Multi-Payer Reimbursement Pilot Overview of Risk/Benefit to Practices L Gordon Moore MD

Payer Participants Aetna CIGNA Community Health Plan of Washington Group Health Cooperative Molina Premera Blue Cross Regence Blue Shield United Healthcare

Goal Primary Goal – to partially shift payment from the current fee-for-service model towards payment for improved outcomes. “Improved Outcomes” defined as: Reduced preventable emergency room visits and hospitalizations

Definitions Reduce preventable ED = Calculated using NYU ED Use Profiling Algorithm for patients attributed to the practice. Reduce preventable hospitalizations – calculated using AHRQ PQI methodology for patients attributed to practice.

Pilot Objectives Reduce preventable ER visits by 30% Reduce preventable inpatient admissions by 10% Pilot objectives are achievable as indicated by results from other pilots nationwide. New York City, 1998: 82% ER visits preventable New Jersey, 2004: 47% ER Visits preventable Tennessee, 2004: 51% ER visits preventable Massachusetts, FY 2006: 47% ER visits preventable

Practice Targets Reduce preventable ER visits and inpatient admissions,combined, by enough to cover the cost of investment in the pilot.

Participation Criteria At baseline, have some level of skill and facility in coordinating care – you have to get out of the gate fast or risk penalty (payback). Helpful attributes: Current participant in WA PCMH collaborative Prior WA DOH collaborative experience NCQA “Level 1” PPC-PCMH recognition A solid plan of action linked to outcomes

Helpful Core Capabilities Ability to: Offer extended hours of access (evenings/weekends) Offer care beyond “office visits” (i.e., phone, online) Demonstrate tools and processes in place for chronic care management (registry, outreach function & staff, etc.) Follow-up ED/hospital discharge with a proactive and coordinated team approach to care coordination Demonstrate timely and actionable communication to your main ED/hospital

How Much $? Two payment plans: Plan 1 Plan 2

Plan 1 Start of payment pilot: get case management bump: Year 1: additional $2.50 PMPM Years 2 & 3: PMPM drops to $2 Shared savings based on difference of periods 1, 2 & 3 from baseline (2 years prior to start) - Savings = going beyond the target set for your practice

Potential Shared Savings Any savings above PMPM earned in a year are shared 50/50 between payers and practice by adjusted PMPM in the following year. Shared savings for reductions in ER visits and hospital admissions beyond break-even levels will be distributed to participating practice groups only if they have met agreed upon quality performance measures.

Plan 1 investment If savings exceed the initial investment then they are shared between practices and plans 50/50 Savings from preventable ED and hospital visits Shared savings

Quality Performance Measures Staying healthy (HEDIS) Screening for Breast Cancer (women, age 52-69) Screening for Cervical Cancer (women, age 21-64) Screening for Colon Cancer (men/women, age 50+) Managing chronic conditions (chart review? registry?) Diabetes (HbA1c testing, cholesterol testing, nephropathy screening) Heart Disease (cholesterol testing, cholesterol lowering medication) Depression (medication adherence at 12 wks. and 6 mo.) Experience measures (surveys by practice? health plan?) Patient/Family experience measures Provider and staff experience measures

Plan 1 Performance Scenarios Assumption for Plan 1 Performance Scenarios: Attributed patients = 1000 Year 1 PMPM payments = 1000 Pts x $2.50 PMPM x 12 months = $30,000 Scenario A: No Improvement Year 1 performance = 100 ED visits Year 1 savings = 0 prevented visits x $1,500/visit = $0 Year 2 adjustment = $30,000 year 1 PMPM x.50 = $15,000 Year 2 PMPM rate = $2.00 PMPM base rate x 12 months = $24,000 - $15,000 adjustment = $9,000/12 months = $750/1000 pts = $0.75

Plan 1 Performance Scenarios Scenario B: Improvement < 50% PMPM Year 1 performance = 97 preventable ED visits Year 1 savings = 3 prevented ED visits x $1,500/visit = $4,500 Year 2 adjustment = $30,000 year 1 PMPM - $4,500 savings = -$25,500 (Stop 0.50 PMPM = $15,000) Year 2 PMPM rate = $2 PMPM base x 12 months = $24,000 -$15,000 adjustment = $9,000/12 months = $750/1000 pts = $0.75

Plan 1 Performance Scenarios Scenario C: Improvement >100% PMPM Year 1 performance = 70 preventable ED visits Year 1 savings = 30 preventable visits x $1,500/visit = $45,000 Year 2 adjustment = ($30,000 PMPM - $45,000) savings = $15,000 Year 2 PMPM rate = $2 base rate x 12 months = $24,000 +($15,00 x.50 = $7,500) = $31,500/12 months =$2625 $/month/1000 pts = $2.63

>50% of PMPM saved Plan 1 PMPM investment Savings from preventable ED and hospital visits No shared savings 50% of PMPM exceeded by savings Next year’s PMPM investment Change in PMPM Same goal for savings If total savings do not exceed the initial investment there are no “shared savings” between practices and plans If savings exceed 50% of PMPM but still fall short of break even, the practice faces a reduction in PMPM investment the next year For years 2 and 3 shared savings occur once savings exceed $2.00 PMPM investment Break even

< 50% of PMPM saved Plan 1 PMPM investment Savings from preventable ED and hospital visits No shared savings < 50% of PMPM saved Next year’s PMPM investment Reduction in PMPM – 50% of previous PMPM Same goal for savings If savings do not exceed the initial investment then there are no shared savings between practices and plans Both practices and plans are limited in their losses to 50% of PMPM For practices, the PMPM is reduced by 50% in the next year Shared savings occur when the savings for the next year exceed $2.00 PMPM for years 2 and 3

PMPM investmentSavings from preventable ED and hospital visits No shared savings 50% of PMPM exceeded by savings Next year’s PMPM investment Change in PMPM Same goal for savings PMPM investmentSavings from preventable ED and hospital visits No shared savings < 50% of PMPM saved Next year’s PMPM investment Same goal for savings Practice 1 Practice 2 Change in PMPM

Potential Downside/Risk If savings are less than PMPM in a year, payment is reduced by the amount of the shortfall up to ½ PMPM, by downward adjustment of following year’s PMPM

Plan 2 The “No Up-Front $” Plan Premise: shift FFS $ to a PMPM so the practice can choose to work as it sees fit Virtual visits instead of office visits Case management and outreach Shared savings just like Plan 1 (with one twist to help the practice) The first $2.50 PMPM (yr 1) of savings goes 100% to practice ($2 PMPM yrs 2 & 3) Beyond that: 50% share (like Plan 1)

Savings Both plans and practices have limits on losses to 50% of the PMPM invested that year Plan 1 – plans receive savings first Plan 2 – practices receive shared savings first Both practices and plans split shared savings once break even point exceeded Yearly PMPM investment Savings from preventable ED and hospital visits Break even Plan paid first Shared savings Yearly PMPM investment Savings from preventable ED and hospital visits Break even Shared savings Practice paid first Plan 1Plan 2

Which Plan is Right for You? For more information, see the advisory letter in your application packet.