Accountable Care Organizations

1. Accountable Care Organizations HFMA Florida Chapter Fall Conference September 16, 2010

2. Presentation Outline • Accountable Care – Approach or “Thing” • Physician/Hospital Integration Journey • Concepts of Bundling Payments • The Payer/Buyer Perspective • Roles and Accountabilities of an ACO • Potential ACO Models • The ACO Revenue Cycle Infrastructure

3. Accountable Care as Approach • Genesis from “HillaryCare” in 1993 • Managed Competition and the PHO • Quality Payment for Services – CMS 2003 • Process – Evidence Based Medicine Guidelines • Outcomes – Improvement in Quality Measures • Treatment of Chronic Diseases • Shared Savings for Cost Containment • Emerging Payer/CMS Pilots in Episodes of Care • Integrated Care = Good Non-Integrated = Bad

4. Accountable Care as Organization • New Name with Newly Anticipated Functionality • Entity Will Need to be Able to do the Following: • Assemble and Manage a Broad-based Group of Providers including Acute Hospitals, Primary Care Physicians, Sub-Specialists, and Ancillary Providers. • Provide Services in a Seamless Business Infrastructure • Accept and Administer Bundled Payments from Payers • Identify Enrollment and Pay Providers • Report on Quality, Costs, and Patient Outcomes • Manage Risk and Gain-Sharing Methodologies

5. The Evolution of Physician/Hospital Integration • Medical Staff Delegated Responsibilities • Credentialing, Privileging, Quality Assurance • Creation of PHOs for Managed Care • Service Line Development • Specialty Partnering with Hospital • Employment of Primary Care & Sub-Specialists • IT Connectivity and Meaningful Use

6. Physician/Hospital Economic Integration • Other than Employment – Not Much • Regulatory Constraints • Stark, F&A, IRS, etc. • Cultural Issues • Professional Independence • Entrepreneurial Interests • Control vs. Security • Financial IT Platform Differences • Hospital Legacy & Practice Management Systems

7. Concepts of Payment Bundling • Management of Chronic Care Patients • Screening and Lifestyle Management • Medical Home Approach – Primary Care • Population-based Semi-Capitation • Episode of Care Fixed Payment • Performance-based Payment • Combinations of Those Above

8. Payer PerspectivesMedicare & Medicaid • Slow the Rate of Cost Growth • Public Health Approach – Lifestyle/Prevention • Obesity, Smoking Cessation, Screening, etc. • Reduce Fee-For-Service Exposure • Bundling Acute Care Episodes for Elderly • Medical Home Fixed Payments for M&M • Shift Risk to Provider Community • Move toward “Partial Capitation”

9. Payer PerspectivesCommercial • Four Clinical Areas Represent 61% of Spend • Cardio-Vascular, Orthopedic, Neuro, Cancer • Difficulty Predicting Unit Cost and Utilization • Hospital and Physician Combined • Bundled Payment Minimizes Risk of Outliers • Pharma and Medical Device Usage Included • Pay For Performance / Enter “the Ratchet” • “They” Won’t be Able to Contract for This

10. ACO Criteria • Clinically and Financially Integrated Provider Network • Capability to Underwrite Risk • Broad Scope of Clinical Services • Acute Care, Primary Care, Out-Patient Care, Rehabilitation Services, Home Care, etc. • Information Technology Infrastructure • Internal and External Transaction Capabilities • Ability to Engage with Consumers/Patients/Payers

11. Potential ACO Models • Health Plan as ACO • Independent Practice Association as ACO • Multi-Specialty Group Practice as ACO • Hospital as ACO • Hospital and Medical Staff as ACO • Other Entrepreneurial Models???

12. Health Plan as ACO • Management of Provider Networks • Administrative IT Platform - Eligibility • Financial IT Platform - Claims • Utilization Management Reporting • Patient Engagement and Incentives • Strong Capital Position • Experienced in P4P/Payment Bundling

13. Independent Practice as ACO • Strong Clinical and Financial Infrastructure • Durable Provider Relationships • Case Management Expertise • Leverage on Acute Care Costs • Managed Care Contracting Expertise • Focus on Patient Retention/Engagement

14. Multi-Specialty Group as ACO • Solid Administrative Infrastructure • Comprehensive Clinical Coverage • Integrated Clinical Platform • Integrated Financial Platform • Out-Patient Services • Built-in Referral Network

15. Hospital as ACO • Comprehensive Acute Care Services • Relationships with Ancillary Providers • Large Medical Staff Footprint • Local Brand Awareness • Solid Capital Structure • Administrative and Financial IT Infrastructure • Managed Care Relationships

16. Physician/Hospital as ACO • Full Spectrum of Patient Services • Superior Local Brand Awareness • Clinical Integration • Ability to Retain Risk • Contracting Leverage with Payers • Administrative/Financial Infrastructure

17. Forming the Health System ACO • Shared Governance Among Constituents • Community Benefit Organization/Co-Op • Medical Staff Roster Development • Invitation to Ancillary Providers • Participation Agreements • Information Technology Requirements • Health System Capitalization

18. ACO Ground Rules Development • Choose Scope of Clinical Services • Establish EBM Guidelines for Services • Model Historical Financial Performance • Determine Professional Fee schedules • Establish Hospital Revenue Code Charges • Create Combined Charge Structures • Determine P4P Gain Sharing Rules • Determine Risk Retention Rules

19. The ACO Revenue Cycle Infrastructure platform • Patient Enrollment and Eligibility • Contract Modeling and Management • Maintenance of CDM/Fee Schedules • Case Management/Referral Services • Claim Re-Pricing/Clearing/Payment • Dispute Resolution/Collections • Performance and Dashboard Reporting

20. Patient Enrollment/Patient Eligibility • Receive Enrollment Data from Payers to ACO Identifying Patient Enrollees • Develop Patient Roster for Physician Offices and Hospital Registration • Perform Eligibility Checking using HIPAA Transactions and Portal Interfaces • Transmit Authorizations to Practices and Hospital Accounting Operations

21. Case Management/Referral Management • Based on ACO Developed EBM Rules: • Track Utilization among Providers • Identify Variances from ACO Guidelines • Manage and Track Provider Referrals • Create Worklists for ACO Reviewers • Develop Internal Clinical Authorizations • Accommodate External Clinical Authorizations

22. Contract Modeling & Management • Model Bundled Contracts using Historical Claims Data and ACO Charge Master • Load Executed Contract Terms and Rules into ACO Master Contract Library • Disseminate Relevant Terms to Providers for Verification and Reconciliation • Identify Payer Variance Record

23. Charge Master Maintenance • Create Charge Master Indexes • Chronic Care Bundles/Medical Home • Acute Episodes/Procedure Package Pricing • Bundled Charges for Episode of Care – 30 Days • Imbed Charge Master into ACO Platform • Maintain and Update • Disseminate to Providers

24. Management of Claims • ACO Platform Receives Un-scrubbed Claims from Physicians and Hospital – UBs & HCFAs • ACO Re-Prices Claims According to Contract Terms or CMS Methodology • ACO Bundles Individual Claims Into Bundled Claim Edited Format • ACO Clears Bundled Claim to Payer/CMS • ACO Receives Payments/Pays Providers

25. Dispute Resolution/Collections • There WILL BE Incorrect Payments within a Bundled Payment Environment • Administrative Denials/Underpayments • Clinical Denials/Reduction of P4P Payments • Financial Reconciliation Denials/Outliers • ACO Platform Re-Adjudicates Disputed Claims with Denial Management Tools • Patient Receivables – Co-Pays, etc.

26. Performance Reporting • Care Management/Utilization Management • Flash Reporting on Active Patients • Concurrent Clinical Variance Reporting • Summary Reporting On Process/Outcomes • Administrative Reporting – Process Costs • Financial Reporting • Charge/Cost, Payer Variances, Gain-Sharing, Risk/Retention, Receivables, Distributions

27. Infrastructure Summary • The New ACO Technology Platform is not simply the Traditional PHO Platform • The Buyer Market will Change its Approach • The ACO must have a Nimble Platform • Physicians will need Assurances that the Operating System is Accurate and Transparent • The Current Revenue Cycle Systems and Applications are Inadequate for the Future

28. Concluding Thoughts • The Accountable Care OrganizationConceptand Construct is a MUST for Health Systems • As an ACO, Health Systems will be positioned as an Integrated Delivery Network • As an Integrated Delivery Network, the Health System can effectively deal with changing Reimbursement Methodologies from Payers • And, as an ACO, Health Systems can become a Participant in the planned State Exchanges

29. Contact Information Nick Hilger JDA eHealth Systems 1717 Park Street, Suite 250 Naperville, IL 60562 nhilger@jdaehealth.com (630)355-5220 ext. 3279 (Office) (651)324-2943 (Mobile)