Good Morning, President just talked about differentiating ourselves by being a provider of Integrated Health Solutions. This means taking a leadership position in this new world of healthcare delivery and finance and being proactive in areas of the healthcare continuum that we may have not entered into in the past.
Headline - The trend of shifting financial risk to all providers is moving at an accelerated rate.
A year ago we discussed the trend of all payers shifting financial risk to providers. You will recall in response to this trend we formed the Product Development and Risk Division. Let me briefly update you on the current environment and take you through some highlights of areas of focus so we continue to maintain our position as the market leader that delivers exceptional value and not be forced to become a commodity provider of health care services. This trend of shifting financial risk is continuing at an accelerated rate. I have updated this document to reflect the enormity of this change of shift in financial risk from the payers to providers.
Headline – Shift from Fee for Service to value Based Payments
Health & Human Services has set a target for Medicare of having 50% of all payments shifting to Alternative Payment Models by 2018. They have also announced that their goal is to have 80% of their reimbursement be value based by 2020. Currently, our Medicare reimbursement is $147 million in allowed charges so we can conclude that 80% of that revenue, $117M, will shift to a financial risk reimbursement methodology.
Headline – Managed Care Medicaid Expenditures increasing at 11% a year
Managed Care Expenditures in Medicaid continue to grow at almost 11% per year form $214 B in 2014 to $354B by 2020.
Headline – United Healthcare increasing Alternate Payment Models by 20% and the Blues and Aetna have set similar goals
In the Commercial Environment 750 New Alternative Payment Model arrangements have been signed in 2016 by United Healthcare alone; and plans to increase Alternative Payment Models by more than 20%. BlueCross Blue Shield and Aetna have similar goals to shift to Value Based Arrangements. All of these arrangements have components that Shift Financial Risk to Providers in some manner.
Theme - Providers are responding to this shift by entering into the risk business through Accountable Care Organizations.
So how are providers meeting this challenge of shift in financial risk? The movement towards Alternative Payment Models continues to accelerate. In 2016 there were over 470 Accountable Care Organizations (provider sponsored health plans) with almost 10% of them taking some type of downside risk. Medicare saved $466M in 2015 so we expect this trend to continue. We are seeing Next Generation ACO Models which offers a new opportunity in accountable care, one that sets predictable financial targets, enables providers and members/patients greater opportunities to coordinate care, and aims to attain the highest quality standards of care.
Head line - We are becoming active participants in Accountable Care Organizations and Clinically Intergrated Networks
ABC Company is becoming an ACTIVE participant versus being Passive in these new financial arrangements. For example, we have requested and will participate in the Network Committee for the newly established Eastside Health Network in WA State, a joint venture between Evergreen Health and Overlake Medical Center. This will allow us to participate in the governance of the network.
Headline- Our competitors are not sitting idly by, and we need to stay ahead by assembling a new fuel system on the car while on the move
Never before have we seen the suddenness of our payer pivoting to new demands to be paid based upon the value we provide not the number of procedures we deliver. The convergence of providers becoming payers and payers becoming providers is creating an even more complex competitive market place. Our competitors are not sitting idly by, and we need to stay ahead by assembling a new fuel system on the car while on the move.
Headline- PD&R and the ABC Company team is working together to create risk products in three critical areas
We are focusing on three areas as we rebuild the fuel system in this Ferrari. We are assessing and managing our current portfolio of Alternative Payment Products; actively responding to market demands by the payers and hospital partners, and building a sustainable infrastructure to introduce and operationalize new products so we can be a Leader not a Responder.
Headline- Managing our current portfolio of Alternative Payment Agreements
We currently have over 42 alternative payment agreements already in place. These are in the form of ACO/CIN, Pay for Performance contracts, one with our largest payer, Capitation, PHO’s and Stipends that have a Fee for Value component. Total billed contract value attached to these agreements is $197M of which 4% is at financial risk. This trend continues to grow exponentially. We have to establish a sustainable infrastructure to support these.
Headline- Establishing a Sustainable Infrastructure
To that end we have already started with inventorying current alternative payment agreements and will have a process in place for reviewing and approving new agreements. We want to establish a core set of measures that make the most difference in our patient’s health and we have the best chances of success. We also will be leveraging our data warehouse and enhancing capabilities to allow us to capture data from various sources and integrate the data. Finally, we will build capabilities to analyze and report on our performance that will allow us to take actionable steps.
Headline - Actively responding to demands in the market place
Maybe the most exciting and innovate project is an agreement we are negotiating which will tie our FFS increases to our performance in lowering the total cost of care for the patience that we can impact. We are working with 5 major payers to share total cost of care information with ABC company . I believe this will be our first opportunity where payers will share with us their own internal claims information. As we work cooperatively with payers to improve our common goals we will find them more willing to share cost of care information with us. We have responded to two national hospital RFP’s seeking our interest in participating in National ACO and CIN programs. I am pleased that we were awarded one of the RFPs with HCA in Texas market. We have designed a process to quickly and consistently introduce new products that can promptly respond to market place demands and ultimately enable us to become the innovator in physician products that will be attractive to payers, our hospital partners and employers. As we become the innovator, we will take on appropriate levels of financial risk that will provide us with the opportunity to develop bundles of care and total cost of care products that provide value to our patients, provider partners and communities. For example, we may participate as the lead entity in a Private Exchange ACO with multiple employers or brokers, payers or hospital partners to ensure appropriate distribution of the healthcare premium dollar as we determine funding for the Financial Risk Pools.
Headline – The Leader in Integrated Health Solutions
Americans want to have our health care problems solved. Experts state that the inefficiencies in our health system exceed a trillion dollars a year. I have often heard that healthcare is a $3 trillion industry without a leader. While we cannot solve this problem alone, we at Company ABC have the scale, leadership, determination, and the vision to be a meaningful positive force in solving this problem. Our determination to continue to strive to be a leader in improving our quality, lowering the total cost of care, we can help make that dream a reality. We have the Leadership and the clinical team to help lead us on this journey as we build the infrastructure to allow us to proactively build a portfolio of risk products for all our service lines. Ultimately, we will be deliver a Provider Sponsored Health Plan that will allow us to be the leader in Integrated Health Solutions in the Risk Based Products for our Hospital Partners, Payers, Brokers, Employers and Government Programs by 2020.
[Sanitized] Fortune 500 Company - Presentation: Creating Value Through Leadership
ABC Company Conference
Creating Value Through Leadership
Presenter’s Name & Title
Provider Reimbursement Environment
• Made ~ $36 billion in value-
based care payments in
• Announced plans to
payments to providers by
20% in 2015 (more than $43
• 750 New value based
arrangements in 2016
• Currently pays $1 out of
every $5 of medical claims
to value-based programs
• Engaged with ~700 local
• 42 Million Members are
enrolled in Value based
• Plans to increase value-
based payments to be
greater than one-third of
• Signed 60 new contracts
with ACOs in 2015
• View the government’s
efforts as positive, but
would like to move more
quickly to value-based
care than HHS has
HHS announced goals and a timeline for shifting
Medicare business to value-based care payment
models (accountable care organizations (ACOs)) and
• 30% payments by the end of 2016
• 50% payments by the end of 2018
• 40% Medicare enrollment to MA by 2025
Health and Human Services
• 2013 – Nearly three quarters of beneficiaries were
in managed care and increased in all years except
for 3 from 2000 – 2013
• Managed care expenditures will grow almost 11%
per year from 2014 to 2023
Managed Care Transformation
Government Pledges Medicaid
Phil Kamp and R. Todd Stockard, Helping solve the U.S. healthcare crisis, 2015
Fee for Service Value Based Payments
Grow Almost 11%
Per Year From
2014 To 2023
2014 2015 2016 2017 2018 2019 2020
750 new Alternative Payment Model arrangements
have been signed in 2016 by United Healthcare alone;
and plans to increase Alternative Payment Models
by more than 20%
Similar Goals to Shift to Value Based Arrangements
Incremental Growth in ACO Programs
Source: CMS, available at: data.cms.gov, accessed October 3, 2016; Advisory Board, “Where the ACOs are”, available at: advisory.com,
accessed October 3, 2016: Health Care Advisory Board interviews and analysis.
28 23 15
2013 2014 2015 2016
Total Participating Total in Downside Risk Models
2017Advisory Board Advisory.com
Overall Participation Continues to Grow
Total ACO Participants at End of Each
CMS Highlights Positive Headlines
Total ACOs which earned savings grew by
4% from 2014 to 2015
Medicare saved $55M more in 2015 than
for total savings of $466M
ABC Company is becoming
an ACTIVE participant
Being Passive in these
New Financial Arrangements.
We Need to Stay Ahead by
Assembling a New
on the Car, While Moving
OUR COMPETITORS ARE
NOT SITTING IDLY BY
Be a Leader
Product Development & Risk Division Value Proposition
Alternative Payment Agreements
ACO / CIN PHO CAPITATION
Establishing a Sustainable Infrastructure
Build reporting capabilities to actively manage and
monitor performance of Alternative Payment
Leverage data ware house and data marts to receive
and analyze financial and clinical data
Establish ABC Co. Core measures for all service lines
Document current alternative payment agreements
and determine common measures
• Data Warehouse
• Payer Claims Data
• Analytics Platform
• Total Cost of Care
• Hospital ACOs
• HHS RFI
• Bundles of Care
• Take on Appropriate
Levels of Financial Risk
• Private Exchange ACO
3• Health information
• Financial Reporting
Deliver a provider
sponsored health plan
that will allow us to be
the leader in integrated
health solutions for
our Hospital Partners,
Patients, Payers, Brokers
and Employers by 2020