Volume to Value. American Medical Group Association Las Vegas, Nevada March 24, 2015
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1 Volume to Value Richard Bone, MD Vice President Medical Management Advocate Medical Group Lee Sacks, MD CEO, Advocate Physician Partners EVP Chief Medical Office, Advocate Health Care American Medical Group Association Las Vegas, Nevada March 24, 2015
2 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
3 Pay No Attention To The Man Behind The Screen
4 4
5 Agenda Advocate Health Care Advocate Physician Partners Advocate Medical Group 5
6 Advocate Health Care Hospitals (12) 4 teaching 1 children's 1 critical access 5 level 1 trauma centers Physicians 1,350 employed/affiliated 5,175 APP 6,400 Medical staff Post-acute Home health, hospice, LTAC & palliative care 33,400 associates
7 MVP 7
8
9 Advocate Experience 9
10 Advocate s Position Advocate Health Care leads the market annually, with: 166,930 total admissions (17.1% share) 15,000+ pediatric admissions (16.6% share) 1.8 MILLION hospital outpatient visits 3.1 MILLION medical group visits 536,327 emergency department visits 22,489 infant deliveries Sources: Pediatric data is based on a nine county market share report (RYQ3 2014) provided by ACH. Adult 10 data is based on the YTD December Growth Report and the RYQ Market Share Report.
11 The Finances Do Not Look Good
12 Health Care Costs Impact on Federal Budget 12 12
13 13
14 Unsustainable Cost Curve National Health Care Spending as a Share of GDP 16.0% 16.6% 17.6% 19.6% 12.5% 13.8% 9.2% 7.2% 5.2% P 14 14
15 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% 15 15
16 Annual per capita healthcare costs 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,
17 Colonoscopies Explain Why U.S. Leads the World in Health Expenditures New York Times, June 1,
18 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 $17,437 $14,117 $22,844 $73,420 Source: International Federation of Health Plans Link: 18
19 WHY HEALTHCARE COSTS MUST BE REDUCED Taxes Copyright 2011 Kaufman, Hall & Associates, Inc. All rights reserved. 19
20 Collision Course Decreasing Revenues Medicare Medicaid Insurers/employers Utilization Increasing Expenses Wages & Benefits Supplies Technology Infrastructure Investments 20
21 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. 21
22 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 22
23 Will Washington Help? SGR Med Mal Reform
24 Advocate Ranked Largest ACO in U.S. with 620,000 Covered Lives! Modern Healthcare Survey
25 Reimbursement Model Shift 55% % 1% 12% 32%
26 Current Value Based Agreements Contract Lives Total Spend Commercial 388,000 $1.5 B Medicare Advantage 35,000 $0.3 B Advocate Employee 26,000 $0.1 B Medicare ACO 137,000 $1.7 B Medicaid ACE 62,000 $0.2 B Total 648,000 $3.8 B 14
27
28 Advocate s Physician Platform Includes Advocate s Clinically Integrated Affiliate, Silver Cross Hospital Active physicians on medical staffs (7,000) Total APP physicians (4,900) 25% PCPs 75% specialists AMG (1,200) Dreyer (200) Aligned (3,500) Independent (non-app) (2,100) 28
29 Strong Physician Engagement To drive improvement in health outcomes, care coordination and value creation through an innovative and collaborative partnership with our physicians and the Advocate System. Advocate Medical Group BroMenn PHO Christ PHO Condell PHO Dreyer Medical Group Good Samaritan PHO Good Shepherd PHO Illinois Masonic PHO Lutheran General PHO Sherman PHO South Suburban PHO Trinity PHO Future PHO Silver Cross PHO Future Medical Group 29
30 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 30
31 Strategy for Transparency Timeframe Year 1 Year 2 Year 3 Year 4 Year 5 Activity External via Annual Value Report Internal via Annual Value Report and Organizational Level Reporting 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 31
32 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
33 2014 Value Report 33 To download a copy of the 2014 Value Report, go to: advocatehealth.com/valuereport 2015 edition will be out in late April
34 Show Me The Money
35 35 Advocate Physician Partners Combined Incentive Fund Distribution History ($ in millions)
36 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 36
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% 37 37
38 PCP Distribution Differential pay based on Performance Index and Member Months for Attributed Patients 38
39 PCP Distribution Performance Index: CI Score x Coordination Factor Coordination Factor: In Network Care x Patient Engagement in Care Management 39
40 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
41 Tier 3 Tier 2 Tier 1 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 41 Rank Physician Score Member Months 1 A ,500 2 B C ,600 4 D ,100 5 E ,300 6 F G ,700 8 H ,300 9 I J ,400 * Minimum Applies If Average MM Per Physician at the Practice Level Is Below 600 % of MM 33.4% 33.3% 33.3%
42 Tier 3 Tier 2 Tier 1 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 1 A ,500 2 B C ,600 4 D ,100 5 E ,300 6 F G ,700 8 H ,300 9 I J ,400 % of MM % of Pool 33.4% 33.3% 33.3% 40.4% 33.3% 26.3% 42
43 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,
44 Specialist Approach 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 in the Future 44
45 Incentive Opportunity Changes Based on Unique Patient Tier APP Board to Determine Percent Change in Incentive Opportunity* for Tiers 1 and 3 45 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
46 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 46
47 Advocate Medical Group
48 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 48
49 The Advocate Medical Group Journey Group Optimization Rapid Growth and Integration Consolidated, Dedicated Management 2008 Physician-led Governing Council 2009
50 Number of Physicians AMG Growth History and Projection 1,400 1,200 1,
51 Group Composition Pediatric Specialists 5% Cardiac Related Specialists 10% APC - Specialists 6% APC - Primary Care 8% Pediatrics 5% Other Adult Specialists 28% Family Medicine 12% Hospitalists - Internal Medicine 4% = Specialists = Primary Care Ob/Gyn 4% Internal Medicine 15% Hospitalists - Pediatrics 3%
52 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. 52
53 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 53
54 Volume to Volume & Value - Aligning for Better Outcomes Three Components to Value Patient Experience Health Outcomes Service Area Operating Margin 54
55 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 55
56 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 56
57 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 57
58 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%
59 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 59
60 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 60 60
61 AMG Hospitalists Salary Benchmarks Midwest Benchmark MGMA - SHM Today Hospitalist
62 Structure Three parts Base salary divided by 26 pay periods At risk component Bonus component
63 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.
64 At Risk Component Average Length of Stay Citizenship Quality (CI Program)
65 Bonus component Readmissions Patient satisfaction
66 MRA Physician Incentive for 2015
67 MRA Incentive Approach Over Time Plan Summary % Individual 100% Individual 100% Individual Score Score Score 50 % Site & 50% Individual Score 100% Individual Score MRA Score Minumum Risk Score Needed for Paid Out N/A Max Payout $10,000 $15,000 $20,000 $20,000 $30,000 Methodology $$ per Member $$ per Member $$ per Member $$ per Member $$ per HCC 67
68 Medicare Risk Score Scale Risk Score PMPY 250 Members Risk Score PMPY 250 Members 0.95 to 0.99 $0.00 $ to 0.99 $0.00 $ to 1.04 $10.00 $2, to 1.04 $10.00 $2,500 VS 1.05 to 1.09 $20.00 $5, to 1.09 $20.00 $5, to 1.14 $30.00 $7, to 1.14 $30.00 $7, to 1.19 $40.00 $10, to 1.19 $40.00 $10, or greater $60.00 $15, to 1.24 $60.00 $15, or greater $80.00 $20,000 Incentive pays a $$ 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 68
69 Recap 2014 MRA Incentive Incentive pays a $$ per MA member based on the average risk score of the PCPs MA panel Incentive capped at $20K per physician Incentive based on Attributed Membership IM and FP Physicians eligible Example A B C D E = Based on MRA Score F = C x E PMPY Site Physician Membership MRA Score Achievement 2014 Projection XXX A $0.00 $0 XXX B $20.00 $1,760 XXX C $30.00 $15,360 XXX D $40.00 $15,800 XXX E $60.00 $14,460 XXX F $80.00 $17,760 Total 1,545 $65, PMPY Risk Score PMPY 0.0 to 0.99 $ to 1.04 $ to 1.09 $ or 1.14 $ or 1.19 $ or greater $
70 Composition Of MRA Scores Patient: Jane Doe Sex: Female Age: 74 HCC HCC Description DX Formula Risk Score Annual Premium 18 Diabetes with Chronic Complications A $3, CONGESTIVE HEART FAILURE B $3, Vascular Disease C $2,570 Disease Interaction Diabetes_CongestiveHeartFailure D $1,294 Demographic Risk Score E $3,091 Dual Eligible (Medicare/Medicaid) F $1,504 Originally Disabled G $1,714 Risk Score H= Sum (A:G) $16,514 FFS Normalization Factor (per CMS) I Normalized Risk Score J = H x I $14,783
71 2015 Example Example A B C D E F = Based on E G = D x F Avg HCC Site Physician Membership HCCs Score Rate 2015 Projection XXX A $20.00 $3,300 XXX B $40.00 $7,800 XXX C $80.00 $19, Rate HCC Risk Score Rate per Range HCC 0 to 0.59 $ to 0.74 $ and above $
72 2015 Projected MRA Bonus 165 physicians will get a payout in the 2015 plan; who got $0 with the 2014 plan - $100K total/$600 average per physician - Average risk score = 0.69 (0.35 demo HCC) 72
73 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
74 What s Next?
75 Health Care Transformation Task Force Committed to putting 75% of Their Business in Value-Based Arrangements by 2020 Private Sector Alliance Focus on the Triple Aim Members are: 1. Large Health Systems 2. Health Insurers 3. Patient Stakeholders 4. Purchasers 5. Policy Experts
76 Government Is Also Active Medicare will shift 50% of its Provider Payments to Alternative Payment Arrangements by 2018 ACOs Bundled Payments New Rules For ACOs already announced Patient Experience Significant Part of the Equation
77 (708) Cell
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