Monica E. Oss, Chief Executive Officer, OPEN MINDS CBHC Annual Conference September 29, 2012 / 10:00 am

Why the demand for coordinated care? What factors are shaping emerging models? What are the emerging coordinated care models? What management practices are needed to assure both good performance and financial sustainability? 2

I. Why The Demand For Coordinated Care? What Factors Are Shaping Emerging Models? 3

1. Federal and state deficits 2. Insurers and managed care plans under price pressure 3. Consumers paying more out of pocket 4. Rising cost per person aging population, longer life expectancies, new technologies 5. High proportion of population uninsured and uncertain future about implementation of reform 6. All easy cost savings have been made Payer focus is moving to the costs of care for consumers using largest proportion of resources. Driving interest in coordinated care 4

5% of U.S. population account for half (49%) of health care spending $11,487 per person 50% of population account for only 3% of spending $664 per person 5

Services to support chronic illnesses contribute to 75% of the $2 trillion in U.S. annual spending Patients with comorbid chronic conditions costs 7x as much as patients with one chronic condition Nine Highest-Cost Chronic Conditions 1. Arthritis 2. Cancer 3. Chronic pain 4. Dementia 5. Depression 6. Diabetes 7. Schizophrenia 8. Post traumatic conditions 9. Vision/hearing loss 6

Condition No Behavioral Health Disorder With Mental Illness And/Or Addiction Asthma/COPD $8,000 $24,598 Congestive Heart Failure Coronary Heart Disease $9,488 $24,927 $8,788 $24,443 Diabetes $9,498 $36,730 Hypertension $15,691 $35,840 Total private insurer medical costs for children with autism is 3 to 7 times greater than for those children without autism... Rhonda Robinson-Beale, M.D., Optum 7

Multiple specialists (and multiple prescriptions) Consumers with 5 or more chronic conditions see 16 physicians a year with 37 office visits Fill 50 prescriptions per year Poor follow-up from ER visits and hospitalizations 20% of Medicare hospitalizations are followed by readmission within 30 days Among <65 Medicaid patients, 10% were readmitted within 30 days Readmissions add $15 billion in annual Medicaid and Medicare payments 8

Care coordination the key element in integrated models Integration of Primary Care & Chronic Disease Management Integration of Primary Care & Behavioral Health Integration of Primary Care & Behavioral Health Coordination of behavioral health services and primary care services to improve consumer services and outcomes Integration of Primary Care & Chronic Disease Management Coordination of services to manage and address multiple chronic disease states within or parallel to primary care 9

100% 97% Percent of Total Expenditures 90% 80% 70% 60% 50% 40% 30% 20% 10% 22% 49% 64% 80% 3% 0% Top 1% Top 5% Top 10% Top 20% Top 50% Bottom 50% 10

Management via ACOs, medical homes, and primary care Specialist role is secondary Focus on prevention and wellness Consumer self-care and consumer convenience is key Web presence (optimization, reputation, etc.) critical for consumer referrals Health information exchange a requirement Primary care relationships with clearly defined specialty service Consumer experience (and preference) critical Web presence key referral mechanism Health information exchange capabilities 11

Coordination of medical, behavioral, and social service needs by specialty group within larger system Health homes Waiver-based HCB programs PACE programs Specialty care management programs Assumption of performance risk (with or without financial risk) Cross-specialty and cross-system care coordination capability EHR system and HIE with real-time care management metrics Performance-based contracting and risk-based contracting capabilities 12

More P4P Less FFS New Tech For Treatment & Service Delivery New Financing & Service Delivery Models 13

More Organizations Are Rating Performance In Health Care CMS Quality Initiatives National Committee for Quality Assurance (NCQA) National Quality Forum (NQF) Substance Abuse and Mental Health Services Administration (SAMHSA) The Joint Commission Center For Excellence in Assisted Living Care management organizations (HMOs, MCOs, PPOs, ACOs, etc.) Consumer-driven open-source rating organizations 14

FFS Financing Beyond FFS Financing Payer (or MCO) maintains risk for unit cost and quantity of services used Payer (or MCO) contracts with provider organizations to deliver services to a population for a fixed amount of dollars Consumers request services Consumers request services MCO approves service Provider organizations deliver services and are reimbursed based on volume Provider organizations determine type and amount of service, delivers service, and manage pool of dollars 19

New Functionality In Telecommunications Synergistic Environmental Factors In Current Market New Health Data Systems & Informatics Emerging Developments in Neuroscience 21

Emerging Developments in Neuroscience Ability to monitor brain functionality and changes Discovery of possibility of brain cell regeneration Changing theory of brain development and maturity longer and later Better understanding of brain chemistry Identification of genetic and epigenetic factors in behavioral and cognitive disability 22

New Functionality In Telecommunications Telehealth Telecare & Assistive Technology ehealth Smart home Technology Techassisted cognitive retraining Companion robots Remote monitoring systems Remote vital sign sensors Wearable wireless devices mhealth Smartphone applications Text message alerts Telehealth Real-time consultation Remote audio/video therapy 23

New Health Data Systems & Informatics EMRs & EMR Data (NHIN of the future) Clinical Data From New Diagnostics & Neurotech Bioconnectivity Single Real-Time Clinical, Admin, & Cost Data Set Clinical Metrics From Telehealth Connection of & Access To All Data Sets Via Web Tools -- For Consumers, Professionals, Health Systems 24

Electronic health recordkeeping systems Computer-assisted treatment planning and clinical expert systems Predictive clinical analytics Remote monitoring and smart homes Web-based consumer interaction and consumer selfmanagement Telehealth, virtual and alternate reality technologies, and webbased treatment management Neurotech devices and computer-based cognitive retraining tools New pharmacological delivery systems - smart drug delivery systems: patches, injectibles, microchips, etc. New diagnostics scans, biologic testing, web-based assessments, etc. Integrated performance metrics monitoring clinical, HR, financial, marketing 25

Telehealth and virtual consultation Participation in health information exchange programs New Technologies Allow Greater (& More Effective) Integration & Coordination Of Care Interoperable electronic recordkeeping systems Smartphone and other technologies for consumer-directed disease management 26

Integrated care is a model of health care delivery that engages people in the full range of physical, behavioral, preventive and therapeutic services to support a healthy life. In an integrated care setting, behavioral health and medical providers work together to coordinate treatment and follow-up of a person s health care. 27

II. What Are The Strategies To Assure Good Performance & Financial Sustainability? 28

1. Payers and consumers want coordinated care models for different reasons 2. Coordinated care models if done well can meet the objectives of both payers and consumers 3. Initial evaluation data on coordinated care models is positive but not definitive Despite this, the sustainability of coordinated care models is questionable. The question how to support the performance of these new models and make them financially sustainable? 29

Treatment of depression in primary care setting Standardized assessment questionnaire for PCPs Clinical care manager for patient education and psychiatrist for team consult 4,862 depression screenings (PHQ9) at 80 clinics over a three year period from March 2008-2011 Consumer Outcomes Depression remission Depression response Before 30% of patients after 6 months 40% of patients after 6 months After 53% of patients after 12 months 70% of patients after 12 months 30

22 clinical locations in 15 Tennessee counties Sites including primary care clinics, schools and Head Start Centers Behavioral health consultant (BHC) embedded, as full -time member of the primary care team Psychiatrist is available by telephone for consults Primary Care Provider (PCP) hands off the patient to the BHC for assessment or intervention. System Performance 28% decrease in medical utilization for Medicaid patients Medicaid patients 20% decrease in medical utilization for commercially insured patients 27% decrease in psychiatry visits 34% decrease in psychotherapy sessions 48% decrease in mobile crisis team encounters

Sources of Funding For Integrated Care Programs 32

Funding Obstacles For Sustainability Of Integrated Care Programs 33

1. Define the coordinated care business model 2. Develop a financial sustainability plan for the business model 3. Establish key performance metrics to track both clinical performance and financial performance 4. Adopt metrics-based management practices to manage to the metrics and assure ongoing success 34

Structural Financing Model Service Delivery Model 35

Structural Financing Options ACO partner (FFS P4P Or risk-based) Specialty ACO provider or partner Medical home provider Medical home partner Health home provider Health home partner Case rate-reimbursed specialty program (by population) High-performing network provider and/or Center Of Excellence Network provider Reimbursement Options FFS, FFS with P4P, risk-based FFS, FFS with P4P, risk-based FFS, FFS with P4P, risk-based FFS, FFS with P4P FFS, FFS with P4P, risk-based FFS, FFS with P4P Case rate, episodic payment, etc. FFS, FFS with P4P, case rate FFS 36

Characteristic Services Delivered Delivery System Elements Service unit by professional type Reimbursement $ reimbursement per service unit (FFS, within case rate, etc.) Service Volume Referral generation (if FFS) Utilization of population (if case rate or capitation) Location Physically co-located Tech-enabled co-location Coordination between separate sites Organizational Affiliations Information System Platform Single legal organization Co-owned legal organization Exclusive contractual relationship Contractual relationship Same EHR system EHR connected via HIE with integrated data EHR connected via HIE with non-integrated data 37

Conduct a breakeven analysis Develop profit/loss projections Business model to imbed in organizational strategic plan, operating plans, and final budget 38

Breakeven analysis answers question at what level of revenue will the program break even? Breakeven analysis is a supply side (i.e. costs only) analysis does not address revenue side of the equation Construct breakeven analysis for the specific coordinated care business model both with and without organizational overhead Key breakeven analysis factors: Annual yield/productivity of service units (by type) per direct service (billable) clinical team member Average annual total compensation cost per direct service (billable) clinical team member Assumptions in breakeven analysis: Constant fixed costs Average variable costs with assumptions Relationship of revenue to variable expense in assumptions Factors affecting assumption of yield/productivity of team members 39

Financial statement summarizing revenues (with associated costs and expenses) incurred during a specific period of time Illustrate the ability of the program to generate a margin by increasing revenue and reducing costs Revenue projections and assumptions are key element of P/L projections Typically, revenue projections in health and human services are created by payer/contract All services provided (and paid) in integrated care setting (assessment codes, etc.) Address same-day billing restrictions of specific payers Number of annual unique consumers by payer Number of annual service units (by type) per consumer by payer Negotiated contract rate for each service unit by type and by payer Billing and collections yield (% of total units billed that are collected) by payer If P4P bonuses or penalties, the projected performance on each P4P performance measure 42

Key issues include: Relationship of new program models to overall service portfolio Allocation of organizational overhead by program and/or payer contract Allocation of organizational marketing expenses Business model should provide executive team with: Capital investment requirements Cash needs for start-up Cash needed until breakeven point achieved 45

Having a plan is not enough tracking and managing performance of plan is key... Whatever gets measured... Gets attention Gets done If you don t measure it, you can t manage it 47

Assess timing of the market changes Facilitate operational improvement Assure sound financial management Make strategic course corrections 48

Routine Operational & Management Reports Key Performance Indicators Benchmarking & Performance Targets Management Dashboards & Alerts 49

Key performance indicators (KPIs) are financial and non-financial measures used by the management team to ensure that the agency is moving forward in achieving its strategic and organizational objectives Driven by structured data from the information system, the KPIs represent those data points that measure the health of your organization Indicator utility: Lagging indicator Coincident indicator Leading indicator KPIs are typically tied to an organization's strategy using concepts or techniques such as the Balanced Scorecard 50

The Balanced Scorecard Concept Financial "To succeed financially, how should we appear to our shareholders?" Objectives Measures Targets Initiatives Customer "To achieve our vision, how should we appear to our customers?" Objectives Measures Targets Initiatives Vision & Strategy Internal Business Processes "To satisfy our shareholders and customers, what business processes must we excel at?" Objectives Measures Targets Initiatives Growth & Innovation "To achieve our vision, how will we sustain our ability to change and improve? Objectives Measures Targets Initiatives 51

Use benchmarks and performance targets to challenge and drive continuous improvement in service quality and operations Benchmark benefits To compare with other organizations To develop cross-industry comparisons To develop points of reference or standards of practice To make best-in-class determinations To develop best practices Beware the benchmarking mediocrity trap!! 53

Dashboard -- A computer interface that organizes key performance indicators in an easy to read format, displaying the information that executives need to run an organization 55

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Organization Strategic Plan & Objectives Organization-Wide Performance Indicators Operating Unit Plan & Objectives Operating Unit Performance Indicators Program Plan & Objectives Program-Specific Performance Indicators Overall Agency Performance 58

Once you have the plan and the tools, it s all about execution Achieving required operational excellence for operating in risk-based environment Managing to the metrics assumptions in the strategy Discipline to achieve those metrics Which brings us to metrics-based management 61

Metrics-based management is a performance management system that relies on three components, each of which must be quantitatively and qualitatively expressed. Current State: Baseline measures of your organization s current performance Desired State: Where your organization wants to be regarding key priorities Bridging the Gaps: A definitive plan for how you'll move your organization to achieve the desired performance 62

Measure the metric Launch the improvement Learning about markets, customers, competitors, and processes Analyze the metrics against budget and benchmarks Design and develop the improvement Identify improvement opportunities 63

Competitive Advantage Optimization Predictive Modeling Forecasting / Extrapolation Statistical Analysis Alerts Query / Drill Down Ad hoc reports Standard Reports What s the best that can happen? What will happen next? What if these trends continue? Why is this happening? What actions are needed? Where exactly is the problem? How many, how often, where? What happened? Degree of Intelligence

Executive team and board interaction Business unit manager accountabilities Supervisory positions and their reports 65

Cultural shift toward accountability for performance metrics executive team, program managers, and supervisors Role of the manager is to ensure the targets are met planning, human capital, processes, policies, etc. Metrics should be integral part of individual performance evaluations and compensation In risk-base environments, managing to the metrics is essential to success 66

Mission Focus & Living Values Dynamic & Engaged Leadership Moving From Strategy To Future Success Culture of Responsibility & Accountability Building Entrepreneurship 67

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