Health Care Reform Perspectives and Implications

1. Health Care ReformPerspectives and Implications Grand Rounds New England Baptist Hospital April 13, 2011 Bob Gibbons bobgibbons@airtstrategies.com Alex Calcagno acalcagno@mms.org

2. Health Care ReformPerspectives and Implications • Politics and Government - Potent Mix • Elections/Appointments • Policy Making • Engagement

3. Health Care ReformPerspectives and Implications • Political Climate • State Environmental Assessment - Elections - Economy - State Revenues - Health Care Costs

4. Health Care ReformPerspectives and Implications • Political Climate • Policy Considerations - Payment Reform - Cost Control - State Budget

5. Health Care ReformPerspectives and Implications • Payment Reform • Special Commission - Established on heels of coverage reform - Examination of payment methodologies - Global Payment w/ACOs recommended - New Independent Board Recommended

6. Current Fee-for-Service Payment System GlobalPayment System $ $ $ $ $ Primary Care Hospital Specialist Post Acute PrimaryCare Post Acute Provider Specialist Hospital Health Care ReformPerspectives and Implications Source: MHA • Payment Reform (cont.) Fixed risk adj. amount “The ACO” Consumer/Patient Premium Dollar Health Insurance Co. Consumer/Patient Premium Dollar Health Insurance Co.

7. Health Care ReformPerspectives and Implications • Payment Reform - Report • MHA Position – “Support w/Caveats” www.mhalink.org - Risk - Benefit design; Patient choice; Employer role - ACO Formation - Societal Needs - Oversight

8. Health Care ReformPerspectives and Implications • Cost Control • Ch. 288 - Small group reforms (AHPs, Coops, Rate/Enroll 1 yr., rate shock) - Limited/Tiered Networks (small group) - Wellness Pilot (small group) - Inpatient/outpatient costs ,health status adjusted TME - Relative Prices, contract price tying prohibition - DOI Approval of Premiums (CPI, MLR, Reserves) - Administrative Simplification - Bundled Payments Pilot - Special Commission on Provider Price Reform -

9. Health Care ReformPerspectives and Implications • Patrick Administration Bill • Payment & Delivery Reform • Immediate Cost Control: Price Regulation • Game Changer!

10. Health Care ReformPerspectives and Implications • Policy Objectives • ACOs by 2015 • Alternative Payment Methodologies • “Med Mal Reform” • Regulatory Oversight • Enhanced Powers: AG, DOI, DHCFP • Payment Reform Coordinating Council • DPH Division of Health Planning

11. Health Care ReformPerspectives and Implications • Cost Control & Payment Reform • Provider Impact - Payment Squeeze - Realignment (Redistribution?) - Accountability: Costs/Outcomes - PCP Focus - HIT investments

12. Health Care ReformPerspectives and Implications • Cost Control & Payment Reform • Next Steps - Advocacy - Engagement

13. Federal Health Care Reform & Physician Payment Reform:A Physician Perspective Grand Rounds New England Baptist Hospital April 13, 2011 Alex. Calcagno Director, Federal RelationsMassachusetts Medical Society

14. 112th CongressThe Political Backdrop

15. Key Delivery System Reforms in the ACA • Medicare Shared Savings (ACOs) - January 2012 • Center for Medicare and Medicaid Innovation - January 2011 • National Pilot on Payment Bundling - January 2013 • Medical Homes CBO estimates $13 billion savings/10 years

16. Medicare Shared Savings DemosACOsJanuary 1, 2012 Voluntary organization of health care providers who agree to be accountable for the overall care, quality and cost of care for their Medicare patients. CMS and ACO share savings if the ACO meets quality standards and the cost of care is less than traditional FFS. General Statutory Requirements • Formal legal structure to receive & distribute savings • Sufficient # of primary care professionals • 5,000 minimum beneficiaries • Contract for 3 years (minimum) • Leadership and management includes clinical and administrative • Defined process to 1)promote evidence based medicine 2) report data to evaluate quality and cost and 3) coordinate care • Demonstrate patient centered care

17. Proposed Rules & Regulatory Notices 4 Regulatory Notices released on March 31, 2011: Comments due June 6, 2011 CMS: Eligibility Leadership Governance Payment Models & Risk Quality Beneficiaries CMS: OIG Waives re Fraud issues (CMP, Anti-kickback, Stark) FTC- DOJ Antitrust Issues IRS Tax implication for tax exempt organizations

18. Medicare Shared Savings Model • Eligibility • ACO professionals ( MDs, physician assistants, nurse practitioners and clinical nurse specialists) in group practice arrangements; • Networks of individual ACO professionals • Partnerships or joint venture arrangements between hospitals, acute care hospitals and ACO professionals • Acute care hospitals paid under IPPS, Critical Access hospitals In combination with the above, can include Federally Qualified Health Centers, Rural Health Centers, post acute facilities and Medicare enrolled providers and suppliers

19. Legal and Governance Structure • Legal and Governance Structure • ACO must have a “formal legal structure to receive and distribute payments for shared savings” and the authority to conduct business under state law • “Provides all ACO participants with appropriate proportional control over decision-making” • Board must be 75% ACO Participants and include beneficiaries • Leadership and Management • Detailed requirements to demonstrate clinical and administrative alignment re quality, cost efficiencies and patient centered care

20. Payment Models & Risk • 2 models: All ACO contracts are for 3 years • One sided risk model (Track 1): Shared savings for first two years with shared savings of risk and losses in the third year ( limited risk) “on ramp” • Two sided risk model ( Track 2):Shared savings and losses for all three years • All ACO participants are paid under FFS • Formula based on last 3 years of Part A and Part B to develop benchmarks and minimum savings, shared savings and losses • Primary care belong to one ACO; hospitals and specialists, several

21. Quality Measurements • Five Domains • Patient/Caregiver Experience of Care • Care Coordination • Patient Safety • Preventative Health • At risk populations/Frail Elderly • 65 quality measurements for 2012 – only report on, following years report and achieve • 50% of primary care must be “meaningful EHR users” • Must meet quality measurements .

22. Beneficiaries • Each ACO must have at least 5,000 beneficiaries • Beneficiaries will be assigned to the ACO based on primary care usage ( internal medicine, general, family, geriatric) CMS requesting comment • Beneficiaries will be assignedto an ACO based on the primary care physician from whom they receive the plurality of their primary care • Beneficiaries will be assigned retrospectively to an ACO. • Beneficiary choice – opt out

23. Threshold Issues • Infrastructure Support • Risk Management • Risk Adjustments • Patient Choice – “leakage” • Profitability - % of “shared savings” • Retrospective assignment • Financing • Time frame – 3 years too limited? • Quality measurements – metric does not exist

24. MMS: Key ACO Issues Series of focus groups, working meetings across MA • One size doesn’t fit all • Adoption must be voluntary • Foster and promote innovation • Multiple organizational models • Multiple payment methodologies • Oversight body: 2/3rds should be providers • ACOs must be physician-led

25. ACOs : Key MMS Issues, cont. • Quality measures must be scientifically valid • Independent development of risk adjusters • Professional liability reform/Defensive medicine • Expand peer review protections • Ease self-referral and anti-trust rules • Liability of the ACO as an entity • AMA “How To” : www.ama-assn.org/go/ACO

26. Cost Containment Provisions • IPAB – Independent Payment Advisory Board • 15 member Commission • Similar to base close commission – authorized to find $13.3 billion starting in 2014 if overall Medicare spending exceeds targets. • Initial focus on insurers, pharmacy and physicians. In 2019 other providers are included • Value Index Modifier • Similar to MA GIC: Authorizes CMS to develop profiles on individual physicians, based on Medicare and private payer data that could be posted on a “Physician Compare” web site. • CMS “to the extent practicable,” should make sure the information is statistically valid and reliable” • Geographic variation: practice costs vs. utilization

27. Physician Payment Reform • Medicare Physician Payment Reform (SGR) • 29% cut January 1, 2012 • MedPac Recommendations – October 2011 • In Ma, cost of medical practice up over 30%, Medicare up 1% • AMA Task Force: • 7 national medical specialty groups and 7 state medical societies • 3 phases : short term stability, interim transitional payment, permanent solution

28. Defensive Medicine – Medical Malpractice Reform • 112th Congress – renewed interest post ACA • MMS supports University of Michigan Model initiated in 2001 • Culture of patient safety, apology, investigatory period, access to court if necessary • Open cases fell from 300 to fewer than 60 • Premiums have dropped dramatically; for example, annual OB/GYN premiums are $30,000 compared to approximately $100,000 outside of the system. • The Culture has changed, less pressure to practice defensive medicine • Solution must be bipartisan to succeed

29. Doctors Day at the State HouseMay 9, 2011Let Your Voice Be Heard…

30. For More Information www. massmed.org Alex. Calcagno acalcagno@mms.org 781-434-7214