia,” Washington Post, September 16, 2011; “Bank of America Layoffs: The Industry Bloodbath Continues,” International Business Times, September 9, 2011; “Six in 10 Americans Don’t See Economy Improving Soon,” Los Angeles Times, September 21, 2011; Health Care Advisory Board interviews and analysis.
  9. 9. 9 Washington’s Newfound Budget Discipline Debt Ceiling Increase Contingent on Massive Deficit Reduction U.S. National Debt and Debt Ceiling $US, In Trillions 16 Legislation in Brief: 14 Budget Control Act of 2011 12 • 74th increase to debt ceiling in 49 years • Establishes a process to raise 10 federal debt limit by $2.4 T 8 • Initial increase offset by automatic $917 B 6 in debt reduction over next ten years • Further increases contingent on 4 enacting additional $1.2 T in 2 debt reduction©2011 THE ADVISORY BOARD COMPANY • 23508A 0 Source: Klein E, “Thirty Years of the Debt Ceiling in One Graph,” The Washington Post, July 15, 2011; Ernst & Young, “Budget Control Act of 2011: Where Do We Go From Here?,” September 8, 2011; Health Care Advisory Board interviews and analysis.
  10. 10. 10 No Blank Check From Employers Either Defined Contribution Plans Displacing Defined Benefits Transition to Defined Contribution Plan 10% Reduction in premium Orion contributes $125-$350 Employee selects individual costs due to switch per month toward coverage policy on exchange Payers Taking Notice Wall Street Journal Case in Brief: Orion Corporation©2011 THE ADVISORY BOARD COMPANY • 23508A “WellPoint, Non-Profits Invest in • 70-employee residential services firm Private Insurance Exchange” located in St. Paul, Minnesota • WellPoint, Blue Cross Blue Shield of Michigan, • Converted HDHP1 to defined and Health Care Service announce plans to contribution plan managed by acquire 78 percent share of Bloom Health Minnesota-based Bloom Health • Insurers plan to offer fully operational exchanges by 2013 Source: Bloom Health, available at: www.gobloomhealth.com, accessed September 21, 2011; Kamp J, “WellPoint, Non-Profits Invest in Private Insurance Exchange,” Wall Street Journal, September 20, 2011; 1) High-Deductible Health Plan. Health Care Advisory Board interviews and analysis.
  11. 11. 11 The New Great Depression Generation? Amid Economic Uncertainty, Consumers Tightening Their Belts Households Postponing or Cancelling Medical Care 95% Percentage of primary care 20% physicians reporting that 16% patients rationing or forgoing medications, treatments due to financial concerns 2006 2009 ” Is it Cyclical… …Or Is It An Enduring Trend?©2011 THE ADVISORY BOARD COMPANY • 23508A “In 2009, despite the economic “We have a very weak economy and it’s just a downturn, the number of prescription different environment for the elective parts of drugs dispensed rebounded to healthcare. This could go beyond the recession. prerecession rates of growth.” Being a less aggressive consumer of healthcare is here to stay.” Paul Ginsburg, Economist, Center Health Affairs, 2011 for Studying Health System Change Source: Martin A, et al., “Recession Contributes to Slowest Annual Rate of Increase in Health Spending in Five Decades,” Health Affairs, 2011, 30: 11-22; Johnson A, Rockoff J, & Mathews A, “Americans Cut Back on Visits to Doctor,” Wall Street Journal, July 29, 2010; Health Insurance, “With or Without Health Insurance, Americans Skipping Doctors Visits, Surgeries,” available at: http://www.insureme.com/health-insurance/or-without-health-insurance-americans-skipping-doctor-visits-surgeries, accessed September 21, 2011; Thomson Reuters, “Thomson Reuters Study Finds More Patients Postponing Medicare Care Due to Cost,” available at: http://thomsonreuters.com, accessed September 21, 2011; Health Care Advisory Board interviews and analysis.
  12. 12. 12 Getting Paid Less to Do Less New Payment Models Calling Old Imperatives Into Question Accountable Payment Models Performance Risk Utilization Risk Cost of Care Quality of Care Volume of Care Bundled Pricing Pay-for-Performance Shared Savings • Bundled Payments for Care • Value-Based Purchasing • Medicare Shared Improvement program • Readmissions penalties Savings Program • Commercial bundled • Quality-based • Pioneer ACO Program©2011 THE ADVISORY BOARD COMPANY • 23508A contracts commercial contracts • Commercial ACO contracts Source: Health Care Advisory Board interviews and analysis.
  13. 13. 13 Seeking Shelter in Scale Market Pressures Driving Consolidations, Integration Providence Health System Steward Health One of the nation’s largest Recent M&A Activity Care System Catholic health organizations Owns six Catholic adding hospitals, practices Vanguard Health Systems hospitals in Boston Purchased Detroit Medical market, with plans to Center for $1.5 B acquire two more Trinity Health Purchased Loyola Health System for $100 M, plus an annual subsidy of $22.5 M to medical school Geisinger Health System Full merger with Shamokin Area Community Hospital©2011 THE ADVISORY BOARD COMPANY • 23508A Texas Health Resources Acquired MedicalEdge Healthcare Group and its Community Health Systems Novant Health 420 physicians, clinicians in has withdrawn its offer to acquire Nine-hospital system the country’s second-largest all Tenet Healthcare experiencing recent acquisition of an independent Corporation’s outstanding growth through physician practice shares after Tenet rejected two of acquisition of hospitals, its bids for buyout offers imaging centers Source: Becker’s Hospital Review, “15 Growing Health Care Systems,” available at: http://www.beckershospitalreview.com/lists-and-statistics/15-growing- healthcare-systems.html, accessed May 1, 2011; Lawley E, “Tenet Sues Community Health,” Nashville Post, April 11, 2011; Roberson J, “Texas Health Resources Acquires MedicalEdge Healthcare Group,” Denton Record-Chronicle, January 5, 2011; Health Care Advisory Board interviews and analysis.
  14. 14. 14 Defining an Expanded Value Proposition Three Strategic Identities System as Preferred System as Service Provider System as Population Network Health Manager Redesigning benefit plans Marketing value-added services Contracting directly to to create a closed network to capture new opportunities share actuarial risk©2011 THE ADVISORY BOARD COMPANY • 23508A Source: Health Care Advisory Board interviews and analysis.
  15. 15. 15 Health Care’s Identity Crisis Traditional Market Distinctions Blurring Providers Acquiring Payers Payers Acquiring Physician Groups Case in Brief: Case in Brief: Partners HealthCare Acquiring UnitedHealth Acquiring Monarch Neighborhood Health Plan HealthCare©2011 THE ADVISORY BOARD COMPANY • 23508A • Partners HealthCare planning to acquire • UnitedHealth planning to acquire Neighborhood Health Plan, Boston-based management division of Monarch payer insuring more than 240,000 HealthCare, one of largest physician primarily low-income residents groups in California • Partners to provide grants to Neighborhood • Monarch to become part of UnitedHealth’s Health affiliated community centers health services business unit Source: Mathews A, “UnitedHealth Buys California Group of 2,300 Doctors,” Wall Street Journal, September 1, 2011; Weisman R, “Partners Plans to Acquire Insurer Neighborhood Health,” Wall Street Journal, August 10, 2011; Health Care Advisory Board interviews and analysis.
  16. 16. 16 Road Map 1 Health Care on a Budget 2 Forces Shaping Future Margins©2011 THE ADVISORY BOARD COMPANY • 23508A 3 Closing Remarks
  17. 17. 17 Four Forces Shaping Future Margins Financial, Clinical Profiles Shifting Dramatically Decelerating Continuing Cost Price Growth Pressure • Federal, state budget pressures • No sign of slower cost growth ahead constraining public payer price growth • Drivers of new cost growth largely • Payments subject to quality, non-accretive cost-based risks • Commercial cost shifting stretched to the limit Shifting Deteriorating Payer Mix Case Mix©2011 THE ADVISORY BOARD COMPANY • 23508A • Baby Boomers entering Medicare rolls • Medical demand from aging • Coverage expansion boosting population threatens to crowd out Medicaid eligibility profitable procedures • Most demand growth over the next • Incidence of chronic disease, decade comes from publicly multiple comorbidities rising insured patients Source: Health Care Advisory Board interviews and analysis.
  18. 18. Force #1: Decelerating Price Growth 18 New Baseline Already Challenging Affordable Care Act Significantly Reduces Public Payments Impact of Affordable Care Act on Provider Rates Cumulative Federal Revenue from Decreased Medicare and Medicaid DSH Payments $22.0 B $110 B $17.0 B Cuts to Medicare $14.0 B $12.6 B Fee-For-Service rates $8.4 B $36 B $7.6 B $3.6 B©2011 THE ADVISORY BOARD COMPANY • 23508A Cuts to Disproportionate Share $3.5 B Hospital (DSH) payments $1.1 B $1.7 B $0 B $500 M 2014 2015 2016 2017 2018 2019 Medicare Medicaid Source: US House of Representatives, “Amendment in the Nature of a Substitute to H.R. 4872, as Reported,” accessed March 18, 2010; US Senate, The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act,” accessed December 24, 2009; Health Care Advisory Board interviews and analysis.
  19. 19. 19 Health Care Likely On the Chopping Block But Little Agreement on How Distribution of Spending in Possible Approaches to 2011 Budget Proposal Reducing Health Care Spending Other Interest Health Care1 Eligibility changes Provider rate cuts 14% on Debt 7% 24% Other 15% Safety Net 20% Programs 2 20% Defense Decreased Fraud, waste©2011 THE ADVISORY BOARD COMPANY • 23508A supplemental payments reduction Social Security Cost shifting to Payment model overhaul beneficiaries (i.e. voucher system) 1) Includes spending for Medicare, Medicaid, CHIP, substance abuse and mental health services, National Institutes of Health, and Food and Drug Administration. Source: New York Times, available at: http://www.nytimes.com/interactive/ 2) Includes spending for unemployment insurance programs, food stamps, military and federal civilian 2010/02/01/us/budget.html, accessed September 17, 2011; Health Care employee retirement and disability, and Temporary Assistance for Needy Families (TANF) program. Advisory Board interviews and analysis.
  20. 20. 20 Sequestration the Lesser of Two Evils? Automatic Cuts to Health Care Relatively Small Sequestration Impact on Breakdown of Total Cuts Key Budget Areas Under Sequestration 2013 2013-2021 Defense Other1 Medicare Medicaid 0.0% -2.0% Other $1.1 T $123 B Health Care -7.8% ” -10.0%©2011 THE ADVISORY BOARD COMPANY • 23508A Cutting Our Losses? "Sequestration is the devil you know and the Super Committee is the devil you dont." Max Richtman National Committee to Preserve Social Security and Medicare Source: Congressional Budget Office, available at: www.cbo.gov, accessed on September 19, 2011; Reuters, “Healthcare Lobbyists Want Debt Committee to Fail,” available at: http://www.reuters.com/, accessed 1) Nondefense discretionary and other mandatory spending. September 17, 2011; Health Care Advisory Board interviews and analysis.
  21. 21. 21 Medicaid Payment Cuts Across the Country Budget Shortfalls, Declining Federal Funding Common Concerns Washington: South Dakota: Wisconsin: New York: Looking to Cut provider Cut provider Considering cut $53 B Medicaid Medicaid Medicaid rates $500 M program by $2 B rates by 10% by 11.5% Medicaid cut Pennsylvania: Increasing California: co-pays for Proposing certain 10% provider services to rate cut save $50 M Virginia: Cut outpatient service reimbursement by 4%©2011 THE ADVISORY BOARD COMPANY • 23508A Arizona: 5% provider rate cut in April 2011, another 5% rate cut in North Carolina: October 2011 Dropping coverage Mississippi: on adult eye exams, Texas: Cut Closing mental glasses as part of provider Medicaid health centers $354 M Medicaid rates by 8% and crisis centers spending reduction Source: Health Care Advisory Board interviews and analysis.
  22. 22. 22 Medicaid Budget Crisis Forcing Innovation Three State Responses to Medicaid Budget Pressure Cut Rates, Limit Services Outsource Program Operations Force Provider Innovation • Washington, California, • Florida Medicaid overhaul • North Carolina placing©2011 THE ADVISORY BOARD COMPANY • 23508A Texas, South Dakota to shift all Medicaid enrollees into enhanced proposing provider rate cuts enrollees to private medical homes through of over 8 percent managed care plans Community Care of • Mississippi closing mental by 2014 North Carolina program health and crisis centers Source: Health Care Advisory Board interviews and analysis.
  23. 23. 23 Some Moving Beyond Traditional Cuts Oregon Bill Ties Medicaid Cuts to Third-Party Care Coordination Plan Oregon Medicaid Contracting Model Medicaid Payment Rates Additional reduction if CCOs fail to produce sufficient savings State pays fixed global payment to Care (19%) Coordination Organizations (CCOs) (15%) CCOs contract with providers to coordinate care, Current 2012 2014 develop new delivery models that lower costs©2011 THE ADVISORY BOARD COMPANY • 23508A Case in Brief: Oregon Health Care Transformation Law • Law reduces Medicaid rates by 19 percent in 2012, mandates creation of care coordination organizations (CCOs) composed of managed care plans charged with coordinating providers, developing new delivery models to lower costs • If CCOs fail to achieve expected $250 M in savings, lawmakers may propose additional cuts of up to 15 percent to take effect in 2014 Source: Managed Healthcare Executive, "Oregon Medicaid shifts to global payments, coordinated care,“ available at: http://managedhealthcareexecutive.modernmedicine.com/mhe/News+Analysis/Oregon-Medicaid-shifts-to-global-payments- coordina/ArticleStandard/Article/detail/732912, accessed September 11, 2011; Health Care Advisory Board interviews and analysis.
  24. 24. 24 Future Payments Depend on Performance Upside Opportunity Available, But Downside Risk Prevails Prominent Pay-for-Performance Programs Payment Driver Description Payment Reduction Timeline • Mandatory pay-for-performance program Value-Based • Percentage of hospital inpatient payments • Withholds begin at 1% in Purchasing withheld, earned back based on quality 2013, grow to 2% by 2017 Program performance • Hospitals with greater than expected Hospital • Penalties capped at 1% of readmission rate subject to financial penalty Readmissions total DRG1 payments in 2013, • Performance based on 30-day readmission Reduction 2% in 2014, and not to exceed metrics for three conditions in 2013, expanding Program 3% in 2015 and beyond in 2015 to include four others©2011 THE ADVISORY BOARD COMPANY • 23508A Hospital-Acquired • Hospitals in top quartile of national, risk- • 1% penalty deducted from Condition (HAC) adjusted HAC rates subject to financial penalty DRG payment starting in 2015 Penalty Source: US Senate, “The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act,” February 19, 2010; Health Care Advisory 1) Diagnosis-Related Group. Board interviews and analysis.
  25. 25. 25 Picking Winners, Losers Based on Performance Performance Scores Drive Payment Redistribution Final Rule: Value-Based Purchasing Program Structure Measure Performance Compare Hospitals Adjust Payments • CMS evaluates hospitals based • Medicare ranks all hospitals • Medicare converts TPS into on achievement and based on TPS incentive payments improvement on selected • For achievement score, • Calculation will use linear clinical care, patient hospitals ranked below the 50th exchange function experience measures percentile do not receive points • Hospitals that receive higher • Based on weighted average of towards TPS©2011 THE ADVISORY BOARD COMPANY • 23508A TPS will receive higher achievement and improvement • For improvement score, incentive payments scores, CMS calculates Total hospitals whose performance • CMS to notify hospitals of Performance Scores (TPS) for has not improved relative to a incentive payment for FY 2013 each hospital1 baseline score do not receive on November 1, 2012 points toward TPS 1) In FY 2013, clinical care measures are weighted at 70 percent Source: Centers for Medicare and Medicaid Services, “CMS Issues Final Rule for First Year of Hospital and patient experience measures are weighted at 30 percent. Value-Based Purchasing Program,” April 29, 2011; Health Care Advisory Board interviews and analysis.
  26. 26. 26 Redefining the Acute Care Episode Bundled Payments Drive Delivery System Integration Bundled Payment Framework Lump Sum Payments Drive Integration Program in Brief: Medicare’s Bundled Through Shared Accountability Payments for Care Improvement • Program seeking voluntary participation in four bundled payment models • Models 1-3 provide retrospective Payer reimbursement; Models 2 and 3 include post-episode reconciliation; Model 4 offers single prospective payment • Acute care hospitals, physician groups, health systems eligible for all models; post-acute facilities may participate without©2011 THE ADVISORY BOARD COMPANY • 23508A hospitals in Model 3 • Physicians eligible for gainsharing bonuses up to 50 percent of traditional fee schedule • For all models, applicants must propose Physician Hospital Post-Acute quality measures, which CMS will use to Services Services Services develop set of standardized metrics Source: Centers for Medicare and Medicaid Services; Health Care Advisory Board interviews and analysis.
  27. 27. 27 All Models Require Discount of FFS1 Pricing Model 1: Model 2: Model 3: Model 4: Hospital Inpatient Services Hospital and Physician Post-Discharge Hospital and Physician Inpatient for All DRGs Inpatient and Services Only Services Post-Discharge Services Model 1 participants Physician groups, acute care plus post-acute care hospitals reimbursed under Eligible Model 1 participants plus post- providers, long-term IPPS2, health systems, PHOs, Model 1 participants Participants acute care providers care hospitals, inpatient conveners of participating rehab facilities, home providers health agencies Clinical All Medicare DRGs Select inpatient DRGs, proposed by applicants Conditions Inpatient hospital and Inpatient hospital and physician Included physician services; Post-acute care; Inpatient hospital services services; Services related post-acute care and related readmissions related readmissions readmissions Minimum of 3% for Minimum increases Expected 30-89 days post-discharge Proposed by applicant Minimum 3% discount (larger for DRGs from 0% for first six months Discount services; minimum 2% for 90+ (no set minimum) in ACE Demonstration) to 2% in Year 3 days post-discharge©2011 THE ADVISORY BOARD COMPANY • 23508A IPPS payment less discount for Prospectively established payment; Provider Part A services; physicians Traditional FFS payment, hospitals distribute payment Payments reimbursed on traditional fee subject to reconciliation with target price to clinicians schedule All Hospital IQR3 measures, Quality Proposed by applicants, with CMS ultimately establishing a standardized set of metrics aligned with plus additional measures Measures measures in other CMS programs proposed by applicants 1) Fee-For-Service. 2) Inpatient Prospective Payment System. Source: Centers for Medicare and Medicaid Services; 3) Inpatient Quality Reporting. Health Care Advisory Board interviews and analysis.
  28. 28. 28 Bundling Not Limited to the Medicare Program Bundled Payment Initiatives Developing Nationwide Reimbursing for “Baskets of Care” Participating in Prometheus Pilot Exploring Participating in cardiac Bundling for Prometheus Pilot bundling obstetrics Developing orthopedic Bundling for bundling CABG1 Participating in Prometheus Pilot©2011 THE ADVISORY BOARD COMPANY • 23508A Bundling joint Bundling total replacements, knee replacement procedures with “defined outcomes” Bundling for cardiac surgery Bundling for Bundling total joint prostate surgery replacement 1) Coronary Artery Bypass Graft. Source: Health Care Advisory Board interviews and analysis.
  29. 29. 29 Shared Savings Options Taking Shape Choices Cater To Varying Appetites For Risk Medicare Shared Savings Program Pioneer ACO Model • First ACO contracts to begin April 2012; • Accelerated pathway to ACO formation contracts to last minimum of three years designed for organizations able to assume • Final rule issued October 20, 2011 utilization risk immediately – Physician groups and hospitals eligible • Participating providers must serve at least to participate, but primary care 15,000 Medicare beneficiaries physicians must be included in any • Offers higher risk, higher reward model; ACO group providers can obtain rewards ranging from – Participating ACOs must serve at least 50-75% of Medicare savings achieved©2011 THE ADVISORY BOARD COMPANY • 23508A 5,000 Medicare beneficiaries • Providers can choose retrospective or – Bonus potential to depend on Medicare prospective patient assignment cost savings, quality metrics methodology – Two options available: • Quality measures to match those in final • No downside risk, lower bonus rule for Medicare Shared Savings Program payment • Deadline to apply was in August 2011; • Downside risk, higher bonus payment CMS expected to select Pioneer ACOs by January 2012 Source: Health Care Advisory Board interviews and analysis.
  30. 30. 30 Mechanics of Shared Savings Applying Total Cost Accountability to Fee-for-Service Payments Shared Savings Payment Cycle Assignment 1 Patients assigned to ACO Program in Brief: Medicare Shared based on terms of contract Savings Program Billing Providers bill normally, receive • Program begins April 1 or July 1, 2012; 2 standard fee-for-service contracts to last minimum of three years payments • Physician groups and hospitals eligible to participate, but primary care physicians must Comparison be included in any ACO group Total cost of care for assigned 3 • Participating ACOs must serve at least 5,000 population compared to risk- Target Actual adjusted target expenditures Medicare beneficiaries • Bonus potential to depend on Medicare cost©2011 THE ADVISORY BOARD COMPANY • 23508A Bonus savings, quality metrics Bonuses or penalties levied • Two payment models available: one with no 4 based on variance of downside risk, the second with downside risk expenditures from target in all three years Distribution ACO responsible for dividing 5 bonus payments among stakeholders Source: Health Care Advisory Board interviews and analysis.
  31. 31. 31 Final Rules for Medicare Shared Savings Summary of Final Rules Who Can Participate? 1. Minimum population size: 5,000 beneficiaries 2. ACO Founders: PCPs, PCP Independent Practice Associations, employed groups, Federally Qualified Health Centers, Rural Health Centers, some Critical Access Hospitals 3. ACO Participants: Hospitals, specialists, PCPs with <5,000 patients, other suppliers and providers 4. ACO must be a legal entity with own tax identification number, governance, management Patient Attribution 1. Retrospective based on plurality of primary care E&M billings by ACO provider 2. Patients may not opt out of being counted against ACO performance measure 3. Patients retain unrestricted choice of providers Shared Savings 1. ACOs receive shared savings payments if spending per attributed beneficiary grows slower than national per beneficiary spending Quality and Reporting©2011 THE ADVISORY BOARD COMPANY • 23508A 1. 33 quality measures (patient/caregiver experience, care coordination/patient safety, preventive health, at-risk populations) 2. Bonus payout to ACO is adjusted based on quality performance 3. Significant transparency requirements around ACO operations and financing Legal Considerations 1. No mandatory antitrust review required for ACOs, but regulators will monitor ongoing market impact 2. Voluntary pre-approval antitrust review available for ACOs above 30% market share 3. Five new waivers create ACO-specific exemptions from fraud and abuse laws Source: Health Care Advisory Board interviews and analysis.
  32. 32. 32 CMS Re-Calibrates SSP in Response to Providers Changes in Final Rule Increase Attractiveness of SSP Participation ” Broadening Participation Options Critical Improvements Included in Final Rule “Today’s menu of ACO options allows America’s hospitals to create new models of accountable care organizations on which Greater reward, lower-risk financials the transformation of health care delivery is so dependent.” Richard Umbdenstock, President and CEO Simplified quality requirements ” American Hospital Association A More Attractive Financial Model Decreased barriers to entry©2011 THE ADVISORY BOARD COMPANY • 23508A “We are very pleased that this rule allows ACOs to share in every dollar of cost savings and includes an option that limits financial risk, which is important for many physician practices.” Peter Carmel, MD, President American Medical Association Source: American Hospital Association, "Statement on Final ACO Rule," available at: http://www.aha.org/presscenter/pressrel/2011/111020-st-acorule.pdf, accessed October 24, 2011; Herman B, "10 Healthcare Leaders Share Thoughts on Final ACO Rule," Beckers Hospital Review, available at: http://www.beckershospitalreview.com/hospital-physician-relationships/10-healthcare-leaders-share-thoughts-on-final-aco-rule.html, accessed October 24, 2011; Health Care Advisory Board interviews and analysis.
  33. 33. 33 Rule Update Warrants a Second Look Program Changes and Implications Initial Concern Change in Rule Implications • Upfront payments to capitalize physician-only • Smaller providers face lower financial Insufficient capital to ACOs, others hurdles to participation fund transition • Meaningful use no longer a prerequisite for • Advance Payment ACO Model smoothes participation cash flow concerns • Relaxed requirements attractive to physician • Meaningful use no longer a prerequisite for stakeholders Resistance from key participation • With structural hurdles lowered, provider stakeholders • Elimination of mandatory anti-trust review focus can shift to financial, strategic • Lessened quality reporting, performance burden considerations • First-dollar savings, elimination of downside risk • Creation of relative “shallow end” minimizes Unfavorable risk/reward from Track 1 risk of slower transition calibration • Benchmark calculation more sensitive to patient • Still, program designed for organizations mix already working to manage utilization risk • ACOs benefit from ongoing insight into Patient assignment • Retrospective attribution supplemented with panel composition©2011 THE ADVISORY BOARD COMPANY • 23508A method prospective patient information • ACO panel still comprises only patients served by ACO Overwhelming quality • Fewer quality measures • Less burdensome reporting requirements performance, reporting • Slower transition to pay-for-performance • Underperformance on any given measure burden • Technical changes to bonus calculation method less harmful • Elimination of mandatory anti-trust review • For ACOs confident in anti-trust compliance, Onerous program design • Relaxed governance prescriptions, leadership formal review hurdle eliminated prescriptions requirements • Clarity around permissible activities with • Extended waivers for Stark, anti-kickback ACO participants, professionals Source: Health Care Advisory Board interviews and analysis.
  34. 34. 34 Reality Check: Success Remains a Heavy Lift Key Determinants of Successful SSP Participation Manage Utilization Maintain Exceptional Operate Under Risk Quality Elevated Transparency • Drive care to ambulatory • Meet high standards for • Provide all necessary medical network care quality across documentation, data©2011 THE ADVISORY BOARD COMPANY • 23508A • Reduce preventable multiple dimensions to CMS acute care episodes • Demonstrate care • Manage communication coordination across to key stakeholders sites of care, over time Source: Health Care Advisory Board interviews and analysis.
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×