Update from the Innovation Center at CMS: How is health care payment going to change? Richard J Baron, MD, MACP Group Director Seamless Care Models Center for Medicare and Medicaid Innovation CMS 4 th Annual Primary Care Summit Rocky Hill, CT November 3, 2011

Wisdom on physician payment “There are many mechanisms for paying physicians; some are good, and some are bad. The three worst are fee-for- service, capitation and salary. Fee-for-service rewards the provision of inappropriate services, the fraudulent upcoding of visits and procedures, and the churning of “ping-pong” referrals among specialists. Capitation rewards the denial of appropriate services, the dumping of the chronically ill, and a narrow scope of practice that refers out every time consuming patient. Salary undermines productivity, condones on-the-job leisure, and fosters a bureaucratic mentality in which every procedure is someone else’s problem.” James C Robinson, “Theory and Practice in the Design of Physician Payment Incentives. The Milbank Quarterly, Vol 79, No. 2, 2001, p. 149

Thank You For the hard work you are doing to improve our nation’s healthcare system. For being a part of this critical dialogue. We’re ready as never before for a leap forward into the healthcare system we want, need, and can have.

CMS Mission CMS is a constructive force and a trustworthy partner for the continual improvement of health and health care for all Americans. 4

Measures of Success Better healthcare - Improve individual patient experiences of care along the IOM 6 domains of quality: Safety, Effectiveness, Patient-Centeredness, Timeliness, Efficiency, and Equity Better health - Focus on the overall health outcomes of populations by addressing underlying causes of poor health, such as: physical inactivity, behavioral risk factors, lack of preventive care, and poor nutrition Reduced costs - Lower the total cost of care resulting in reduced monthly expenditures for Medicare, Medicaid or CHIP beneficiaries by improving care

The Current System Greatest Acute Care in the World: People come from around the world to be treated But: 49.9 Million Americans lack coverage Uncoordinated – Fragmented delivery systems with variable quality Unsupportive – of patients and physicians Unsustainable – Costs rising at twice the inflation rate

Innovation Will Transform American Health Care All Americans receive the right care, in the right setting, at the right time, all the time Health dollars spent efficiently; rate of growth slowed significantly Clinical and delivery system best practices diffused rapidly CMS part of the solution… 7  Fragmented delivery systems with variable quality  Costs rising at twice the inflation rate  17 year lag between best practice discovery and widespread adoption  Clinicians dissatisfied  Patients often passive and unengaged PUBLIC SECTOR Current payments – part of the problem… Future State People-Centered Current State Producer-Centered  Episode-based payments  Value-based purchasing  Accountable Care Organizations  Patient Centered Medical Homes  Resource Utilization Reporting  Innovation Center rapid testing and diffusion  Fragmented payment systems (IPPS, OPPS, RBRVRS)  Fee-for-service payment model PRIVATE SECTOR INNOVATION CENTER

A Future System Affordable Accessible – to care and to information Seamless and Coordinated High Quality – timely, equitable, safe Person and Family-Centered Supportive of Clinicians in serving their patients needs

Transforming Health Care We can invent our way to success We can improve our way to a sustainable, proud, and excellent American health care system We can make health care more affordable for our country by making it better for the people who depend on it Better care will be, overall, less costly care

Partnership for Patients Bundling Pioneer ACOs Global Payment ACO – Track 2 Medical Homes Meaningful Use Delivery Reform Continuum Providers can choose from a range of care delivery transformations and escalating amounts of risk, while benefitting from supports and resources designed to spread best practices and improve care. ACO – Track 1 Tools to Empower Learning and Redesign: Data Sharing, Learning Networks, RECs, PCORI, Aligned Quality Standards

New Tools in the CMS Toolbox Medical Homes Hospital-Acquired Conditions (HAC) Payment Rules Value-Based Purchasing Reducing Fraud, Waste & Abuse Medicare and Medicaid Coordination Office CMS Innovation Center Medicare ACO Shared Saving Program

The Innovation Center “The purpose of the Center is to test innovative payment and service delivery models to reduce program expenditures under Medicare, Medicaid and CHIP…while preserving or enhancing the quality of care furnished…” –“Preference to models that improve coordination, quality and efficiency of health care services.” Resources - $10 Billion in funding for FY2011 through 2019 Opportunity to “scale up”: HHS Secretary authority to expand successful models to the national level

The Innovation Center Mission Statement “Be a constructive and trustworthy partner in identifying, testing and spreading new models of care and payment that continuously improve health and healthcare for all Americans.”

Our Work Patient Care Models – The right care at the right time, in the right setting – every time Seamless Coordinated Care Models – Coordinating care to improve health outcomes for patients Community and Population Health Models – Keeping families and communities healthy

Our Process Solicit ideas for new modelsSelect the most promising modelsTest and evaluate the modelsSpread successful models

Initial Programs ACO Initiatives: Shared Savings Program, Pioneer, Advance Payment, Learning Sessions Bundled Payments for Care Improvement Multi-Payer Advanced Primary Care Practice Demonstration Federally Qualified Health Center (FQHC) Advanced Primary Care Practice Demonstration Medicaid Health Home State Plan Option State Demonstrations to Integrate Care for Dual Eligible Individuals Demonstration to Improve Quality of Care for Nursing Facility Residents Financial Models to Support State Efforts to Coordinate Care for Medicare- Medicaid Enrollees Partnership for Patients Comprehensive Primary Care initiative Innovation Center Advisors

ACO Initiatives at CMS: –Shared Savings Program –Pioneer ACO Model –Advance Payment Initiative –ACO Accelerated Development Learning Sessions CMS ACO Initiatives

Advance Payment Initiative The Innovation Center sought public comments on whether it should offer an Advance Payment Initiative. The Advance Payment Initiative would give certain ACOs participating in the Medicare Shared Savings Program access to part of their shared savings up front. ACOs would need to provide a plan for using these funds to build care coordination capabilities, and meet other organizational criteria. Advance payments would be recouped through the ACOs’ earned shared savings.

Multi-payer Advanced Primary Care Practice Model Evaluate the effectiveness of doctors and other health professionals receiving a common payment method from Medicare, Medicaid, and private health plans Medicare will participate in existing State multi-payer health reform initiatives that currently include participation from both Medicaid and private health plans. The demonstration program will pay a monthly care management fee for beneficiaries receiving primary care from APC practices Eight states selected to participate: Maine, Vermont, Rhode Island, New York, Pennsylvania, North Carolina, Michigan and Minnesota will participate

Federally Qualified Health Center Advanced Primary Care Demonstration Evaluate the impact of the advanced primary care practice model on the accessibility, quality, and cost of care provided to Medicare beneficiaries served by Federally Qualified Health Centers (FQHCs). FQHC receives care management fee for each Medicare beneficiary enrolled at the FQHC Applications were due September 9, 2011 Up to 500 FQHCs will be selected

Medicaid Health Home State Plan Option Option open to all states Allows Medicaid beneficiary with at least two chronic conditions to designate a single provider as their “health home” Participating states will receive enhanced financial resources from the federal government to support “health homes” (90-10 Federal-State match) The Innovation Center will be assisting with learning, technical assistance and evaluation activities.

State Demonstrations to Integrate Care for Dual Eligible Individuals CMS awards contracts to states for design of models aimed at improving the quality, coordination, and cost effectiveness of care for dual eligible individuals 15 states have received contracts of up to $1 million: –California, Colorado, Connecticut, Massachusetts, Michigan, Minnesota, New York, North Carolina, Oklahoma, Oregon, South Carolina, Tennessee, Vermont, Washington and Wisconsin

Community-based Care Transitions Program (CCTP) The CCTP, mandated by section 3026 of the Affordable Care Act, provides the opportunity for community based organizations to partner with hospitals to improve transitions between care settings $500 million available for community-based organizations Applications now being accepted and awarded on a rolling basis The goals of the Community-based Care Transitions Program are to: Improve transitions of beneficiaries from the inpatient hospital setting to home or other care settings Reduce readmissions for high risk beneficiaries Document measurable savings to the Medicare program Learn more:

Comprehensive Primary Care initiative

Community Care of North Carolina –Decreased preventable hospitalizations for asthma by 40 % –Lowered visits to the Emergency Room by 16% Group Health Cooperative of Puget Sound –Reduced emergent and urgent care visits by 29% –Lowered hospital admissions by 6% Geisinger Health Plan –Reduced admission rates by 18% –Lowered hospital readmissions by 36% per year Evidence Supporting Comprehensive Primary Care

Comprehensive Health Services –Business is providing workforce health care –Found increasing the use of primary care resulted in 17% reduction in costs for established patients in one year Wisconsin-based QuadMed –Operates five employee clinics on-site or nearby –The company’s health costs/employee are approximately one quarter the cost of the rest of community Increased quality indicators, including patient satisfaction Lower rates of emergency department visits and hospital admissions Evidence Supporting Comprehensive Primary Care: Employers

Comprehensive primary care Aim: Better health, Better care, Lower cost Continuous improvement driven by data Comprehensive primary care functions:  Risk-stratified care management  Access and continuity  Planned care for chronic conditions and preventive care  Patient and caregiver engagement  Coordination of care across the medical neighborhood Enhanced, accountable payment Optimal use of health IT Supportive Multipayer Environment Practice and Payment Redesign through the CPC initiative

1.Risk-stratified care management 2.Access and continuity 3.Planned care for chronic conditions and preventive care 4.Patient and caregiver engagement 5.Coordination of care across the medical neighborhood Comprehensive Primary Care Functions: What is CMS trying to support?

Participating practices will deliver intensive care management for the sickest patients with highest needs By engaging patients, providers can create a plan of care that uniquely fits each patient’s individual circumstances and values Markers of Success: –Policies and procedures that describe routine risk assessment –Presence of appropriate care plans informed by the risk assessment 1. Risk-stratified care management

Patient care team must be accessible to patients 24/7 Use patient data tools to provide real-time, personal health care information Provide care from the same provider or health team to build trusted relationships Markers of Success: –Continuity of visits with same provider –Availability of EHR when office is closed 2. Access and continuity

Primary care practices will proactively assess patients to determine need Provide appropriate and timely preventive care Use disease registries to track and appropriately treat chronically ill patients Markers of Success: –Provision of Medicare’s Annual Wellness Visit –Documentation of medication reconciliation 3. Planned care for chronic conditions & preventive care

Primary care practices will engage patients and their families in active participation in goal setting and decision making. Patients will be full partners in truly patient-centered care Markers of Success: –Policies and procedures designed to ensure that patient preferences are sought and incorporated into treatment decisions 4. Patient & caregiver engagement

Primary care as first point of contact will take the lead in coordinating care Primary care team will work together with broader health team and the patient to make decisions Access to and meaningful use of electronic health records will be used to support these efforts Markers of Success: –Use of processes and documents for communicating key information during care transitions or upon referral to other providers 5. Coordination of care across the medical neighborhood

Three Components of Medicare Payment in the CPC initiative Medicare fee-for-service remains in place Average $20 PBPM fee (risk-adjusted) to support increased infrastructure to provide CPC for first 2 years –Reduced to an average of $15 PBPM in years 3 and 4 Opportunity for Shared Savings in years 2, 3, and 4 –Calculated at the market level –Practice share determined by size, acuity and quality metrics

Additional Support for Primary Care Practices Commitment to share data with practices on utilization and the cost of care for aligned beneficiaries Shared learning to help practices effectively share their experiences, track their progress and rapidly adopt new ways of achieving improvements in quality, efficiency and population health

Individual health plans, covering only their members, cannot provide enough resources to transform primary care delivery –Requires investment across multiple payers CMS is inviting public and private insurers to collaborate in purchasing high value primary care in communities they serve Collaboration with Payers and Purchasers

Participating Payers and Purchasers Commercial Insurers Medicare Advantage plans States Medicaid Managed Care plans State/federal high risk pools Self-insured businesses Administrators of self-insured group (TPA/ASO)

CMS invites Payers and Purchasers to align support strategies in a community Interested payers may describe in the application how they would propose to align with CMS: –What they are already doing to support CPC functions through enhanced, non-visit based support –What they would be prepared to do to support CPC functions –Describe the geographic area in which they would be prepared to test this model with CMS Payers may propose comprehensive primary support in one or more markets, through one or more lines of business

What is a “market”? 39 Interested payers will describe the contiguous geographic area in which they would be prepared to test this model with CMS Use a combination of Metropolitan Statistical Areas (MSAs), counties, and/or zip codes as descriptors –May span multiple MSAs and/or counties The final definition of a market will be based on the overlapping, contiguous geographic services areas of participating payers and will remain within one state

States as Applicants 40 May apply on behalf of state employees program or encourage Medicaid manage care plans to apply May apply and propose support from the Innovation Center for Medicaid fee-for-service beneficiaries utilizing or assigned to participating practices –Funding available for enhancements to primary care, such as newly initiated or enhanced PCCM services

Applying states need to Share data on cost and utilization Collaborate with CMS in conversations with their states’ Medicaid managed care organizations to encourage them to consider applying to participate in this initiative Commit to working with CMS in its evaluation of the initiative 41

Evaluating Payer Applications Innovation Center will assess alignment of payer proposals: –Method of enhanced, non-visit-based support for comprehensive primary care functions –Opportunity for practices to qualify for shared savings –Attribution methodology for how a payer’s members will be identified as being served by a participating practice –Sharing data on cost and utilization with participating practices –Willingness to align quality, practice improvement and patient experience measures

Market Selection Market selection is combination of: –Scoring of individual payer proposals against eligibility criteria –Collective “market impact” of proposals Markets will be chosen based on where a preponderance of health care payers: –Apply, meet criteria, are selected, and agree to participate Goal is to have diverse geographic representation

Once markets are selected, CMS will invite all willing and eligible payer applicants to participate in market-level discussions involving payers, providers, consumers to agree on: –A common approach to data sharing –Implementation milestones –Alignment on quality measures No discussion of payment or pricing. Market Discussions

Result of Market Discussions Each payer will enter into a Memorandum of Understanding (MOU) with CMS: –The content of the MOU will be the same for all payers in a market –Through the MOU, payers will commit to the common approach to data sharing, implementation milestones and quality metrics –The MOU will reference the payer’s proposal to CMS of their support for comprehensive primary care

Occurs after the 5-7 markets are selected The goal is to enroll ~75 practices per market We expect to attract high-performing practices CMS and participating payers will enroll primary care practices who agree to provide comprehensive primary care CMS will sign an agreement with practices Payers will sign separate agreements with practices Practice Selection

Resources All application materials and more information can be found on the website, Letters of Intent are due November 15, 2011 Applications are due on January 17,

Questions? For further questions, please 48

Partnership Join us on this journey to provide coordinated, seamless, reliable, and patient-centered care that is rooted in health, grounded in primary care, and economically sustainable. CMS wants to support your transformation and work with you to improve care and reduce costs.

Questions? Suggestions? How can we work together? Thank You