Reforming Health Care with Savings to Pay for Better Health

Reforming Health Care with Savings to Pay for Better Health Mark McClellan, MD PhD Director, Initiative on Health Care Value and Innovation Senior Fellow, Economic Studies October 2014 National Forum on Hospitals & Population Health: Building Partnerships to Improve Health

Recommendations from the RWJF Commission to Build a Healthier America 1. 1. Invest in the foundation of lifelong physical and mental well being in our youngest children 2. 2. Create communities that foster health promoting behaviors 1. 3. Broaden health care to promote health outside of the medical system

Why Don t We Just Spend More on Programs That Improve Population Health?

State Expenditures on Medicaid and K-12 education Source: NASBO State Expenditure Reports

Total Health-Service and Social-Service Expenditures for OECD Countries Source: Bradley et al BMJ Qual Saf 2011

Increased Support for Improving Health Through Accountable Care Payment Reforms Accountable care = provider accountability for quality, outcomes, and costs for a defined population of patients Payments tied to measurably better care and lower costs, not just volume and intensity of services Accountable Care Organizations (ACOs) Medicare Physician Group Practice Demonstration, Regional Initiatives Private Health Insurer ACOs Medicare ACOs: Medicare Shared Savings Program, Pioneer ACOs Medicaid ACOs and Related Reforms Other payment reforms that can include accountability for better results and lower costs: Medical homes Bundled payments Community care organizations

Health Care Financing Reform: Volume to Value Timely and consistent methods for sharing data and analytics to improve performance Meaningful, consistent performance measures derived from care data Rapid evaluation of reforms and expansion of successful reforms Medical Homes for Primary Care Supports care coord, prevention, chronic disease mgmt, and other key primary care activities Rewards reductions in primary care related cost trends Bundled Payments for Specialty/Intensive Care and Post Acute Care Combine payments across providers involved in specialty care Rewards greater efficiency and quality within the episode of care ACO/Shared Accountability Payments Reimburses population level improvements in quality and overall per capita costs Encourages coordination across the continuum of care Can reinforce/ support piecewise accountable care reforms

Why Don t Health Care Financing Reforms Focus More on Population Health? Health care financing not closely tied to population health improvement Paying for health care based on volume/intensity rather than health impact (i.e., fee for service and medical inputs not health outputs) Payment reforms toward value not volume have emphasized improvements in value measurable in short term (i.e., months to a few years) Limited evidence of real world impact of specific population health interventions integrated into health care delivery Long time frame, many intermediating factors affect improvement in population health Many risk factors are hard to modify, especially within traditional health care system Difficult to replicating programs that improve population health across different institutional, cultural, and geographic settings Limited experience with effective integration of medical and communitybased services But interest, activity, and experience are growing

Shifting Toward Population Health Improvement Through Medicaid Accountable Care State Accountable Care Activity. National Academy for State Health Policy

Shifting Toward Population Health Improvement Greatest opportunities involve lower income/ vulnerable populations (Medicaid, dual eligibles, uninsured/high risk) Health care organizations Regional collaborations Actionable population health indicators: payments based not only on patient experience, preventive care, care coordination, and chronic disease outcomes but also on measurable risk factors for adverse longer term health outcomes, such as: Adults: cardiovascular health index Children: school participation and completion (e.g., attendance, kindergarten readiness) Broader measures of costs of care to encourage shifts toward more efficient overall service delivery: Acute care Long term care

Shifting Toward Population Health Improvement (cont d) Actionable population health measures can be used with accountable care reforms that shift from FFS toward episode or person level payments Pilots can begin providing more flexibility for delivering targeted medical services with additional types of support services that can better influence health outcomes Behavioral health services Community based health services Social services Other community services Evaluation and revision: develop expansion plan for successful payment reforms that link funding streams and demonstrate better results

Community-Based Accountable Care: Colorado Regional Care Collaboratives (RCCs) Medicaid beneficiaries belong to a Regional Care Collaborative (7 in the state); 352,236 members as of 6/2013, 47% of Medicaid clients After its 2 nd year of operations, FY 2012 2013, indicates $44 million in gross savings or cost avoidance (in FY 2011 12, gross program savings estimated to be between $9 $20 million) FFS reimbursement but RCCs receive incentive payments based on key indicators Program Performance (2012 2013): 15 20% reduction for hospital readmissions & 25% reduction in high cost imaging services relative to comparison population prior to program implementation 22% reduction in hospital admissions among ACC members with COPD who have been enrolled in the program six months or more, compared to those not enrolled; Lower rates of exacerbated chronic health conditions such as hypertension (5%) and diabetes (9%) relative to clients not enrolled in the ACC Program Well Child Visits will be added as a key performance indicator for FY 2013 2014

Community-Based Accountable Care: Minnesota Integrated Health Partnerships (ICP) Demonstration ACO model in Medicaid Program 2013: 6 participating sites (100,000 beneficiaries) 1 st year results: Saved $10.5 million 3 providers (Children s Hospitals and Clinics for Minnesota, North Memorial Health Care, and Northwest Metro Alliance) are eligible to share in savings Children s Hospital: every family with complex, high risk is matched with care coordinator; extended evening office hours to facilitate access to primary care North Memorial: high risk patients receive home visits from community paramedics identified through data from DHS Northwest Metro: urgent care sites with evening & weekend hours, pharmacists follow up with patients who haven t picked up their medications for chronic conditions, addressing obesity among children, & establishing case management services for hundreds of patients with complex conditions In 2 nd year, organizations will also share in downside risk 2014: 3 additional participating sites (45,000 beneficiaries)

Community-Based Accountable Care: Minnesota (cont d) Example: Hennepin Health (8,6000 members) 2014 participating site, but launched in 2012 in partnership with 4 Hennepin County entities: Hennepin County Human Services and Public Health Department, Hennepin County Medical Center, Metropolitan Health Plan, NorthPoint Health & Wellness Center (contract through a capitated payment arrangement) Defined as a defined network of health care & social service providers Voluntary risk sharing arrangement among partners Recognizes that what drives health care utilization and influences outcomes is often outside the traditional health care delivery system Financing Model: Alignment of incentives across hospital, outpatient clinics, social services, and public health Receives PMPM capitation payments from MN s DHS Hennepin Health partners have agreed to risk sharing arrangements that shift the remainder of financial risk toward provider partners & dictates how gains & losses will be distributed Margin left at the end of the year will be used in two ways: Direct distributions to individual organizations based on formulas that recognize partner s size and performance measures Reinvestment initiatives to drive further system improvement (e.g. transitional housing units for medically complex homeless populations, vocational services to high cost behavioral health patients, and developing a sobering center for chronic inebriates)

Outcomes (from claims, 2012 vs. 2013): 2.5% increase in primary care visits/1000 9.1% decrease in ED visits/1000 3.2% decrease in inpatient admissions/1000 10.82% increase in patients receiving optimal diabetes care 23.46% increase in patients receiving optimal vascular car 7.55 % increase in patients receiving optimal asthma care

Community-Based Accountable Care: Oregon Medicaid 1115 Waiver, $1.9 billion/5 years 16 regionally defined Coordinated Care Organizations (CCOs) CCO receives a single budget to cover medical and mental health services (and in the future, dental care) that grows at a fixed rate CCOs must achieve a 2% reduction in the rate of growth in per capita Medicaid spending by the end of the program's second year or will face penalty First year results (2012 2013): 11 of 15 CCOs met 100% of improvement targets Decreased ED visits by 17% from 2011 baseline, corresponding cost decreased by 19% Decreased hospitalizations for chronic conditions (27% for chronic heart failure, 32% for COPD, 18% for adult asthma) Increased developmental screening for first 36 months of life by 58% Increased by primary care visits by 11%, increased enrollment in PCMHs by 52% Stayed within budget

Community-Based Accountable Care: New Jersey Features: 3 year demonstration enacted in 2011; final regulations released in May ACO required to be non profit serving a minimum of 5,000 Medicaid beneficiaries within a designated region Must contract with 100% of hospitals, 75% of primary care providers, and 4 mental health providers in the designated area 21 mandatory measures related to health care quality and utilization 6 demonstration measures related to social service utilization that will not be used in gain sharing calculation Participation: 8 communities recently submitted applications: Camden, Trenton, Atlantic City, Newark, New Brunswick/Franklin Township, Paterson, Cumberland County, Gloucester County Covers 11.6% of NJ s Medicaid population Implementation considerations: Medicaid managed care plan participation Broad local collaboration and buy in Execution of specific strategies to improve care and reduce costs

Organization-Based Accountable Care: University Hospitals Rainbow Care Connection (Ohio) Feasible pathway for care improvement and cost reduction Team based care with Physician Extension Team, with integrated behavioral health services and collaboration with community agencies Enhanced use of telehealth services especially for rural patients Comprehensive care coordination programs for complex chronic conditions Enhanced patient/family access to PET to avoid hospital use Use of performance measures to show progress while avoiding undesirable consequences: Improvements on outpatient quality of care measures Improved functional outcomes for children with complex chronic conditions Increased access to provider teams (phone, visits) Reduced ED visits rates, hospital admission rates Reduced trend in cost per child Payment reform linked to delivery reform and impact measurement: Pediatric Medicaid ACO paid through capitation contracts with three Medicaid managed care plans covering 200,000 children (1/3 are Medicaid enrollees) Effectuated by $12.7 million Health Innovation Grant (CMMI) Bears risk for clinical and financial outcomes

Organization-Based Accountable Care: Children s Mercy Pediatric Care Network Initial opportunities for care improvement and cost reduction Uniform medical home/population management support tools Standardized claims, payment systems, UR to reduce admin costs and improve data for payment and delivery reforms Use of performance measures to show progress while avoiding undesirable consequences: Measures of system capabilities for supporting care HEDIS measures: well child care, immunization, appropriate asthma medications ER/hospitalization rate measures Cost per child Payment reform linked to delivery reform and impact measurement: Entered global capitation agreement with Medicaid managed care Shared savings based on case or person level spending reductions and quality improvements, with common structure across payers Partial risk contracting (i.e., moving some payments toward PMPM) Aligning payment reforms with providers outside of Mercy

CMMI State Innovation Model (SIM) Grants Opportunity to test new alignments, payments, incentives Current models being tested focus on total costs of care delivery & improving patient experience, measures of population health that focus on clinical preventive services Recommendations: Include meaningful performance measures related to population health Focus on stepwise, measurable progress on performance measures that can show impact in short term Develop pathway for both care reforms and payment reforms, aiming for a sustainable financing model (i.e., meet Medicaid waiver conditions that Medicaid costs will not be higher) Expect to adjust along the way Source: IOM 2013

Advancing Population Health Through Accountable Care Strengthen Foundations for Health Care Public Health Integration Measures to support delivery improvements and payments for innovative care Process measures from administrative data augmented with supplemental data collection longitudinal outcome emasures from systems to deliver services Learning Network Compare interventions and experiences with other health systems Provide toolkits, guidances & templates, and best practices for states, communities, and health care organizations Identify Priority Populations and Outcomes for Pilot Programs Medicaid Children s health Uninsured/underinsured high risk populations

Advancing Population Health Through Accountable Care (cont d) Implement Financing Reforms to Create Sustainable Business Case SIMs, foundation grant support, in kind contributions may be needed initially but alone they do not provide a sustainable business model Develop a place to land after the initial funding fades: accountable care payment reforms that enable social and population health services to be integrated efficiently and sustainably Continue to Evaluate and Improve Standard measures and benchmarks can reduce implementation and evaluation costs Evaluations will expand evidence base on how to improve outcomes and reduced costs through combining changes in health care delivery with effective financing mechanisms to sustain them