The Alternative Quality Contract (AQC): Improving Quality While Slowing Spending Growth

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1 The Alternative Quality Contract (AQC): Improving Quality While Slowing Spending Growth Dana Gelb Safran, ScD Senior Vice President, Performance Measurement and Improvement Presented at: MAHQ 16 April 2015 Context for AQC Development 2 1

2 Economic Imperative in a Global Economy Average spending on health per capita ($US PPP) Total expenditures on health as percent of GDP Source: OECD Health Data 2011 (Nov. 2011). 3 The increasing cost of health care in MA compared to other public spending priorities STATE BUDGET, FY2001 VS. FY2014 (BILLIONS OF DOLLARS) FY2001 FY2014 +$5.4 B (+37%) -$3.6 B (-17%) -12% -22% -31% -14% -11% -51% -13% Health Coverage (State Employees/GIC; Medicaid/Health Reform) Public Health Mental Health Education Infrastructure/ Housing Human Services Local Aid Public Safety Source: Health Policy Commission, 2013 Cost Trends Report, data from the Massachusetts Budget and Policy Center Proprietary and Confidential Do Not Distribute without Permission 4 2

3 The Alternative Quality Contract: Twin goals of improving quality and slowing spending growth In 2007, leaders at BCBSMA challenged the company to develop a new contract model that would improve quality and outcomes while significantly slowing the rate of growth in health care spending. 18% 16% 15.9% The Massachusetts health reform law (2006) caused a bright light to shine on the issue of unrelenting double-digit increases in health care spending growth (Health Care Reform II). 14% 12% 10% 8% 6% 4% 2% 8.2% 13.1% 13.8% 12.1% 13.3% 12.5% 12.8% 10.7% 10.8% 0% -2% BCBSMA Medical Trend Workers' Earnings General Economic Growth Sources: BCBSMA, Bureau of Labor Statistics. 5 The AQC Model 6 3

4 The Alternative Quality Contract Global Budget Population-based budget covers full care continuum Health status adjusted Based on historical claims Shared risk (2-sided) Trend targets set at baseline for multi-year Quality Incentives Ambulatory and hospital Significant earning potential Nationally accepted measures Continuum of performance targets for each measure (good to great) Long-Term Contract 5-year agreement Sustained partnership Supports ongoing investment and commitment to improvement 7 AQC Measure Set for Performance Incentives PROCESS OUTCOME AMBULATORY Preventive screenings Acute care management Chronic care management Depression Diabetes Cardiovascular disease Control of chronic conditions Diabetes Cardiovascular disease Hypertension HOSPITAL Evidence-based care elements for: Heart attack (AMI) Heart failure (CHF) Pneumonia Surgical infection prevention Post-operative complications Hospital-acquired infections Obstetrical injury Mortality (condition specific) PATIENT EXPERIENCE EMERGING ***Triple weighted*** Access, Integration Communication, Whole-person care Discharge quality, Staff responsiveness Communication (MDs, RNs) Up to 3 measures on priority topics for which measures lacking 8 4

5 Performance Payment Model: Updated (2011) As quality improves, provider share of surplus increases/deficit decreases Quality Performance Incentive Provider Share of Surplus (increases as quality improves) Provider Share of Deficit (decreases as quality improves) 70% 80% Linking Quality and Efficiency The 2011 AQC ensures that providers have a strong incentive to focus on both objectives. 55% 40% 20% PMPM Performance Score PMPM Quality Dollars The 2011 AQC also allows groups to earn PMPM quality dollars regardless of their budget surplus or deficit. High quality groups earn more PMPM quality dollars. 9 AQC Results: The First Four Years 10 5

6 AQC Physician Participation (Current as of February 2015) 6,000 PCPs SCPs 90% 16,000 93% 5,000 4,000 4,592 5,136 5,547 5,664 14,000 12,000 10,000 11,731 12,986 14,067 14,777 3,000 8,000 2,000 1,000 1,373 1,420 2,303 6,000 4,000 2,000 2,577 2,618 5, * * * All 2015 figures as of February 11 Results Under The AQC: Improvement of the 2009 Cohort of AQC Groups from Adult Chronic Care Pediatric Care Adult Health Outcomes Optimal Care BCBSMA HEDIS National Average BCBSMA HEDIS National Average BCBSMA HEDIS National Average These graphs show that the AQC has accelerated progress toward optimal care since it began in The first two scores are based on the delivery of evidence-based care to adults with chronic illness and to children, including appropriate tests, services, and preventive care. The third score reflects the extent to which providers helped adults with serious chronic illness achieve optimal clinical outcomes. Linking provider payment to outcome measures has been one of the AQC s pioneering achievements. 12 6

7 AQC Results: Formal Evaluation Findings Source: Song Z, et al. Changes in Health Care Spending and Quality 4 Years into Global Payment. The New England Journal of Medicine Total Cost Results In Year 3, we met our goal of cutting trend in half. By 2012, AQC trend was 1.3% and declining. AQC Total Cost Trend 15% 10% Pre AQC Trend 5% 0% MA State Benchmark (3.6%) AQC Trend (1.2%) 14 7

8 Five Keys Ingredients to AQC Success 1 2 Financial Measures. The measures are nationally accepted as clinically appropriate so there is wide support for improving performance on these indicators. Incentives. Real dollars are at stake for improvement. Targets. For each measure, there is a range of performance targets 3 representing a continuum from good care to outstanding care, so the model rewards both performance and performance improvement. 4 Data, Reports, Advice. Dynamic/actionable data and reports made available daily, monthly and quarterly, helping organizations to identify efficiency opportunities at a patient, practice and organizational level. Leadership. Each group has strong engaged leadership driving 5 to success on integrating care, significantly improving quality and reducing costs. 15 AQC Support & Improvement Analytics 16 8

9 Components of the AQC Support Model Our four-pronged support model is designed to help provider groups succeed in the AQC. Data and Actionable Reports Consultative Support Best Practice Sharing and Collaboration Training and Educational Programming 17 Data and Actionable Reports We distribute reports that can be used to help organizations recognize opportunities, develop goals and measure their success. Daily Daily Census, Discharge, PCP Referrals and Inpatient & Outpatient Authorization Reports Weekly New Member Report ED Utilization Report Monthly AQC Member Call Tracking Grid Monthly Ambulatory Quality Report Monthly AQC Ambulatory Quality Measures Group Comparison Report Chronic Condition Opportunities Report Quality Diabetic Composite Score Bi-Monthly Case Management Report Quarterly Ambulatory Care Sensitive Conditions Report AQC Financial Dashboard Non-Emergent ED Report Top 100 Rx Report Bi-Annually Practice Pattern Variation Report Episode Treatment Groups (ETG) Practice Pattern Variation Report Emergency Department Use for Specific Conditions Annually Readmission Report AQC Ambulatory Quality Measures Score/Results AQC Hospital Quality Measures Score/Results Recurring Cost and Use Report Site of Service Report 18 9

10 Benign Hypertension, With and Without Comorbidity Individual Primary Care Physicians Rate of ARB Use per 100 Episodes with ACE-I and/or ARB 2007 Rate = Episodes with ARB / Episodes with ACE-I and/or ARB Rate of ARB Use per 100 Episodes with ACE-I and/or ARB The 12 primary care physicians in this group have rates The of 12 ARB primary use ranging care physicians from 13% in to this 55%. group have rates of ARB use ranging from 13% to 55%. 9 physicians have rates above the network average. 9 physicians have rates above the network average Individual Primary Care Physicians (N=3178) 19 Delivery System Innovation: Four Themes There are four domains in which we see AQC Groups innovating to improve quality and outcomes while reducing overall spending. Staffing Models Approaches to Patient Engagement Data Systems & Health Information Technology Referral Relationships & Integration Across Settings 20 10

11 Local & National Context 21 Key Affordability / Cost-Related Developments in Massachusetts Health reform passes (Ch. 58) Begins path to near universal coverage Much of Chapter 58 enacted, e.g.: MassHealth expansion Commonwealt h Care Consumer affordability schedule New health plan options for young adults Employer Fair Share Cost Containment Part 1 (Ch. 305) passes Increased transparency about cost drivers Reports on health insurer and hospital reserves Special Commission on Payment Reform Recommends move to global payment Government reports and hearings on cost drivers Governor rejects small group premiums Cost Containment Part 2 (Ch. 288) passes Aims to control premiums for small business, individuals Governor Patrick files payment reform legislation Payment Reform (Ch. 224) passes - Sets health care cost growth target at state GDP - Requires public payers (Medicaid, GIC, Connector) to transition to alternative payment models - Establishes ACO licensing process - Increased transparency of health care prices for patients 22 11

12 Impact of the AQC on Medicare spending and quality These results make it clear: There is no free lunch. There may be free chips or fruit salad, but if you want the lunch, you have to come to the table. Paul Grundy, MD, Director of IBM Global Healthcare Transformation 23 Account View: Illustration $700 FFS FFS Costs Costs $700 Incentive Payments for Member Based Performance Charges $600 $500 $400 $300 $200 $100 the Global AQC budget creates contracts incentives create for incentives providers for to providers deliver more to deliver more efficent, efficient, high high quality quality care care lowering FFS trend $600 $500 $400 $300 $200 $100 the incentives payments to providers Global budget are billed contracts as Member will Based have Charges higher incentive the AQC payments will have than higher traditional MBC than contract traditional types contract types Business business as as usual usual Global AQC budget contracts $0 $700 $600 $0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5 Total Total Cost Cost $500 $400 $300 $200 $100 $0 However, on a total cost basis, global however, budget on contracts a total cost deliver basis, on the the goal AQC of delivers providing on high its goal quality of care delivering at more affordable high quality trends care at more affordable trends Year 1 Year 2 Year 3 Year 4 Year 5 While the charges associated with incentive payments rose relative to traditional contracts, the overall medical trend declined significantly 24 12

13 Account View: Putting FFS and Incentive Costs in Perspective Allowed Claims PMPM Allowed FFS $445 $465 $472 Incentive Payments for Performance MBC $5 $10 $32 Total $451 $475 $504 $600 $500 $400 $300 $200 Incentive MBC Payments for Performance Allowed FFS FFS $100 $ Components of Trend 2010/ /10 2 year Allowed FFS 4.4% 1.4% 2.9% Incentive Payments for Performance MBC 1.0% 4.7% 2.9% Total 5.4% 6.1% 5.8% 25 ABC Account Report ABC Account Report Key ABC Account Green Account-specific AQC performance favorable when compared to account-specific non- AQC performance Red Account-specific AQC performance unfavorable when compared to account-specific non- AQC performance BCBSMA Network Green AQC performance favorable when compared to non- AQC performance Red AQC performance unfavorable when compared to non- AQC performance Note: Colored cells plus ( ) indicate that the account population is large enough that we are confident of your results

14 PPO Market Penetration PPO comprises about half of our in state providers commercial revenue. % PPO (+non/hmo) penetration by state, July % 100% 70% 85% 50% 70% 53% PPO 47% HMO BCBSMA commercial provider network revenue, by product 27 Summary and Priority Issues Ahead Payment reform gives rise to significant delivery system reform Rapid, substantial performance improvements are possible in the context of meaningful financial incentives; rigorously validated measures and methods; ongoing, timely data sharing and engagement; and committed leadership For payment reform, deep provider relationships and significant market share are advantageous Expanding payment reform to include PPO presents unique challenges o Gaining strong employer buy-in and support will be important this means models must offer value from day-1 Continued evolution of performance measures to fill priority gaps o Focus on outcomes, including patient reported outcomes (functional status, well being) Continued delivery system reform, including o o o o Evolving the role of hospitals in the delivery system Building deeper engagement of specialists Bringing incentives (financial and non-financial) to the front lines Advancing innovations in virtual care 28 14

15 For More Information 29 15