Accountable Care? No turning back.

1. Accountable Care? No turning back. Regional HFMA 2011 Charles Vignos, CPA President, Summa Health Network System VP, Managed Care ACO Chief Operating Officer Summa Health System I:/Charles Vignos/ACO Educational Session Regional HFMA 2011

2. Questions To Be Answered • Why is there an Urgency to Change? • What is an Accountable Care Organization (“ACO”)?

3. Information to Share • CMS Shared Savings Model • Summa’s ACO: Pilot Project

4. Why is there an Urgency to Change?Healthcare Spending Growth

5. Why is there an Urgency to Change?Medicare Spending $ in billions; figures for 2006 and beyond are projections Source: Modern Healthcare's By The Numbers - December 2007 (CMS, 877-267-2323, cms.gov)

6. Health Care Reform • The Patient Protection and Affordable Care Act • Attempts to address many fundamental problems with the current healthcare system • Extends healthcare coverage to 32 million uninsured people • Begins to reform the payment system toward accountable, coordinated healthcare delivery • “Bending the Cost Curve” • Reform attempts to slow down the rate of increase of healthcare costs, specifically for Medicare • Authorizes a number of value-based pilots that focus on reducing costs and increasing quality • Medicare Accountable Care Organization (ACO) pilots will begin January 1, 2012

7. Our Burning Platform • Reform has created 2 options for the future of the healthcare system Value-Based Purchasing Insurance-centered approach leading to continuous ratcheting down of prices year after year Healthcare Reform $$$ leave the healthcare system and go to insurance company investors Accountable Care Patient-centered approach that is a new way of delivering care to improve quality and reduce the total cost of care for a defined population $$$ are reinvested in providing healthcare services in local communities

8. Medicare VBP Principles Reimbursement at  risk Penalties tied to DRGs Public Reporting Reward-then-Penalty Progression

9. Why Change How We Provide Care? Everyone is working in their own silos… Primary Care Specialty Care Ambulatory Hospital and ED Skilled Nursing Nursing Home Home Health

10. Accountable Care as the Integrator Patients Primary Care Specialty Care Ambulatory Hospital and ED Skilled Nursing Nursing Home Home Health

11. What is Accountable Care? The concept of Accountable Care highlights the need for physicians, hospitals, other providers, payers, and patients and their caregivers to work collaboratively to ensure and measurably improve appropriate, high- quality, efficient and cost-effective delivery of healthcare.

12. What is Accountable Care? Accountable Care is… • Engage payers with moving away from the current fee-for-service payment system that rewards doing more to a new payment system that incentivizes a focus on primary care, wellness and population health • Engage providers that are clinically and fiscally accountable for the populations they serve • Engage patients to actively take responsibility for their health • Hospitals and physicians building upon their relationships with each other and partnering in a deeper way with patients, populations and payers 12

13. Goals of Accountable Care The Triple Aim Simultaneously…… • Improving the health of populations • Reducing the per capital costs of health care • Improving the experience of care

14. CMS Shared Savings Model Proposed ACO Rules 14

15. Core Requirements Identified in the Proposed Rule 15

16. Assignment 16

17. Proposed ACO Regulations: Key Calculations 17

18. Proposed ACO Regulations: Financial Requirements ACO’s are to establish a self-executing method for repaying losses to the Medicare program by indicating that: • Funds may be recouped from Medicare payments to the ACO’s participants • Obtaining reinsurance • Placing funds in escrow • Obtaining surety bonds • Establishing a line of credit • Or establishing another repayment mechanism 18

19. Setting the Benchmark • Three-year look-back, with greater weight to most recent year • Patients who would have been assigned to the ACO: • Determined by patients seen by primary care providers based on “plurality of billed charges” • Risk adjusted based on CMS-HCC coding (diagnostic coding-dependent) • Benchmark adjusted for each performance year based on the projected national growth rate in national per capita expenditures for Parts A and B 19

20. 60 Days 60 Days 60 Days 60 Days Estimated Timeline for CMS Accountable Care Organizations 2012 Q1 2011 Q2 2011 Q3 2011 Q4 2011 CMS Proposed Regulations Released March 31, 2011 Comment Period Due June 6, 2011 Final Rules Prepare ACO Application Applications Due CMS Review Prepare for ACO Go-live ACO Program Begins, Second Group of ACOs, July 1, 2012 CMS Approval ACO Program Begins, First Group of ACOs, January 1, 2012 20

21. Summa ACO Pilot Project 21

22. Location

23. Summa’sIntegrated Delivery System Hospitals Physicians Health Plan Foundation • Inpatient Facilities • Tertiary/Academic Campus • 3 Community Hospitals • 1 Affiliate Community Hospital • 2 JV Hospitals with Physicians • Outpatient Facilities • Multiple ambulatory sites • Locations in 3 Counties • Service Lines • Cardiac, Oncology, Neurology, Ortho, Surgery, Behavioral Health, Women’s, Emergency, Seniors • Key Statistics • 2,000+ Licensed Beds • 62,000 IP Admissions • 45,000 Surgeries • 660,000 OP Visits • 229,000 ED Visits • 5,000 Births • Over 220 Residents • Multiple • Alignment Options • Employment • Joint Ventures • EMR • Clinical Integration • Health Plan • Summa Physicians, Inc. • 240+ Employed Physician Multi-Specialty Group • Summa Health Network • PHO with over 1,000 physician members • EMR/Clinical Integration Program • Geographic Reach • 17 Counties for Commercial • 18 Counties for Medicare • 55-hospital Commercial provider network • 41-hospital Medicare provider network • National Accounts in 2 States • 155,000 • Total Members • Commercial Self Insured • Commercial Fully Insured • Group BPO/PSN • Medicare Advantage • Individual PPO • System Foundation • Focused On: • Development • Education • Research • Innovation • Community Benefit • Diversity • Government Relations • Advocacy Net Revenues: Over $1.6 Billion Total Employees: Nearly 11,000

24. The Vision for Our ACO Organizational Facts • Start Date – Began operations January 1, 2011 • Initial Pilot Population – 11,000 SummaCare Medicare Advantage members that currently see a participating primary care physician • Legal Entity – Non-profit taxable structure allows for physician majority on the Board • Board Composition – 4 community primary care physicians, 1 medical specialist, 1 surgical specialist, 3 Summa representatives The ACO is a clinician-led care organization that partners with communities to compassionately care for and serve our populations in an accountable, value- and evidence-based manner.

25. Functional Components of an ACO • Care Models • Financial Models • Technology • Delivery Network

26. Care Models • Reviewing high-cost and high-utilization clinical conditions (i.e. heart failure) • Redesigning transitions of care (i.e. hospital to home) to address readmissions and emergency room visits • Care coordination by care manager to facilitate the relationship between hospital, physician and patient

27. Example: Patient care transitioned from hospital to home after treatment of new onset HF Current Model: Patient is “discharged” from the hospital. • Medications and how to take them are verbally reviewed with the patient. • Prescriptions for new medications are provided on paper; patient must figure out how to obtain them on the way home. • Once they get home, patient may continue to take both old and new medications … in addition to any other supplements or remedies.

28. Example: Patient care transitioned from hospital to home after treatment of new onset HF Current Model: Patient is “discharged” from the hospital. • Comprehensive care plan, including implications of new diagnosis, may or may not have been verbally reviewed with patient; little or no documentation of what was discussed or expectations; no documentation of questions or concerns that patient may have. Inconsistent involvement of patient in setting goals of care • Instructions to varying degrees of specificity with regard to activity and diet are verbally reviewed with patient +/- family/caregiver; +/- in writing.

29. Example: Patient care transitioned from hospital to home after treatment of new onset HF Current Model: Patient is “discharged” from the hospital. • Patient instructed to make follow-up appointments with a list of physicians or services (e.g. cardiac rehab), who may not have seen or known about patient’s recent hospitalization, and may not know specifically why they are seeing the patient in follow-up. • When patient sees physician or receives new clinical service (e.g. cardiac rehab), they must re-give their histories, meds, etc. • Patient has no resource familiar with their hospitalization and health status that they can call if they have questions.

30. Key Area for Improvement • 50% of all patients re-hospitalized within 30 days of medical discharge had no bill by a physician between discharge and re-hospitalization • 50-66% of HF hospitalizations preventable • Discharged too soon • Failed chronic illness follow-up • Failed self-care

31. What is different in the care of these patients? Care Managers (CM): • Notifies PCP when ACO HF patient is admitted • Collaborates with PCP & office staff (i.e. discharge information) • Post-acute care (PAC) appointment secured at time of admission • Goal is for PAC visit to occur within 7 days of discharge • Follows patient indefinitely Transitional care nurse (TCN): • Visits patient in the acute care setting • Contacts patient by phone within 48 hours of discharge • Makes a home visit within 1 week of discharge • Follows patient for 30 days 31

32. Financial ModelSelection of Shared Savings Model • Key drivers of the selection: • Model driven by ACO goals and fundamentals of the “Triple Aim” • Easy to put into operation • Deals with the Total Medical Spend (not just components) • Allows for the inclusion of quality and service criteria • Model should provide a good transition step to other financial models as the ACO evolves • Does not require providers to take insurance risk (but shows more is available if they move that way in the future)

33. The ACO Financial Model Based on Actuarial Analysis of Historical Data Projected Total Cost of Medical Care Paid to Providers on a FFS Basis Actual Cost of Care for the Defined Population - Provider Bonus Available ONLY if Surplus Exists at Year End Surplus (or Deficit) Shared Savings Pools Outpatient Diagnostics Other Outpatient Hospital, SNF, Inpatient Rehab Outpatient Ancillary Outpatient Retail Pharmacy Different Provider Types Participate in Pools Based on an Estimated Ability to Impact Associated Costs

34. Financial Model: Primary CareSurplus Distribution Payment Criteria • Membership – 50% of PCP Distribution • Number of Enrollees assigned to PCP • Example: • 100 lives out of 10,000 lives = 1% • $2,000,000 x 1% = $20,000 (eligible for distribution) • $20,000 x 50% = $10,000 (meet membership criteria) • Quality – 50% of PCP Distribution - $10,000 • Care Measures • Advancement of ACO Care Model • Participation in Practice Improvement Education • Patient Satisfaction

35. Financial Model: SpecialistSurplus Distribution Payment Criteria • Membership – 50% of Specialist Distribution • Volume of unique Enrollee contacts • Example: • 100 Enrollee contacts out of 10,000 lives = 1% • $2,000,000 x 1% = $20,000 (eligible for distribution) • $20,000 x 50% = $10,000 (meet membership criteria) • Quality – 50% of Specialist Distribution - $10,000 • Consultation Reports • Advancement of ACO Care Model • Participation in Practice Improvement Education • Patient Satisfaction

36. Financial Model: HospitalSurplus Distribution Payment Criteria • Medical Expenditure – 50% of Hospital Distribution • Quality – 50% of PCP Distribution • Care Measures • Advancement of ACO Care Model • Participation in Practice Improvement Education • Patient Satisfaction

37. Financial Model – Shared Savings

38. Technology to Support ACO • Developing call center to support transitions of care • Care coordination (i.e. after discharge) • Clinical patient support (i.e. follow-up questions) • Physician office extenders (i.e. after hour nurse triage) • Data management • Clinical decision support (at time of care) • Clinical reporting (Population Health Management)

39. The Value of DataOpportunity: Total Admits Note: Benchmark is based on Moderately Managed Midwest Utilization Targets – Milliman

40. Segmenting the Opportunity:

41. Opportunity: ED Utilization Note: Benchmark is based on Moderately Managed Midwest Utilization Targets – Milliman

42. Opportunity: Admits from the ED Note: Benchmark is based on Moderately Managed Midwest Utilization Targets – Milliman

43. Delivery Network • Inclusive, not exclusive • View the ACO as a community collaboration • Must engage both employed and independent providers • Needs to expand to all levels along the care continuum • Inclusive of all physicians that want to participate as long as they meet ACO quality and utilization standards

44. Delivery Network Provider Participation Requirement • Operational Requirements: • Participation in educational initiatives • Practice open to all new enrollees • Quality of Care Requirements: • Adherence to ACO Care Models • Referrals to other ACO Members • Clinical Information Exchange Requirements: • ACO approved EMR • Exchange of clinical and demographic information necessary for ACO operations

45. Delivery Network • Today, the network has a total of 421 physicians participating. • 230 Primary Care Physicians • 191 Specialists • There are 2 multi-specialty employed groups and 12 independent primary care community groups.

46. Lessons Learned • Must be collaborative, physician led, and physician driven. • Takes time! Establish guidelines, measure, and enforce parameters to improve care and prove value. • Establish strong infrastructure and IT for hospitals and physicians. • Establish one incentive system that physicians and hospitals control, understand, and get results. • Relentless focus on redesigning clinical care delivery across the continuum to find new ways of improving efficiency, service, and quality.

47. Why ACO’s Will Survive? Financial Perspective • National Debt • Growth of Health Care Spending • Provider Reimbursement Being Reduced • Health Care Reform – One of the few items that addressed “Bending the Cost Curve” • Funding comes from savings

48. Questions? Bill Gates Quote We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten years. Charles Vignos, CPA vignosc@summahealthnetwork.org 330.996.8486