1. ACOs – Past, Present and Future
January 14, 2016 // 1:55 P.M. – 2:45 P.M. EST

2. Kent Thompson Matt Fadel
TODAY’S PRESENTERS
Kent Thompson
Manager, DHG Healthcare
Matt Fadel
Manager, DHG Healthcare

3. SESSION GOALS AND OBJECTIVES
Understand Current MSSP Structure and History
Identify the history of the MSSP program and the current infrastructure.
Results of the current program
Overview of the results of the programs released by CMS for 2014.
Understand the Components of Clinical Integration
Using your clinically integrated network to demonstrate value in the market

4. History & Current Infrastructure 2014 ACO Results
Agenda
MSSP Fundamentals
History & Current Infrastructure
2014 ACO Results
Components of Clinical Integration
Source: MLN Webinar 4/8/14

5. MSSP Fundamentals

6. What is an ACO?
Group of doctors, hospitals, and other health care providers
Come together voluntarily
Provide coordinated high quality care to Medicare patients
Goal – ensure patients get the right care at the right time
Avoid unnecessary duplication of services
Successful ACO
Delivers high-quality care
Spends health care dollars more wisely
Share in savings achieved for the Medicare program
ACO Programs
Medicare Shared Savings Program (MSSP)
Pioneer ACO Model
Next Generation ACO Model
Comprehensive End-Stage Renal Disease Care Model

7. Statutory Requirements
By statute, ACOs must meet the following eligibility criteria:
Agree to participate in the program for at least a 3-year period
Have a sufficient number of primary care professionals for assignment of at least 5,000 beneficiaries
Have a formal legal structure to receive and distribute payments
Have a mechanism for shared governance and a leadership and management structure that includes clinical and administrative systems
Shall provide information regarding the ACO professionals as the Secretary determines necessary
Define Processes to:
Promote evidenced-based medicine
Promote patient engagement
Report quality and cost measures
Coordinate care
Demonstrate it meets patient-centeredness criteria
Source: MLN Webinar 4/8/14

8. Fundamentals of the MSSP Program
Explanation Of How MSSP Works And Are Structured.
DESIGN ELEMENT
ONE-SIDED MODEL
TWO-SIDED MODEL
Sharing Rate
Up to 50% based on quality performance
Up to 60% based on quality performance
Minimum Savings Rate (MSR)
Varies by number of assigned beneficiaries 2%
Shared Savings Method
First dollar sharing once MSR is met or exceeded
Maximum Sharing Cap
Total shared savings payments cannot exceed 10% of benchmark
Total shared savings payments cannot exceed 15% of benchmark
Minimum Loss Rate
None
ACO repays share of all losses if expenditures are more than 2% higher than benchmark
Shared Loss Rate
One minus final sharing rate applied once minimum loss rate is met; loss rate is capped at 60%
Maximum Loss Cap
Losses capped at 5%, 7.5%, 10% in years 1, 2, 3, respectively
SHARED SAVINGS PAYMENT CYCLE
Health Care Advisory Board, 2012

9. Fundamentals of the MSSP Program33
Total number of quality measures 4
Domains of quality measures
25%
Percentage of quality score composed
by each domain
Patient, Caregiver Experience of Care
8 Measures
All based on CAHPS Scores
Patient Safety/ Care Coordination
10 Measures
EHR capabilities weighted twice as much as other categories
At-Risk Population
7 Measures
Focused on diabetes, hypertension, ischemic vascular disease, heart failure, coronary artery disease, depression
Preventive Health
8 Measures
Include a variety of screenings, measurements, immunizations
Health Care Advisory Board, 2012

10. History and Current Infrastructure

11. Medicare Shared Savings Program Background
Shared Savings Program Web site
Mandated by Section 3022 of the Affordable Care Act
Established a Shared Savings Program (SSP) using Accountable Care Organizations (ACOs)
Medicare Shared Savings Program must be established by January 1, 2012
Notice of proposed rulemaking issued March 31, 2011
CMS sought and received over 1,300 comments on the proposal
Issued Final Rule November 2011
Source: MLN Webinar 4/8/14

12. Medicare Shared Savings Programs
Now an annual enrollment process
Another 121 ACOs started 1/1/16
Total Medicare beneficiaries – 8.9 million
477 ACOS over 49 states and District of Columbia
64 ACOs are risk bearing
Increased interest in performance-based risk (22 in Tracks 2 & 3)
21 ACOs accepted as Next Generation ACOs
West Virginia
7 ACOs with service areas including WV
ACO address – Virginia (3), Maryland (3), Massachusetts (1)

13. Next Generation ACO Model
New ACO Model
21 ACOs participating in 2016
Next Generation ACO Model
Significant experience in coordinating care for patient populations through initiatives, including MSSP and Pioneer ACO Model
CMS partners with ACOs with experience in care coordination of patient populations and provider groups ready to assume higher levels of financial risk and reward (up to 100% risk)
Ties to goals of tying traditional or fee-for-service Medicare payments to alternative payments (ie. ACOs)
2016 – 30%
2018 – 50%

14. Current MSSP participants and new applicants
Next Generation ACO
Current MSSP participants and new applicants
Two application rounds: 2015 & 2106
Three one year performance periods with two additional one-year extensions
Smoothing cash flow through alternative payment mechanisms
Discount rather than MSR
Quality, Regional and National Efficiency components

15. ACO Investment Model (AIM)
Developed in response to stakeholder concerns that some ACOs lack access to funding needed to invest in an infrastructure to implement such a program successfully
Encourages formation of ACOs in areas where there are low concentration of current programs
Focus on rural areas
Upfront payments and per beneficiary payments
41 participating ACOs (2 existing and 39 selected for 2016 start
Serve a combined 394,000 beneficiaries nationwide
25 include a Critical Access Hospital or IPPS hospital with fewer than 100 beds
Represent 34 states (including West Virginia)

16. ACO Investment Model (AIM)
AIM class starting in 2016
Current MSSP participants can join from 2012, 2013 and 2014 classes
Three payment streams for 2016 class:
An upfront, fixed payment:  Each ACO receives a fixed payment of $250,000.
An upfront, variable payment:  Each ACO receives a payment of $36 per beneficiary based on the number of its preliminarily, prospectively-assigned beneficiaries.
A monthly payment of varying amount depending on the size of the ACO:  Each ACO receives a monthly payment of $8 per beneficiary based on the number of its preliminarily, prospectively-assigned beneficiaries for up to 24 months.
During the selection process, the ACO Investment Model will target new ACOs serving rural areas, areas of low ACO penetration and existing ACOs committed to moving to higher risk tracks.

17. ACO Investment Model (AIM)
Who can participate?
For ACOs starting in 2016, an ACO will be eligible to participate in AIM if it is eligible to participate in MSSP and satisfies the following requirements:
Has 10,000 or fewer preliminarily, prospectively-assigned beneficiaries
Does not include a hospital as an ACO participant or an ACO provider/supplier unless the hospital is:
Critical Access Hospital (CAH) or;
Inpatient Prospective Payment System (IPPS) hospital with 100 or fewer beds
Can’t be owned or operated in whole or in part by a health plan

18. ACO Investment Model (AIM)
AIM Payment Example
Participation begins in January 2016
6,000 Assigned Beneficiaries
Upfront, fixed payment
$ ,000
Upfront, variable payment
216,000
Monthly payment ($48,000/month)
1,152,000
Total payments over 24 months
$ 1,618,000

19. ACO Investment Model (AIM)
Do I repay the upfront payments?
CMS will recover the payments from shared savings as long as you are in the program. If you don’t earn enough to cover the costs and you don’t enter a second program, CMS will not pursue recovery.
What if the payments are more than I save?
CMS won’t pursue amounts in excess of the earned shared savings.
What if I leave the program early?
CMS will pursue full recovery of payments if you leave the program early.

20. 2014 ACO Results

21. 2014 ACO Financial Results
In 2014, MSSP and Pioneers generated $926M of savings with $423M returned in savings
MSSP ACOs:
In 2014, generated $806M in savings with shared savings of $341M, compared to 2013 savings of $705M and shared savings of $315M.
Savings to Medicare Trust Fund of $465M ($390M in 2013).
Pioneers:
In 2014, generated total model savings of $120M compared to $96M in 2013 and $88M in 2012.
11 of 15 ACOs qualified for shared savings of $82M.
3 ACOs paid CMS $9M in shared losses
Source: CMS 8/25/15.

22. Overall higher average performance:
2014 ACO Quality Results
Overall higher average performance:
MSSP ACOs
Improved in 27 out of 33 measures, with quality improvement shown in:
Patients’ ratings of clinicians’ communication,
Beneficiaries’ rating of their doctor
Screening for tobacco and cessation
Screening for high blood pressure
Electronic Health Record Use
Achieved higher average performance on 18 of 22 Group Practice Reporting Option measures.
Source: CMS 8/25/15. .

23. Overall higher average performance:
2014 ACO Quality Results
Overall higher average performance:
Pioneers
Mean quality score increased to 87.2 from 85.2 in prior year.
Showed improvements in 28 of 33 quality measures and experienced average improvements of 3.6% across all quality measures compared to prior year.
Strong improvement in these areas:
Medication reconciliation (70% to 84%)
Screening for clinical depression and follow-up plan (50% to 60%)
Qualification for an electronic health record incentive payment (77% to 86%)
Improved average performance score for patient and caregiver experience in 5 of 7 measures compared to prior year.
Source: CMS 8/25/15. .

24. Components of Clinical Integration

25. The Tipping Point – Volume to Value

26. Physician Alignment Vehicle Required to Attack Numerous Programs
Hospital Acquired Conditions
Bundled Payments
Value-based purchasing
Readmissions
Oncology Care Model
MSSP
Rewards and/or penalties are linked to each program
Workflow changes for CMS programs will directly impact on other patient populations.
CMS Programs
Scope of services and requirements are already defined
Complicated CMS programs are just the beginning of payer programs. An aligned physician base can help respond to CMS requirements and prepare for incoming commercial payer programs

27. CINs: Definition
A Clinically Integrated Network (CIN) is a selective partnership of physicians collaborating with hospitals to deliver evidence-based care, improve quality, efficiency, and coordination of care, and demonstrate value to the market.
Clinically Integrated Network
Payors and Employers $
Contracts
Participation Agreement
Participation Agreement
CI Entity
Private Practice Physicians
Health System and Employed Physicians
Distribution of Funds $ $
WHAT IT’S NOT
Physician employment
Hospital-led initiative
Mechanism to gain negotiating leverage over payors

28. Components of a CIN Clinically Integrated Network
Infrastructure & Funding
Distribution of Funds
Contracting
Information Technology
Physician Leadership
Structure & Governance
Participation Criteria
Performance Objectives
Clinically
Integrated
Network

29. Structure & Governance
Overview: Other than an employment-only model, a CIN usually is structured as a joint venture or subsidiary Physician Hospital Organization, or an Independent Practice Association (IPA).
IPA
Joint Venture PHO
Health
System
Participating
Physicians
Payors /
Employers
PHO
XX%
Health System
Subsidiary PHO
Health
System
Participating
Physicians
Health
System
Participating
Physicians
IPA
Subsidiary
Participating
Agreement
100%
100%
Participating
Agreement
Payors /
Employers
Payors /
Employers

30. Infrastructure & Funding
Overview: The CIN is a separate business entity with a distinct identity, mission, and vision, dedicated leadership and staff, sustainable sources of revenue, and participating provider agreements with physicians that create potential value for both physicians and payors.
Sources of Revenue
The CIN will need to offset costs of building the network (Infrastructure) and eventually provide returns through various revenue sources depending on the maturity of the network.
Reporting Incentives and Membership Fees
Self Funded Health Plan
Payor Contracts
Maturity of CIN
Low
High
Value Incentive Program
Pay-for-Performance
Employer Contracts

31. Participation Criteria
Overview: Member physicians or groups that satisfy certain guidelines and criteria must sign an agreement outlining the expectations and requirements for participation in the CI program.
Sample Participation Criteria
Participating Physicians Clinical Integration Legal Agreement (Independent & Employed)
Physician Leadership
Information Technology Adoption
Quality Improvement
Contracting Requirements
Active member of “Hospital” Medical Staff
Participate in educational programs
Complete orientation program
Provide leadership and oversight over defined operations
Utilize professional and office
Access to high-speed internet
Implement the preferred health information technology
Share clinical information / data
Develop, implement, and monitor clinical protocols
Review member physician performance
Develop / implement corrective action plans and process improvement initiatives
Participate in jointly negotiated contracts

32. Examples of Performance Improvement
Performance Objectives
Overview: CINs identify metrics and targets designed to meaningfully impact the clinical practice of all network physicians, and to align their conduct with hospital initiatives, so as to improve quality and demonstrate value across the entire continuum of care.
Examples of Performance Improvement
Element
Description
Examples
Variance & Cost Reduction
Minimize variable physician performance not related to patient characteristics
Minimize orthopedics supply chain cost
Staffing and productivity opportunities
Unnecessary Care Reduction
Reduce avoidable, unproductive and duplicative services
Prostate cancer screenings for elderly patients
Reduce Readmissions
Clinical Restructuring
Ensure treatment in most optimal setting with most appropriate level of provider
Early step down from an IP to SNF bed
Partnerships with a local retail clinic to offer non-urgent care
System Optimization
Shift focus to upstream, preventative care with emphasis on CI
Disease-based medical homes
Patient engagement strategies using telehealth
Source: Sg2 Analysis

33. Physician Leadership
Overview: Health systems must empower physicians to have an influence on the future direction of the network. This will help integrate physicians’ clinical expertise into hospital operations and increase cooperation and credibility of the CI network.
CIN
Share in network governance IT
Quality
Care Redesign
Membership
Finance
Medicine
Primary Care
Neurosciences
Lead and participate on sub-committees supported by CIN or Health System personnel
Heart and Vascular
Surgery
Women & Children

34. Information Technology
Overview: CINs use an IT-dependent performance improvement architecture with data-based mechanisms and processes to monitor and track utilization, quality, and efficiency of resource use to demonstrate value.
Digitize critical information on an individual within each care site
View health-related data via a customizable user interface within an enterprise
Exchange health-related data within and between enterprises
Derive
value and intelligence to improve care quality and outcomes and to curb costs
Deliver clinical and patient information to enhance patient care experiences and practitioner effectiveness
Advanced Clinical Decision Support
Clinical
care
value
Process/
behavioral
change
Health Analytics
Health Information Exchange (Private)
Healthcare Portals or Registries (Clinicians and Patients)
Intermediate Electronic Medical Records
IT Optimization
Source: IBM Center for Applied Insights
Maturity over time

35. Distribution of Funds $
Overview: The CIN establishes an organized plan to link performance on defined gradients to eligibility for incentive payments.
Hospital / System
Payors &
Employers
Cost Savings
Efficiency Gains
P4P Contracts
Shared Savings
Increased Rates
Hospital
Specialty
Location
Equal distribution
Performance targets
Educational event attendance
Submission of Data
Adoption of IT platform
Individual Activity/ Outcomes %
Local Network Performance
Clinical
Integration
Network
Global Network Performance $

36. Contracting
Overview: A CIN may utilize a wide range of contracts to achieve improved cooperation for better quality services and demonstrated value.

37. Proposed DEVELOP Phase Committee Structure
CIN Board Meeting
Monthly
STEERING COMMITTEE
Oversee network development within the local market, approve subcommittee outputs, and link communication between the committees and key stakeholders
FINANCE
Identify contracting opportunities, evaluate the employee health plan as a revenue source, and project financial implications of the network
NETWORK STRUCTURE
Create clinical strategy focused on continuously improving quality, coordination, safety, and patient experience.
COMMUNICATION AND EDUCATION
Engage the broader medical staff to understand goals of both employed and private practice physicians within network development
INFORMATION TECHNOLOGY
Determine the IT needs, assess current capabilities, and fill identified gaps in order to ensure the network can track results and demonstrate value
Quality
Monthly, 1.5 Hr. Mtgs
INFORMATION TECHNOLOGY
Monthly, 1.5 Hr. Mtgs
FINANCE
Monthly, 1.5 Hr. Mtgs
Membership and Credentialing
Bi-Weekly, 1.5 Hr. Mtgs
Physician (Chair)
2 Physicians
CMO
1-2 additional PCH Administrators
Physician (Chair)
2 Physicians
CIO
CMO / CMIO
CFO
Physician (Chair)
2 Physicians
CFO
VP Bus. Dev.
Physician (Chair)
2 Physicians
CMO
Sales
Marketing

38. CIN Lessons Learned Client #1: Lessons Learned
• CIN can be used to establish a competitive advantage and market leverage
• A consistent communication plan must be used with the health system, physician group(s), and physician-led committees
Client #4: Lessons Learned
• Participation criteria should align with the priorities of the health system, physicians, and the community
• Allow physicians to define quality and lead quality-based initiatives
Client #2: Lessons Learned
• Determine the necessary level of organizational and market readiness for the network prior to implementation
• Physician engagement drives the pace of implementation
Client #5: Lessons Learned
• CI implementation requires a common vision, education, and communication across a broad constituency
• Academic Medical Centers must transition to a model more closely aligned with primary care
Client #3: Lessons Learned
• Minimize the amount of complexity in the distribution methodology
• Metrics for awarding and distributing funds must be meaningful to the physicians and flexible over time
Client #6: Lessons Learned
• Involving physicians early in the visioning process is key to gaining medical staff buy-in
• Pace of tolerable change is unique to each market

39. Why Are Large-Scale Networks Forming?1
ACCESS TO PATIENTS
Geography
Payer Contracts
Marketing
Secure referral markets
Coordination of patients
New market growth / penetration
Enhance value with comprehensive services
Mitigate reimbursement rate pressure
Large “buyers”
Leverage brand & reputation
Local presence with big market access
Strength & expertise through scale 2
SHARE COSTS & CAPABILITIES
Information Technology
Skilled / Scarce Resources
Platform to build population health analytics
Expand Data over continuum of care
Clinicians (recruitment & outreach)
Leadership & oversight
Care management teams
Payer & population health expertise 3
STANDARDIZE
Operational
Clinical
Finance
Promote best practice adoption
Accelerate innovation
Benchmark & measure
Consolidate duplicative services
Drive patient care coordination
Enhance quality
Improve each organization’s cost structure

40. Questions? Kent Thompson Matt Fadel Manager Manager DHG Healthcare
Winston-Salem, NC P:
Matt Fadel
Manager
DHG Healthcare
Hudson, OH P: