Healthcare Reform & Disruptive Innovation Oxymoron or We Told You So?

Charles Ingoglia, Vice President, Public Policy, National CouncilDale Jarvis, Managing Consultant, Dale Jarvis and Associates Healthcare Reform &Disruptive Innovation Oxymoron or We Told You So?

Last Year at the ACMHA Summit we predicted the following… • Federal Healthcare reform will trigger dramatic changes in how health and behavioral health services are organized and funded • These changes will create a tipping point in how the healthcare needs of persons with serious mental illness and the behavioral healthcare needs of all Americans are addressed

If you read the newspapers and blogs you would think we blew it with our predictions One in Five think the ACA has been Repealed; Another Quarter not Sure KFF Health Tracking Poll, February 2011 3

This Year We’d Like to Suggest the Following… • Change is coming to every corner of the healthcare ecosystem but change does not always equal improvement • The result will be: • True Disruptive Innovations, • Sustaining Innovations, and • Disruptive De-evolution • Depending on which state and which part of the ecosystem you’re in 4

We also Think… • An epic battle is unfolding between centers of power that benefit from a sick care system and • Those that see a competitive advantage in creating a true health care system 5

Diagramming the Epic Battle It’s all about Inverting the Resource Allocation Triangle so that: • Prevention Activities are funded and widely deployed • Primary Care budgets in U.S. are doubled • Mental Health and Substance Use Disorder Servicesare available to all In order to Decrease Demand in the High Cost Specialtyand Acute Care Systems 6

Question 1: Who’s going to win this Epic Battle (e.g. will healthcare reform really change healthcare from a sick care system to a true health care system)? 7

Chuck and Dale’s Thought Process:The U.S. Quality and Cost Problems 110 Preventable Deaths per 100,000 $7,285 Per Capita Health Expenditure 8

Our Prediction... The Winners Will Be… • The American Public and American Business • Because there are more heavyweights being hurt by a sick care system than benefiting and our belief that when “disruptive innovation” gets rolling in an industry, you can slow it down but not stop it 9

Question 2: If healthcare reform results in the shift from a sick care system to a health care system, how will this affect Americans with mental health and substance use conditions and the organizations that serve them? 10

The Two-Part Problem is Closely Linked to a Third Problem • Americans with a Serious Mental Illness die, on the average, at age 53 • The high prevalence combined with high cost for persons with Behavioral Health disorders, directly affect the quality and cost problems 11

Our Prediction… • If the balance of power shifts in the way we predict, this will accelerate: • A growing awareness of the prevalence of MH/SU disorders and the cost of not providing effective treatment and supports, • Combined with parity and the increased risk accompanying near universal coverage for the safety net population, • Combined with the an awareness that: • Behavioral Health is necessary for Health • Prevention is Effective • Treatment Works • People Recover • Resulting in recognition that we cannot achieve the Triple Aim without addressing the health care needs of persons with a SMI and the MH/SU needs of all. • This is already happening throughout the U.S. Triple Aim Better Health for the Population, Better Care for Individuals, Reduced Costs 12

Question 3: What does Disruptive Innovation have to do with all this, especially for the behavioral health community? 13

Let’s Start with the Definition of Disruptive Innovation • Clayton Christensen suggest that problems facing the American health care system mirror nearly every other industry in their early phases. • Products and services in new industries “are so complicated and expensive that only people with a lot of money can afford them and only people with a lot of expertise can provide or use them.” • Historically, this phase has been followed by the advent of new methods of production and distribution that disrupt the status quo and result in goods or services that are more affordable and widely available to the general public. • Often accompanied by disruptive innovator companies that become the new market leaders, replacing the old guard. 14

And Definitions of Sustaining Innovation and Disruptive De-Evolution • In contrast, a given business sector that has not yet been disrupted produces a particular set of complicated and expensive products or services for a very limited market; think of the mainframe computer or the multi-specialty general hospital. • Over time improvements are made in those products or services as the leading companies compete for business; think of IBM competing with Burroughs and UNIVAC; or the Mayo Clinic’s Centers of Excellence). • These improvements include refinements in how the product or service is created to increase quality and reduce costs. The most significant improvements almost always made by industry leaders are called Sustaining Innovations (as distinguished from Disruptive Innovations). • We define Disruptive De-Evolution as an ill conceived change process that results in moving backwards, not forwards. E.g. the Anti-Triple Aim: Poorer Health for the Population, Worse Care for Individuals, Higher Costs. 15

We want to explore change that is occurring in six states • New York Medicaid Redesign • Vermont Blueprint for Health • Massachusetts Payment Reform • Oregon Transformation Team • Colorado Medicaid ACOs • Washington State Regional Health Authorities • And help generate a discussion about whether these changes represent: • True Disruptive Innovations, • Sustaining Innovations, or • Disruptive De-Evolution 16

What all six have in common… • The head is being reconnected to the body • Through different approaches to primary care/behavioral health integration at the clinical, financial and structural levels • The Triple Aim is a key organizing principle 17

New York Medicaid Redesign • Proposal Title: To establish interim behavioral health organizations to manage carved-out behavioral health services while moving toward integrated care financing and delivery models. • Brief Proposal Description: Bringing in Behavioral Health Organizations (BHOs) to manage behavioral health services that are currently paid for via unmanaged fee for service reimbursements and not otherwise covered under the state's various Medicaid Managed Care (MMC) plans. 18

Vermont Blueprint for Health • Began with clinical redesign in 2007 • Followed by ACO Pilots in 2008 19

Vermont Blueprint for Health • Three Single Payor Proposals Put Forward in 2011: • Cover remaining 32,000 uninsured Vermonters • Bring all Vermonters up to standard, essential benefit package • Finance by a payroll contribution, with exemption for low wage employers and workers • Anticipated Financial Results: 20

Massachusetts Payment Reform • Recently, Governor Patrick filed HD 3590, An Act Improving the Quality of Health Care and Controlling Costs by Reforming Health Systems and Payments. Proposal to radically restructure the delivery system and behavioral health included in meaningful ways. 21

Massachusetts Payment Reform • 9-member behavioral health task force to make recommendations on: • The most effective and appropriate approach to including behavioral health services in the array of services provided by Accountable Care Organizations (ACOs); • How current reimbursement methods and covered behavioral health benefits may need to be modified to achieve more cost effective, integrated and high quality behavioral health outcomes; and, 22

Massachusetts Payment Reform • The extent to which and how payment for behavioral health services should be included under alternative payment methods established or regulated under this legislation. • Provision of a transition period from a fee-for-service delivery model to a payment system that incorporates alternative payment methodologies, including global payments. The goal is to transition to alternative payment methodologies by 2015. Publically funded programs, including MassHealth, Commonwealth Care, and Commonwealth Choice will implement alternative payment methodologies and use integrated care organizations and ACOs by January 1, 2014. 23

Oregon Transformation Team 24

Colorado Medicaid ACO Implementation Seven Regional Care Coordination Organizations will provide: • Medical management, particularly for medically and behaviorally complex clients, to ensure they get the right care, at the right time and in the right setting; • Care-coordination among providers and with other services such as behavioral health, long-term care, SEP programs and other government social services such as food, transportation and nutrition; and • Provider support to include assistance with care-coordination, referrals, clinical performance and practice improvement and redesign. 27

Washington Regional Health Authorities Current “Wiring Diagram” 28

But What About ACOs for Persons in the Safety Net Population? 29

Key WA Idea Promote two organizing efforts: • Organizing the delivery system to create accountable systems of care • Organizing the payors of all safety net services to create a supportive payment and regulatory system 30

Final Thoughts on the Implications for Behavioral Health • We guarantee we are all moving into a period of disruption • This is going to be hard stuff • Behavioral Health won’t automatically be included • BH stakeholders need to develop the value proposition • And we will likely have to ask to be involved • This will require thinking and acting differently • And what unfolds will depend, to a large degree, on what the people in this room do over the next 18 months 31

Healthcare Reform & Disruptive Innovation Oxymoron or We Told You So?