Multi-Payer Reimbursement Pilot

1. Multi-Payer Reimbursement Pilot Overview of Risk/Benefit to Practices L Gordon Moore MD

2. Payer Participants • Aetna • CIGNA • Community Health Plan of Washington • Group Health Cooperative • Molina • Premera Blue Cross • Regence Blue Shield • United Healthcare

3. Goal • Primary Goal – to partially shift payment from the current fee-for-service model towards payment for improved outcomes. • “Improved Outcomes” defined as: Reduced preventable emergency room visits and hospitalizations

4. Definitions • Reduce preventable ED = Calculated using NYU ED Use Profiling Algorithm for patients attributed to the practice. • Reduce preventable hospitalizations – calculated using AHRQ PQI methodology for patients attributed to practice.

5. Pilot Objectives • Reduce preventable ER visits by 30% • Reduce preventable inpatient admissions by 10% • Pilot objectives are achievable as indicated by results from other pilots nationwide. • New York City, 1998: 82% ER visits preventable • New Jersey, 2004: 47% ER Visits preventable • Tennessee, 2004: 51% ER visits preventable • Massachusetts, FY 2006: 47% ER visits preventable

6. Practice Targets • Reduce preventable ER visits and inpatient admissions ,combined, by enough to cover the cost of investment in the pilot.

7. Participation Criteria • At baseline, have some level of skill and facility in coordinating care – you have to get out of the gate fast or risk penalty (payback). • Helpful attributes: • Current participant in WA PCMH collaborative • Prior WA DOH collaborative experience • NCQA “Level 1” PPC-PCMH recognition • A solid plan of action linked to outcomes

8. Helpful Core Capabilities • Ability to: • Offer extended hours of access (evenings/weekends) • Offer care beyond “office visits” (i.e., phone, online) • Demonstrate tools and processes in place for chronic care management (registry, outreach function & staff, etc.) • Follow-up ED/hospital discharge with a proactive and coordinated team approach to care coordination • Demonstrate timely and actionable communication to your main ED/hospital

9. How Much $? • Two payment plans: • Plan 1 • Plan 2

10. Plan 1 • Start of payment pilot: get case management bump: • Year 1: additional $2.50 PMPM • Years 2 & 3: PMPM drops to $2 • Shared savings based on difference of periods1, 2 & 3 from baseline (2 years prior to start) - Savings = going beyond the target set for your practice

11. Potential Shared Savings • Any savings above PMPM earned in a year are shared 50/50 between payers and practice by adjusted PMPM in the following year. • Shared savings for reductions in ER visits and hospital admissions beyond break-even levels will be distributed to participating practice groups only if they have met agreed upon quality performance measures.

12. Plan 1 • If savings exceed the initial investment then they are shared between practices and plans 50/50 Shared savings investment Savings from preventable ED and hospital visits

13. Quality Performance Measures • Staying healthy (HEDIS) • Screening for Breast Cancer (women, age 52-69) • Screening for Cervical Cancer (women, age 21-64) • Screening for Colon Cancer (men/women, age 50+) • Managing chronic conditions (chart review? registry?) • Diabetes (HbA1c testing, cholesterol testing, nephropathy screening) • Heart Disease (cholesterol testing, cholesterol lowering medication) • Depression (medication adherence at 12 wks. and 6 mo.) • Experience measures (surveys by practice? health plan?) • Patient/Family experience measures • Provider and staff experience measures

14. Plan 1 Performance Scenarios Assumption for Plan 1 Performance Scenarios: Attributed patients = 1000 Year 1 PMPM payments = 1000 Pts x $2.50 PMPM x 12 months = $30,000 Scenario A: No Improvement • Year 1 performance = 100 ED visits • Year 1 savings = 0 prevented visits x $1,500/visit = $0 • Year 2 adjustment = $30,000 year 1 PMPM x .50 = $15,000 • Year 2 PMPM rate = $2.00 PMPM base rate x 12 months = $24,000 - $15,000 adjustment = $9,000/12 months = $750/1000 pts = $0.75

15. Plan 1 Performance Scenarios Scenario B: Improvement < 50% PMPM • Year 1 performance = 97 preventable ED visits • Year 1 savings = 3 prevented ED visits x $1,500/visit = $4,500 • Year 2 adjustment = $30,000 year 1 PMPM - $4,500 savings = -$25,500 (Stop loss @ 0.50 PMPM = $15,000) • Year 2 PMPM rate = $2 PMPM base x 12 months = $24,000 -$15,000 adjustment = $9,000/12 months = $750/1000 pts = $0.75

16. Plan 1 Performance Scenarios Scenario C: Improvement >100% PMPM • Year 1 performance = 70 preventable ED visits • Year 1 savings = 30 preventable visits x $1,500/visit = $45,000 • Year 2 adjustment = ($30,000 PMPM - $45,000) savings = $15,000 • Year 2 PMPM rate = $2 base rate x 12 months = $24,000 +($15,00 x .50 = $7,500) = $31,500/12 months =$2625 $/month/1000 pts = $2.63

17. >50% of PMPM savedPlan 1 • If total savings do not exceed the initial investment there are no “shared savings” between practices and plans • If savings exceed 50% of PMPM but still fall short of break even, the practice faces a reduction in PMPM investment the next year • For years 2 and 3 shared savings occur once savings exceed $2.00 PMPM investment Change in PMPM Break even No shared savings 50% of PMPM exceeded by savings PMPM investment Savings from preventable ED and hospital visits Next year’s PMPM investment Same goal for savings

18. < 50% of PMPM savedPlan 1 • If savings do not exceed the initial investment then there are no shared savings between practices and plans • Both practices and plans are limited in their losses to 50% of PMPM • For practices, the PMPM is reduced by 50% in the next year • Shared savings occur when the savings for the next year exceed $2.00 PMPM for years 2 and 3 Reduction in PMPM – 50% of previous PMPM No shared savings < 50% of PMPM saved PMPM investment Savings from preventable ED and hospital visits Next year’s PMPM investment Same goal for savings

19. Practice 1 No shared savings No shared savings Change in PMPM < 50% of PMPM saved 50% of PMPM exceeded by savings Change in PMPM Practice 2 PMPM investment PMPM investment Savings from preventable ED and hospital visits Savings from preventable ED and hospital visits Next year’s PMPM investment Next year’s PMPM investment Same goal for savings Same goal for savings

20. Potential Downside/Risk • If savings are less than PMPM in a year, payment is reduced by the amount of the shortfall up to ½ PMPM, by downward adjustment of following year’s PMPM

21. Plan 2 • The “No Up-Front $” Plan • Premise: shift FFS $ to a PMPM so the practice can choose to work as it sees fit • Virtual visits instead of office visits • Case management and outreach • Shared savings just like Plan 1 (with one twist to help the practice) • The first $2.50 PMPM (yr 1) of savings goes 100% to practice ($2 PMPM yrs 2 & 3) • Beyond that: 50% share (like Plan 1)

22. Savings Both plans and practices have limits on losses to 50% of the PMPM invested that year Plan 1 – plans receive savings first Plan 2 – practices receive shared savings first Both practices and plans split shared savings once break even point exceeded Plan 1 Plan 2 Shared savings Shared savings Break even Break even Practice paid first Plan paid first Yearly PMPM investment Savings from preventable ED and hospital visits Yearly PMPM investment Savings from preventable ED and hospital visits

23. Which Plan is Right for You? • For more information, see the advisory letter in your application packet.