Health Care Evolution

Health Care Evolution Patient-Centered Medical Home to Clinical Integration & Accountable Care Ken Bertka, MD bertka@mindspring.com 419-346-8719

Agenda Top 3 Challenges of Health Care Reform PCMH & ACO Definitions Current State of Primary Care New Direction PCMH Evidence for the PCMH Path to Clinical Integration & Accountable Care 2

Payment Reform Population Management Patient Engagement Patient Engagement Enhanced Access Better communication Care coordination Self-management Team care Payment Reform Practice Efficiency Blended payments PMPM care coordination Pay-for-performance Transformation Population Management Data driven focus top chronic conditions at-risk populations preventive care Clinical Integration/ACO

PCMH & ACO Definitions 4

High-Level Definitions Patient-Centered Medical Home (PCMH) ~ Model of primary care high performing practice ~ Based on the Joint Principles of the PCMH ~ Key elements accessibility, comprehensiveness, coordination of care, continuity of care, team work, population management (practice level) Accountable Care Organization (ACO) subset of Clinical Integration ~ Local accountability for a defined population quality, access, cost, patient satisfaction ~ Aligned incentives across physicians, hospitals, other clinicians & providers of health care ~ Applies the Joint Principles of the PCMH across an entire system of care ~ Requires clinical integration (Advisory Board Definition) - Network of physicians working in collaboration - Physician-led initiatives to improve the quality & efficiency of care. Strong management and health information technology support. - Legal basis for collective negotiation by independent physicians on basis of improved clinical outcomes & efficiencies. 5

Current State of Primary Care 6

Primary Care is Stressed The demands on primary care are high Workforce shortage ~ 78 million baby boomers reach age 65 beginning in 2011 ~ Estimated shortage of 40,000-60,000 primary care physicians over the next 10 years Procedure-oriented payment system works against primary care Care coordination & population management are lacking Appointment wait times are too long Health care reform expanded coverage does not expand access and does not address work force 40% family physicians considered leaving their practices in 2010 (M3 USA poll of 3,729 FPs) 7

8 Source: The Advisory Board, 2010

9 Source: The Advisory Board, 2010

Cost Centers of Health Care Home health care, 3% Nursing care facilities, 5% Personal care, 5% Medical Public health, 3% goods, 3% Cost of insurance, 5% Hospital Care, 31% Investment, 6% Primary Care, 6% Specialists, 15% Dental & Other, 7% 10 Prescription Drugs, 10%

Medicare Hospital Readmissions 19.6% Hospital readmission rate within 30 days ~ 18.4% in CT Responsible for 17% of Medicare hospital payments Top re-admission diagnoses (initial admission dx) ~ Heart failure ~ Pneumonia ~ COPD ~ Psychoses ~ GI problems 2012 Hospital trust fund (Part A) revenues drop below expenditures 2024 Part A trust fund exhausted SGR 30% cut in 2012? Jencks, Williams, Coleman. N Engl J Med 2009; 360:1418-1428 11

New Direction Patient-Centered Medical Home 12

Joint Principles of Patient- Centered Medical Home Personal physician Physician-directed medical practice Team approach Whole person orientation Coordination of care Quality & safety Enhanced access Payment for added value 13

Practice-based Care Team Great Outcomes Health Information Technology Practice Management Practice Organization Health IT Care Management Quality and Safety Quality Measures Patient Experience Access to Care and Information Continuity of Care Services Practice Services Patient-Centered Medical Home = High Performing Primary Care Practice 14

Payment Reform Advocacy Blended Payment Model Pay for Performance- Clinical and Patient Experience Pay for Performance- Clinical and Patient Experience Fee for Service for Visits/Procedures Fee for Service for Visits/Procedures Care Coordination Payment (monthly payment based upon the level of PCMH) Care Coordination Payment (monthly payment based upon the level of PCMH) 15

Today Tomorrow Traditional Practice My patients are those who make appointments with me Patients chief complaint determines care Care is determined by today s problem and time available today PCMH Our patients are those who are registered in our medical home We systematically assess all our patients health needs to plan care Care is determined by a proactive plan to meet patients needs without visits Care varies by scheduled time and memory or skill Care is standardized according to evidence-based of the doctor guidelines Patients are responsible for coordinating their own care I know I deliver high-quality care because I m well trained Acute care is delivered during the next available appointment and to walk-ins It s up to the patient to tell us what happened to them Clinic operations center on meeting the doctor s needs A team of professionals coordinates all patients care We measure our quality and make rapid changes to improve it Acute care is delivered by open-access and nonvisit contacts We track tests and consultations, and follow-up after ED and hospital visits A multidisciplinary team works at the top of our licenses/training to serve patients 16

Evidence for the PCMH Just Keeps Growing 17

PCMH Pilot Outcomes Pilot Incentives Hospitalization Reduction ED Visit Reduction Total Savings (per patient) Colorado Medical Home for Children Community Care of North Carolina P4P 18% $215-$1,129 PMPM payment 40% 16% $516 Geisinger (Proven Health Navigator) P4P PMPM payment Shared savings 18% $500 Group Health Cooperative PMPM payment 16% 29% $10 PMPM Intermountain Health Care (Care Management Plus) P4P 4.8-19.2% 0.7-3% $640-$1,650 MeritCare Health System & BCBS of ND PMPM payment Shared savings 6% 24% $530 Driving Quality Gains and Cost Savings Through Adoption of Medical Homes, Health Affairs 2010 18 $119K savings/pcp

Patient-Centered Care = Decreased Health Care Utilization 509 adult patients, 1 year study Davis Observation Codes measure patient-centeredness Controlled for sex, age, education, income, self-reported health status, obesity, alcohol abuse, & smoking Patient-centeredness above median associated with: ~ Decreased visits for specialty care ~ Decreased hospitalizations ~ Decreased laboratory & diagnostic tests ~ Decreased total charges 34% ($1,435 vs. $948) Bertakis et al., JABFM, May-June, 2011 19

TransforMed Small Practice Results 2-year outcomes data 36 unrelated, independent practices Improved Finances ~ Practice revenue 11% increase ~ Physician salaries 14% increase ~ These results are without payment reform Improved Satisfaction ~ Physician satisfaction 58% increase ~ Staff satisfaction 66% increase Quality ~ One year data indicates that independent practices can improve quality while lowering costs consistent with results from large, integrated systems 20

PCMH Pilot Outcomes Physicians & Staff Happier staff Happier physicians Increased revenue Increased take-home pay in today s payment environment Team-based care Relatively rapid returns from transformation Increased standardization of care Patients Improved satisfaction Improved preventive care Improved quality measures Reduced ED utilization Reduced readmissions Reduced hospitalizations Longer team-based appointments Enhanced patient communication Reduced per capita cost for certain chronic conditions 21

Comprehensive Primary Care Initiative (October, 2011) 5-7 Regional markets ~ 75 primary care practices in each market ~ 200 Medicare patients/practice ~ EHR or registry; preference given to EHR MU Stage 1 Public- & private-payer partnership ~ 60% practices revenue generated from participating payers ~ letter of intent from payers by November 15 Medicare/Medicaid payment reform for primary care ~ Traditional fee-for-service payments ~ Risk adjusted care coordination PMPM fee average $20 (range $8-$40) reduces to average $15 in years 3 & 4 ~ Shared savings increased reliance in years 3 & 4 Operational Summer 2012 CMS has authority to expand to across the country if the initiative is shown to improve quality & lower costs 22

Path to Clinical Integration & Accountabilty 23

PCMH. Then what? What is missing? 24

Triple Aim Improved care for individuals patient experience Improved health for populations Reduced cost 25

PPACA Implications for Physicians Improved access ~ Include teams of non-physicians ~ Engage & monitor patients at home Incentives to change clinical practice ~ Exceptional patient experience ~ Shared clinical goals ~ Shared decision making ~ Proactively manage preventive care ~ Expand use of EHRs ~ Collaboration with hospitals dramatically reduce readmissions ~ Patient-centered outcomes research to tailor care Removing barriers ~ Administrative simplification 26 Annals of Internal Medicine, August 23, 2010 Robert Kocher, MD; Ezekiel Emanuel, MD; Nancy-Ann DeParle, JD

Evolution of Care All Physicians Team-based care Focus on the top of license, training & interest Improved communication patient engagement Clinical integration Patient engagement including those who need encouragement/incentive to engage Patient-centered aligned incentives outcomes, quality, cost Population management 27 External accountability outcomes, quality, cost Payment reform

Clinical Integration Accountable Care What is still missing?

Payment Reform will Drive Clinical Integration Today Today Pilots Today 2012 Pilots 2012 Pilots Source: The Advisory Board, 2010 29 Clinical Integration

New Bundled Payment Initiative August 23, 2011 Model 1 Model 2 Model 3 Model 4 Services Covered in Bundle Payment Hospital & physician services during hospitalization only Hospital, physician, & other providers during hospitalization & in post-acute discharge phase (includes lab & DME) Hospital, physician, & other providers during post-acute discharge phase only (includes lab & DME) Prospective bundled payment to hospital for hospital, physician, & other clinician services during hospitalization CMS Center for Innovation authorized by the Affordable Care Act Goal Better health, better care, lower cost Begins in 2012 Definition of episode of care to be defined 30

Medicare Shared Savings ACO 31

Clinical Integration Clinical Integration is NOT Physician employment A return to capitation of the 80s Electronic health records IPA/PHO messenger contract model Gimmick to bypass anti-trust law Program led by the hospital Clinical Integration is A network of physicians working in collaboration usually with a hospital A program of physician-led initiatives to improve the quality and efficiency of patient care. ~ Strong management and health information technology support. Legal basis for collective negotiation by independent physicians on the basis of improved clinical outcomes and efficiencies. Advisory Board, 2010 32

Essential Elements for CI/ACO Physician commitment & leadership ~ Governance ~ PCMH ~ senior-level, full-time medical director ~ Culture of teamwork & shared commitment Financial resources ~ CMS estimate - $1.8 million to start ~ AHA-sponsored study - $11.6 - $26.1 million to start Clinical guidelines & standardized care across the continuum of care Data collection & analysis performance measurement Population management ~ Early identification of high-risk individuals Patient engagement ~ Proactive interactions Payment reform ~ Aligned financial incentives

Capitation vs. ACO Economics Management Environment Capitation Era Discounts Withholds Lower utilization Prevention Patients enroll into a gatekeeper model Booming economy Limited informatics ACO - Clinical Integration Contracts at current price Incentives Appropriate utilization Chronic disease management Attribution Relationships then care coordination Recession Robust informatics 34

Revised - Medicare Shared Savings ACO - 1 Term Organization Physiciandirected Proposed 3 years, participation voluntary, April 1 & July 1, 2012 start dates Separate legal entity, 75% of Board must be providers, 1 board member must represent Medicare beneficiaries Full-time medical director, physician-directed QA & PI committee Antitrust Safety zone below 30% market share, mandatory review above 50% Increased flexibility for rural hospitals & physicians Fraud & Abuse Size Patient Assignment 65 Quality measures minimal attainment levels after year #1 Waiver for shared savings distributions Minimum 5,000 lives, primary care coverage Assigned retrospectively at the end of each year based upon plurality of primary care services; patients have freedom of choice to have services performed anywhere Preliminary/prospective assignment with quarterly updates Patient/Caregiver experience 7 7 (CAHPS Survey) Care coordination 16 6 Patient safety 2 Preventive measures 9 8 At-risk/Frail elderly 31 12 Reduced to 33 quality measures EHR Meaningful Use requirement waived

Revised - Medicare Shared Savings ACO - 2 One-sided model (first 2 years then twosided) Two-sided model (all 3 years) Processes & strategy plans Benchmark calculation Marketing Proposed Savings threshold 3.9% (5,000 pts) 2% (50,000 pts) first dollar share in savings above threshold Share 50% of savings above threshold up to 7.5% maximum savings threshold Downside risk after year 2 removed 25% withhold on shared savings removed Savings threshold 2% - share in savings from first dollar once threshold is reached Share 60% of savings up to a 10% maximum savings threshold If loss above 2% threshold pay 40% (1 minus share rate) back to CMS up to a cap (5%, 7.5%, 10% - years 1, 2, 3) 25% withhold on shared savings removed Promote evidence-based medicine Patient engagement Report internally on quality & cost metrics Coordinate care 3-year lookback then updated annually Includes Indirect Graduate Medical Education (IME) - Removed Includes Disproportionate Share Hospital (DSH) payments - Removed Prior approval by CMS of all patient marketing materials Revised to file and use procedure as currently allowed for Medicare Advantage Plans

Current Delivery Systems with ACO Potential

High-Level Definitions Patient-Centered Medical Home (PCMH) ~ Model of primary care high performing practice ~ Based on the Joint Principles of the PCMH ~ Key elements accessibility, comprehensiveness, coordination of care, continuity of care, team work, population management (practice level) Accountable Care Organization (ACO) subset of Clinical Integration ~ Local accountability for a defined population quality, access, cost, patient satisfaction ~ Aligned incentives across physicians, hospitals, other clinicians & providers of health care ~ Applies the Joint Principles of the PCMH across an entire system of care ~ Requires clinical integration (Advisory Board Definition) - Network of physicians working in collaboration - Physician-led initiatives to improve the quality & efficiency of care. Strong management and health information technology support. - Legal basis for collective negotiation by independent physicians on basis of improved clinical outcomes & efficiencies. 38

The best way to predict the future is to create it Peter Drucker 39

Thank you!! Ken Bertka, MD, FAAFP bertka@mindspring.com Cell: 419-346-8719