Payer Perspectives On Value-based Contracting
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1 Payer Perspectives On Value-based Contracting Miles Snowden, MD, MPH, CEBS Chief Medical Officer 1
2 A simple goal Making the health system work better for everyone 2
3 Optum serves 60,000,000+ individuals 80,000 provider practices and other health care facilities 67,000 pharmacies* 5,000 hospitals 400 global life sciences organizations 300 health plans 150 state, federal and municipal agencies and departments Statistics as of 6/30/13 except where noted; *as of 1/17/13 3
4 % Who Feel There are Significant Differences in Quality of Care in Community Majorities of physicians and, especially, hospital execs see significant differences in quality of care across the community. PHYSICIANS (A) 55% CONSUMERS (B) 37% HOSPITALS (C) 62% Base: All Qualified Respondents: (Physicians n = 1,602, Consumers n = 3,400 / 3,398 / 3,397, Hospitals n = 400) Q625/Q425/Q325 Are there, or are there not, significant differences in the quality of care provided by doctors and hospitals in your local area? 4
5 % of Healthcare Costs in Community That Could Be Reduced Without Sacrificing Quality Consumers are much more optimistic than either physicians or hospital execs about the extent to which healthcare costs in their community could be reduced without sacrificing quality. Mean Mean PHYSICIANS (A) 10% 59% 6% 25% 17% 17% CONSUMERS (B) 2% 4% 20% 32% 4% 38% 30% 30% HOSPITALS (C) 1% 10% 78% 3% 7% 18% 18% % 51-75% 26-50% 1-25% None Not Sure Base: All Qualified Respondents: (Physicians n = 1,602, Consumers n = 3,400 / 3,392, Hospitals n = 400) Q530/Q205/Q305 Without sacrificing quality, how much do you think healthcare costs in your community could be reduced? 5
6 The current health management model duplicates and fragments the engagement of the individual PHM programs need to be coordinated across all stakeholders to deliver a seamless and comprehensive approach through sharing resources to reduce costs Providers Healthplan Employers Hospital Aggregators (IDNS, IPA, Large Groups) Physicians Focus on UM and authorization for episodic care Overlay of telephonic wellness and disease mgmt. Target high-cost case mgmt. Focus on health and wellness programs Targeted telephonic disease management Leading employers offering onsite services Focus on discharge planning New energy on readmission prevention Condition management in areas of excellence Varity of services based on maturity of market and aggregator Leaders support population management Drive to PCMH Focus on episodic care Leading providers focused on PCMH driving to closing gaps in care and prevention Multiple access points Different engagement models Different outcome measures Variation in clinical protocols 6
7 We begin by understanding the market trends Trends Implications Consolidation of Provider Community Continued focus on gaining market leverage with payer community 1. Need to focus on clinical and operational improvement to achieve value beyond market share System Affordability Consumers are faced with a health care affordability crisis 2. Market is defining new reimbursement models focused on population management Value-Based Care Models Aligned economic and practice incentives between providers and payers 3. Market is defining new incentives and penalties in physician compensation models Population Care Management Focus on managing populations and individuals across the system of care 4. New primary care models are being deployed Industry Defined Performance Measurements New patient satisfaction, outcomes and quality measurements are tied to reimbursement and compensation models 5. New capabilities needed to measure and deliver value-based care 7
8 Individual There are many new partnership models occurring to engage stakeholders in many different ways Traditional Three-Prong Partnership Employe r Employe r Provider Payer Individual Provider Payer Direct to Employer Private Exchanges/Defined Contribution Exchange Employe r Provider Employe r Payer Provider Payer Individual Payer Provider 8
9 Physician Compensation Reimbursement As the healthcare delivery landscape shifts to value, the compensation models need to evolve Traditional Model New Model Unit Cost Collections Coding Volume (Sick Care) Panel Size & Risk Care Coordinatio n Quality & Patient Satisfactio n Service/ Outcomes (Well Care) Efficiency Quality Satisfaction Efficiency Quality Productivity Productivity Episodic View Population View 9
10 Journey to Value-Based Provider Reimbursement Compensation Continuum (Level of financial risk) Small % of financial risk Moderate % of financial risk Large % of financial risk Fee-for-service Performancebased contracting Physician Hospital Patient-centered medical home Bundled and episodic payments Shared savings Shared risk Capitation + performancebased contracting Limited Integration Moderate Integration Full Integration Encounter Management Episode Management Population Management 10
11 Familiarity with ACOs Compared with physicians, hospital executives are more familiar with ACOs. PHYSICIANS (A) HOSPITALS (B) 34% 13% 66% 87% Yes No Base: All Qualified Physicians and Hospital Execs: (Physicians n = 1,602, Hospitals = 400) Q400/Q515 Are you familiar with the concept of an Accountable Care Organization? 11
12 Intent to Join/Form ACO Among those familiar with ACOs, about the same proportion of physicians and hospital execs report their practice or hospital has already joined or formed one. However, hospital execs are more likely than physicians to report that they are considering an ACO. 53% 67% 20% 18% 15% 28% 23% 22% 23% 25% Already joined Yes (within 12 months) Yes (but not in next 12 months) No Not sure 18% PHYSICIANS (A) 8% HOSPITALS (B) A Base: Familiar with ACO: (Physicians n = 1,117, Hospitals = 345) Q405/Q520 Is your practice considering joining or forming an accountable care organization (ACO)? 12
13 Navigating the journey from providing care to managing health Invest New Capital Patient Access Optimize Performance Medical Necessity Reimbursement Financial and Clinical Analytics Population Health Management Quality Providing Care Aligned Incentives Managing Health Clinical Care Coding and Documentation Care Delivery Model Prepare for Change 13
14 Prepare for change Care delivery model CARE DELIVERY MODEL CONSENSUS Agreement on the goal GOVERNANCE Accountability for the goal STRUCTURE Alignment to the goal 14
15 Governance Representatives from all partners including clinical, financial and operational leadership and staff Executive oversight (board) Provider leadership Clinical and operational leadership Clinical research and execution Financial contracted cost analysis Operations, legal, marketing IT connectivity solutions Provider engagement Clinical initiatives T1 T2 T3 T4 15
16 Physician Engagement Design program performance Physician Leadership Chief Medical Officer Primary Care Physician Leader Specialty Leaders Hospitalists Design individual physician profiles Perform outlier intervention Pilot new models Engage in care delivery redesign Educate physicians Portal Panel meetings Individual performance meetings Approve evidence-based guidelines and protocols 16
17 Key opportunities in population health management Population medical costs are largely from treatment of chronic conditions in the ambulatory setting medical claims cost distribution among 5.5 million commercial members using Optum for Population Health Management services 17
18 Invest new capital With expert financial and clinical predictive analytics as your enabler, patient risk now becomes an opportunity to manage health and drive down costs. Financial & Clinical Analytics Population Health Management To predict the future medical experience of individual health consumers and defined populations To identify, engage, and impact every individual with a health need within a defined population 18
19 Information technology Technical Blueprint for Provider Gain-Sharing Enablement Data Aggregation Risk Stratification Care Coordination Patient Engagement Collect the data generated by providers, then aggregate the provider community s data around individual health consumers and defined populations Use aggregated data to identify and stratify Patients at risk for unfavorable future medical experience Provider performance relative to peers and best practice Convert data analysis into actionable information at the time of care Catalyze action to mitigate identified risk at the point-of-care Convert data analysis into actionable information at the population level Catalyze action to: Identify Engage Impact every individual with a health need within a defined population 19
20 Four steps of population health management Provider groups who have been successful in value-based contracts consistently cite the same four areas of critical focus for success in population health management. POPULATION HEALTH MANAGEMENT Optimize network Manage care transitions Invest in high acuity interventions Expand disease management Share cost/quality reporting with referring providers Track patients across the continuum of care Intensively manage the progress and outcomes of interventions for the highest risk cohorts Manage all populations, not just highrisk cohorts 20
21 Actionable information begins with the right data Analytics to predict future medical costs of individuals and populations are limited by the characteristics of the types of available data: Claims data Clinical data Socio-demographic and Care Management data insensitive non-specific untimely + always available + sensitive + specific + timely variably available (may be incomplete or unstructured in EMR, or unavailable from non-emr users) + sensitive non-specific + timely + generally available 21
22 Population health management technology 22
23 Population health management technology 23
24 Population health management technology 24
25 Population health management technology 25
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