Rural ACO’s Risks, Rewards and Reality Lynn Barr, MPH Founder National Rural ACO

2 Confidential and Proprietary © 2014 National Rural ACO Consortium

3 Confidential and Proprietary © Physician Fee Schedule RAC Audits Reduce CAH reimbursement from 101% to 100% Meaningful Use Stage 2 ICD-10 Increased transparency in cost and quality SGR fix What is happening in DC?

4 Confidential and Proprietary © 2014 The Ever-Shrinking Pie

5 Confidential and Proprietary © 2014 Value-Based Reimbursement Quality Cost/Life Value = Accountable Care Organization = A mechanism to maximize Value by measuring and optimizing Quality and Per-Beneficiary Cost

6 Confidential and Proprietary © PFS pays 4% bonus or 4% penalty in 2017 for top quartile performers on ACO-like quality measures and cost per beneficiary “Doc Fix” pays 8% bonus or 4% penalty 2019 “Doc Fix” pays 24% bonus or 12% penalty Are you ready? How will you support your physicians? How will you protect higher-priced hospital-based outpatient services? How will you protect your high-spend patients? An ACO entrepreneur can earn $1M on each 1000 lives. How will you keep “carpet-baggers” out of your community? New Payment Policies

7 Confidential and Proprietary © 2014 Commercial Insurers Narrow Networks – Patients pay more to seek care outside of the network Reference Pricing – Plans pay a fixed amount for elective procedures – such as total joint replacement at Cleveland Clinic – Patient’s pay the balance if they go elsewhere. High Deductible Plans and Pricing Transparency – Cost sharing causes patients to “shop around” on everything from CT scans to surgery Rushing into ACO’s: Wellpoint forecasts 75% participation by 2016, United - $65 billion by 2018, Aetna – 45% participation by New Care Coordination Fees $3-$10 PMPM Commercial $42 PMPM Medicare! New Payment Policies

8 Confidential and Proprietary © 2014 CBO – July 2014 Downgraded cost per Medicare Life by $1000 per year Projected savings of $1.23 Trillion Results are In!

9 Confidential and Proprietary © 2014 Orient your mission toward population health and line up payment models as quickly as possible. Get data to find your opportunities to improve cost and quality. Get data so physicians succeed under new payment models. Get waivers and clinically integrate with others to create market power, improve coordination and reduce costs while maintaining independence. Publish your data so payors, physicians and patients recognize your value. Enter data-informed arrangements that get you more of the premium dollar. How Do You Win?

10 Confidential and Proprietary © 2014 Medicare Shared Savings Other Payer Shared Savings Self-Insure Employees Co-Brand Insurance For Employers Co-Brand Insurance For Community Medicare Advantage Get Data and Establish Processes PCMH Actuarial Analysis Only go as far as it makes sense! PCMH = patient-centered medical home. One Step at a Time

11 Confidential and Proprietary © 2014 Medicare Shared Savings Program Transitional payment program Providers become accountable for the cost and quality of care for a defined population Requires care coordination and promotion of evidence-based medicine Gives competitive advantage to help participants to achieve goals Waivers Data If successful, share up to 50% of savings. If not successful, no penalty. ALL EXISTING REIMBURSEMENT STAYS THE SAME!

12 Confidential and Proprietary © 2014 xQ ACO Programs $10,000 $9,500 $500 $250 $200 All existing reimbursement stays the same. ACO’s Baseline Spending per Patient— Based on Previous Three Years, for All ACO Participants ACO’s Year 1 Spending per Patient SavingsShared Savings (50%) Quality Score Adjusted Shared Savings How Does ‘Shared Savings’ Work?

13 Confidential and Proprietary © 2014 Beneficiary Groups $84,293 Top 5% $35,986 6%–10% $15,320 11%–25% $4,381 26%–50% $743 51%–100% Focus on ‘Top 10%’ Patients to Achieve Savings

14 Confidential and Proprietary © 2014 Poor quality scores can reduce payment up to 39%. 25% At-Risk Populations 25% Preventive Health Patient and Caregiver Experience 25% Care Coordination and Patient Safety 25% Maximize Quality Performance

15 Confidential and Proprietary © 2014 Save by Forming a Narrow Network Focus referrals on high-value providers. Develop MOU with tertiary and specialty care to: Require data exchange and discharge notification. Avoid repeating rural diagnostics. Recognize rural medical home. Use rural health system services when feasible. Accept all patients referred, regardless of insurance type. Provide urgent appointments within 72 hours and routine appointments within four weeks. Use best efforts to provide the highest level of quality and patient satisfaction at the lowest cost. Use and promote evidence-based medicine. MOU = Memorandum of Understanding.

16 Confidential and Proprietary © 2014 PBPY = per beneficiary per year. Not really… It’s more about seeing the data and funding the infrastructure than getting paid shared savings. It will position the health system for future success by producing high-quality scores and low $ PBPY. Maximize future payments. Use what you learn to negotiate with payers for additional upside. Demonstrate value to other providers. It’s good for our patients and our community. ACO Millionaires!

17 Confidential and Proprietary © 2014 PBPY = per beneficiary per year. What Can You Learn From Data? Immediate returns in ED utilization

18 Confidential and Proprietary © 2014 PBPY = per beneficiary per year. What Can You Learn From Data? Where do you rank?

19 Confidential and Proprietary © 2014 PBPY = per beneficiary per year. What Can You Learn From Data? What is your cost per life?

20 Confidential and Proprietary © 2014 PBPY = per beneficiary per year. What Can You Learn From Data?

21 Confidential and Proprietary © 2014 PBPY = per beneficiary per year. What Can You Learn From Data? What are your greatest costs?

22 Confidential and Proprietary © 2014 PBPY = per beneficiary per year. What Can You Learn From Data? What are your greatest costs?

23 Confidential and Proprietary © 2014 PBPY = per beneficiary per year. What Did One Member Learn? Part A Market Share How do you get back what you manage to prevent?

24 Confidential and Proprietary © 2014 PBPY = per beneficiary per year. What Can You Learn From Data? Tertiary Care Nearby CAH Nearby SNF Tertiary Care Local SNF Where do your patient’s go?

25 Confidential and Proprietary © 2014 PBPY = per beneficiary per year. What Can You Learn From Data? Why are they leaving? Tertiary Care Nearby CAH Nearby SNF Tertiary Care Local SNF

26 Confidential and Proprietary © 2014 Who Sent Them There?

27 Confidential and Proprietary © 2014 Receive data on all claims submitted on your Medicare patients, regardless of point of service, to identify patient needs and be able to accurately calculate your outpatient market share, referral patterns and opportunities for new services. Measure, report and improve on ambulatory clinical quality measures and total costs per Medicare beneficiary to prepare for new, value-based payment models. Valuable waivers of Stark, Patient Inducement, Antitrust and Anti-Kickback Statutes to enable you to align yourself with your providers; negotiate better rates with payers; and demand data exchange, high quality, excellent service and cost control from your referral network. Receive shared savings payments from CMS that should cover your costs and allow you to engage with more payers. MSSP Benefits

28 Confidential and Proprietary © 2014 Care coordination for chronically ill patients. Assistance in supporting non-compliant patients. Assistance in meeting the non-clinical needs of patients that affect their health and well-being. AT LEAST 20% of shared savings goes directly to clinicians for quality. Automatically comply with and receive payments for PQRS, if participating. Automatically comply with Clinical Quality Measures for Meaningful Use. Prepare for maximum payments under new value-based payment models. Benefits for Physicians

29 Confidential and Proprietary © 2014 What are the risks of NOT joining an ACO? You are stuck in the fee-for- service/cost based reimbursement model while the world moves on. Doctors will join somebody else’s ACO Nearby ACO’s will poach your high spend patients Can’t replace lost reimbursement so must cut services – death spiral Diminishing incentives in the future. Do you want to be the chef or the lunch?

30 Confidential and Proprietary © 2014 Conclusion Fee for Service is OVER! Choose or the choice will be made for you. Community health systems are perfectly poised for population health. ACO’s are a good transitional program to morph from optimization for fee for service to optimization for population health. Most rural providers do not have enough resources or beneficiaries to succeed as an ACO – they must collaborate to play. Rural markets have the most low hanging fruit – never managed populations yield immediate return.