First Illinois Chapter HFMA

Jack Hill, Executive Vice President & Partner

Model for Population Health Management with Quantifiable Results and Optimal Gain Sharing Potential

CFO Breakfast - March 23, 2012

Agenda

1. The Current Health Care Environment

2. Population Health Management Process

3. Proven Results4. Why You Should Care5. Opportunities for

Commercial ACO Deployment

Reform is Here and We Have to Deal with It

The Current Health Care Environment

3

The Patient Has to be Engaged


4

The Political Landscape is Rife with Challenges


5

The Train Has Left the Station – Reform for Medical Providers is in Play and Population Health Management should be THE Primary Objective


6


7

Patient /Payor Shifts

Payment Reductions/

Changes


8

The Changing Health Care Environment

9

Structural

Organization

Phys

Hosp/etc

Data

Warehouse

Medical

Referral

Control

Employer

Stop Loss

Data Drill

Down

Capabilities

Gain Sharing

Formulas

Small

Employer

Financial

Targets

Recognition

of High Cost

Patients

Geographic

Benchmarks

Gain Sharing

Distribution

Methodology

Episodic

AnalysisPredictive

Modeling

Delivery of Quality

Healthcare

Controlled Healthcare Costs

Healthier Members=

Step Down

UM

Management

Ongoing

Educational

Resources

Employee

Healthcare

Indexing

Employer

Benefit

Consulting

Hospital/

Physician

Discounts

Physician

Profiling

Employer

Healthcare

Indexing

ACO Medical

Director

Chronic

Disease

Management

Treatment

Criteria

Compliance

Member

Incentive

Program

Personal

Health

Records

Wellness

Programs

On-site

Testing

Professional

Telephonic

Nurse Coaching

Health

Risk

Assessments

* *

*

* * *

* *

* * *

Community Healthcare

Partner

Population Health Management Process

10

Step 1• Turn Claims and ERM into Actionable & Intelligent Data

Step 2• Align & Engage With Highest Quality & Cost Efficient Physicians

Step 3• Improve Medical Utilization & Member Health Status

Step 4• Seamlessly Integrate the Entire Program

Step 5• Communicate Effectively to the Ultimate User – The Patient


11


12

Why? Because data mining identifies the risks.


13


14


The Highest Quality Physicians…..

Provide the Needed Preventative Service Rates for Chronically Ill Patients…..

15

Population Health Management Process – Chronic Disease

Management

• Monitors and manages chronic diseases and co-morbidities that total 80% of costs

• Members with a chronic condition are assigned a Nurse Coach

• Physician profiling allows high dollar claimants to be shifted to high quality, cost effective providers

• Incentives can be aligned with desired health outcomes

• Built in benchmarks and accountability measures to demonstrate member compliance

• Reporting to the provider whether the chronically ill population meet the minimum care standards

• Documented ROI

• Reinsurance credit when used with predictive modeling and physician profiling

16

Population Health Management Process – Predictive Modeling

• Predictive modeling’s value proposition is that it shortens the cycle between an adverse event and intervention

• Utilizes a Predictive Risk Model which is the science of ranking individuals from those with the greatest probability of disease onset to the least probability

• The Predictive Risk Model utilizes a very sophisticated software application which takes the following factors into consideration resulting in the assignment of a Healthcare Index Age/gender Illness burden Co-morbidities Types/frequency of medicines

• Large claim prevention depends significantly on early identification, intervention and coaching

17

Population Health Management Process – Physician Profiling

• Patented process employs three stringent, clinically based tests which each physician provider must pass in order to be an Endorsed ProviderPractice patterns which result in low total costs for the types of illnesses

comparable to other physicians of the same specialtyDelivery of high levels of post-primary preventive care services for

chronically ill patientsPatterns of clinical and billing practices that avoid service up-coding,

services that are not appropriate for the diagnosis, invalid diagnostic coding and services performed more frequently than typically appropriate.

• It has been statistically validated that Endorsed Providers are on average 42% less expensive than providers who do not pass the three, clinically based tests

• There are on average 15% Non-Endorsed Providers in areas where there are enough episodes to statistically measure

• It has been actuarially validated that Non-Endorsed Providers on average will add 10% excess cost to costs

18

Proven Results

19

Why Should I Care?

Fee forService

Paid for eachunit of service

WITHOUTconstraint on

spending

Pay for Coordination

Additional perCapita payment

Based on ability toManage care

Pay forPerformance

Payment tied toobjective measures

of performanceReform

VBP/HIT/Readmit

EpisodicPayments

Payment based ondelivery of services

within a giventimeframe

ReformBundled Payment

Shared SavingsShared savings

From better carecoordination and

disease managementReformACOs

New PaymentModels

Providers sharefrom better

care coordinationand disease

management

20

Opportunities for Commercial ACO Deployment

CommunityEmployers

Hospital(s) &Physician(s)

Product Administration

21


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BENEFIT BUDGET• Employers and Healthcare Providers determine health benefit budgets.• Healthcare Providers arrange for deeply discounted healthcare services.• Employers and Healthcare Providers share in the savings to the healthcare budget through

financial performance rewards.ENGINEERING AND COORDINATION OF CARE• ACO Medical Director engineers the coordination of patient care pathways through top

performing medical providers.BEST OF BREED CLINICAL VALUE NETWORKS AND PHYSICIAN RECRUITED• Best of breed physicians are identified by the ACO Medical Director and are heavily

incentivized by the gain sharing due to favorable variances to the employers’ healthcare budget.

• High Quality, Cost Effective Physicians.DEVELOP A CULTURE OF WELLNESS• Member Health Incentive Programs.• Healthcare Coaching - Ongoing Healthcare Education.

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24


Single 375.72$

Family 939.30$

Month Total Total Target

January 155,172.26$ 464,953.21$ 620,125.47$

February 159,680.90$ 458,378.11$ 618,059.01$

March 157,050.86$ 460,256.71$ 617,307.57$

April 158,929.46$ 462,135.31$ 621,064.77$

May 160,808.06$ 460,256.71$ 621,064.77$

June 160,056.62$ 460,256.71$ 620,313.33$

July 157,426.58$ 463,074.61$ 620,501.19$

August 158,553.74$ 465,892.51$ 624,446.25$

September 160,432.34$ 468,710.41$ 629,142.75$

October 160,808.06$ 467,771.11$ 628,579.17$

November 159,680.90$ 461,196.01$ 620,876.91$

December 160,056.62$ 460,256.71$ 620,313.33$

IBNR 1,908,656.41$ 5,553,138.13$ 7,461,794.53$

January

February

March

April

7,461,794.53$

Favorable

Variance to

Budget

246,395.45$

Single Census Family Census Factor

106,849.34$

Sample Monthly Calculation

425 375.72$ 488 939.30$ 200,483.45$

281,896.78$

657,759.15$

Factor

Average Expected Paid Claims

Annual Budget Target

$7,441,506

Monthly Target Factors

$7,531,413

Reinsurer 1 Reinsurer 2

$7,391,071

Reinsurer 3

$7,402,033

Actual

419

422

Total Bonus Pool

Hospital

Physicians

413 375.72$ 495 939.30$

418 375.72$ 490 939.30$

427

428

425

426

375.72$

375.72$

375.72$

375.72$

375.72$

375.72$

375.72$

375.72$

375.72$

423

428

426

939.30$

939.30$

939.30$

939.30$

939.30$

332,940.76$

512,394.34$

529,450.56$

488,394.34$

501,935.40$

462,384.56$

440,586.45$

523,940.56$

412,940.56$

88,496.45$

198,485.67$

5,582,482.68$

1,879,311.85$

939.30$

939.30$

SAMPLE GAINSHARING TARGET FORMULA ONE

$100,000 Specific Stop Loss

4,758,695.77$

323,859.34$

212,945.45$

939.30$

939.30$

499

498

491

490

492

490

490

493

496

Example: Total Bonus Pool $716,700

Hospital $238,898

Physician $477,795

Physician# of

Patients

Patient

Risk

Score

Target

PMPM

Risk

Adjusted

PMPM

Actual

PMPM

Difference -

Risk Adjusted

minus Actual

Total Patient

Cost Difference

per Year

Patient Cost

Difference per

Year for

Allocation

AllocationDistribution

Amount

Physician

Profiling

Index

Index

Bonus

Factor

Bonus

Forfeiture

Bonus

Forfeiture

Reallocation

Bonus

Distribution

a b c d e f g h i j k l m n o p

(c x d) (e - f) (g x b x 12) (i / total of i)(j x bonus

pool)(l x m)

(pro-rata

allocation)(k + n + o)

1 1,400 0.95 $700 $665 $650 $15 252,000$ 252,000$ 11.6% 55,358$ 0.80 20.0% -$ 7,545$ 62,903$

2 1,200 0.98 700 686 710 (24) (345,600) - 0.0% - 0.85 15.0% - - -

3 1,100 1.01 700 707 690 17 224,400 224,400 10.3% 49,295 0.90 12.0% 6,719 56,014

4 1,250 1.08 700 756 715 41 615,000 615,000 28.3% 135,101 1.00 8.0% 18,414 153,514

5 1,100 1.10 700 770 800 (30) (396,000) - 0.0% - 1.50 0.0% -

6 1,200 1.12 700 784 725 59 849,600 849,600 39.1% 186,637 1.75 -12.0% (22,396) 164,240

7 1,300 1.15 700 805 790 15 234,000 234,000 10.8% 51,404 2.00 -20.0% (10,281) 41,123

1,433,400$ 2,175,000$ 100.00% 477,795$ (32,677)$ 32,677$ 477,795$

SAMPLE GAINSHARING DISTRIBUTION FORMULA

25

Physician Distribution

Health Index Score of Patient Population

Score Indicates Physician is Practicing High Quality Cost Efficient Medicine


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Public Programs (Medicare under ACO Rules & Medicaid)

ACO Gain Sharing and Risk Mature Management Expertise – Proven Results

Commercial Payers

Participate in closed networks and risk Reduce trend

Local Employers

Gain Sharing with little or no risk Shared Benchmarks & Incentives

Uninsured

Currently Underwriting Risk Need to be Managed & Risk Mitigated

Medical Providers’ Own Employees

Captured Population Controlled Population

Targeted Strategy

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Questions & Answers

Jack Hill Executive VP & Partner

www.accountablecaresg.com

Phone: 630.878.7539 Email: [email protected]

First Illinois Chapter HFMA

Documents

Transcript of First Illinois Chapter HFMA