Volume to Value. AMGA CMO Meeting April 3, Richard H. Bone, M.D. Vice President Medical Management Advocate Medical Group
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1 Volume to Value AMGA CMO Meeting April 3, 2014 Richard H. Bone, M.D. Vice President Medical Management Advocate Medical Group In times of change, learners inherit the earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists. Eric Hoffer (Stolen from Gary Kaplan, his favorite quote) 2 1
2 3 Agenda Advocate Health Care Advocate Physician Partners Advocate Medical Group 4 2
3 Sites Of Care Advocate Health Care 12 Hospitals 11 acute care hospitals 1 children s hospital 5 level 1 trauma centers 4 major teaching hospitals 1 critical access hospital 2 Physician Groups 1,400 employed Home Care Company 3.4 Million Patients Served 34,000 Associates Total Revenue $4.9B AA Rating 5 MVP 6 3
4 7 Advocate Experience 8 4
5 POSITION (2013) Advocate Health Care leads the market annually, with: 190,300 total admissions (16.2% share*) 9,000+ pediatric admissions (10.1% share**) 2 MILLION hospital outpatient visits 2.8 MILLION medical group visits 459,495 emergency department visits 19,500 infant deliveries 9 * Six County Market Share ** Nine County Market Share The Finances Do Not Look Good 5
6 Health Care Costs Impact on Federal Budget
7 Unsustainable Cost Curve National Health Care Spending as a Share of GDP 17.6% 16.6% 16.0% 19.6% 12.5% 13.8% 9.2% 7.2% 5.2% P Health Spending-Comparison Health Care Spending in Developed Countries, 2008 $7,538 $2,902 $3,129 $3,737 $3,696 $4,079 $4,627 $5,003 $1,801 PERCENT OF GDP i 6.5% 9.0% 8.7% 10.5% 11.2% 10.4% 10.7% 8.5% 16.0%
8 Annual per capita healthcare costs 3/25/2014 Costs By Age Categories Heathcare Costs by Age U.S. is spending much more for older ages $45,000 $40,000 $35,000 $30,000 $25,000 UK Germany Sweden US Spain $20,000 $15,000 $10,000 $5,000 $ Age Source: Fischbeck, Paul. US-Europe Comparisons of Health Risk for Specific Gender-Age Groups Carnegie Mellon University; September, Colonoscopies Explain Why U.S. Leads the World in Health Expenditures New York Times, June 1,
9 Contextual Change Extraordinary price vulnerability 2012 Comparative Price Report (Average Prices) Spain United Kingdom France United States CT Scan Head $119 $175 $183 $566 MRI $230 $335 $363 $1,121 Hospital and Physician Cost Appendectomy $2,245 $3,408 $4,463 $13,851 Hospital and Physician Cost Normal Delivery $2,265 $2,641 $3,541 $9,775 Hospital and Physician Cost Knee Replacement Surgery $7,827 $7, $25,637 Routine Office Visit Physician $11 -- $30 $95 Total Hospital and Physician Cost Bypass Surgery Source: International Federation of Health Plans Link: $17,437 $14,117 $22,844 $73, WHY HEALTHCARE COSTS MUST BE REDUCED Taxes Copyright 2011 Kaufman, Hall & Associates, Inc. All rights reserved. 18 9
10 Collision Course Decreasing Revenues Medicare Medicaid Insurers/employers Utilization Increasing Expenses Wages & Benefits Supplies Technology Infrastructure Investments 19 A Few Observations 1. Healthcare in America is unaffordable for patients, for employees, for state and federal governments 2. Solving the federal deficit requires a solution to the Medicare budget 3. There is a high likelihood that utilization of inpatient hospitals will decline precipitously over the next five to ten years 4. There is no revenue solution to the survivability of hospitals it is now a cost game and a care organization game Copyright 2011 Kaufman, Hall & Associates, Inc. All rights reserved
11 Contextual Change An unprecedented need to lower the cost structure of the industry. I am assuming that the future value of our existing cost structure is currently greater than the future value of our expected revenue stream. John Oliverio President Wheaton-Franciscan Healthcare 21 Advocate Ranked Largest ACO in U.S. with 553,000 Covered Lives! Modern Healthcare Survey 11
12 Reimbursement Model Is Shifting 23 Value Based Agreements Contract Lives Total Spend Blue Cross 380,000 $2.0 B Medicare Advantage 32,000 $0.3 B Advocate Employee 22,000 $0.1 B Medicare ACO 106,000 $1.2 B Total 540,000 $3.6 B 24 12
13 Pluralistic Physician Structure Physicians on Advocate Medical Staffs = 6,000 Advocate Physician Partners (APP) = 4,500 AMG/Dreyer 1,200/200 Independent = 3,100 Non-APP = 1,
14 Advocate Physician Partners Our Role: To Drive Improvement in Health Outcomes, Care Coordination and Value Creation Through an Innovative and Collaborative Partnership with Our Physicians and the Advocate Health System Condell PHO Christ Hospital PHO South Suburban PHO Trinity PHO Future PHO Good Shepherd PHO Lutheran General PHO Good Samaritan PHO Future Medical Group Dreyer Medical Clinic Advocate Medical Group Illinois Masonic PHO BroMenn PHO What Is Clinical Integration? Collaborative effort by more that 4,500 Physicians (both Employed and Independent) and 12 Hospitals to drive Targeted Improvements in Health Care Quality and Efficiency through a Single Program to Improve Outcomes 28 14
15 How The CI Program Works Select top impact areas for employers & community: Chronic disease conditions & generics Benefits costs, absenteeism, presenteeism Utilize best evidence-based practices Establish performance targets annually Obtain contracts to reward improvement Provide physicians tools, training & feedback Develop physician progress reporting system Reward performance at end of year 29 Strategy for Transparency Timeframe Year 1 Activity External via Annual Value Report Internal via Annual Value Report and Organizational Level Reporting Year 2 Year 3 Year 4 Year 5 Blinded Comparative Overall Organizational Level Reporting Blinded Comparative Overall Physician Level Reporting with Outstanding Physician Performance Recognition Unblinded Overall Physician Scores within Metrics Unblinded Across All Organizations and Physicians 30 15
16 From Membership Partnership New Contract Models Require More Engaged and Committed Physicians Increasing financial interdependence Poor performance hurts all APP Pursuing Policies and Tactics Requiring More Integration Participation in All Contracts (incl. MSSP) Increased data sharing Participation in ECM Coordination of Care Programs Mandatory EMR implementation for IM FP by Value Report To download a copy of the 2013 Value Report, go to: advocatehealth.com/valuereport 32 16
17 Show Me The Money Total Dollars Distributed 17
18 CI Flow Of Dollars HMO Surplus 2004 FTC Decree leads to CI Funding Payment based off of PPO Billings 2011 Shared Savings but Minus Infrastructure Costs APP Incentive Design Professional HMO Surplus Facility HMO Surplus CI Funding AdvocateCare Shared Savings Minus Infrastructure Costs and Deficits PCP CI Value Pool Specialist CI Value Pool Hospital Value Pool
19 Change in Incentive Distribution Increase relationship between value contribution and incentive distribution Continue transition to pay-for-performance Value contribution has several key components CI Score Care coordination Number of patients managed 37 Weighting of Domains Based on Point Allocation Chronic Care 24.7% Health and Wellness 18.7% Efficiency 22.9% Care Coordination 25.3% Patient Experience 8.3%
20 Use All 4 Guiding Principles To Revise PCP Incentive Create Single PCP Value Incentive Use Attributed PPO and HMO Member Months to Calculate PCP Incentive Opportunity Tier Physicians Using Individual CI Score and Care Coordination Score Reward Highest Tier with Higher PMPM Incentive Opportunity than Average Continue to Calculate Incentive Earned Using Individual and Site CI Score 39 PCP Distribution Performance Index: CI Score x Coordination Factor Coordination Factor: In Network Care x Patient Engagement in Care Management 40 20
21 PCP Distribution Differential pay based on Performance Index and Member Months for Attributed Patients 41 Rank PCPs by Performance 1. PCP Performance Score = 2 * Individual CI Score + Care Coordination Score 2. Physician E Example: CI Score of 85% and Care Coordination Score of 50% = 2 * = Rank Physicians High to Low on Performance Rank Physician Score 1 A B C D E F G H I J
22 Tier 1 Tier 2 Tier 3 Tier 1 Tier 2 Tier 3 3/25/2014 Create Three Tiers 4. Add Physician Member Months; Use 600 Member Months to Calculate Minimum Opportunity in 2013* 5. Create Three Tiers Having Equal Member Months 43 Rank Physician Score Member Months % of MM 1 A ,500 2 B % 3 C ,600 4 D ,100 5 E , % 6 F G ,700 8 H ,300 9 I % 10 J ,400 * Minimum Applies If Average MM Per Physician at the Practice Level Is Below 600 Allocate PCP Pool by Tier 6. Allocate Percent of PCP CI Pool So Tier 1 Has Highest PMPM Opportunity and Tier 3 Has Lowest Opportunity Rank Physician Score Member Months % of MM % of Pool 1 A ,500 2 B % 40.4% 3 C ,600 4 D ,100 5 E , % 33.3% 6 F G ,700 8 H ,300 9 I % 26.3% 10 J ,
23 PCP Incentive Opportunity = Tier PMPM * Member Months Sample Physician Distribution Tier 1 Tier 2 Tier 3 Member Months 3,600 3,600 3,600 Tier Opportunity (pmpm) $ 9.64 $ 7.98 $ 6.28 Individual Physician Opportunity $ 34,704 $ 28,728 $ 22,608 Individual CI Incentive Opportunity (70%) $ 24,293 $ 20,110 $ 15,826 Individual CI Score Individual CI Incentive Earned $ 21,864 $ 18,099 $ 14,243 Group CI Incentive Opportunity (30%) $ 10,411 $ 8,618 $ 6,782 Group (PHO/Medical Group) CI Score Group CI Incentive Earned $ 8,850 $ 7,326 $ 5,765 Total Incentive Earned $ 30,713 $ 25,424 $ 20,008 Total Incentive Unearned $ 3,991 $ 3,304 $ 2, Specialist Approach for 2013 Identify Specialties with Greatest Influence on Population Health and Total Cost of Care OB/GYN, Cardiology, Orthopedic Surgery, Hematology/Oncology and Hospitalists Rank by Number of Unique AdvocateCare Patients (HMO, PPO & Medicare) at Specialty Level Patient Volumes Vary Across Specialties Increase Incentive Opportunity for Physicians Seeing Most Patients; Decrease for Physician Seeing Fewest Patients Refine and Expand for
24 Incentive Opportunity Changes Based on Unique Patient Tier APP Board to Determine Percent Change in Incentive Opportunity* for Tiers 1 and 3 47 Rank by Unique AdvocateCare Patients Tier Physicians within Specialty Change to Incentive Opportunity* Physicians in Specialty % Physician A Tier 1: Top Third % Physician B 90 0% Physician C Tier 2: Middle Third 60 0% Physician D 30-20% Physician E Tier 3: Lowest Third 5-20% Physician F *Incentive Opportunity is based on allowable billings Sample: Variation in Incentive Opportunity by Tier* of +/- 20% Sample Specialist Physician Distribution Tier 1 Tier 2 Tier 3 Unique AdvocateCare Patients Preliminary Individual Physician Opportunity $ 20,000 $ 20,000 $ 20,000 Individual Physician Opportunity (+/- 20%) $ 24,000 $ 20,000 $ 16,000 Individual CI Incentive Opportunity (70%) $ 16,800 $ 14,000 $ 11,200 Individual CI Score Individual CI Incentive Earned $ 14,280 $ 11,900 $ 9,520 Group CI Incentive Opportunity (30%) $ 7,200 $ 6,000 $ 4,800 PHO (or Dreyer/AMGMC) CI Score Group CI Incentive Earned $ 6,480 $ 5,400 $ 4,320 Total Incentive Earned $ 20,760 $ 17,300 $ 13,840 Total Incentive Unearned $ 3,240 $ 2,700 $ 2,160 *Tier will be calculated each year based on unique AdvocateCare patients in specialty grouping. Incentive Opportunity continues to be based on allowable billings 48 24
25 APP s PCP Incentive Fund Design APP Primary Care Physicians Tiers Based on Individual Physician CI & Care Coordination* Scores Care Coordination Includes Percent In- Network Admissions and Care Management Engagement Factor Tier 1 PMPM Individual Physician Opportunity (120% of Tier 2) Tier 2 PMPM Individual Physician Opportunity Tier 3 PMPM Individual Physician Opportunity (80% of Tier 2) Distributed Based on Individual CI Score Distributed Based on Group/PHO CI Score 49 Individual Opportunity (70%) Group/PHO Opportunity (30%) = Individual Distribution + = + Group/PHO Distribution = Individual Physician Total Distribution + Residual Funds from Individual Portion + Residual Funds from Group/PHO Portion = Residual Funds Are Rolled Over Into General CI Fund and Available for Distribution the Following Year APP s Specialist Incentive Fund Design APP Specialist Physicians Tiers Based on Unique AdvocateCare Patient for 5 Specialties* in 2013 * 5 Tiered Specialties: OB/GYN, Cardiology, Orthopedic Surgery, Hematology/Oncology and Hospitalists Tier 1 Individual Physician Opportunity (120% of Tier 2) Tier 2 Individual Physician Opportunity Tier 3 Individual Physician Opportunity (80% of Tier 2) Distributed Based on Individual CI Score Distributed Based on Group/PHO CI Score 50 Individual Opportunity (70%) Group/PHO Opportunity (30%) = Individual Distribution + = + Group/PHO Distribution = Individual Physician Total Distribution + Residual Funds from Individual Portion + Residual Funds from Group/PHO Portion = Residual Funds Are Rolled Over Into General CI Fund and Available for Distribution the Following Year 25
26 Advocate Medical Group Advocate Medical Group Physician Led & Physician Run One Unified Management Structure for last 6 years Dyad Model 430 Physicians when created Now 1,200 Providers Compilation of Multiple Small Siloed Parts with Multiple Cultures and Compensation Plans 20% of Advocates $5 Billion Dollar Revenue 52 26
27 Number of Physicians 3/25/2014 The Advocate Medical Group Journey Group Optimization Rapid Growth and Integration Physician-led Governing Council 2009 Consolidated, Dedicated Management AMG Growth
28 Group Composition APNs/PAs 77 Family Medicine 149 Internal Medicine 151 Other Related Specialists 427 = Specialist (581) Cardiac Related Specialists = Primary Care (489) What is the Role of AMG? Advocate Vision To be a faith-based system providing the best health outcomes and building lifelong relationships with those we serve. AMG Role A nationally-recognized, physician-led integrated group committed to delivering the best health outcomes
29 Advocate Health Care Board of Directors Advocate Medical Group Governing Council AMG Regional Councils AMG Governing Council Committees Health Outcomes Committee Operational Improvements Committee Physician Engagement Committee Strategic Planning & Development Committee Finance Committee AMG Practice Sites/ Departments AMG Vice-presidents Medical Management/ AMG Vice-presidents Operations 57 Volume to Volume & Value - Aligning for Better Outcomes Three Components to Value Patient Experience Health Outcomes Service Area Operating Margin 58 29
30 Patient Experience Two Elements Site score (70%) Region score (30%) Based on Press CGCAHPS Survey Clinician and Group Consumer Assessment of Healthcare Providers and Systems administered by Press Gainey Developed and approved by the Physician Engagement Committee 59 Patient Experience Distribution Patient Experience Scaling Targets Category Weight Minimum Goal Maximum Satisfaction Percentile - Site 70% 30 th Percentile 75 th Percentile 90 th Percentile Satisfaction Percentile - Region 30% 30 th Percentile 75 th Percentile 90 th Percentile 60 30
31 Health Outcomes Three Elements Individual Physician Clinical Integration score (70%) AMG AdvocateCare Index (20%) Patient Safety - AHRQ Regional Survey score (10%) Developed and approved by the Health Outcomes Committee 61 Health Outcomes Distribution Health Outcomes Scaling Target Scores Category Weight Minimum Goal Maximum Clinical Integration 70% Patient Safety 10% 50 th Percentile 68 th Percentile 90 th Percentile AdvocateCare Index 20%
32 Service Area Operating Margin One Element Measured by Service Area Same goals as Service Area management Physicians will be assigned to a Primary Service Area Developed and approved by the Finance Committee 63 Value Measure Details 64 Value Measure Operating Margin Health Outcomes Health Outcomes Health Outcomes Patient Experience Patient Experience Element Operating Margin Service Area Clinical Integration Individual Physician AdvocateCare Index Corporate Patient Safety ARHQ Survey Regional Patient Experience Site Press Ganey Survey Patient Experience Regional Press Ganey Survey Element Percentage Frequency Scoring Period Meaningful Delivery 100% Monthly Annual Quarterly 70% Quarterly corrected summary Annual report after Nov 30th Annual Annual 20% Monthly Annual Annual 10% Annual Annual 70% 30% On demand / Monthly On demand / Monthly Six month rolling average Six month rolling average Annual After October Monthly Monthly 32
33 Clinical Compensation Year 1 Potential 5% upside Potential 5% downside Upside and downside consist of Health Outcomes 2% Patient Experience 1% Service Area Operating Margin 2% 95% of Clinical Compensation 100% of Clinical Compensation AMG Hospitalists Salary Benchmarks Midwest Benchmark MGMA - SHM Today Hospitalist 33
34 Structure Three parts Base salary divided by 26 pay periods At risk component Bonus component Base Salary Productivity based. All Hospitalists are expected to reach a certain Productivity (RVUs) per year. Once a year reconciliation. If deficit, funds can be deducted from the at risk portion or the Bonus portion. 34
35 At Risk Component Average Length of Stay Citizenship Quality (CI Program) Bonus component Readmissions Patient satisfaction 35
36 Value In A Faculty Program Teaching RVUs Advocate Christ Medical Center Department of Internal Medicine Faculty Educational and Administrative Responsibilities (TRVU s) Expected score 6 PER QUARTER Faculty Responsibility Operational Definitions A Evaluation: Face to Face Face-to-face feedback at completion of rotation Tracked by turning in Face-To-Face Feedback Form within 2 weeks after end of rotation or documented in New Innovations Form will be stamped with date of receipt by program coordinator or designee Tracked by Med Ed Program Assistant or designee. Activity Level TRVU <80% 0 >80% 1 100% 2 B Evaluation: New Innovations Timely completion of evaluations in New Innovations Defined by submission by due date. Monitored by Med Ed Program Assistant or designee. C Evaluation: Mini-CEX Completion of mini-cex, with credit given after CEX form submitted to program coordinator or designee within 1 week of completion Form will be stamped with date of receipt by program coordinator or designee Tracked by Med Ed Program Assistant or designee. <80% 0 >80% 1 100% 2 <80% 0 >80% 1 100% 2 D Conference attendance: Grand Rounds Attendance at weekly scheduled Grand Rounds Verified by sign-in sheets Entered into New Innovations/E*Value Tracked by Med Ed Program Assistant or designee. Exception only made for vacation and illness <50% %% 1 >75% 2 36
37 Advocate Christ Medical Center Department of Internal Medicine Faculty Educational and Administrative Responsibilities (TRVU s), Con t. E Faculty Responsibility Conference: Resident Report Operational Definitions Attendance at scheduled Resident report Verified by sign-in sheets Entered into New Innovations/E*Value Tracked by Med Ed Program Assistant or designee. Activity Level TRV U <50% % 1 >75% 2 F Faculty Development Attendance at Departmental Faculty Development Sessions Verified by sign-in sheets Entered into New Innovations/E*Value Tracked by Med Ed Program Assistant or designee. G Recruitment Conduct at least 10 interviews with residency applicant Submit completed Applicant Interview Form to residency coordinator or designee by 11am the same day Tracked by Residency Coordinator or designee. <50% 0 >50-74% 1 >75% 2 < >10 2 H Scholarly Activity Mentor for Trainee project or Personal Project, Publication or Outside Presentation submit completed Scholarly Activity Form to Med Ed Program Assistant or designee for tracking. Each activity 1 Version January 2014 Medicare Risk Score Scale Risk Score PMPY 250 Members Risk Score PMPY 250 Members 0.95 to 0.99 $0.00 $ to 0.99 $0.00 $ to 1.04 $10.00 $2, to 1.04 $10.00 $2,500 VS 1.05 to 1.09 $20.00 $5, to 1.09 $20.00 $5, to 1.14 $30.00 $7, to 1.14 $30.00 $7, to 1.19 $40.00 $10, to 1.19 $40.00 $10, or greater $60.00 $15, to 1.24 $60.00 $15, or greater $80.00 $20,000 Incentive pays a $$ per MA member based on the average risk score of the PCPs MA panel New Achievement Tiers added for risk scores above 1.25 Max Payout increased from $15K to $20K 74 37
38 2013 MRA Incentive Plan Summary % Individual Score 50 % Site & 50% Individual Score 100% Individual Score MRA Score Minumum Risk Score Needed for Paid Out Max Payout $10,000 $15,000 $20,000 Attributed Membership Member attributed to PCP who saw them the most # of times in 7/12 6/13 If a member see 2 PCPs equally, the member is attributed to PCP last seen If there is no visit history in the attribution period, the member defaults to payor assigned PCP 2013 Incentive will be based on Risk Scores as of January Example Example A B C D E = Based on MRA Score F = C x E PMPY Site Physician Membership MRA Score Achievement 2013 Projection XXX A $0.00 $0 XXX B $10.00 $880 XXX C $20.00 $10,240 XXX D $30.00 $11,850 XXX E $40.00 $9,640 XXX F $60.00 $13,320 XXX G $80.00 $20,000 Total 1,795 $65, PMPY Risk Score PMPY 0.0 to 0.99 $ to 1.04 $ to 1.09 $ or 1.14 $ or 1.19 $ or 1.24 $ or greater $
39 Point of Care (POC) Tool Provider MRN Patient DOB Advocate Medical Group - ORLAND PARK xxxxxxx Appointment Date 5/23/2012 xxxxxxx Appointment Time 2:00PM xxxxxxx Plan HUMANA MEDICARE 10/11/ (89) Site ORLAND PARK HCC Category DX Diagnosis Name LastServDt CHRONIC KIDNEY DZ STAGE III (MOD) X 10/17/ RECURR DEPR PSYCHOS-UNSP X 8/15/ SINOATRIAL NODE DYSFUNCT X 10/17/2011 MRA SUSPECT LIST HCC HCC Description Abnormal Value Test Date 80 Congestive Heart Failure BNP=69 04/14/ Clinical Integration Measures Clinical Integration Measures Last ER Visit Congestive Heart Failure Wellness UTILIZATION Last Hospitalization Wellness Visit in Last 12 Months QUALITY PROGRAM NAME STUDY NAME Incomplete or Abnormal Measure LastService Next Wellness Opportunity 5/23/ /26/ /26/2012 ACE/ARB =No;BetaBlocker=None;Depression Screening =None; Alcohol Assessment=None;Smoking Assessment=None; CaseManager Conditions 2/10/2012 Rick.Bone@advocatehealth.com (708) Cell 39
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