1. 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

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

3. 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.

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

5. 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):

6. 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

8. FFS payment remains a major barrier
FFS Lacks Flexibility
No payments for telephone, , 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

9. 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

10. 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,

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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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
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
physicians
## Primary Care Physicians
Range of sites (# & size) across Eastern MA

20. 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

21. Massachusetts Chapter 224 of the Acts of "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)

22. 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).

23. 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

24. 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

25. 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

26. 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

27. 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

28. 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

29. 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

30. 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

31. 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

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