Becker's - 2015-05-09 C/2_… · Number of ACOs GROWTH BY CONTRACT ... • MSSP does not require...
Transcript of Becker's - 2015-05-09 C/2_… · Number of ACOs GROWTH BY CONTRACT ... • MSSP does not require...
4/21/2015
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THE MARKET DYNAMICS OF THE ACO
MOVEMENT
David Muhlestein, PhD JD
Senior Director of Research & Development
Leavitt Partners
May 9, 2015
PRESENTATION OVERVIEW
1. Accountable Care Basics
2. ACO Trends
3. What’s Driving ACO Activity?
4. ACO Market Dynamics
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ACCOUNTABLE CARE BASICS
WHAT IS ACCOUNTABLE CARE?
• Bear financial risk for the measured health of a population
• Align incentives to encourage the production of high quality health outcomes
• Oversee the provision of clinical care
• Coordinate the provision of care across the continuum of health services
• Invest in and learn to use appropriate IT to manage population health
• Improve the individual experience of care
• Improve population health
• Reduce the cost of health care for populations
Processes
Outcomes
Structure
ACCOUNTABLE CARE TRENDS
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ACCOUNTABLE CARE LIVESGrowth Over Time
0
5
10
15
20
25
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2010 2011 2012 2013 2014 2015
23.5 Million
Co
ve
red
Liv
es
(Mil
lio
ns)
Source: Leavitt Partners Center for Accountable Care Intelligence
ACO GROWTHOverall Trajectory
81 86 104
159
213
318 335
440 467 479
598 615623 645
742
0
100
200
300
400
500
600
700
800
Q2
2011
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Nu
mb
er
of
AC
Os
GROWTH BY CONTRACT TYPEFor New and Existing ACOs
8 8 10 3362
182 183
295 296 296 297
418 418
418
523
76 7888
173196
212 230266 285
316341
381416
463
528
84 86 98
206258
394 413
561 581612
638
799834
881
1051
0
200
400
600
800
1000
1200
2011
Q2
2011
Q3
2011
Q4
2012
Q1
2012
Q2
2012
Q3
2012
Q4
2013
Q1
2013
Q2
2013
Q3
2013
Q4
2014
Q1
2014
Q2
2014
Q3
2014
Q4
# o
f A
CO
Co
ntr
act
s
Government Commercial Total
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ACO GROWTH VS CONTRACT GROWTHOverall Trajectory
82 87 105145
196
317342
444471 483
601 616 624 646
742
84 92 100
214266
402 422
570 590621
647
808843
883
1051
0
200
400
600
800
1000
1200
Q2
2011
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
Q3
2014
Q4
2014
# o
f A
CO
s a
nd
Pa
ym
en
t A
rra
ng
em
en
ts
# of ACOs
# of Payment Arrangements
WHERE ARE THEY FORMING?
Source: Leavitt Partners Center for Accountable Care Intelligence
HOW MANY LIVES?
Source: Leavitt Partners Center for Accountable Care Intelligence
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AVERAGE NUMBER OF ACOS Based on patient location
Source: Leavitt Partners Center for Accountable Care Intelligence
MEDICARE SHARED SAVINGS PROGRAM
Source: Center for Medicare & Medicaid Innovation
3rd Round
2nd Round
1st Round
4th Round
3rd Round
2nd Round
1st Round
5Th Round
4th Round
3rd Round
2nd Round
1st Round Source: Center for Medicare & Medicaid Innovation
3rd Round
2nd Round
1st Round
5Th Round
4th Round
3rd Round
2nd Round
1st Round
ACO PENETRATION OF LIVES OVER TIME
Source: Leavitt Partners Center for Accountable Care Intelligence
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HOSPITALS IN ACOS OVER TIME
Source: Leavitt Partners Center for Accountable Care Intelligence
WHAT’S DRIVING ACO ACTIVITY?
FACTORS ASSOCIATED WITH ACO GROWTHWhat’s driving ACO activity?
IndicatorsIndicatorsIndicatorsIndicators MeasuresMeasuresMeasuresMeasures DiscussionDiscussionDiscussionDiscussion
Level of insurance coverage % Population under 65 w/ Insurance Higher rate of insurance encourages ACO
Age of the population Median Age Older the population, the more common for ACO
Experience w/ managed care % of Privately Insured Covered by HMO Experience with managed care increases ACO receptivity
Employer size Est. Proportion Employees in Large Firm Large risk-bearing employers more likely to consider ACO
Physician group dynamics Proportion of Drs. in Group Practice Greater physician alignment makes it easier for ACO
Employee insurance type % of Individuals in a Self-Insured Plan Employers with heavy risk seek to mitigate thru ACO
Historical economy Economic Strength Pre-Recession Stronger econ. foundation enabled experimentation
Medical spend Avg. Medicare Spending/Beneficiary Increased ACO activity in lower cost markets
Key Quantitative Indicators of Projected ACO Activity
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PROJECTED GROWTH OF ACOS
Darker Red = More VBP Activity19
DRIVERS OF EARLY GROWTH
Belief that accountable care represents a better way of delivering care
Preparation for future risk-bearing
Attempt to increase market share
Response to accountable care activities of market competitors
Inability to stay competitive with traditional payments
DRIVERS OF FUTURE GROWTH
Success of current ACOs and expansion of contracts
Mandated/Incented adoption by government payers
Belief that providers are going to be forced to bear risk in the future
Response to accountable care activities of market competitors
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TYPES OF CONTRACTS ADDEDFor New and Existing ACOs
84
252
154167
15
70 72
114
0
50
100
150
200
250
300
2011 2012 2013 2014
# o
f A
CO
s
First Contract Additional Contract
Source: Leavitt Partners Center for Accountable Care Intelligence
LIKELY SCENARIOSContinued vs. Slow Growth
Continued Growth:• Increasingly favorable, though
modest, financial results
• MSSP does not require two-sided risk
• Commercial payers aggressively
move toward risk-based contracts
Slowed Growth:• Continued mixed financial results
• Medicare continues to support
MSSP; requires two-sided risk for
organizations that continue beyond 3
years
• Gradual expansion of model across
commercial payers
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COMPARISON Continued growth compared to slowed growth
[VALUE]
Million
0
10
20
30
40
50
60
70
80
2010 2012 2014 2016 2018 2020
Co
vere
d L
ives
(Millio
ns)
Predicted
Actual
[VALUE]
Million
0
10
20
30
40
50
60
70
80
2010 2012 2014 2016 2018 2020
Co
vere
d L
ives
(Mil
lio
ns)
Predicted
Actual
Continued Growth:
Number of ACO Lives
Slowed Growth:
Number of ACO Lives
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ACO TREND IMPLICATION
As accountable care grows, the practice of delivering care will evolve
which will effect all health care sectors
Accountable care will continue to exist as a viable payment model for
the foreseeable future
The organic growth of ACOs will be relatively slow
External pressures, particularly those from government payers, could
significantly accelerate the growth
ACO MARKET DYNAMICS
ACCOUNTABLE CARE IN CHICAGO
Jan 2011
Advocate Health
Care & BCBSIL
sign ACO contract
May 2011
DuPage Medical Group
& Edward Hospital form
Illinois Health Partners
for HMO patients
July 2012
Advocate Health
Care joins MSSP
Jan 2013
Presence Health
Partners joins
MSSP
Jan 2014
Ingalls Care
Network
joins MSSP
Adventist
Health
Network
signs ACO
contract
with Cigna
July 2014
Presence
Health
Partners
adds ACO
contract
with Cigna
Illinois
Medicaid
launches
ACE
Program
Northwest Community
Healthcare signs ACO
contract with BCBSIL
Advocate adds
ACO contract with
UnitedHealthcare
Jan 2015
Loyola Physician
Partners joins
MSSP
Presence Health
Partners adds
ACO contract
with BCBSIL
NorthShore signs
ACO contract with
BCBSIL
Vanguard Health
Chicago joins MSSP
Alexian Brothers
joins MSSP
Independent
Physicians ACO of
Chicago joins
MSSP
Independent Physicians
ACO of Chicago adds
ACO contract with
BCBSIL
Alexian
Brothers adds
ACO contract
with BCBSIL
Kane County IPA
signs ACO contract
with BCBSIL
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CHICAGO, IL: MARKET OVERVIEW
A
B
C
B
IndicatorsIndicatorsIndicatorsIndicators Market DetailMarket DetailMarket DetailMarket Detail
MeasureMeasureMeasureMeasure ACO IndicatorACO IndicatorACO IndicatorACO Indicator ValueValueValueValue PercentilePercentilePercentilePercentile DriverDriverDriverDriver
% Population under 65 w/ Insurance More Insured 84.0% 60
Median Age Older Population 36.4yrs. 30
% of Privately Insured Covered by HMO More Managed 10.8% 42
Proportion of Drs. in Group Practice More Groups 66.6% 58
Est. Proportion Employees in Large
Firm
More Employees 49.6% 89
% in a Self-Insured Plan More Self-
Insured
69.5% 67
Economic Strength Pre-Recession Stronger Econ. -- 82
Avg. Medicare Spending/Beneficiary Higher Spending $9,140 75
Key Indicators of Current & Projected ACO Activity
ACO Contract Type Number of ACOsNumber of ACOsNumber of ACOsNumber of ACOs
Commercial only 5
Medicare only 3
Government & Commercial 4
Medicaid ACE 9
PROVIDER DYNAMICSACO Market Dynamics
WHEN ONE PROVIDER DOMINATES A MARKETProviders have the ability to drive or restrain ACO growth
• 2012: Began small scale ACO-like pilot projects
• 2012: Signed ACO-like agreement with Aetna
• 2013: Signed ACO agreement with Cigna
• 2015: Joined MSSP
“We’re so far behind that we can be ahead”
Ann Huston, Chief Strategy Officer of Cleveland Clinic
NY Times, March17, 2015
VS
• 2011: Signed ACO contract with BCBSIL
• 2012: Joined 1st round MSSP
• 2014: Joined Illinois Medicaid ACE program
• 2014: Signed ACO contract with UnitedHealthcare
(Shared savings contracts account for 2/3 of hospital revenue)
A more cautious approach by a dominant provider may lead to slower net adoption of
ACOs in the market.
When a dominant provider pursues ACO growth, others in the market quickly respond.
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PAYER DYNAMICSACO Market Dynamics
PAYER-DOMINATED MARKETSHow can payer-dominated markets drive ACO growth?
New York Alabama
Number of Payers with at least 10k
Lives21 8
Largest Payer’s Market Share 38% 90%
Number of ACOs 34 2
Estimated Number of ACO-Covered
Lives~1.2M ~140K
Number of Commercial Payers with
ACO contracts9 1
Examples:
• New York – Many payers
adopting ACO contracts in
many different markets
• Alabama – With the
largest payer not
endorsing accountable
care, ACO growth has been
slow
STATE MEDICAID PROGRAMS AND ACO GROWTH
Leavitt Partners Center for Accountable Care IntelligenceSlide last updated 9/12/2014
Passed ACO Legislation, or
Pilot/Active ACO-like Program
Examples:
• Oregon – Approx. 627K lives, first state to
move entire Medicaid population to CCOs
• Vermont – Approx. 140K lives, mimicking
MSSP
• Illinois – 3-year path to capitation, goal to
cover approx. 1M lives by 2015
• Colorado – Approx. 352K lives, large
investment in Statewide Data Analytics
Contractor (SDAC)
• Alabama – 6 organizations in approval
process, will cover approx. 800K lives
• Maine – Approx. 357K lives, ACOs select 3
of 7 elective measures to be evaluated
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ACO GROWTH ≠ MERGERS
Very few mergers have happened as a result of ACO activity (<5)
Instead, hospitals and health systems are choosing non-ownership
affiliations
• Working together to achieve mutual objectives gets both parties more
traction than squabbling over who holds the keys.
CONCLUSIONS
CONCLUSIONS
ACO growth will continue to be market dependent
Past history is often indicative of future trends
Dominant payers and providers can accelerate or slow the adoption
The ultimate key is how successful providers are at managing
populations
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