Payers and Providers Collaborate for Success In Age of Reform

1. Payers and Providers Collaborate for SuccessIn Age of Reform March 10, 2011

2. The New Realty • Need to bend the cost curve • Increased attention to quality metrics • Reimbursement models that incent patients and providers to move toward both lower cost and higher quality

3. Cost Curve – How do you Bend It? • Reduced payment per service, reduced trend/annual rate increases • More efficient use of medically necessary services • Elimination of unnecessary services • Fewer complications/higher cost services due to improved quality and more coordinated care

4. Achievable? With Collaboration • Shared savings • Resources/support to initiate and maintain • Investment in the tools to accomplish • Ongoing monitoring and sharing of data • Added value to provider, payer and employer/patient

5. Key Players – How to Engage? • Payers - • Achieve a savings they can pass on to their customers, investors, providers • Hit metrics they can market – utilization, quality, and cost metrics • Providers - • Deliver the tools to better manage utilization • Demonstrate willingness to invest in changes that will ultimately result in savings • Share in savings

6. Coming Together – How? • Win-Win Structures • Agreement on Goals that Benefit All • Lower cost BEFORE lower reimbursement • Improve quality BEFORE increasing reimbursement • Common set of metrics and attainable goals • Data everyone can trust/rely on • Meaningful shared savings – dollars significant enough to generate/maintain interest

7. Options for Collaboration • Pay for Performance/Gainsharing • Enhanced, data driven, primary care initiatives • Global risk, bundled payments and other alternative financial arrangements

8. Pay for Performance/Gainsharing Why? • Simple Method to Align and Achieve Physician and Hospital (and Payer) Goals • Engages physicians, payments to docs within the year, collaboration/improvements begin immediately • Not complicated - data is readily available & accepted as valid • Flexible - adapt to special needs of hospital • Perfect tool for any start up ACO and other “risk” entities

9. Pay for Performance/Gainsharing • Many efforts underway aimed at efficiency and quality improvements - BUT • Getting the attention and involvement needed from physicians? • Physicians have a true understanding of their role in achieving the goals – how to hit the benchmarks? • Providers getting the right kind of data, on a regular basis, that give direction on behavior changes? Usually Not…..

10. Continuum Health PartnersPay for Performance Overview • 2006 Managed Care, 2008 Medicare demo • Designed to compensate Physicians who improve quality andimplement more efficient inpatient practice patterns • Savings shared with physicians who move toward or hit benchmarks • Upside bonus only, based on individual performance • No change in current billing process or payment (and loss of income factor included in bonus)

11. CHP Pay for Performance Basic Framework All cases severity adjusted to 4 levels using APR-DRGs to account for ‘sicker’ patients. Benchmarks established using CHP actual experience – average cost of the top 25th percentile (lowest cost) performers. Monies to pay bonus come from hospital savings generated by improvements in efficiency. No savings - no bonuses paid out. Payments withheld from physicians who do not meet quality standards (Core Measures, Infection indicators, Readmission rates, medical record completion, patient complaints etc)

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14. Successful Partnership Achieved • Preliminary Results – Significant cost reductions and improved quality • Shrinking gap between bottom 75th percentile and top 25th percentile • Greater understanding of data and interest in clinical guidelines – moving toward standardization of care • Incentives more closely aligned

15. Core Measure Trends

16. Additional Initiatives • Enhanced, comprehensive data distribution among providers • Primary care/patient focused medical home • Stratification of high risk patients with directed case management • Medical benefit redesign to incent greater compliance • Directing patients toward provider networks sharing data/managing patients