David Share, MD, MPH Executive Medical Director, Health Care Quality Blue Cross Blue Shield of Michigan dshare@bcbsm.co

1. Health Care Effectiveness andEfficiency in Service of Community Wellbeing: The Physician Group Incentive Program (PGIP) and Organized Systems of Care (OSCs) David Share, MD, MPH Executive Medical Director, Health Care Quality Blue Cross Blue Shield of Michigan dshare@bcbsm.com

2. Outline • Engaging communities of caregivers in health care system transformation: Underlying principles • Blue Cross and Blue Shield of Michigan Physician Group Incentive Program (PGIP) • PGIP Organized Systems of Care (OSC) Initiatives

4. Overarching Principles Health care is local: natural communities of caregivers taking responsibility for creating systems serving community need • Build community first; don’t rush to payment solutions • OSC/ACO must be grounded in self-defined communities, not third party defined communities • Harness intrinsic motivation of providers by ceding control: Purpose, autonomy and mastery must drive system development and performance, not short term gain • Incentives, or payment reform, separate from community, and explicit purpose, will not succeed

5. Physician Group Incentive Program Shared Vision • Physician Organizations (POs) take responsibility for developing systems of care • Shared information systems • Shared processes of care • Shared accountability for population level performance • Organizing concepts • Patient Centered Medical Home Model • Systems designed to respond to patients’ and community’s needs

6. Physician Group Incentive Program: Health Plan Role • Convene and catalyze; not engineer and control • Provide resources to reward infrastructure development and process transformation • Reward quality and cost results (improvement and optimal performance) at the population level • Structure reimbursement to support system transformation

7. Physician Group Incentive Program: Health Plan Role • Reward performance at population level • Share data at organization, office and physician level • Leave management of individual patient care to practices and of physician practices to PO

8. Physician Group Incentive Program: Physician Organization Role • Collaborate on crafting future vision • Collaborate on implementation • PGIP quarterly meetings • Common interest groups • Initiative leadership teams • Regional learning collaboratives • Animate physician members • Develop and deploy new systems of care • Work with organization members to examine and optimize performance

9. Physician Group Incentive Program in 2010 • 8,150 physicians • 5,000 PCPs • 38 Physician Organizations (4 serve as management support organizations for smaller POs) • 100+ sub-POs • 2,000,000 members • $100+M annual incentive dollars

10. PGIP Initiatives 1 • Improvement Capacity Initiatives • Establishing staff dedicated to managing process improvement teams (new PGIP groups only) • Establishing analytics and reporting staff (new PGIP groups only) • Condition-focused Initiatives • Oncology/ASCO Quality Oncology Practice Initiative™ (limited participation) • Service-focused Initiatives • Pharmacy use and quality • Radiology procedures utilization • ER Utilization • Inpatient Utilization • Anticoagulation management (Professional CQI ~ limited participation) • Transition of Care Professional (CQI: SHM BOOST) • Core Clinical Process-focused Initiatives • Evidence based care (quality) performance • *Performance reporting • *Patient-Provider Partnership • *Extended access • *Individual care management • *Test tracking and follow-up • Lean Thinking-Clinic Re-engineering (Professional CQI) • Clinical IT-focused Initiatives • *Accelerating the Adoption and Use of Electronic prescribing • *Patient registry • *Patient Portal • * = PCMH capabilities 2 3 4 • *Coordination of Care • *Preventive Services • *Specialist Referral Process • *Linkage to Community Services • *Self-Management Support 5

11. Transforming Physician Reimbursement at the Physician Organization Level • Incentive payments to Physician Organizations • reward infrastructure development ($40M per year) • reward improvement and optimization of population level quality and cost performance ($40M per year) • payments to support provider delivered care management services (testing in five POs) • Lean clinic process re-engineering support

12. Transforming Physician Reimbursement at the Physician Office Level • Incentive payments to physicians in office practice • Increase office visit fees to PCMH-designated practices (+10%) • New codes for care management and self-management support (T-code payments; in person and telephonic) payable to PGIP physicians: supports multi-disciplinary, team based care/care management • Increase office visit fees for offices in PCMH-designated practices in POs with optimal population level cost performance (+10%)

13. Eligibility Requirements for PCMH Designation Program • Physician offices nominated by their PGIP PO • Acceptable Evidence Based Care Report scores (quality measures) • Commendable performance on cost/use performance • Critical mass of PCMH capabilities in place Practice Units that achieve PCMH Designation may continue to participate in PCMH Initiatives and are expected to demonstrate ongoing progress towards fully implementing PCMH domains of function

14. Table 1: Performance Statistics* for 2010 PCMH Designated Practices Compared to PGIP Primary Care non-Designated Practices -Adults *Adjusted for age, gender, and risk score. Statistics based on members attributed to Primary Care Practitioners. 2010 claims data is preliminary and expected to change due to run-out.

15. OSC Purpose • The purpose of an Organized System of Care (OSC) is to serve the needs of a community of patients in an effective and efficient manner across settings and over time • Guiding principles: • The organization exists to serve the community; the community isn’t there to sustain the organization • Patient-Centered Medical Home-based care • All-patient systems/solutions, not payer-specific programs • Community of caregivers organizes to meet the needs of a population defined by patient attribution to PCPs • One to one relationship between OSC and PCP • One to one, or one to many, relationship between specialists/hospitals and OSC

16. OSC Purpose General Principles, continued: • Goal is integration across provider groups (PCP, specialist, facility) in a collaborative manner: affiliation and alignment essential; co-ownership optional and may be detrimental • Before the fact responsibility forcreating shared processes of care and information systems; after the fact accountability for results (quality and cost) at a population level • Success will depend on optimizing quality and efficiency at population level: right sizing facility and specialist capacity and services; activating and engaging patients

17. Building the OSC Infrastructure • Expanded Participation in PCMH Initiatives • Specialists participate in: • Patient Registry • Performance Reporting • Extended Access Initiative • Specialist Referral Process • Coordination of Care • New OSC Development Initiatives – participation by PO • OSC Operational Capabilities • OSC Processes of Care • OSC Use/Cost/Payment Management

18. OSC eligibility for designation • Physician Organizations with a critical mass of PCMH-designated offices (or with a critical mass of patients served by PCMH-designated offices) • include specialists in POs • Formal affiliation with hospital, safety net providers and other essential entities in care continuum • Alignment/affiliation between PCPs/specialists and hospitals • Core OSC organizational, business, operational and care coordination capabilities in place; focus on integration across settings of care • Minimum 20,000 attributed BCBSM members

19. OSC challenges • Building OSC capacity analogous to practices building PCMH capacity: organizational structure; operational capacity; business/legal infrastructure; care management infrastructure; OSCs don’t come ready-made/no ruby slippers • OSCs tasked to achieve excellent results at population level on cost and quality performance: focus on wholesale level for accountability; leave retail level to providers to manage • Viability dependent on optimizing value: being judicious stewards of health care resources and reliably providing high quality care

20. Aligning hospital and physician incentives as catalyst to “right sizing” local and regional systems of care: strategy in evolution • Introduce hospital-specific population level accountability for total cost of hospital inpatient and outpatient services • Special focus on re-hospitalization, ED use, ambulatory care sensitive condition admissions and overall inpatient use • Include hospitals in Organized Systems of Care and establish shared accountability with Physician Organizations

21. PGIP: Catalyzing Health System Transformation in Partnership with Providers 2004 2005 2006 2007 2008 2009 2010 2011 2012 PGIP Chronic Care Model PCMH Primary care transformation OSCs Organized Systems of Care • Transform care processes to effectively • manage chronic conditions • Build registry and reporting capabilities to manage populations of patients • Achieve savings in specified areas • Reward physicians for improved performance and efficiency • Share savings • Build PCMH infrastructure • Strengthen doctor-patient relationship • Support PCPs and their team’s ability to effectively manage care • Coordinate care across the continuum for a defined patient population • Establish linkages with community services • Support establishment of systems of care that assume responsibility and accountability for managing a defined population of patients across all locations of care Continue to add new specialties to PGIP Expand PGIP to include specialists involved in chronic care Implement PCMH and quality/use initiatives Continue to increase number of initiatives Extend provider-delivered care management with links to BCBSM for customer reporting statewide

22. PGIP/OSC Future Development • Patients will declare their primary care affiliation rather than relying on inference from claims data • Insurance products will include tiered payment to groups (providers in groups, including specialists and facilities) dependent on population level cost and quality performance • Members’ liability for cost will vary based on the value of the population-level care delivered by the system from which they seek care (parallel to providers’ value tiers)

23. Summary • Without eliminating FFS payment (and radically restructuring benefits and claims systems), BCBSM uses professional and hospital payment to catalyze practice transformation and optimize population level performance • Success = efficient/effective care; volume-driven care = failure • Collaboration yields more than competition in health system transformation efforts - Payers or Multi-stakeholder health care coalitions should support regional, collaborative efforts aimed at learning, implementing and disseminating knowledge about “what works” in system transformation - Reimbursement should reward results at a population level (wholesale, not retail), freeing providers to lead practice transformation, and enhance care management, at the local and regional level