Healthcare Economics Manager

Tom Szostak

Accountable Care Organizations

Innovations in Healthcare

Christmas Brag Letters

The TLA’s of ACO’s

AGENDA

1 •HEALTH ECONOMICS

2•AFFORDABLE CARE ACT

3•MIGRATION TO VALUE BASED HEALTHCARE

4•ACO STRUCTURE, QUALITY, COMPLIANCE, AND

MEASUREMENTS

5•MEDICAL IMAGING IN THE ACO ENVIRONMENT

U.S. Healthcare Sector 6th Largest Global Economy

$14.66

$10.09

$4.31 $4.06 $2.94 $2.70 $2.22

$-

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

GD

P

World Economies 2011

United States

China

Japan

India

Germany

U.S. Healthcare

Sector

U.S. Life Expectancy & Cost of Care

Source: Organization for Economic Co-operation & Development -2011

ICD-10 Nations

Adoption of Resource

Based Relative Value

Scale in 1992

AMA and Relative Value

Update Committee (RUC)

recommend RVU changes

to CMS

RUC comprised of 29

members of which 3 are

primary care

VOLUME-BASED HEALTHCARE

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

1995 2000 2004

Primary Care

Specialists

Interventional

Cardiology

Radiology

Source: MGMA Physician

Compensation Survey – Dec. 2005

Anticipate Greater Demand for Health Services

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

Estimate of New Medicare Enrollees

Estimate of New Medicare Enrollees

79 MILLION MEDICARE

BENEFICIARIES BY 2030

How Reimbursement Economics Works in Washington

$34.59 $35.13

$37.90

$36.18 $35.98

$34.07 $34.07

$30.15

$28.39

$25.50 $24.67

$36.79 $37.34

$37.90 $37.90 $37.90 $38.09 $38.09

$36.07 $36.87

$33.98 $33.98

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

2003 2004 2005 2006 2007 2008A 2008B 2009 2010 2011 2012

Ra

te

Year

Medicare Physician Fee Schedule Conversion Factor

Historical Timeline Through December 31, 2012

CMS Final Rule Conversion Factor Congressional Relief Final Rule

$350B burden to the

national debt

Per Capita Healthcare Cost

2005

$6,400 per capita

2011

$8,400 per capita

2020 $13,730 per capita

$1 in $5 will be spent on

healthcare products and

services

=20%

Affordable Care Act of 2010

Tenets of the New Health Economic Law

Access -

32 million more lives covered

93% of Americans with insurance

Quality – Active purchaser of healthcare services

Volume-based to Value-based

Physician-centric to patient-centric care

Cost – Making healthcare affordable

Extends life of the HI Trust Fund (Part A) for 7 years (2024)

Reduces the federal deficit by $138 billion through 2019

Creation of the Independent Payment Advisory Board (IPAB)

The REAL Difference

Value

To

Volume

© Toshiba Corporation 2010

Breast

Imaging

Center

© Toshiba Corporation 2010

Pathologist

Breast

Imaging

Center

© Toshiba Corporation 2010

Pathologist

Breast

Imaging

Center

© Toshiba Corporation 2010

Pathologist

Breast

Imaging

Center

Breast

© Toshiba Corporation 2010

Pathologist

Breast

Imaging

Center

Breast

© Toshiba Corporation 2010

Pathologist

Breast

Imaging

Center

BreastRadiation

Oncology

Center

Primary Care office

Breast Imaging Center

Pathology

Breast Surgeon’s Office

Acute Care Hospital

Radiation Oncology

Center

A Fragmented Healthcare System

© Toshiba Corporation 2010

Medicare Payment Systems for Place of Service

© Toshiba Corporation 2010

PPS – Part AHOPPS – Part B Acute IPPS – Part A

MPFS – Part B MPFS – Part B MPFS – Part B MPFS – Part B

Acute IPPS – Part A SNF PPS – Part A ASC – Part B HOPPS – Part B

Electronic Medical Record Connects Points of Care

Establishes Foundation for Payment Reform

Electronic

Medical Record

ACO Evolution

Medicare Physician

Group Practice

(PGP)

Demonstration

Project Mandate

ACO

Demonstration

Project Begins

2000 2002 2005 2010

April 1, 2005

2007

Benefits

Improvement

and Protection

Act of 2000

2004 2006

1st Report to

Congress

Design

2nd Report to

Congress

Pre-implementation 10 Physician

Groups, 5,000

Providers &

220,000 FFS

Beneficiaries

2011

ACO Proposed

& Final Rules

Released

March 31,

2010

Demonstration

Project Ends

ACA signed

into law

March 28,

2010

Shared Savings

Program

3 year participation

Primary care (e.g. GP, IM,

Geriatric, & FP)

Electronic Health Record not

required

Prospective beneficiary

assignment

Two Track option

33 measures/4 domains

Prevention & Wellness

“3 Part Aim”

Accountable Care Organizations

April 1, 2012

Advanced Payment Model to provide

resources to launch networks

27 ACO’s participating as of April 1,

2012

Pioneer Model Program

3 year requirement

Effective Jan. 1, 2012

Limited to 32 healthcare

consortiums

Primary care (e.g. GP, IM,

Geriatric, & FP)

EMR MU attestation required on

50% of primary care providers

Prospective beneficiary

assignment – 15K minimum

Shared risk with greater loss or

savings

Yr 3 – 50% @ global payment

33 measures/4 domains

Accountable Care Organizations

CMS Innovation Center Programs

Participants in this program have

experience in offering patient-

centric, coordinated care through

alliances or integration of care

networks.

Advanced Payment Model available for rural

providers or PHOs with less than $50M in

annual revenues.

Integrates the physician

team with the hospital to

appropriate leverage IT

functions

Prevention

Wellness – Post

discharge/Care

coordination/Prevent

readmission

Supports Value-base

purchasing initiatives

Accountable Care – “Better Health, Better

Healthcare and Reduced Expenses”

Patient

Governance

Finance

Health ITQA &

Utilization Review

Compliance

POPULATION HEALTH

MANAGEMENT

Model

Integrated

Delivery

Systems

(IDN)

Multispecialty

Group

Practice

(MSO)

Physician-

Hospital

Organizations

(PHO)

Independent

Practice

Associations

(IPA)

Virtual

Physician

Organization

Features

Own

hospitals,

physicians,

and health

plan

Strong

affiliation with

hospital and

Non-employee

medical staff,

functions like

MSO

Independent

physician

practices that

contract with

health plan

Small,

independent

practices

(rural setting)

Examples

Kaiser Health,

Geisinger

Health

System

Marshfield

Clinic, Atrius

Health (MA)

Advocate

Health

Monarch

Healthcare,

Healthcare

Partners

North Dakota

Cooperative

Network

Examples of Accountable Care Organization Models

• Patient/Caregiver Experience (7

Measures)

• Consumer Assessment of

Healthcare Providers and Systems

(CAHPS)

• Care Coordination & Patient

Safety

• Preventative Health

• At Risk Population

• Diabetes

• Hypertension

• Ischemic Vascular Disease

• Heart Failure

• Coronary Artery Disease

ACO Quality Measures & Domains

Year 1 – “Pay for

Reporting”

All 33 measures

Year 2

“Pay for Performance”

25 measures

“Pay for Reporting:

8 measures

Year 3

“Pay for Performance”

32 measures

“Pay for Reporting”

1 measure

ACO Quality Reporting Scoring

Quality performance must be met within each domain

Minimum of 70% score on each measure

Domains weighted equally

Incorporation of Physician Quality Reporting System (PQRS)

0.5% of total Part B for covered professionals

Performance for EHR will be weighted twice that of other

measures

Shared Savings Opportunity

Per Capita Costs based on

Part A & B expenditures

FFS – 3 most recent years

3 year average

BY3 – 60%

BY2 – 30%

BY1 – 10%

Risk adjusted for high-use

populations

Benchmarks reset

annually

Establishing ACO Cost Benchmarks

Accountable Care Leads Health Delivery Redesign

2012 2013 2014 20182015 20162010 2011

Electronic Health Records

Accountable Care Organization – National Pilot

Value Based Purchasing – Hospital Inpatient

Preventable Readmissions

Episode Based Payment/Bundling – National Pilot

CONVERSATIONAL HEALTHCARE SERIES

Radiologists in the ACO Environment

Physician Alignment

Alignment with integrated health systems

Focus on “value over volume”

Not RVU focused, but demonstrating

appropriate use of testing

Cost effective and outcomes driven

Experts of the specialty

Value of imaging in an Accountable Care

Organization

Educate ACO physician community

Utilization management – cost

controls/impacts

Role of teleradiology and corporatized groups

Support more than one ACO

Maximize sub-specialization offering

Sell offering directly to commercial

entitiies

Cost advantage versus

hospital setting

Steps ahead in

understanding customer

service (CAHPS)

Access

Location

Ease of use

Accreditation advantage

Imaging Centers in the ACO Environment

“UnitedHealth Buys California Group of 2,300 Doctors” Sept 1, 2011

Monarch will continue to partner with WellPoint on an ACO collaborative

despite Optum’s acquisition.

“Highmark To Buy West Penn Allegheny Health System” June 28, 2011

“Advocate Health Care, Blue Cross and Blue Shield of Illinois

Sign Agreement Focusing on Improving Quality, Bending the

Health Care Cost Curve” October 6, 2010

“Humana to buy Addison-based Concentra for $790 million” November 22, 2010

“Unlikely” Market Innovations Reinventing Healthcare

Economics of a Post Reform Market

• Market Consolidation

• Insurance acquisitions and alliances to carve out markets

• Standardization of care – ½ of all healthcare in US unsupported

by evidence based guidelines

• Cost-shifting by employers, insurance companies, and providers –

expect to pay more

• Potential commoditization of ancillary services

•Exceptional ACOs can compete with

commercial payers