How Payment Reforms Can Help Achieve a High Performance Health System

1. How Payment Reforms Can Help Achieve aHigh Performance Health System Karen Davis President The Commonwealth Fund www.commonwealthfund.orgkd@cmwf.org LHCO 215 Dec. 01, 2011 Robert Kaplan Second National ACO Congress November 1, 2011

2. Payment and Delivery System Reforms thatContribute to High Performance Health System Accountable care organizations (ACOs) Medical homes Value-based purchasing Enhanced care coordination/chronic disease management; bundled payment Health information technology; Beacon communities Combination strategy in innovator communities

3. Timeline for Payment and System Innovation • 2011 • 10% Medicare Primary Care Increase • Innovation Center CMMI) • All-Payer Demos and Health Innovation Zones 2012 Medicare Shared Savings (ACOs) Pioneer ACOs Bundled Payment for Care Improvement Initiative Value-based Purchasing for Hospitals • 2013 • National Medicare Payment Bundling Pilot •  Medicaid Primary Care up to Medicare Levels 2010 Productivity Improvement Patient Centered Outcomes Research

4. Timeline for Payment and System Innovation-Cont. 2014 Independent Payment Advisory Board (IPAB) 2015 Value-based Purchasing for Physicians Reduce Payment for Hospital Acquired Infections

5. Accountable Care Organizations

6. Key Elements of Success forAccountable Care Organizations Strong Primary Care Foundation Accountability for Quality of Care, Patient Care Experiences, Population Outcomes, and Total Costs Informed and Engaged Patients Multi-Payer Alignment Calculation of Shared Savings and Payment of ACOs Innovative Payment Methods and Organizational Models Balanced Physician Compensation Incentives Timely Monitoring and Support Criteria for Entry and Continued Participation Mission

7. Recent ACO Development

8. Brookings-Dartmouth ACO Pilot Site Program: HealthCare Partners • Large medical group and independent practice association (IPA) in Los Angeles, CA • Developing an ACO with Anthem to provide care coordination for 50,000 Anthem preferred provider organization (PPO) members • ACO is physician-owned and governed, and will include 1,000 primary care physicians and 1,700 specialists • Success factors • Stable leadership • Consistent emphasis on prevention and health promotion • Integrated health information technology (HIT) infrastructure • Use of effective care coordination and care management • Extensive experience taking on full risk capitation • Solid payer-provider relationship (including active involvement in a joint implementation committee)

9. Brookings-Dartmouth ACO Pilot Site: Monarch HealthCare • Large independent practice association (IPA) located in the Southern, Northern, and Coastal regions of Orange County, California • Developing an ACO with Anthem to provide care coordination and care navigation support for 25,000 Anthem PPO members in Orange County • ACO is physician-owned and governed, and will include approximately 500 of its 850 primary care physicians • Success factors • Strong executive leadership • Trust and transparency in partnerships • Extensive experience taking on full risk capitation • Solid payer-provider relationship (including active involvement in a joint implementation committee)

10. Mercy Health System Improving Coordination OfCare For Medicaid Beneficiaries Hospital Admission Rate Per 1,000 Members Per Year, Before And After Coordinated Care Management, 2008 And 2009 Improved care coordination by placing care managers in provider settings affiliated with Mercy Health System Cost savings of $37.70 PMPM for the patient population that received improved care coordination Rate of hospital admissions per1,000 members per year was reduced 17 percent among treatment group; length-of-stay dropped 37 percent

11. Mount Auburn Cambridge Independent PracticeAssociation Boston-area independent practice association (IPA) forged relationships among physicians and a hospital to share in savings generated by improved quality and lower costs High-risk case management program for patients at Mount Auburn Hospital and in the community, discharge planning, pharmacy management, referral management, utilization review, and related information services including performance reporting to physicians on utilization and quality improvement Participating physicians encouraged to adopt a common electronic health record (EHR) system that interconnects with the hospital's clinical information system to share laboratory and radiology results Physicians in the IPA have achieved notable results on 12 of 23 measures of ambulatory care quality on which they were rated by the Massachusetts Health Quality Partners (MHQP) Exceed both state and national benchmarks for the care of diabetic adults, preventive care for children and adults, and appropriate use of imaging tests for lower back pain.

12. GRACE’ Model Leads To Better Care For Dual Eligibles Average Total Health Care Costs Among GRACE Intervention And Usual Care (Comparison) Patients In High-Risk Group, Years 1–3 Geriatric Resources for Assessment and Care of Elders (GRACE) is an integrated care model targeting low-income seniors, many dually eligible and most with multiple chronic conditions Utilizes in-home assessments by a team consisting of a nurse practitioner and a social worker to develop an individualized plan of care High-risk patients enrolled in GRACE had fewer visits to emergency departments, hospitalizations, and readmissions and reduced hospital costs compared to control group Two-year GRACE intervention saved $1,500 per enrolled high-risk patient by the second year

13. INTERACT Collaborative Quality Improvement Project INTERACT II Shows Potential to Reduce Hospital Admissions Hospitalizations per 1,000 resident days • Interventions to Reduce Acute Care • Transfers (INTERACT) II helps • nursing home staff identify, assess, communicate, and document changes in residents' status • Three strategies: • identifying, assessing, and managing conditions to prevent them from becoming severe enough to require hospitalization; • managing selected conditions, such as respiratory and urinary tract infections, in the nursing home itself; and, • improving advance care planning and developing palliative care plans as an alternative to acute hospitalization for residents at the end of life

14. What’s Next? Implementation and the Path Ahead

15. Strategic Implementation of Reforms • Payment models are complimentary - • ACOs – Accountability of all services for an entire population, which helps ensure no cost-shifting and overall policy goals of better health and lower total costs are being met • Bundled Payments – Accountability for select services and conditions, which helps ensure important gaps in care are addressed and specialists are included in efforts to better coordinate care • Leveraging other payment initiatives (medical home, meaningful use, P4P payments, etc) can help finance start- up costs and maximize returns on clinical transformation efforts • Need to experiment with different approaches • Not sure what works best • Vary with local market characteristics and provider experience with care management • Early evidence shows that most successful innovators are those with multiple initiatives

16. Culture Change • Early and critical step for accepting accountability • Requires evolution in relationship between providers, payers and patients • Providers and payers must move beyond adversarial negotiations around payment rates toward collaborations for more efficient care. Not only about payment reform, but also data analytics and benefit redesign to support higher-value care. • Providers and other providers need to become better at working with each other to coordinate care – includes engaging in best practice sessions, sharing expert opinions and synthesizing patient-centered outcomes research to develop practice-changing innovations. • Providers and patients also need to work better together. Requires time to equip patients, and their care support team, with the information needed to feel confident about making efficient and effective health care decisions. • ACO movement is a great signal that the cultural change is happening • Will not be easy, there will be failures as well as success • Need strong commitment and vision

17. A New Era in Health Care Delivery:How Payers and Providers Can Help • The U.S. has passed historic legislation that will help usher in a new era in American health care • Will make major strides toward achievement of goals of affordable coverage for all while slowing cost growth • However, realizing the potential is not assured • Oversight and system of tracking health system performance will be needed • Effective implementation is a big hurdle • Stakeholders need to work together toward success of reform • Learning rapidly as innovation is tested and experience is gained and applying that knowledge to spread successful innovation are essential • Providers and payers to come together and help make it work • Active participation in innovative payment pilots

18. ACOs: California Style ACO Congress John E. Jenrette, M.D. Chief Executive Officer Sharp Community Medical Group November 2, 2011

19. Accountable Care Organizations (ACO) Working Definition A provider led organization whose mission is to manage the full continuum of care and be accountable for the overall costs and quality of care and be accountable for the overall costs and quality of care for a defined population

20. Goals Of Accountable Care Organizations Reduce, or at least, control the growth of health care costs Maintain or improve health of a population Improve in both clinical quality and patient experience and satisfaction

21. Opportunities for Improvement Improved prevention and early diagnosis  Reductions in unnecessary testing, procedures, and referrals Reductions in preventable Emergency Department visits and hospitalizations  Reductions in infections and adverse events in the hospital  Reductions in preventable readmissions  Use of lower cost treatments, settings, and providers

22. CMG Care Transformation ModelClinical and Operational Systems Accountable Care Organization Medical Group & Enterprise Level Activities Advanced Primary Care Under Patient-Centered Medical Home Patient & Family

23. SMG Care Transformation Model Clinical Systems Accountable Care organization Skilled Nursing FacilitiesHospitals -SNFists -Service Line Integration -On-site Case Management -Medical Staff Alignment -Efficiency Rating Systems -Incentives for Efficiency “Preferred Facilities” -Quality (SCIP, Leap Frog) -Safety Ancillary Services -Free-Standing ASC & Diagnostic Testing Centers Medical Group & Enterprise Level Activities -Outcomes & Evidence Based Medicine -Call Coverage Home Care -Home Safety -Post Discharge visits -Home Health -PCP/SCP Incentives Pay for Performance Hospitalist, Post Discharge follow-up -ER Avoidance Programs -Urgent Care -End of Life (Palliative Care) DME -Integration & Oversight by Care Management -Transition of Care -Coordination of Behavioral & Mental Health Services -Care management (Acute, Chronic, Inpatient, SNF) -Health Coaching (Shared Decision Making) Advanced Primary Care Under patient-Centered Medical Home Hospice -Home Palliative Care -Cost Effective Medical Mgmt & Utilization of Services (SCP, Ancillary) -Access, Same Day Appointments, e-Visits -Patient Satisfaction & Loyalty -Provider & Office Staff Satisfaction -Prevention & Wellness -Point of Care Analytics & Clinical Decision Support -Gaps in Care -Population Mgmt & chronic Care Prescribing Program Patient & Family -Personal Health Record -Patient Portal -Health Risk Assessment -Patient Engagement & Activation

24. SMG Care Transformation ModelOperational Systems and Structure Accountable Care organization -Medical Group-Hospital -Governance & Legal Structure “Systemness” & Network -Financial Incentives & Alignment Development (Shared Savings, Bundled payments, Partial Cap, Full Cap) -Contracting (Evaluate Ancillary Services; SNFs, Home Care -Facility Evaluation (ASCs) -Measurements Sets & Targets Health Plan role for Incentives, Payment Models and Data Exchange Medical Group & Enterprise Level Activities -”Sales” & Marketing -Strategic Planning -Clinical Support Infrastructure of Care Mgmnt Teams & Programs -IT Infrastructure (HER, Care Mgmnt Platform Analytics . Clinical Decision support, E-Prescribing, Predictive Modeling tools) -Network Development -Contracts (PCP/SCP) -Participation Criteria, Report Cards, Monitoring & Corrective Action Plans -Health Care Team Education -Financial Incentives -Measurement Sets & Operational Tools Advanced Primary Care Under patient-Centered Medical Home -Point of Care analytics -Job Descriptions for Additional Staffing -Adequate primary Are Base -Financial Modeling -Work flow Redesign & Process Changes -Education of Staff, PCPs, Team -Measurement Sets, Dashboards Patient & Family -Value Based Benefit Design -Benefit and Product to Steer Patients -Enrollment in Model (Attribution) -Communication Strategy

25. Pioneer ACO 3 year agreement, can be extended 2 more 15,000 Medicare FFS beneficiaries Must demonstrate ability to take risk “hit the ground running” 30 pilots June 28 – Letter of Intent August 19 – Application September 19 – Interview at HHS

26. Health Information Technology Access • Secure messaging • Care teams • Remote monitoring • PHR/EHR access • Patient engagement tools • Payment Reform • Efficiency measurements • Pay for performance and quality • Gain sharing contribution tracking • Risk and acuity measurement • Predictive modeling • Comparative effectiveness analytics Coordination of Care Reminders/outreach Team/care plan coordination / transitions of care Referral management Diagnostic results management Shared decision support

27. Using Individualized Guidelines to Op4mize Cost and Quality for Accountable Care Organiza4ons David Eddy, MD PhD Founder and Chief Medical Officer Emeritus Archimedes

28. Keys to success for ACOs • ACOs need to optimize health outcomes while keeping costs within a defined budget •  A significant portion of the savings must come from reducing preventable hospitalizations •  Preventable hospitalizations are responsible for one out of every 10 health care dollars spent • Preventing these hospitalizations will require: • Physicians identifying and delivering the right preventive treatments for the right patents • Activating patents to take the suggested treatments, based on their preferences

29. The current situation • Physicians decisions determine how the vast majority of healthcare dollars are spent • Which people get which tests and treatments • These decisions are determined largely by population-­‐based guidelines • Example: JNC 7 guideline for hypertension • “Treat if SBP > 140” • “If have diabetes or renal failure, treat if SBP > 130” • To improve the efficiency of healthcare we need to improve guidelines

30. Fortunately, this is possible • There are inherent limitations in how guidelines are currently designed and applied • Focus on one variable at a time (e.g., BP) • Understate the importance of other risk factors • Use sharp thresholds (e.g., SBP > 140) • Ignore the continuous nature of risk factors • Are qualitative, not quantitative • Assume all guidelines are equally important • No information to aid MD-patent decision making • It is possible to do better

31. It is possible to do better • “Individualized Guidelines” • Take into account all the important information about a patent • Consider all the risk factors simultaneously • Take into account the continuous nature of risk factors • Consider all potential treatments simultaneously • One-­‐by-­‐one and in all combinations • Develop a prioritized list, in order of expected Benefit • Can identify thresholds to achieve desired objectives for quality and cost •  Present information on actual risks and benefits to each patient

32. Individualized guidelines can improve quality and lower costs  • Example: JNC-­‐7 guideline for blood pressure • Treaperson’s BP > 140/90 • If they have t if a diabetes or chronic kidney disease, < 130/80 • Use ARIC population • “Atherosclerotc Risk In Communities” • 12,000+ people age 45-­‐65 at start of observation • Followed for 12+ years • 2710 eligible for new hypertension treatment at start • Recorded MIs, strokes and other outcomes • Can use observed MIs and strokes to determine benefit of different management strategies for hypertension

33. Superiority of Individualizedguidelines • Absolute magnitudes of events prevented and costs saved depend on many factors • Risk of CVD in population • Electiveness of BP treatments • Cost of hypertension medications, visits, tests • Cost of treating MI’s strokes • But relative superiority of Individualized guidelines is not sensitive to these • Approximately 45% greater benefit at same cost • Approximately 65% greater savings at same benefit

34. Requirements for using individualizedguidelines • Electronic access to person-­‐specific data • Basic data every physician already uses • Risk/benefit calculator • Spans all the important risk factors, treatments, and outcomes • Accurately calculates risks, and effects of treatments • Incentive to both increase quality and control costs • Accountable Care Organizations are ideally positioned to implement individualized guidelines

35. Four ways ACOs can use Individualized guidelines • Identify individuals who will benefit considerably from treatment but are currently missed •  Identified by traditional guidelines, but currently untreated • Give physicians and patents quantitative information about risks of adverse events and benefits of treatments • Identify priorities for outreach programs • Calculate incentives for physicians and patents

36. Bottom line for users • Improved health outcomes • For every 1 million members, an estimated 1400 heart attacks and strokes would be averted annually • Reduced costs • An estimated $98 million saved annually

37. Summary and conclusions • Traditional guidelines have served us well • Evidence-­‐based • Easy to remember, use, explain, and apply • Appropriate for the technology of the time • Guidelines were new, records were all on paper • But they have limitations • Now possible to move to next generation • Better data, information systems, validated mathematical models • ACOs can use individualized guidelines to help improve outcomes and reduce costs

38. Disclosure • Archimedes is a healthcare modeling company based in San Francisco • Archimedes is a subsidiary of Kaiser Permanente • I will describe • An application developed by Archimedes (IndiGO) • An implementation of IndiGO by Kaiser Permanente • An evaluation by KP Care Management Institute • The application is available to any health system, health plan, or medical group