2016 STATE OF REFORMModels of Provider Risk and Value Based PaymentPanelists: Jay Johnson, Network Services, Confluence HealthSue Dietz, National Rural ACO ConsortiumCindy Ehnes, Esq., COPE Health Solutions

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THE WHY, THE WHAT & THE HOW OF PROVIDER RISK CONTRACT MODELS

Poll of audience: Who currently takes full risk contracts from government or

commercial payers? Who takes some form of sub-capitation for various services? Who participates in commercial or government programs that

reward cost reductions against a base? Who believes that they will be in full risk programs within in 3

to 5 years?

State of Reform: The ‘Why’ Of Provider Risk Contracting

Sue Dietz Regional Vice-President

The Speed of Change is Increasing

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Secretary Burwell’s historic announcement“Our first goal is for 30% of all Medicare provider payments to be in alternative payment models that are tied to how well providers care for their patients, instead of how much care they provide – and to do it by 2016. Our goal would then be to get to 50% by 2018.

Our second goal is for virtually all Medicare fee-for-service payments to be tied to quality and value; at least 85% in 2016 and 90% in 2018.”

Only 36 percent of the 1,201,363 professionals who were eligible to participate in 2012 participated in PQRS, so how is that going to happen?

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How Will the Secretary Achieve Her Goal?

• MSSP• BPCI• PCM

H

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• Readmissions

• MU• PQRS• MIPS• CCJR

MACRA: 2019 – 2025 (AKA “Doc Fix”)

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Medicare and CHIP Reauthorization Act of 2015Increased federal deficit by $141 billion over next 10yrs

Three key provisions:

(1) Sustainable Growth Rate repeal and annual updates(2) Merit based payment system (MIPS)(3) Alternative Payment Models (APMs)

Measurement year 2017-2018. Benchmark set in 2019.

July 2017 – CMS provides feedback on scores

July 2018 – CMS provides Claims data

Set benchmark in 2019Below – PenaltyAbove - Bonus

Score 1-100

Certified PCMH highest potential score for the CPIA category

Quality Score Tied to Payment

No MIPS if in a Qualified APM

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Public Reporting Impact of MIPS

• COPE Health Solutions offers an extensive line of health care consulting and workforce development services for providers and payers seeking to succeed in the new value-based payment environment while developing the diverse talent needed to fill future health care roles

• Cindy is an attorney licensed in California and Colorado who served as Gov. Schwarzenegger's Director of the CA Department of Managed Health Care for seven years, where she oversaw health insurance services for 21 million Californians.

• Regulated business and financial solvency for 105 health plans & 220 Risk-bearing Medical Groups

• Drafted & enforced RBO oversight regulations

The ‘What’ of Successful Provider Risk Models

• CMS is aggressively promoting alternative payment models (e.g. ACOs now serving 8 M & population health initiatives)

• MACRA advances CMS desire to have most Medicare payments tied to value by 2018. A most powerful steering wheel!

• Medicaid Managed Care has penetrated most State programs • Medicaid Plans & Private payers are increasingly seeking risk-based

contracts with narrow network partners• Medicare Advantage participation is more attractiveThe onus is on providers to take action or fall behind as Payers strategize to move risk and site of care.

Current Market Drivers:

• Most current health plan payments remain discounted Fee-for-Service with back-end UM

• Still >75% Fee-for-service contracts (even in CA…home of capitated managed care)

• Adequate risk contracts are increasing but dependent on Payers willingness and perceived ‘value’ – i.e. – quality, efficiency, and total costs of care.

• High infrastructure costs to transition from inpatient, acute care to chronic care management

• Integration of HIT & Mobile Health management• Critical need to reduce cost while improving both quality of care & patient outcomes

Despite Push to VBP, Most Providers Still Have “One Foot in Each Canoe”

Elements of a Successful Business Case for Risk Contracting

Health System, Medical Center,

partners & affiliate care providers

Financial alignment: Payment linked with patient attribution,

desired behaviors and outcomes that the health system can

influenceChanges to core business models to support payment for outcomes vs

volumeReduction in use of expensive acute care services where payment model

incentivizes Tailored, high-performing but

lower-cost affiliated care networks that limits ‘patient or member

leakage’ to control & reward longer term initiatives

Case management and transitions-of-care for high risk patients

Planning to radically shift care to community, retail and home based

services over timeUnified HIT and data analytics to segment and manage population

risk at a patient/member levelSkilled, trained, diverse community-

based workforce

Fee-for-service: Negotiated

payment based on volume of service

Performance-based, fee-for-service:

Negotiated payment for volume plus

additional incentives for managing costs, quality,

and patient experience

Shared savings: Shared savings if interim costs

are less than target

Risk sharing: Shared savings and shared

losses

Full capitation: All savings and losses are assumed by provider

Spectrum of Provider Risk Contracting

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THE ‘HOW’ OF CLIMBING THE RISK LADDER

Models of Provider Risk Contracting

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CLIMBING THE RISK LADDER: KEY ITEMS TO CONSIDER AS YOU MOVE FORWARD

A Health Plan or Payor “Partner”: Are you adversaries or friends, what is the trust level? Can you get out of losing arrangements?

Contracts: Who are your partners? What are the incentives? Fee For Service squirrel cage spinning while transitioning to Value Based Care

– a huge challenge. Incentives under FFS compared to Risk or Value Based Care. Benefit / Premium levels: Who sets the rates?

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CLIMBING THE RISK LADDER: KEY ITEMS TO CONSIDER AS YOU MOVE FORWARD

The Physician as Payor / center of the spoke – Implications? “Better Health” is only 20% driven by the health care system!

Patient Attribution: Managed Care Lite / Heavy. Many value-based programs rely on algorithms to allocate the patient to the Group / PCP. Old style HMO requires a PCP – patient relationship.

Rising Risk Patients: the 5% – 50% equation. Medical Director Rules: Velvet glove / steel fist? Prior Auth rules: Who is the insurance company now?

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CLIMBING THE RISK LADDER KEY ITEMS TO CONSIDER AS YOU MOVE FORWARD

Networks: Adequacy standards. Intellectual Capital – Who remembers how to do all this? West

Coast phenomenon: UMGA, the experts have left the room. State of Washington Health Reform in the 90’s: Failure then,

success now under the ACA? What did we learn? Patient choice and satisfaction issues?

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CLIMBING THE RISK LADDER: KEY ITEMS TO CONSIDER AS YOU MOVE FORWARD:

IT systems that drive population health? Build or buy services? Accounting and Actuarial Skills? Cash Flow Issues – IBNR (is not an app!) Claims Payment systems and issues: who controls YOUR

checkbook? Stop Loss: What is it? How much do I need?