Collaborative Ventures Network CMS and State Innovation Tony Rodgers Executive Healthcare Consultant and Strategist 1
Topics Covered The US Healthcare Cost Dilemma Drivers of Healthcare Innovation CMS and AHCCCS Initiatives Value-Based Payment Models: Challenges and Opportunities Managing Value-Based Performance 2
Healthcare Cost Dilemma Over the period of 2017-2026, national health spending is projected to grow at an average rate of 5.5% annually, which would be 1.0% faster than the expected annual increase in GDP during these years. The healthcare share of GDP is projected to rise from 17.9% in 2016 to 19.7% by 2026. National health expenditures are projected to reach $5.7 trillion in 2026, up 77% from 2016. The prices for medical goods and services are expected more than double annually from an average annual growth rate of 1.1to an annual growth rate of 2.5 percent over the next ten years. Challenges of State and Federal Health Care Policy Makers How can we expand coverage when the cost of healthcare keep rising at a faster rate than the Gross National Product? How can we control cost when the population is aging and 20% of the patient population consume 80% of healthcare cost? How can we assure access to affordable healthcare coverage when more and more healthy individuals are opting out of health care coverage? 3
US Healthcare Cost and Utilization Dilemma Pediatric and Adult ED visits Statistics FY 2015 Age Cohort 0 18 years 19 64 years 65+ years US Population 78,473,200 171,311,200 46,447,200 All ED visits Number of visits 30,047,000 86,102,900 26,775,600 Rate per 1,000 population 382.9 502.6 576.5 Treat-and-release ED visits 29,066,900 76,635,500 17,653,500 Treat and Release ED Visits Rate per 1,000 population 370.4 447.3 380.1 Treat and Release ED visits as percent of total 96.7% 89.0% 65.9% ED visits resulting in hospital admission as a percent of total ED visits that resulted in hospital admission: rate per 1,000 population Percent of ED visits that resulted in a hospital admission 980,100 9,467,500 9,122,200 12.5 55.3 196.4 3.3 11.0 34.1 4
National Trend in Cost Per Stay Has Been Relatively Flat Medicare Medicaid 5
Inpatient Trends for Arizona 2007-2018 Adult Medicaid Expansion Medicare Medicaid Private Coverage Uninsured 6
Inpatient Stays: Mental Health and Substance Use Medicaid Medicaid Medicare 7
Arizona Adult Diabetes: Inpatient Stays 8
Arizona All Emergency Room Visits 9
Adult Emergency Room Visits Medicaid Medicaid 10
All EmerD Pediatric Visits 11
Drivers of Health Care Innovation 12
The Eras of Major Healthcare Innovation Primary Driver of Healthcare Innovation ERA 1: Medical Science Driven Innovation: Germ Theory ERA 2: Health Science Driven Innovation: Chronic Disease and Illness Management ERA 3: Technology and Health Information Science Driven Innovation: Population Health and Life Span Health, and Wellness Focus of Innovation Innovation focus: new medicines and drugs improving clinical care approaches to reduce the mortality and morbidly rate of patients. This resulted in the rise of the US acute care and specialty care system. Innovation focus: specialty care management Acute care sub-specialties This resulted in the emergence of healthcare systems and networks that could manage acute and post acute care. Innovation focus: Integrated systems of care Mega data and healthcare Clinical Informatics to inform to support person-centered care Meaning use of health data and technology to address population health, improve life span health, and functional status. 13
Each Period of Health Care Innovation Built on Knowledge Gained in the Previous Era Medical Science Germ Theory Health Science Chronic Disease and Illness Health Information Science Clinical Care Innovation Integrated Chronic Disease and Illness Management Innovation Person-Centered and Population Health Innovation 14
THE ERA OF HEALTHCARE INFORMATION SCIENCE Health Information Driven Person- Centered Model of Care Design and Innovation Predictive Modeling and Risk Analysis to More Effectively Manage Healthcare Cost and Service Utilization Population Health Management Data and Analytics Disease Registries 15
Information Driven Healthcare QUALTIY PERFORMANCE CARE MANAGEMENT PERFORMANCE POPULATION HEALTH PERFORMANCE COST AND UTILIZATION PERFORMANCE PATIENT EXPERIENCE PERSORMANCE Structural Measures Process Measures Outcome Measures Readmission Rate Reduction Unnecessary ER Visits Reduction in Duplicate Services Preventive Care Measures Reduction of Health Disparities Reduction in Patient Risk Factors Reduction Total Cost of Care Contain Acute Care Cost, and Utilization Efficient Use of Resources Patient Experience Measures Patient Engagement, Health Literacy, Patient Adherence 16
Innovations in Population Health Management Must Cause a Paradigm Shift from just Sick Care Focus to Population and Individual Life Span Health Optimal Health Improved Health Outcomes Early Intervention! Current Health System Results Poor High Risk Communities and Populations Infants Adolescents Adults Seniors Age 20% of Americans are On a this trajectory! 17
Population Health Management POPULATION HEALTH MANAGEMENT FRAMEWORK Patient Health Risk Assessment Intervention Screening Socioeconomic Community Risk Assessment Risk Stratification Linkages to community resources Social Service Integration and collaboration Community Partnerships and Collaborations Housing and Stabilization Support Beneficiary Population Health Analytical Tools Patient Health Registries and Database Care Gaps and Performance Dashboards Care Gap Analysis Integrated Team Based Model of Care Comprehensive Case/Care Management and Coordination Complex Case Management 24/7 Nurse Triage and Information Line Behavioral Health workforce competency building Resource capacity development Tools for continuous performance improvement Transition of Care support Connectivity to patients, care givers, and families Community Health Workers Virtual integration with physical health services Tools for Telehealth and Remote Monitoring Tools 18
CMS Innovation Center: Payment and Delivery Reform Research and Development Center The CMS Innovation Center priorities for innovation in payment and delivery system models focus on: 1. Innovative models of care and new payment approaches that focus health conditions that offer the greatest opportunity to improve care, quality, and reduce costs. 2. Delivery system approaches that better meet the needs of the most vulnerable individuals, while addressing health disparities. 3. Promote patient-centeredness to achieve better outcomes, while engaging broad segments of the delivery system in valuebased payment arrangements that reduce cost. 19
AHCCCS Payment and Delivery System Evolution AHCCCS is pursuing the implementation of longterm strategies to bend the cost curve and improve member health outcomes. The strategy is to leverage the AHCCCS managed care model to deploy value based health care systems: Improve patients experience and population health Contain per-capita health care costs to the rate of general inflation Create aligned incentives with MCO and provider partners, Enact performance expectations that reward innovation and results Encourage and support continuous quality improvement and learning AHCCCS Initiatives Transforming the health care system to an integrated care coordination system Implement a holistic approach to health care by integrating behavioral and physical health for persons with serious mental illness Alignment of Medicare and Medicaid for dual eligible Individuals Simplifying the system of care for children with special health care needs Improve coordination within the justice system to transition people leaving the criminal justice system Expand the meaningful use of EHR/HIE and telemedicine technologies 20
Value-Based Payment Arrangements 21
Key Elements in the Design Value-Based Payment Arrangements Value-Based Payment Model Elements Payer Attribution or Assignment Methodologies Quality Measures and Benchmarks Total Cost of Care Benchmark Risk Adjustment Factors Scope of Services Provider Accountability The process used by payers to attribute or assigned a patient to an accountable provider. Attribution parameters can include: The criteria used to determine which providers are eligible for patient assignment The minimum and maximum length of time (in months) that the patient is attributed/assigned to the provider for the purpose of performance reporting and alternative payment. Patient opt-in opt-out criteria Patient s knowledge and compliance with attribution or assignment to the provider The population appropriate measures and benchmarks. The average total healthcare cost per beneficiary per year. Target healthcare expenditure level is usually determined from previous years claims data. The formulas and factors used to stratify patient by risk categories or create risk groupings. The scope of services that are included in the value-based payment arrangement and on which the total cost of care benchmark analysis is based. The method used to determine which specific provider is accountable for quality and cost performance. Data Collection and Reporting Requirements The specific data sources, data types, and data sets that must be collected and for performance reporting and analysis. 22
The CMS Priorities for New Payment Models New payment models should: Improve care for patients who are receiving a specific treatment or medical procedures. Improve care during a specific time periods or cycle of care for patients who have a specific health condition or combination of conditions. Deliver more coordinated, efficient care for patients who have a specific condition or are receiving a specific treatment or medical procedure. Improve the efficiency of care and/or outcomes for patients receiving care for multiple chronic conditions or at multiple provider sites in the healthcare delivery system. Improve care for patients with specific conditions or who are in early stages of a condition to prevent the conditions progression to a more acute stage. Improve care for the health conditions of a population of patients, or to prevent the development of health problems in a population of patients with particular risk factors. Support delivery of innovative model of care or a different mix of services that reduce acute care utilization and cost for a population or group of patients. Better align healthcare provider payment with patient health outcomes. 23
Value-Based Payment Arrangements Most value-based payment arrangements are poorly designed and structured to achieve the desired result. Many payers lack a basic understanding of the of the importance of apply behavioral economics principles to the payment model design. Four Key Behavioral Economics Principles the must be addressed in the Design of Value-Based Payment Arrangements Principle 1: Adequate financial reward to incentivize the required provider behavior that will achieve the desired outcome. Principle 2: Address the provider s upfront cost to in terms to IT and practice transformation cost. Principle 3: There must be balance between the risk and reward. Principle 4: The overall payment opportunity must reflect the provider s on-going operational or administrative burden associated with the requirements of value base payment. 24
Provider s Value-Based Payment Dilemma Without reductions in the total cost of care across the target population, there will be insufficient net savings to finance new models of care interventions that are necessary to produce the net savings level. 25
The Challenge of Transitioning from Fee for Service to Value-Based Payment 26
Information Infrastructure for Value-Based Payment Arrangements Moving beyond just the treatment of illness and disease to achieve improved population health outcomes requires new health information tools and analytical capabilities. Population Health Information and Analytics Platform Data Integration Software Tools Data Warehouse or Data Repository, Cost and Quality Performance Analysis & Reporting Tools Patient Master File Index Patient Disease Registry Population health analytical tools Healthcare cost analytical tools Risk Stratification Tool & Comorbidity Index Actionable health information and analysis is key to support: Patient care management and coordination of care Quality and cost performance improvement Reduce unnecessary healthcare service utilization Identification and management of patient care gaps Clinical management of high risk high cost patients Population health outcome management 27
Provider Influenced Value Based Care Healthcare Care Process Inputs Schematic for Improving Healthcare Value Providers clinical knowledge and competency Use of Evidencebased clinical care processes Application of medical and e-health technology Performance Accountability Integration and Coordination of Care Provider and Patient engagement Domains of Healthcare Value-Base Performance Cost of Care Resources used Manpower cost Facility cost Medical device cost Medical Technology Administration and Operations Performance Improvement Behavior Continuous evaluation & improvement of healthcare performance Continuous learning Outcome from the Care Process Health Outcomes Population Health Functional Status Quality of Life Personal Productivity Physician and Healthcare Provider Behaviors Meaningful Use of EHR Systems & E-Health Solutions Effective Use of Health Information Technologies Use of health analytics Patient/Provider e- connectivity Person- Centered Care Medical Homes Team approach Effective care management and coordination Patient s Care Experience Satisfaction with Care Engagement in Care Trust and Respect Investment in Wellness Shared Decision Making & Engagement of Patients Continuity of Care Accountable for patient health literacy Provider/patient accountability Performance Analysis Platform EHR and HIE Platform Health Information Infrastructure Use of Information Management Tools for Health Data Analysis and Clinical Information Management 28
Managing Value-Based Performance 29
The Challenges of Controlling Cost and Utilization Inherent in value-based payment arrangements is the accountability for patients healthcare cost and service utilization: 1. Managing the total cost of care below a target benchmark requires the managing and coordinating the patient s care throughout the delivery system. 2. The highest cost patients have complex multiple chronic illnesses often with significant social and economic challenges. 3. Reducing cost long-term requires continuity of relationship between and provider and patient population. 30
Episode of Care Payment Scheme for Colorectal Cancer Screening and Colonoscopy Procedure 60 day Episode of Care Life Cycle from Event Initiation to Episode Completion $120 $132.50 $2,612.50 $2,702.50 Ave. Total Cost Physician $120 Pharmacy $12.50 Colonoscopy Diagnostic Procedure= $2,480 Physician Follow up= $90 Patient Instruction on Bowel Preparation Clinic Registration, Financial Screening, & Nurse Prep Pathology Lab Event Ends: No Cancer Identified Patient Education Given Day 1 Prep Bowel Day 60 Medication Initiating Event: Assessment for Appropriateness and Referral By Primary Care Provider Pre-Procedure Workup Procedure Prep & Sedation Colonoscopy Diagnostic/Therapeutic Procedures w/biopsies Procedure Patient Follow up Visit Explanation of Results Action as necessary Post Procedure 31
Total Cost of Care Benchmark Benchmarking Cost for Target Patient Population Cost for Target Group of Patients Total Cost of Care Benchmarking The payer determines the benchmark healthcare cost target based on historical beneficiary healthcare cost data. The total cost of care benchmark adjustments: Service and cost trend factors Service carve outs Benefit or healthcare policy changes Risk factors Efficiency adjustments or other total cost of care contingencies factors (e.g. reinsurance) The cost of care benchmark is important because it is used to compare the impact of the provider network on the total cost of care. Category of Services Inpatient Service Average Units of Services Per Patient Per Year Cost Per Unit of Service Per Patient Cost Per Year 3.6 days $1,250 $4,500.00 Outpatient Hospital 4.5 visits $165.00 $742.50 Emergency Room Visits 1.2 visits $445.00 $534.00 Primary Care 3.2 visits $85.00 $272.00 Specialty Care 2.4 visits $135.00 $324.00 Prescription Drugs 56 scripts $45.00 $2,520.00 Laboratory Services 25 tests $38.00 $950.00 Imaging and Radiology 3.2 procedures $205.00 $656.00 Other Institutional 0.8 days $185.00 $148.00 Case Management 3.5 units $45.00 $157.50 Other Medical Services 4.5 services $55.00 $247.50 Average Annual Per Beneficiary Total Cost of Care Benchmark $10,694.50 32
Value-based care assumptions: Managing Cost and Utilization for Value-Based Payment Arrangements Evidence-based person-centered care interventions will reduce unnecessary acute care and other service utilization and costs. The standard care interventions are implemented for the entire assigned patient population. The results of the care intervention will be sustainable. Current Total Cost Baseline : $3,968 PMPY PLUS Cost of the Alternative Model of Care Intervention $90 PMPY MINUS Net cost and utilization reduction from new model: $220 PMPY EQUALS New Total Cost of Care Level $3,838 PMPY 3.3% SAVINGS Expected Change in Patient Population Cost and Utilization TOTAL UNITS UNIT COST TOTAL COST OF CARE Services Per 1000 Beneficiaries Expen Per Baseline Pro Forma SERVICE BASKET Baseline % Change Pro Forma Service PBPM PBPM Inpatient hospital Acute inpatient 2,200 admits -10.0% 1,980 admits $9,100 $1,668 $1,502 Post-acute care Skilled nursing 400 admits -7.0% 372 admits $13,000 $433 $403 Inpatient rehab 95 admits 95 admits $15,000 $119 $119 Inpatient LTCH 20 admits 20 admits $32,700 $55 $55 Home Health 550 episodes 10.0% 605 episodes $5,500 $252 $277 Total PAC $859 $854 Other benefits/services OP services 6,200 events -7.0% 5,766 events $630 $326 $303 Emergency room 1,100 visits 1,100 visits Evaluation & Mgmt 30,000 visits 15.0% 34,500 events $90 $225 $259 Procedures 6,500 events 6,500 events $325 $176 $176 Imaging 7,500 events 7,500 events $85 $53 $53 Lab tests 15,000 events 15,000 events $25 $31 $31 Other tests 4,000 events 4,000 events $35 $12 $12 Prescription Drugs/vac. $360 $360 DME 2,000 events 2,000 events $150 $25 $25 ASC proced. 700 events 700 events $415 $24 $24 Hospice 200 admits 200 admits $9,200 $153 $153 Other 55.0% $56 $87 Total Medicare Cost of Care $3,968 $3,838 33
General Schematic for Value-Based Performance Improvement Person-Centric & Population Centric Information Supported Outcome Oriented Continuous Performance Improvement Payer Value Based Payment 3 Shared Performance Risk Performance Improvement Management Analyze Patient and Population Health Data for Opportunities for Performance Improvement 2 Improved Health Outcomes Outcome Data and Information 1 Patients and Populations Value-Based Payment Use Health Information Analytics to Identify Performance Improvement Opportunities 4 Take Actions to Improve Performance Outcomes Elements of Value-Based Payment Providers 1 2 3 4 Assessing Patient Risk Factors and Health Status Collect Cost and Quality Performance Data Analyze and Report Performance Results Financial Gain or Loss 34
Performance Analysis and Improvement Requires wide-spread use of clinical informatics and data analytics 1. Identify high risk patients 2. Identify gaps in care 3. Identify opportunities to improve performance 4. Compare performance among CVN participating providers 5. Support care management and patient engagement 35
Summary Keys To Success The Key Success Factors for Competing in a Value Based Care Market Effective Person- Centered Care Performance Management & Improvement Clinically Integrated Provider Network Data Management and Data Analytics Infrastructure Effective Care Management & Care Coordination Population Health Management Effective Management of Financial Risk Effective Provider Network Governance & Leadership 36
Thank You Tony Rodgers, Chief of Healthcare Strategy TonyR@healthyarizona.org 37