1. HealthManagement.com November 18, 2015 Payment Reforms: Implications for Providers of the State Innovation Model and New Medicaid HMO Contracts Speaker: Eileen Ellis, Managing Principal, HMA Western Michigan HFMA

2. HealthManagement.com Michigan State Innovation Model (SIM) Model Design: – “Reinventing Michigan’s Healthcare System: Blueprint for Health Innovation” Model Testing: – $70 million – Four years 2015-2018 – Five regions, then ten, then statewide? – Multipayer 2

3. HealthManagement.com Michigan SIM Four “Pillars” Improving Population Health Value Based Purchasing Integration of Care Structural Transformation 3

4. HealthManagement.com Michigan SIM Five “Foundational Concepts” Patient Centered Medical Homes Accountable Systems of Care (ASCs) Community Health Innovation Regions (CHIRs) Payment for Value Infrastructure Support 4

5. HealthManagement.com Michigan SIM Target Metrics Healthy Babies – High infant mortality – Racial disparity Super-utilization (ED visits) – Often pain related – High rates of behavioral health diagnoses Multiple Chronic Disease – High number with multiple chronic conditions – High rates of smoking and obesity 5

6. HealthManagement.com Healthy Babies SIM goals for 2020: – Increase timeliness of prenatal care – Reduce teen birthrates by 5% – Ensure well-child visits – Reduce Medicaid C-Section rate by 15% (Baseline is 30%) – Reduce Medicaid premature births by 5% 6

7. HealthManagement.com Super-Utilization SIM goals for 2020: – Reduce ED utilization rate by the “super- utilizers” by 10% – Ensure access to primary care. 7

8. HealthManagement.com Multiple Chronic Disease SIM goals for 2020 – Improve diabetes care, hypertension, depression screening and treatment – Reduce adult obesity by 5% – Increase adequate physical activity for adults by 20% – Increase adequate daily consumption of fruits and vegetables by 20% – Reduce Excessive alcohol consumption by 10% – Reduce proportion of adult cigarette smokers by 15% 8

9. HealthManagement.com SIM & Medicaid Procurement SIM decisions will be made after Medicaid HMO selection – Administrative Board met yesterday CHIRs/ASCs need Partner HMOs that indicated strength in: – Population health, including social determinants of health – Care integration – Payment Reform – Working with PCMHs & ASCs 9

10. HealthManagement.com SIM concepts in Medicaid Procurement: Population Health – Social Determinants of Health – Working with community organizations Delivery System Redesign – PCMH – ACS Infrastructure Support => HIE/HIT Payment Reform by the HMOs 10

11. HealthManagement.com SIM in Other States: New Payment Models Movement to value-based purchasing Gradual transition to risk-based models – Maine: purchaser led payment reform, performance based shared savings – Colorado integrates behavioral health and primary care and has tiered payments moving from shared savings to shared risk. – Delaware incrementally introduces pay-for- value and “total cost of care” payment models. – Arkansas Episodes of Care (discussed later) 11

12. HealthManagement.com Value-Based Payment Models in Michigan Medicaid HMO procurement Fee for service PCMH with supplemental PMPM Capitated PCMH with quality incentive FFS episodes of care with shared savings Prospective episodes of care (bundled payments) with quality adjustment/payment FFS global budget with shared savings (ACO-like) FFS global budget with shared savings and shared risk (ACO-like) PMPM global capitation with quality adjustment / payments Other??? 12

13. HealthManagement.com Patient Centered Medical Home Models Fee-for-service PCMH – Most HMOs have P4P incentive payments – Supplemental payments for PCMH transformation – Care management fees – Some shared savings Capitated PCMH – Not as widespread – Some plans implementing limited shared risk instead – Quality concerns 13

14. HealthManagement.com Episodes of Care (Retrospective) – Arkansas SIM Includes acute, procedural and ongoing specialty care conditions – Acute ambulatory upper respiratory infection (URI), – Acute exacerbation of asthma, – Congestive health failure (CHF), – Perinatal care, – Procedure based: total joint replacement, colonoscopy, tonsillectomy, cholecystectomy – Behavioral Health ongoing specialty care conditions: ADHD, oppositional defiant disorder (ODD) 14

15. HealthManagement.com Michigan Medicaid FFS Episodes of Care with Shared Savings United: experience in other states with perinatal, asthma, COPD, joint replacement, & cardiac procedures. McLaren: shared savings model for joint replacement: physician and ambulatory surgery center Meridian: oncology treatments for breast, colon & lung cancers Molina: Michigan Medicare example for behavioral health 15

16. HealthManagement.com Possible Retrospective Episodes Based Payments (REBP) Likely candidates for first wave in Michigan? – Acute exacerbation of asthma, – Perinatal care – Total joint replacement – Acute COPD exacerbation – Maybe one more Wave 2: Colonoscopy, Cholecystectomy, Acute PCI, Non-Acute PCI; Wave 3: Respiratory infection, pneumonia, inpatient UTI, outpatient UTI, Esophagogastroduodenoscopy, GI hemorrhage Wave 4: ADHD, ODD, CABG, CHF, Valve repair & replacement, Bariatric surgery 16

17. HealthManagement.com Payment Reform: Prospective Episodes of Care (Bundled Payments) McLaren: with Karmanos for radiation oncology for breast cancer patients. Only facility payments for first 12 months, then plan to expand to include physicians. – Diagnosis based rather than procedure based. Meridian: considering for oncology treatments for breast, colon & lung cancers United: after experience with FFS episodes, willing to move to bundled payments. Molina: testing model for 20 members with chronic conditions and high ED use. (With Center for Integrative Medicine) 17

18. HealthManagement.com Payment Reform – FFS Global Budgets: Shared Savings & Shared Risk United: Accountable Care shared savings – mostly with FQHCs and large private practices. Over time they will move to shared risk and expand number of groups. Meridian: Agreement in place with Jackson Health Network for shared savings and with the DMC PHO for shared savings and shared risk. They expect to expand both models. McLaren: In discussion with a PHO, but may start with a “shadow” model because the PHO is nervous. No consideration at this time for shared risk. Molina: In conversation with three large provider groups regarding shared savings. Some shared risk in duals demonstration ICO. 18

19. HealthManagement.com Payment Reform – PMPM Global Capitation McLaren & United do not indicate any intent to implement PMPM capitation. United believes providers are not ready. Meridian has one PMPM Global Capitation contract with Parkside Pediatric in Jackson. Both Molina and United have experience with this model in other states. 19

20. HealthManagement.com Additional Discussion/Questions? Eileen Ellis. Managing Principal eellis@healthmangement.com 517-482-9236 20