The Nuts and Bolts of Arkansas Health Care: Crafting a New System

1. The Nuts and Bolts of Arkansas Health Care:Crafting a New System Joseph W. Thompson, MD, MPH Arkansas Surgeon General Director, AR Center for Health Improvement

2. Healthcare Financing in Transition • 1928 Penicillin discovered • 1944 first patient treated • 1941 WWII Wage controls / Employers’ response • 1957 Hill Burton Act stimulates hospitals • 1965 Medicare / Medicaid established • 1973 Federal HMO Act • 1990s Employer / Medicaid HMO expansions • 1997 State Children’s Health Insurance Program • 2003 Medicare Modernization Act • 2011 Patient Protection and Affordable Care Act

3. Changing Cost Allocations for Arkansas Families’ Annual Insurance Premiums $11,816 34%* 27% 29% 66%* $6,355 68% 71% Source: AHRQ, Medical Expenditure Panel Survey (2000-2010 Tables of private-sector data by firm size and state (Table II.D.1) and II.D.2). Available at www.meps.ahrq.gov/mepsweb/data_stats/quick_tables_search.jsp?component=2&subcomponent=2.

4. Arkansas Uninsured By County (19-64 years of age) U.S. Census Bureau. 2010 health insurance coverage status for counties and states: Interactive tables. Small Area Health Insurance Estimates Web site. http://www.census.gov/did/www/sahie/data/interactive/. Published 2012. Accessed January 2, 2013.

5. Current Health Insurance Distribution Private Insurance Medicare Currently Uninsured: ~550,000 ARKids First B Medicaid for Pregnant Women Medicaid ARKids First A Medicaid Disability* Medicaid—Extremely low-income parents*

6. New Health Insurance Distribution Private Insurance Medicare Sliding Scale Subsidies for Private Insurance through the Exchange (~150,000-200,000 newly insured) Private Insurance/ Medicaid ARKids First B Medicaid Expansion (~250,000 newly insured) Medicaid ARKids First A Medicaid Disability* Medicaid—Extremely low-income parents*

7. Overall State Vision • Improving the health of the population • Enhancing the patient experience of care • Reducing or controlling the cost of care Objective • Episode-based • care delivery • Acute conditions, defined procedures • Population-based • care delivery • Medical Homes • Health Homes Care delivery strategies Enablinginitiatives Payment innovation Health care workforce development Consumer engagement and personal responsibility Health information technology adoption Expanded coverage for health care services

8. Title Unit of measure 1 Footnote SOURCE: Source TRACKER Arkansas Health System Improvement Agency Organizational Structure Unit of measure State Leadership Governor Mike Beebe State Leadership Implementation & Coordination Governor’s Policy Staff & Dr. Joe Thompson ACHI Implementation Workforce Chancellor Dan Rahn & Dr. Paul Halverson Payment & Quality Improvement Mr. John Selig Health Information Technology Mr. Ray Scott Insurance Exchange Commissioner Jay Bradford Workgroup Participation UAMS ADH & ACHI Higher Ed (2- & 4 yr) Steering Group: DHS, ADH, BCBS, QualChoice, United, ACHI AFMC UAMS DIS Medicaid AID (Exchange) DHS (Mcd eligibility & expansion) EBD

10. Goals of Workforce Strategic Planning • Support the implementation of and transition to team-based care that is patient-centered, coordinated, evidence-based, and efficient • Enhance and increase the use of health information technology (HIT) • Increase the supply of and improve the equitable distribution of primary care providers • Adopt new financing, payment, and reimbursement policies and mechanisms

12. Health Information Technology • Over 3,000 primary care providers and hospitals committed to EHRs adoption and have received • nearly $140M(through Feb 2013) • State Health Alliance for Records Exchange (SHARE) Currently more than 2,300 secure message users from about 271 health care locations in Arkansas • U.S. Department of Commerce Broadband Technology Opportunities Program ($128M)

14. Goals • Reward high quality care and outcomes • Ensure clinical effectiveness • Promote early intervention and coordination to reduce complications and associated costs • Encourage referral to higher-value downstream providers

15. Payers recognize the value of working together to improve our system, with close involvement from other stakeholders Coordinated multi-payer leadership… • Creates consistent incentives and standardized reporting rules and tools • Enables change in practice patterns as program applies to many patients • Generates enough scale to justify investments in new infrastructure and operational models • Helps motivate patients to play a larger role in their health and health care

16. Populations serve require care in three domains Care/payment models Patient populations(examples) Prevention,screening,chronic care • Healthy, at-risk • Chronic, e.g., • CHF • Diabetes Patient-centered medical homes Focused episodes • Acute medical, e.g., • CHF • Pneumonia • Acute procedural, e.g., • Hip replacement Acute andpost-acutecare • Developmental disabilities • Long-term care • Behavioral health (mental illness / substance abuse) Health homes Supportivecare

17. Patient Centered Medical Homes

18. Why primary care and PCMH? • Most medical costs occur outside of the office of a primary care • physician (PCP) , but PCPs can guide many decisions that impact • those broader costs, improving cost efficiency and care quality • Ancillaries (e.g., outpatient imaging, labs) • Specialists • PCP • Patients & families • Community supports • Hospitals, ERs

19. Medical Home: Comprehensive Primary Care Initiative • 69 primary care practices • Receiving FFS + enhanced payments • Improving patient experience: care coordination, access, communication • Practices responsible for ALL patients • Quality, cost and transformation milestones will be evaluated • PMPM began October ‘12 • Medicare $8-40; risk-adjusted • Medicaid +$3 kids; +$7 adults • Private ~$5 • Must meet targets • Quality, performance, transformation • Shared savings model year 2-4 • Expansion in Summer 2013 http://innovations.cms.gov/initiatives/Comprehensive-Primary-Care-Initiative/index.html

21. Spending Breakdown for CHF 30-day Episodes with and without a Readmission N=4,992 CHF episodes Avg Total Episode Cost = $23,511 Readmits 24% 76% No readmits Avg Total Episode Cost = $9,440 Source: Medicare FFS claims data, 2010

23. Episode Strategies • for Care

24. 2012: episode-based payment was launched or 5 episodes, statewide Accountableprovider Most relevantpayor types Key sources of value Pregnancy and delivery Eliminating unnecessary inductions, C-sections, and extended length of stay in the hospital • Medicaid* • Commercial* Deliveringphysician ADHD • Medicaid* • Commercial Matching care to guidelines for pharmacotherapy vs. counseling Treatingphysician orpsychologist Hip and kneereplacement Orthopedicsurgeon Readmission and post-acute stays, cost of implant • Medicare • Commercial* • Medicaid* Acute/post-acuteheart failure • Medicare • Commercial* • Medicaid* Encouraging hospitals to extend reach beyond point of discharge Hospital Upper respiratory infections • Medicaid* • Commercial Diagnosingphysician Eliminating inappropriate use of antibiotics and radiology * Implemented or in process; others to follow SOURCE: Arkansas Payment Improvement Initiative

25. 2013: Wave 2 Episodes launch • Wave 2a (April 2013) • Tonsillectomy • Cholecystectomy • Colonoscopy • Oppositional Defiant Disorder (ODD) • Wave 2b to follow (Fall 2013) • PCI & CABG • COPD exacerbation/Asthma exacerbation • Neonatal Care • ODD / ADHD

26. APII scope and pace of rollout 2014 2013 • 50+ episodes, >40% of spend • All primary care medical homes, >80% of Arkansans • Reports and payment affecting >80% of providers • Health informationexchange 2012 • 15-20 episodes, >20% of spend • Pediatric medical homes • Reports and payment to >5,000 providers • Multi-payor care model for care coordination • EMR connectivity to multi-payor provider portal • 5 episodes, statewide, affecting 5-10% of spend for Medicaid, BCBS • 69 medical homes for ~10% of Arkansans: MCaid, MCare, BCBS • Reports and risk affecting >2,000 hospitals, physicians, other professionals • Multi-payor portal for providers to enter dataand receive reports Financial goal: 10% reduction in spend by 2017, followed by sustained reduction in trend* *Reflects goal publicly communicated by Arkansas Medicaid; similar success case for BCBS

28. Arkansas Health Benefits Exchange • Arkansas with potential of 450,000 newly covered lives • Pursuing Federal-state partnership model • Opportunity to strengthen competitive market • Majority of expansion in rural underserved areas • Plans offered by private insurance companies

29. New Health Insurance Distribution Private Insurance Medicare Sliding Scale Subsidies for Private Insurance through the Exchange (~150,000-200,000 newly insured) Private Insurance/ Medicaid ARKids First B Medicaid Expansion (~250,000 newly insured) Medicaid ARKids First A Medicaid Disability* Medicaid—Extremely low-income parents*

30. Progress on Private Insurance Exchange • Exchange determines basic benefit package, plan participation, consumer support • Arkansas implementing state-federal partnership model • Major reforms for health insurance market • Upcoming steps: • Finalization of basic benefit package • Private plans submit bids (late Spring) • Outreach and education (Summer) • Enrollment (October 2013) • Coverage (1/1/2014)

31. Arkansas’s Private Option • Utilize health insurance exchange to purchase insurance coverage for those <138% FPL • Qualified high-silver policies offered to all • Federal funding via Affordable Care Act starting January, 2014 • Essential health benefit plan with private provider payment rates • Medically frail, dual eligible and children on Medicaid excluded • Some existing Medicaid beneficiaries transitioned

32. Arkansas’s Private Option • Plan doubles the size of the state exchange; shrinks share of Medicaid • Less disruption in services for people who would move between Medicaid and private insurance because of change in income • Reduce size of Medicaid program by transitioning pregnant women, medically needy, ARHealthNetworks, and others to Exchange while still ensuring coverage • Entice more insurance companies to participate in Exchange • Boost state revenues above original estimate with more federal dollars flowing into state’s health care system • Eliminates employer exposure to $25-38M per year in penalties

33. How does expansion help the state? • One-time opportunity to strive for complete coverage and “catch-up” to richer states through healthcare coverage • Address unmet healthcare needs of citizens • Fiscally advantageous • 100% federally funded with opt-out provision • Takes over for existing state patchwork coverage • Relieves state from financing uncompensated care • Assists county and municipal governments • Estimated $1B in new funding stimulates economy

34. RAND Report: The Economic Impact of the ACA on Arkansas • Unbiased, external assessment • Model of full implementation of ACA • subsidies toward the purchase of private insurance through the health insurance exchange • Medicaid expansion • Results • 400,000 newly insured Arkansans • 2,300 Lives saved annually • Net increase on state GDP of $550 million annually • 6,200 jobs created

35. www.ACHI.net