1. THE AFFORDABLE CARE ACT AND CLINICAL INTEGRATION: A PRIMER Mike Segal, Esq. Broad and Cassel Presented June 13, 2013 Broad and Cassel Copyright 2013 19 th Annual Meeting of the Florida Society of Gynelogical Oncologists (FSGO)

2. 2 “IT’LL SOON SHAKE YOUR WINDOWS AND RATTLE YOUR WALLS FOR THE TIMES THEY ARE A-CHANGIN’” - BOB DYLAN Broad and Cassel Copyright 2013

3. 3 Affordable Care Act (ACA)  Signed into law in March 2010  Controversial; for sure, but Constitutional No Longer An Issue;  Today – IT’S THE LAW!  Bipartisan Support for providing better quality of care at a lower cost – the “Quality/Cost Initiative”. Broad and Cassel Copyright 2013

4. 4 ACA Goals  Consolidate physicians and hospitals into provider teams, using state-of-the-art technology, coordination of care and evidence based medicine, with protocols  Accentuate use of Primary Care Physicians  Encourage Wellness  Focus on disease prevention and tracking diseases  Medical Homes Broad and Cassel Copyright 2013

5. 5 ACA Goals How does the government intend to achieve this Quality/Cost Initiative through ACA?  Phase out fee-for-service medicine  Promote the use of state of the art intellectual technology with usable data  Pay providers who provide outstanding performance and outcomes, and penalize those who don’t  Insure millions of people currently not on the rolls through health care exchanges, beginning 1/1/2014 Broad and Cassel Copyright 2013

6. 6 Fee-For-Service Failings According to a Massachusetts 2009 Special Commission Report, fee for service:  Rewards overutilization  Fails to recognize differences in provider quality or performance  Encourages the use of high-margin services rather than low-cost alternatives  Fails to compensate for care coordination  Bases payment on market leverage rather than health care value  Fails to align provider incentives Broad and Cassel Copyright 2013

7. 7 Major ACA Provisions Focusing on Quality/Cost Initiative  Creation of Accountable Care Organizations (ACOs) – Began 1/1/12  Center for Medicare and Medicaid Innovation (CMI) – Initially funded with $10 billion  Medical Homes – Independent at Home Medical Practice Program - was to begin 1/1/12, but has not  Bundled Payments – National, voluntary pilot program that began 1/1/13  Hospital Value-Based Purchasing – Effective 10/1/12 Broad and Cassel Copyright 2013

8. 8 Accountable Care Organization – Definition  What is an ACO? According to Elliot Fisher, who is generally credited with inventing the concept:  ACOs consist of providers who are jointly held accountable for achieving measured quality improvements and reductions in the rate of spending growth. Our definition emphasizes that these cost and quality improvements must achieve overall, per capita improvements in quality and cost, and that ACOs should have at least limited accountability for achieving these improvements while caring for a defined population of patients. Broad and Cassel Copyright 2013

9. 9 What are the GOALS of a Medicare ACO?  Better Care for Individuals  Better Health for Populations  Lower Growth in Expenditure  BETTER QUALITY OF CARE AT A LOWER COST! Broad and Cassel Copyright 2013

10. 10 Mechanics of Shared Savings (MSSP) Image Courtesy of the Advisory Board Company Applying Total Cost Accountability to Fee-for-Service Payments Broad and Cassel Copyright 2013

11. 11 Crux of MSSP Sharing Opportunity  Applies to Medicare Part A and B only  Measured on total Part A and B costs of assigned beneficiaries  Basic reimbursement for services rendered by providers to beneficiaries unchanged  CMS will share with ACO (shared savings) reductions in total, aggregate cost of beneficiary care, provided that, if health quality initiatives not obtained, the shared savings will be reduced (and could even be eliminated) Broad and Cassel Copyright 2013

12. 12 THERE ARE RISKS  Cost of perations can be more than $1 million per year, with no assurance of any shared savings  Where does the investment come from?  Shared Savings, even if earned, not likely to be received until will into the second contract year, and must first be used to pay back investors  Consequences of lower costs may mean fewer treatments, less testing, fewer admissions, et al  April 23, 2012, Modern Healthcare article, “No ROI in ACO,” indicates for-profit hospital companies not rushing to participate  Beneficiaries cannot be forced t use ACP participants  In an ACO demonstration project that ran from 2005 – 2010, with 10 sophisticated integrated delivery systems and medical practices, only about half showed any real return on investment Broad and Cassel Copyright 2013

13. 13 Who Can Participate?  Minimum Population Size: 5,000 Beneficiaries (but in actuality more is necessary)  Potential ACO Entities: medical groups, independent practice associations, partnerships or joint ventures between hospitals and medical groups, integrated delivery systems with employed physicians, federally qualified centers, rural health centers and some critical access hospitals  Physicians and other Medicare enrolled providers and suppliers (e.g., SNF nursing home, LTC hospital) may participate with the above entities in an ACO  All entities must have strong PCP presence  ACO must be a legal entity with its own tax identification number, governance and management Broad and Cassel Copyright 2013

14. 14 Some Requirements  Physicians must account for 75% of governing body (no matter how much they own)  At least one Medicare beneficiary must be on the governing board – unless the ACO demonstrates an alternative means of ensuring meaningful participation in governance by Medicare beneficiaries  ACO contracts are for three years (or more, in case of those starting in 2012)  Two Tracks: Track One is shared savings only, while Track Two provides the ability to share more savings, but also with risk of loss  An ACO professional includes a physician, PA, NP or CN  ACO must have an Executive Director, a compliance officer and a medical director (does not have to be full-time)  Must have an infrastructure designed to receive and distribute shared savings Broad and Cassel Copyright 2013

15. 15 Some Additional Requirements  Must have a repayment mechanism in place if Track Two (or, in case of more than 36 month contract, requesting an interim payment)  All participants (whether or not owners) must sign a participation agreement  ACO must sign data use agreement to receive data from CMS  Must have QU/QA plan  Must have plan to promote evidence-based medicine  Must promote beneficiary engagement  Must coordinate care  Must have a procedure for terminating non-performing parties  Must be subject to substantial monitoring and reporting requirements, including reporting of quality data Broad and Cassel Copyright 2013

16. 16 TINs: All or None Rule  Patients are assigned to a Medicare ACO through its PCPs (and, in certain cases, specialists) based upon plurality of care  PCPs are, by tax identification number (TIN), exclusive to one Medicare ACO  Specialists (except specialist treated as PCP) can be in more than one Medicare ACO, but if specialist is in a group with PCPs that is difficult to accomplish – (check out following site for Broad and Cassel article on subject: http://www.broadandcassel.com/articles/DecipheringACOExclusivity.pdf)  A Medicare ACO Participant includes an entity (or an individual if a solo physician) has a TIN and which has one or more Medicare billers (ACO providers/suppliers) who have reassigned their billings to the Medicare ACO Participant TIN  Medicare ACO application requires each ACO Participant in the Medicare ACO, and all of its providers/suppliers, to agree in writing to comply with all MSSP regulations Broad and Cassel Copyright 2013

17. 17 Patient Attribution  Beneficiaries Assigned on a Retrospective Basis: Image Courtesy of the Advisory Board Company Broad and Cassel Copyright 2013

18. 18 Patient Choice and Notice  Patients may freely choose providers without regarding to provider’s participation in an ACO  Providers participating in the ACO must inform patients that the provider is participating and that patient has freedom of choice  Notices of ACO participation must be posted  Patients must be provided option to protect privacy of personal information  EHR and internal data remains key, but not absolutely required for now  ACO must notify patients of its intent to request identifiable data from CMS and the patients’ right to refuse to allow CMS to share such information Broad and Cassel Copyright 2013

19. 19 Expenditure Target  Base expenditure target, against which shared savings is measured, will be computed by CMS based on 3 years weighted average of expenditures for assigned beneficiaries  Weighting is 60% most recent year, 30% for the year before and 10% for the year before that  The expenditure target is trended forward each year based upon a national, not local, increase Broad and Cassel Copyright 2013

20. 20 Prospective Date Enable ACOs to Focus Effort Image Courtesy of the Advisory Board Company Broad and Cassel Copyright 2013

21. 21 Shared Savings Image Courtesy of the Advisory Board Company Broad and Cassel Copyright 2013

22. 22 Shared Savings  ACOs receive shared savings payments if spending per attributed beneficiary grows slower than national per beneficiary spending. 1 Minimum Savings Rate Image Courtesy of the Advisory Board Company Broad and Cassel Copyright 2013

23. 23 Quality and Reporting  33 quality measures in 4 domains:  Patient/Caregiver Experience  Care Coordination/Patient Safety  Preventive Health  At-Risk Populations  EHR Quality Measure is double weighted Broad and Cassel Copyright 2012

24. 24 Meaningful Use No Longer a Prerequisite Image Courtesy of the Advisory Board Company Broad and Cassel Copyright 2013

25. 25 Quality and Reporting Image Courtesy of the Advisory Board Company Broad and Cassel Copyright 2013

26. 26 Quality and Reporting Bonus payout to ACO is adjusted based on quality performance  Payouts are based on the percentage of “quality points” that the ACO earns  ACOs earn quality points for simply reporting in the first year of participation, but by the third year will receive quality points based on actual performance  Measured against other ACOs  Even if savings achieved, entitlement to share is based on quality  70% quality standards overall in each domain necessary to avoid being placed on a corrective action plan  Significant transparency requirements around ACO operations and financing  ACOs will be required to provide administrative information about the ACO to CMS and the public on both the quality and the financial performance of its operations Broad and Cassel Copyright 2013

27. 27 Changes to the Antitrust Policy Statement Image Courtesy of the Advisory Board Company Broad and Cassel Copyright 2013

28. 28 Legal Considerations Image Courtesy of the Advisory Board Company New Waivers for Fraud & Abuse Restrictions Broad and Cassel Copyright 2013

29. 29 ACOs (Not Medicare): Clinical Integration Required  1996 - FTC and DOJ issues joint guidelines regarding antitrust issues for health care combinations  Guidelines require, in network where not all physicians are members of same medical group, that physician members be “clinically integrated” in order to share financial information and jointly negotiate fee for service contracts  There have been four published FTC opinions since 2002 holding that Clinical Integration (CI) in network was achieved (see, e.g., www.tristatehealth.com) Broad and Cassel Copyright 2013

30. 30 Clinical Integration – Why is it important? What is it?  The Advisory Board Company defines Clinical Integration as “a strategy in which physicians – often in partnership with a hospital or health system – make a significant collective commitment to performance improvement and investment in infrastructure to facilitate these quality and efficiency gains”  CI designed to bring together different specialties under common governance and incentive structures to create – and reward – collaboration between groups of physicians who may not currently work together  CI is an imperative for a successful ACO (Medicare or otherwise) Broad and Cassel Copyright 2013

31. 31 Three part FTC/DOJ standard  Participants must demonstrate significant commitment (both in time and money) to cost control and quality improvement, with realistic opportunity to achieve goals  Joint fee for service contracting with payers, must be reasonably necessary to support network’s infrastructure and support greater collaboration (in other words, network may negotiate higher prices, but only if this is directly connected with offering a more effective CI product)  Network cannot have too much market power Broad and Cassel Copyright 2013

32. 32 Clinical Integration Key Elements 1.ACCOUNTABILITY 2.COLLABORATION 3.PATIENT CENTERED MEDICAL HOMES 4.QUALITY MEASURES 5.EVIDENCE BASED MEDICINE 6.TRANSPARENCY 7.HEALTH INFORMATION TECHNOLOGY 8.CULTURE OF ACOUNTABILITY Broad and Cassel Copyright 2013

33. 33 Accountability  “To be accountable is to understand that care will be measured and reported and that quality must improve, all while costs are controlled, or at least monitored.” - Alice Gosfield  Accountable for Performance and Outcomes  Accountable for Costs  Accountable for Patient Satisfaction  No more Fee for Service  Aligning Incentives Broad and Cassel Copyright 2013

34. 34 Collaboration  Team approach  Use of case managers  Strategic oversight for plan of care  Cross communication among professionals, and with health plans  Careful documentation – in electronic form  Strong patient communications Broad and Cassel Copyright 2013

35. 35 Patient Centered Medical Homes (PCMH)  PCMH is, according to NCQA, “a model of care in which patients have a direct relationship with a provider who coordinates a cooperative team of healthcare professionals, takes collective responsibility for the care provided to the patient, and arranges for appropriate care with other qualified providers as needed.”  Patient centric  Primary care based  Heavy dose of nurses, P.A.’s and other paraprofessionals  Provides coordinated care  Foundation of ACOs  Quality time between patient, physician and care team  Coordinated care  Managed care plans are implementing PCHM  Certification Broad and Cassel Copyright 2013

36. 36 Quality Measures  Still a work in progress  Meant to measure outcomes  33 quality measures with Medicare ACOs, divided into 4 parts:  Patient/Caregiver experience  Care coordination/patient safety  Preventive Health  At-risk populations Broad and Cassel Copyright 2013

37. 37 Evidence Based Medicine  Treatment of similar patients in similar ways  Base treatment on scientific evidence  Requirement for Clinical Integration Favorable FTC opinion  Requirement for Medicare ACO  Intermountain Healthcare famous for this  See James and Savitz, “How Intermountain trimmed health care costs through robust quality improvement effects,” Health Affiars June 2011  Must be transparent Broad and Cassel Copyright 2013

38. 38 Health Information Technology (“HIT”) Transparency  Important current aspects of HIT include:  EHRs  Computerized Physician Order Entries (“CPOE”)  Health Information Exchange (“HIE”)  Florida way behind in HIE; Governor will not cooperate with Federal government  Data production and sharing and analysis critical to Clinical Integration Broad and Cassel Copyright 2013

39. 39 Culture of Accountability  Change of culture to promote accountability critical and involves:  Collaboration and communication among multiple disciplines  Proper incentives  Use of data  Importance of quality  Appropriate documentation  Teamwork  Change of culture can be dramatically hard to adhere Broad and Cassel Copyright 2013

40. 40 “YOU BETTER START SWIMMING OR YOU’LL SINK LIKE A STONE FOR THE TIMES THEY ARE A-CHANGIN’” - BOB DYLAN Broad and Cassel Copyright 2013

41. 41 QUESTIONS? Broad and Cassel Copyright 2013 Mike Segal, Esq. Broad and Cassel MSegal@BroadandCassel.com