Changes in Medicare to Improve Care and Control Costs David Polakoff, MD, MSc Chief Medical Officer and Associate Dean Commonwealth Medicine Director, Center for Health Policy and Research

Medicare spending Medicare spending projected to grow 6.7% annually between 2014-20211 Centers for Medicare & Medicaid Services. (2012). National Health Expenditure Projections 2011-2021. Baltimore, MD: Centers for Medicare & Medicaid Services.

Medicare spending Medicare beneficiaries with 6 or more chronic conditions (14% of FFS beneficiaries) account for 46% of Medicare spending2 Centers for Medicare & Medicaid Services. (2013). Chronic Conditions Among Medicare Beneficiaries, Chartbook: 2012 Edition. Baltimore, MD: Centers for Medicare & Medicaid Services.

In search of a solution… Medicare Spending = Services to Seniors x Fees to Providers

In search of a solution… Solution to poorly coordinated care that patients receive Source: Berwick, D, Hackbarth, A. (2012). Eliminating Waste in US Health Care. JAMA, 307(14):1513-1516.

In search of a solution… 5-17% of hospital admissions are potentially preventable* More than a million preventable errors and adverse events annually, costing $19 billion** Many opportunities to reduce testing and other services without harming patients *AHRQ HCUP ** The Economic Measurement of Medical Errors, Milliman and the Society of Actuaries

FFS payment remains a major barrier FFS Lacks Flexibility No payments for telephone, email, and other communication with patients No payments for care coordination among providers No payment for support services for self-management Penalty Quality/Efficiency Lower revenue if patients do not make frequent visits Lower revenue for parsimonious use of tests and procedures Lower revenue if infections and other complications are avoided rather than treated Adapted from Center for Healthcare Quality and Payment Reform

In search of a solution… Coined term of “accountable care organizations” Elliott Fisher and Glenn Hackbarth at Public Meeting of the MedPAC in 2006 Policymakers seek to slow the growth in Medicare spending Shift away from FFS toward a shared savings model Need comprehensive performance measures to determine high performing providers

Accountable Care Organizations (ACOs) “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 for a defined population”3 Begins with a collection of providers and health care organizations, rather than insurance plans Rittenhouse, DR, Shortell, SM, Fisher, ES (2009). Primary care and accountable care—Two essential elements of delivery-system reform. New England Journal of Medicine, 361, 2301-2303.

So, is this Managed Care v2.0? Creation of physician networks Defined populations Promote member health Resource utilization management to control costs

Or not… Characteristics HMO ACO Payment Fee For Service +/- enhancements Variety of payment models Physician selection Select from in-network of providers; out-of-network provider additional cost Select any provider; no risk to patient for changing provider Authorization for treatment Pre-approval/referral process No pre-authorization necessary Risk Insurers, some sharing with provider Insurer role in evolution Number of enrollees Large organizations of hundreds of thousands Localized population of a few thousand Incentives Network participation, P4P Shared savings, shared risk Coordination of care Not central to the model Focus on primary care; Coordination of care among primary care and specialist providers Governance Health plan Provider control

What are accountable payment models? Bundled payments A single payment to two or more providers who in present state are paid separately (e.g. hospital + physician) Warrantied payments Higher payments for quality care; no additional payment to treat preventable errors or complications (e.g. readmissions) Condition-based payments Payment is based on patient’s condition(s), rather than the procedure used to treat the condition

Attribution methodologies for ACOs Prospective attribution: patients assigned for performance year based on services used in prior year Performance year or retrospective attribution: patients assigned for performance year based on services used during the year

ACOs viewed as a potential cost-cutting solution Included in provisions of Section 3022 of the Patient Protection and Affordable Care Act Requires CMS to create an ACO “program” no later than January 1, 2012 CMS initiates a number of ACO-like programs Medicare Shared Savings Program Advanced Payment ACO Model Pioneer ACO Model

Pioneer ACO Model Initiated by CMS Innovation Center as a shared savings model Designed to support organizations with experience operating as ACOs or similar arrangements in providing patient-centered, coordinated care to beneficiaries at lower cost to Medicare Test different payment arrangements and approaches to care

Pioneer ACO Model 32 organizations selected to participate in initiative in December 2011 Participants started January 1, 2012 3 year performance period Prospective attribution methodology 33 quality measures to assess performance

Pioneer ACO Model Participants 1. Allina Health (formerly Allina Hospitals & Clinics) 17. Monarch Healthcare 2. Atrius Health 18. Montefiore ACO (formerly Bronx Accountable Healthcare Network (BAHN)) 3. Banner Health Network 19. Mount Auburn Cambridge Independent Practice Association (MACIPA) 4. Beacon Health (formerly Eastern Maine Healthcare System) 20. OSF Healthcare System 5. Bellin-Thedacare Healthcare Partners 21. Park Nicollet Health Services 6. Beth Israel Deaconess Physician Organization 22. Partners Healthcare 7. Brown & Toland Physicians 23. Physician Health Partners 8. Dartmouth-Hitchcock ACO 24. Plus (formerly North Texas ACO) 9. Fairview Health Systems 25. Presbyterian Healthcare Services (formerly Presbyterian Healthcare Services Central New Mexico Pioneer Accountable Care Organization) 10. Franciscan Alliance 26. Primecare Medical Network 11. Genesys PHO 27. Renaissance Health Network (formerly Renaissance Medical Management Company) 12. Healthcare Partners Medical Group (alternative name: Healthcare Partners of California) 28. Seton Health Alliance 13. Healthcare Partners of Nevada 29. Sharp Healthcare System 14. Heritage California ACO 30. Steward Health Care System 15. JSA Medical Group, a division of HealthCare Partners 31. Trinity Pioneer ACO, LC (formerly TriHealth, Inc.) 16. Michigan Pioneer ACO 32. University of Michigan = Massachusetts Participants

Pioneer ACO Models in Massachusetts 5 Massachusetts health organizations selected as participants: Atrius Health Beth Israel Deaconess Physician Organization Mount Auburn Cambridge Independent Practice Association Partners Healthcare Steward Health Care System Atrius Health Affiliated with Mount Auburn Hospital - 1,000 physicians # Primary Care Physicians Partners Healthcare 50 sites across Eastern and Central MA - 630 physicians Comprised of 5 medical groups Range of sites across Eastern MA Beth Israel Deaconess Physician Organization Affiliates: Brigham & Womens and MGH, community and specialty hospitals, home health, long term care services - 1,600 physicians 400 Primary Care Physicians 125 primary care sites across Eastern MA, north from the NH border and south to Cape Cod Steward Health Care System - ## physicians Affiliated with BIDMC and 4 community hospitals Range of sites across Eastern 10 hospitals in system, along with medical group, hospice and home care Mount Auburn Cambridge IPA - 500 physicians ## Primary Care Physicians Range of sites (# & size) across Eastern MA

Example: BCBS MA Alternative Quality Contract (AQC) Single payment for all costs of care for a population of patients Initial payment set based on past expenditures Adjusted annually based on patient conditions Offers flexibility to pay for previously uncovered services Bonus for high quality care Five year contract Savings for payer achieved by controlling increases in costs Provider benefits from returns on investments in prevention and infrastructure Payor provides analytic support Broad participation Positive initial results after two years of reporting Higher ambulatory care quality than non-participating practices, improved patient outcomes, lower readmission rates and ED use

Massachusetts Chapter 224 of the Acts of 2012 "An Act Improving The Quality Of Health Care And Reducing Costs Through Increased Transparency, Efficiency And Innovation" Signed into law on August 6, 2012 Framework for developing criteria for certification of ACOs and and Medical Homes Responsibility placed on “health care entities” to control health care costs Promotes adoption of Alternative Payment Methodologies (APM)

Massachusetts Chapter 224 of the Acts of 2012 New commissions and agencies to monitor and enforce health care cost growth Health Policy Commission (HPC) Center for Health Information and Analysis (CHIA) Establish cost growth benchmark each year Focus on wellness and prevention Expand primary care workforce Health resource planning Health information technology Health Policy Commission: HPC is charged with establishing the annual cost growth benchmark and monitoring progress through annual cost trends hearings. The Commission will also register provider organizations, certify Accountable Care Organizations (ACOs) and Patient Centered Medical Homes (PCMHs), and administer the Healthcare Payment Reform Fund, which was established in 2011. Center for Health Information and Analysis: CHIA charged with compiling the state’s annual cost trends reports, managing the state’s All-Payer Claims Database (APCD), monitoring the performance and financial stability of hospitals and health plans, and analyzing total medical expenses in the Commonwealth. Wellness and prevention: The law creates and finances a new Prevention and Wellness Trust Fund. It also creates a new tax credit to encourage employers to establish wellness programs and tasks DPH and DOI with the creation of a model wellness guide. Primary care workforce: changes to the professional-scope-of-practice laws for Physician Assistants (PAs) and Nurse Practitioners (NPs) and creates new funds for investing in primary-care capacity. The law requires that, to the maximum extent possible, public and private payers assign each member to a primary care provider (PCP), a term also redefined in the law to include both PAs and NPs. Health resource planning: law creates 10-member Health Planning Council; inventory all “health resources” Health information technology: dedicates new funds for the expansion and adoption of electronic health records (EHRs) and the statewide health information exchange (HIE).

Primary Care Payment Reform (PCPR) Initiated as APM for beneficiaries of MassHealth (the Massachusetts Medicaid Program) Goals: Improve access to care Enhance patient experience, quality of care and efficiency Emphasize PCMH Integrate primary care services with behavioral health

Primary Care Payment Reform (PCPR) 3 year program, anticipated to start October 1, 2013 Primary care providers offered more flexibility and resources to deliver care to patients Areas of focus: Clinical delivery- operate in accordance with PCMH principles Quality measures and metrics- report on 23 quality measures Payment methodologies- variable payment for services

Primary Care Payment Reform (PCPR) Shared savings/risk track payment: Risk Track 1 – Upside/Downside risk Minimum Panel Enrollees: 5,000 Receive or owe 60% of the difference between Actual Spend and Target spend Risk Track 2 – Transitioning to Downside risk Risk Track 3 – Upside risk only Minimum Panel Enrollees: 3,000 Variable savings based on percent difference between Actual Spend and Target spend

Capabilities needed to accountably manage care Data and analytics to measure and monitor quality and utilization Coordination of care among other specialists, providers, hospitals Predictive modeling to identify and target high risk patients Registry functionality to plan and track patient care and ensure follow up Resources to support patient education and self-management MD with sufficient time to diagnose, plan treatment, follow up

Capabilities needed to accountably manage care Health Plan Data and analytics to measure and monitor quality and utilization Coordination of care among other specialists, providers, hospitals Predictive modeling to identify and target high risk patients Registry functionality to plan and track patient care and ensure follow up Resources to support patient education and self-management MD with sufficient time to diagnose, plan treatment, follow up Physician

Patient centered medical homes have begun to change this Data and analytics to measure and monitor quality and utilization Coordination of care among other specialists, providers, hospitals Predictive modeling to identify and target high risk patients Registry functionality to plan and track patient care and ensure follow up Resources to support patient education and self-management MD with sufficient time to diagnose, plan treatment, follow up

Expectations and Value for the Patient More coordinated care Notified if provider is participating ACO No restrictions on provider selection Right to choose any doctor or hospital who accepts Medicare at any time No penalty for changing providers No referrals or pre-authorization needed No changes in benefits Cost of coverage should not increase

Expectations and Value for the Provider/Practice Increase coordination between physicians and specialists Increase use of primary care Reduce costs from avoidable procedures or admissions Identify attribution methods and patient population

Expectations and Value for the Provider/Practice Accountable for performance Quality Cost Population health Patient experience Compensation may be affected by outcomes achieved by the entire organization, not individual providers

Challenges Excess hospital capacity Excess, and maldistribution of specialists Primary care shortage Inadequate penetration of EMRs Health Information Exchanges (HIAs) – rudimentary or nonexistent