Annual Report 2011

Integrated Healthcare AssociationInnovation Through Collaboration

Innovation Through Collaboration™

IHA promotes accountability and transparency by promoting healthcare standards, measurements, rewards and public reporting.

IHA leverages its distinctive strength – the ability to bring together leaders from key sectors of healthcare in California – to promote innovation through both individual and collaborative efforts.

IHA supports a visible, ongoing effort to promote healthcare improvement by educating and informing the general public, policymakers, other associations and organizations through the media and other methods.

IHA seeks to influence policy issues that support its mission through information exchange, public positions and collaboration by key stakeholders.

IHA serves as a catalyst by initiating and coordinating projects that advance solutions for delivery system challenges.

Our VisionHealthcare that promotes quality improvement, accountability, and affordability, for the benefit of all California consumers.

Our MissionTo create breakthrough improvements in healthcare services for Californians through collaboration among key stakeholders.

How We Achieve Our MissionAccountability

Breakthrough Collaboration

Education and Information

Policy Influence

Project Development

The Principles that Guide UsIn organizing and carrying out its work, IHA:

• Operates a shared governance model based upon trust, and open dialogue;• Seeks to remain a limited-membership policy board, but with representation from

a broad cross-section of the healthcare industry;• Solicits senior decision-maker participation from its member organizations;• Considers academic, business/purchaser, and consumer perspectives in its discus-

sions, including but not limited to, board representation;• Promotes ideas, solutions, and points of view to policymakers, but does not lobby

on specific pieces of legislation;• Promotes incentives to align the interests of various healthcare stakeholders;• Seeks to develop consensus, but believes open, active dialog and debate on important

issues is productive, even if a consensus cannot be reached.

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Dear IHA Members, Affiliates, Stakeholders, and Friends:

I am pleased to present our first Annual Report. I believe that it validates IHA’s evolution from our early days as a networking organization to our current status as an active leadership group serving an important role in today’s California healthcare community. Leveraging the combined efforts of the IHA Board, its member organiza-tions, affiliates, stakeholders, and many program participants, we have established a foundation of collaboration and trust. Building upon this foundation we have accom-plished a great deal toward our mission to improve the quality and affordability of healthcare in California. Reflecting back on the past year, I believe we lived up to our motto, “Innovation through Collaboration.” As you read this report, I hope you will agree.

As you know, the implementation of the Affordable Care Act brought significant changes to healthcare in 2011. Within our state, we have witnessed significant ef-forts to implement insurance reforms, and to prepare for the California Health Ben-efit Exchange, Medicaid expansion and growth, and many other reform initiatives. New accountable care delivery models and collaborations between health plans, hos-pitals, and physician organizations have been launched, and many organizations are strengthening and adjusting their market position through mergers, acquisitions, or other strategic initiatives.

Amidst these 2011 developments, IHA has continued to ask the question, “How can we be helpful?” The answer has come in a variety of forms, including our programmatic work focused on collecting and aggregating cost and quality information, measuring performance, and testing payment innovations. We have freely shared the practical knowledge and lessons learned from these efforts through conferences, publications, and numerous presentations by our staff. More recently, we have worked to influence policy relevant to our programmatic work through policy briefs, forums, and partici-pation in statewide and national leadership groups.

During the past year, our flagship California Pay for Performance (P4P) Program delivered Total Cost of Care testing results to participating physician organizations and health plans for the first time, and the P4P committees continued their hard work to transition the program to Value Based P4P, which incorporates both cost and quality. The IHA Bundled Payment Demonstration Project, funded by a grant from the Agency for Healthcare Research and Quality, completed its first fiscal year with slow, but deliberate progress. A standardized, coded Division of Financial Responsibility (DOFR) was completed by an IHA-convened workgroup, and a number of other projects were started and moved forward.

2011 was a busy and exciting year for IHA! I hope you will learn more about our organization from this Annual Report, and that you will work with us in the future to improve healthcare for all Californians.

Sincerely,

Tom Williams, Dr.P.H.

President and Chief Executive Officer

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Unlike a trade association that aims to represent one sector of healthcare, IHA has balanced representation from hospitals/health systems, health plans, and physi-cian organizations. Our Board membership additionally includes representatives from government, academic,

purchaser, consumer and other sectors to ensure that “all are at the table.” Our unique ability to convene cross-sector organizations to collaborate on challenging industry issues and projects is one of our greatest assets.

Chair Bart Asner, M.D.

Chair-ElectElaine Batchlor, M.D.

Past ChairDon Rebhun, M.D.

TreasurerDavid Joyner

SecretaryBarry Arbuckle, Ph.D.

Our Greatest Asset Is Our Board of Directors

2011 Board Directors

Beaver Medical Group (EPIC Management),Charles Payton, M.D., Vice President and Chief Medical OfficerFamily Care Specialists Medical Group, Hector Flores, M.D., Medical DirectorHealthCare Partners, Donald J. Rebhun, M.D., Regional Medical Director Hill Physicians Medical Group, Steve McDermott, Chief Executive OfficerMonarch HealthCare, Bart Asner, M.D., Chief Executive OfficerPalo Alto Medical Foundation, Richard Slavin, M.D., President and Chief Executive OfficerThe Permanente Medical Group, Philip Madvig, M.D., Associate Executive DirectorSanté Health System, Scott B. Wells, President and Chief Executive Officer Sharp Rees-Stealy, Jerry Penso, M.D., Medical Director, Continuum of Care

Physician Groups

Catholic Healthcare West (now Dignity Health), John Wray, Senior Vice President, Payer Strategy and GrowthCedars-Sinai Health System, Richard Jacobs, Senior Vice President, System DevelopmentJohn Muir Health, Paul Swenson, Executive Vice President, AdministrationMemorialCare Medical Centers, Barry Arbuckle, Ph.D., President and Chief Executive OfficerProvidence Health and Services, Michael Hunn, Senior Vice President and Regional Chief ExecutiveStanford Hospital and Clinics, Jenni Vargas, Vice President for Business DevelopmentSutter Health, Jeffrey Burnich, M.D., Senior Vice President and Executive OfficerTenet California, Ronald L. Kaufman, M.D., Chief Medical OfficerPublic Hospital (vacant)

Hospitals and Health Systems

Aetna, Greg Stevens, Senior Vice President, Network Management, West Anthem Blue Cross, Jeff Kamil, M.D., Vice President and Senior Medical DirectorBlue Shield of California, David Joyner, Senior Vice President, Large Group and Specialty BenefitsCalOptima, Trudi Carter, M.D., Chief Medical OfficerCigna Healthcare of California, Peter Welch, President and Chief Executive OfficerHealth Net of California, Martha Smith, Chief Provider Contracting Officer Kaiser Foundation Health Plan, William B. Caswell, Senior Vice President, OperationsL.A. Care Health Plan, Elaine Batchlor, M.D., Chief Medical OfficerUnitedHealthcare, Sam Ho, M.D., Vice President and Corporate Medical Director

Health Plans

2011 IHA Board Officers

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CalPERS, Ann Boynton, Deputy Executive Director, Benefit Programs Policy and Planning Center for Healthcare Decisions, Marjorie E. Ginsburg, Executive DirectorDisney Worldwide, Barbara Wachsman, Senior Executive, Employee Health BenefitsKeenan, Henry Loubet, Chief Strategy OfficerMonterey County Schools Insurance Group, Sherrell Freeman, Executive Director

Purchasers and Consumers

Genentech, Cheryl Silberman, Ph.D., Therapeutic Head, MetabolicsGlaxoSmithKline, Karen Hamby, Vice President, Integrated Healthcare MarketsMcKesson Corporation, David Nace, M.D., Vice President and Medical DirectorMerck & Company, David Abrahamson, M.D., Senior Medical Director, Western RegionStanford University, Graduate School Of Business, Alain Enthoven, Ph.D., Marriner S. Eccles Professor of ManagementTriZetto, Jeff Rideout, M.D., Senior Vice President, Cost & Care Management and Chief Medical OfficerUC Berkeley School Of Public Health, James C. Robinson, Ph.D., Leonard D. Schaeffer Professor of Health Economics

At Large

California Children’s Hospital Association, Cindy Ehnes, President and CEOCalifornia Department of Managed Health Care (vacant)Centers for Medicare & Medicaid Services, Region IX, David Sayen, Regional Administrator Stanford University, School Of Medicine, Arnold Milstein, M.D., Director, Clinical Excellence Research Center UC Berkeley School of Public Health, Stephen M. Shortell, Ph.D., Dean

Liaison (Non-Voting)

Funding

2011 reVeNue SOurCeS 2011 exPeNSeS

19%10% 25%

46%

4%10%

Grants 25%

Program Administration Fees 46%

Membership & Affiliate Dues 19%

Other revenue (conferences & other) 10%

Program Services 86%

Membership Development 4%

Management & General 10%

86%

IHA FundingThe sources of IHA revenue are from program administra-tion fees, grants from private foundations and federal agencies (e.g., the Agency for Healthcare Research and Quality), Board membership dues, Affiliate program

membership dues, conferences and other sources. The majority of IHA expenses are for program services, with a relatively small percentage for management and general operations, and membership development.

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Value Based Pay for Performance and Total Cost of CareThe California P4P program began in 2003 and is a story of consensus building and engagement. The program enables physician organizations to earn health plan incentive payments based upon performance against a set of 85 quality and efficiency measures. Results are publicly reported and top performers are recognized in a yearly awards ceremony.

IHA is responsible for collecting data, deploying a common measure set, and reporting results on behalf of eight health plans and 200 physician organizations comprised of almost 35,000 physicians that care for almost 10 million members. It is the largest non-governmental physician incentive program in the United States. P4P has successfully raised awareness and acceptance of the use of objective measures in healthcare quality performance, increased accountability of health plans and physician organizations, and helped identify variations in clinical care results related to socioeco-nomic status. Attention has now expanded to measurements of resource use and costs, and assessing the value of care delivered by considering these alongside quality.

In response to affordability concerns, IHA developed a measure of Total Cost of Care (TCC) that captures the costs for care delivered to all commercial HMO/POS enrollees in each P4P participating physician organization. The TCC measure includes all covered professional, pharmacy, hospital, and ancillary care, as well as administrative payments, and is risk-adjusted to capture differences in patient popu-lation characteristics across physician organizations. Measuring and understanding the drivers of total cost of care are key steps to assist providers in moderating the steep upward trend in healthcare costs.

IHA is working with its stakeholders to transition the P4P program to Value Based Pay for Performance to incorporate both cost and quality into health plan incentive payments to California physician organizations. Value Based P4P is a key step in holding organizations responsible for both the quality and cost of care delivered to their members, and is aligned with the national movement towards Accountable Care Organizations.

Highlights from Our Work

Value Based P4P is a key step in holding organizations responsible for both the quality and cost of care delivered to their members.

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Bundled episode of Care PaymentsIHA is implementing a demonstration project funded by the Agency for Healthcare Research and Quality to test the feasibility of bundling payments to hospitals, surgeons, consulting physicians and ancillary providers for selected inpatient surgical procedures. The demonstration is expected to enable improved patient care quality and efficiency, and facilitate shared savings among health plans, providers, employers, and patients.

The demonstration will include rigorous evaluations that will be developed indepen-dently by the RAND Corporation and by researchers associated with the University of California at San Francisco and Berkeley.

To date, IHA has recruited many facility and professional organizations to partici-pate in the program, and has completed extensive work to rigorously define six episode procedures including: total knee and hip replacement, knee arthroscopy with menisec-tomy, cardiac catheterization, cardiac angioplasty with stents, and partial knee replace-ment. Data consultants and health plans have worked collaboratively to provide hospital participants with comprehensive data sets critical to episode price setting and contract templates developed to assist health plan/provider negotiations. Two health plans completed contracts in 2011 and are awaiting initial patients.

In addition to the demonstration project work, IHA plans to submit an application to the Center for Medicare & Medicaid Services Innovation Center (CMMI) to serve as “convener” for up to 29 California hospitals as part of the CMMI Bundled Payments for Care Improvement initiative.

Administrative Simplification – Division of Financial responsibilityIn partnership with a number of healthcare stakeholders, IHA developed a coded Division of Financial Responsibility (DOFR) template for use in contracts involving capitation between health plans, physician organizations, and hospitals. The DOFR provides a framework for these organizations when allocating financial responsibilities for services and includes a standard set of 104 health care service categories and 10,000 associated billing and revenue codes. It gives health plans and providers a uniform start-ing point for capitated payment negotiations and assignment of risk. The standard set of service categories and associated codes help organizations define lines of responsibility, reduce payment ambiguities, minimize administrative burdens associated with man-aging multiple risk relationships, and lower costs associated with misdirected claims (“claims ping-pong”) that also lead to consumer frustration with their care experience.

Our goal is to provide superior outcomes and patient value. Bundling payment to the health-care team – creating a single price for the patient’s care over the whole episode of treat-ment – will align the financial incentive with the clinical goal.

Simplifying the admin-istrative relationship between health plans and capitated hospitals and physician organizations is critical to affordable care.

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California, with its history in managed care and its numerous accountable care-like provider organizations, is a state on the cutting edge of health reform. As a result, private and public policy makers nationally are highly interested in California innovations to improve quality and affordability. Through our work, IHA draws the attention of national policy makers and we share our experiences freely, both suc-cesses and failures, influencing programs and policies in many states and at the Fed-eral level.

California FocusOur programs and projects support IHA’s mission to improve quality, accountability, and affordability in California healthcare by leveraging our unique multi-stakeholder leadership and organizational capabilities. Pursuant to this, our projects and pro-grams operate only within California, and help solve problems unique to California’s healthcare environment.

IHA is engaged in numerous Boards, Committees, and statewide forums, including the California Department of Managed Health Care’s Financial Solvency Standards Board (FSSB), the California Quality Collaborative (CQC), the California Chartered Value Exchange and others. In 2011, IHA also participated in its first California Health Policy Forum in Sacramento, sponsored by the Center for Health Improvement, to share expertise on payment reform, value based pay for performance, bundled payment, and ACO initiatives.

IHA Helping to Lead the Way

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National InfluenceAlthough IHA has a California focus, the organization offers its experience and expertise to national policy makers and thought leaders through information, educa-tion, public positions, collaboration with key stakeholders, and staff participation in various national forums and initiatives.

For example, IHA staff participate on the American Recovery and Reinvestment Act (ARRA) HITECH Eligible Professional Clinical Quality Measures Technical Expert Panel, the Measure Applications Partnership clinical workgroup convened by the National Quality Forum (NQF), the NQF Resource Use Steering Committee and related endeavors. IHA is also an active member of the Network for Regional Health-care Improvement (NRHI), which provides an opportunity to collaborate with simi-lar organizations across the country on cross-sector programs and solutions, and to engage on national reform topics and issues.

In addition to publishing its second white paper on Accountable Care Organi-zation for PPO Patients: Challenge and Opportunity in California, our 2011 National ACO Congress, sponsored jointly with the California Association of Physician Groups, was again a great success and opportunity for national leaders and implementers of ACOs to share their progress.

2011 staff speaking engagements that provided an opportunity for IHA to influence national policy include: Centers for Medicare & Medicaid Services (CMS) Meeting on Evidence of Coverage and Payment; CMS Measures Forum on the topic of Computing Value – combining quality and cost measures; Agency for Healthcare Research and Quality (AHRQ) Learning Network for Chartered Value Exchanges on Community Collaborative Experiences with Multi-payer Programs; and the AcademyHealth Roundtable on bundled payments.

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Published by Integrated Healthcare Association and sponsored by theCalifornia Healthcare Foundation

© 2011 Integrated Healthcare AssociationAll rights reserved

The Integrated Healthcare Association is coordinating an episode of care payment initiative involving prominent health plans, hospital systems, and physicians organizations in California.

he fragmentation of payment methods undermines effi ciency and quality of care due to its effects on both providers and consumers. This effect is espe-

cially pronounced when considering high-cost surgical procedures that encompass multiple caregivers and facilities. On the provider side, each physician now typically is paid individually regardless of the total cost and final outcome of the patient’s care, while the hospital is paid per discharge or based on the number of days the patient is in the facility. The care provided before and after discharge often is even more fragmented and involves an additional cast of providers and facilities. Under this contemporary scheme, there is little incentive for any one caregiver to pay attention to the outcome of the patient’s entire course of care, as distinct from each caregiver’s individual contribution. One major objective of shifting to bundled payment for all services provided during the episode of care (EOC) is to create incentives for collaboration among all participants.

On the consumer side, there currently is almost no impetus or ability to compare price and quality across alternative clinical treatments and provider organizations. The consumer’s out-of-pocket cost-sharing responsibility typically is comprised of a confusing mix of deductibles, coinsurance, copayments, and annual out-of-pocket pay-ment maximums that do not promote informed, cost-conscious choice. Consumers often must pay out-of-pocket for at least part of the ambulatory services that might forestall the need for expensive surgery, but then often bear no responsibility for the cost implications of whether to have surgery, where to have it, and which implantable device to use as part of the procedure. In this sense, consumers are both under-insured and over-insured for high-cost hospital and ambulatory surgery procedures such as orthopedic surgery, cardiac angioplasty, and bariatric surgery.

The Integrated Healthcare Association (IHA) is coordinating an episode of care payment initiative involving prominent health plans, hospital systems, and physi-cian organizations in California. In order to support that initiative, it is also sponsoring a project to explore the state of innovation in benefit design and how those emerging designs could support EOC payment methods. This Issue Brief describes the need for benefi t redesign and the principal obstacles that must

Issue Brief No. 1 � September 2011

Redesigning Insurance Benefits and Consumer Cost-Sharing for High-Cost Surgical Services

James C. Robinson, PhDLeonard D. Schaeffer Professor of Health EconomicsDirector, Berkeley Center for Health Technology

Kimberly MacPherson, MBA, MPHProgram Director, Health Policy & ManagementAssociate Director, Berkeley Center for Health Technology

School of Public Health, University of California, Berkeley

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Published by Integrated Healthcare Association and sponsored by theCalifornia Healthcare Foundation

© 2011 Integrated Healthcare AssociationAll rights reserved

The Integrated Healthcare Association is coordinating an episode of care payment project for knee and hip replacement surgery, which will be expanding into other diagnostic and surgical procedures.

he Integrated Healthcare Association (IHA) is coordinating a bundled episode-of-care (EOC) payment project for knee and hip replacement surgery, which

will be expanding into other diagnostic and surgical procedures. It bears many similarities to, though also some differences from, Medicare’s Acute Care Episode (ACE) payment demonstration for orthopedic and cardiac surgery. As organized to date, the IHA project changes the way hospitals and physicians are paid by health plans but does not alter the structure of the patients’ cost-sharing obligations. This omission represents a meaningful limitation of the project. The IHA now is re-examining consumer benefit design in light of the move towards EOC provider payment.

This Issue Brief describes the need for benefi t re-design in the context of the move-ment towards EOC payment methods. It gives examples of benefi t options specifi cally for the types of high-cost acute care procedures that are the focus of the IHA initiative. These options include coinsurance with a high annual out-of-pocket maximum, reference pricing, and “Centers of Excellence” contracting. The Brief concludes by considering the extent to which payment reform and benefi t redesign can supple-ment one another and also be used as substitutes for one another.

THE NEED FOR BENEFIT RE-DESIGN

The principle that insurance benefi ts should be redesigned to be compatible with and supportive of EOC payment is supported by the health plans and provider organizations participating in the IHA episode payment initiative, albeit for some-what distinct reasons. The principal goals and potential challenges expressed to date by the stakeholders around EOC payment include:

� Channeling patient volume to reward provider participation in EOC paymentThe move from fragmented to bundled payment imposes meaningful administra-tive costs on participating provider organizations and threatens to sharpen internal disagreements over the division of revenues between physicians and the hospital organization. Some provider organizations participating in the bundled payment

Issue Brief No. 2 � September 2011

Aligning Consumer Cost-Sharing withEpisode of Care (EOC) Provider Payments

James C. Robinson, PhDLeonard D. Schaeffer Professor of Health EconomicsDirector, Berkeley Center for Health Technology

Kimberly MacPherson, MBA, MPHProgram Director, Health Policy & ManagementAssociate Director, Berkeley Center for Health Technology

School of Public Health, University of California, Berkeley

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ABSTRACT: In response to affordability concerns, the California Pay for Performance (P4P) Program has developed a measure of Total Cost of Care (TCC) that captures the costs of care delivered to all commercial HMO/POS enrollees in each P4P-participating physician organization. The TCC measure includes all covered profes-sional, pharmacy, hospital, and ancillary care, as well as administrative payments, and is risk-adjusted to capture differences in patient population characteristics across physician organizations. Measuring and understanding the drivers of total cost of care are key steps to assist providers in moderating the upward trend in healthcare costs.

� � �

www.iha.org

Published by Integrated Healthcare Association

© 2011 Integrated Healthcare AssociationAll rights reserved

Measuring and understanding the drivers of Total Cost of Care are key steps to assist providers in moderating the upward trend in healthcare costs.

INTRODUCTION: AFFORDABILITY CONCERNS AND THE MOVE TOWARDS MEASURING “VALUE”

The Integrated Healthcare Association (IHA) manages the California Pay for Performance (P4P) Program, which is the largest non-governmental physician incentive program in the United States. Founded in 2001, this program represents the longest running U.S. example of data aggregation and standardized results reporting across diverse regions and multiple health plans. IHA runs the program on behalf of eight health plans representing 10 million insured persons, and is respon-sible for collecting data, deploying a common measure set, and reporting results for approximately 35,000 physicians in over 200 physician organizations (PO).

The P4P Program has created a successful statewide collaboration that encompass-es uniform performance measures, aggregated data collection and validation, a trusted governance process, and a single public report card for POs in California. Over the life of the program, steady, incremental performance improvements have been achieved in the quality of healthcare delivered by P4P participants, however the dramatic increase in California’s healthcare costs over the past decade has overshadowed quality gains.

In response to these concerns, IHA’s P4P Program has begun a transition to Value Based P4P, which encompasses both cost and quality, as its overarching goal over the next fi ve years. The foundation of this new strategic direction is a measure of Total Cost of Care (TCC) developed by the P4P Technical Effi ciency Committee. This brief outlines TCC specifi cations, the process of risk adjustment, TCC implementation, and the impli-cations of total cost of care measurement for the future of the California P4P Program.

WHAT DOES TCC MEASURE?

TCC measures actual payments associated with care for all commercial HMO/POS enrollees in a PO, including all covered professional, pharmacy, hospital, and ancillary care, as well as administrative payments and adjustments. Participating health plans report a single lump sum payment for each contracted PO to a data

Issue Brief No. 3 � September 2011

Measuring Total Cost of Care

Emma Dolan, MPP, MPH, Policy AnalystDolores Yanagihara, MPH, Director, Pay for Performance Program

participating physicianparticipating physicianparticipating organization. The TCC measure includes all covered all covered all profes- covered profes- coveredsional, pharmacy, hospital, and ancillary and ancillary and well administrative payments, and

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ABSTRACT: Value Based Pay for Performance is a new strategic initiative that is being adopted by the California Pay for Performance Program to incorporate both cost and quality into health plan incentive payments to California physician organi-zations. This initiative aims to help address affordability concerns that have arisen due to the overwhelming increases in HMO premiums over the past decade.Value Based P4P gives participating physician organizations the potential to earn a quality-adjusted shared savings payment based on their performance on both cost and quality metrics. Value Based P4P is a key step in holding organizations responsible for both the quality and cost of care delivered to their members, which is aligned with the national movement towards Accountable Care Organizations, and should help create a more competitive, value-based HMO product.

� � �

www.iha.org

Published by Integrated Healthcare Association

© 2011 Integrated Healthcare AssociationAll rights reserved

Value Based P4P is a key step in holding organizations responsible for both the quality and cost of care delivered to their members.

INTRODUCTION: EMBRACING COST MODERATION AS A STRATEGIC IMPERATIVE

The California Pay for Performance (P4P) Program has created a robust infrastructure to measure the quality of care delivered to HMO/POS enrollees by physician organiza-tions in this state. Founded in 2001, this program represents the longest running U.S. example of data aggregation and standardized results reporting across diverse regions and multiple health plans. The Integrated Healthcare Association (IHA) runs the pro-gram on behalf of eight health plans representing 10 million insured persons, and is responsible for collecting data, deploying a common measure set, and reporting results for approximately 35,000 physicians in over 200 physician organizations (PO).

Since the program’s inception, stakeholders have focused primarily on measur-ing and improving quality; however, during this time, the costs of care have continued to rise unabated. This has fueled concerns over the long-term sustain-ability of the HMO product in California, and focused the attention of P4P stake-holders on cost alongside quality.

In response, the P4P Program adopted improved value, which encompasses both cost and quality, as the ultimate goal of P4P between 2011 and 2015. The primary initiative for reaching this goal is Value Based Pay for Performance (Value Based P4P), which will hold POs accountable for the costs of all care provided to their HMO members, as well as the quality of this care, and will help to align POs and health plans toward a more price-competitive HMO product.

PRIMARY OBJECTIVES OF VALUE BASED P4P

The primary objectives of Value Based P4P are to reorder the priorities of the P4P Program to emphasize cost control and affordability; to continue to promote quality; to

Issue Brief No. 4 � September 2011

Value Based Pay for Performance in California

Emma Dolan, MPP, MPH, Policy AnalystDolores Yanagihara, MPH, Director, Pay for Performance Program

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www.iha.org

Published by Integrated Healthcare Association

© 2011 Integrated Healthcare AssociationAll rights reserved

Health reform ... is a real opportunity for physicians, hospitals, and other organizations to work together to “create better mousetraps” in the Medi-Cal delivery system.

INTRODUCTION

On November 1, 2011, IHA and CAPG hosted a Safety Net ACO roundtable as part of the Second National ACO Congress in Los Angeles. This roundtable focused primarily on a case study of HealthCare First South Los Angeles, a safety net ACO initiative that includes Daughters of Charity Health System (DCHS), St. John’s Well Child and Family Center, St. Francis Center, the Southside Coalition of Community Health Centers, Los Angeles Department of Health Services, and a number of private primary and specialty care physicians, in partnership with L.A. Care, Los Angeles County’s public health plan.

The panelists were Jim Mangia, CEO of St. John’s, Conway Collis, Senior Counselor and Chief Government Affairs Offi cer for DCHS, and Dr. Elaine Batchlor, the Chief Medical Offi cer of L.A. Care. The session was moderated by Dr. Kevin Grumbach, who is Chair of the Department of Family and Community Medicine at the University of California, San Francisco, as well as a practicing physician at San Francisco General Hospital.

A number of themes emerged from the roundtable, including the necessity of evolution in the healthcare delivery system to provide high-quality, effi cient care in the safety net; the diffi culties of overcoming access and demographic challenges to deliver integrated, coordinated care; the importance of gaining and maintaining support from a wide variety of stakeholders; and the primacy of a strong primary care base upon which to build accountable care organizations.

IMPLEMENTING HEALTHCARE REFORM: THE IMPORTANCE OF A STRONG DELIVERY SYSTEM

Dr. Batchlor began the panel with a discussion of the changing Medi-Cal landscape in California, specifi cally stemming from the Affordable Care Act and the state’s Section 1115 waiver, under which many Medi-Cal fee-for-service enrollees will be transitioned into managed care. L.A. Care is undertaking pilots to better integrate care for certain populations, such as dual eligibles who are already transitioning into managed care, and children with special healthcare needs. The plan is also working with L.A. County on early expansion of insurance coverage in preparation for 2014.

L.A. Care is seeking to encourage the development of a stronger healthcare delivery system that can provide high-quality, coordinated care for an increasing number of Medi-Cal enrollees, who have traditionally been challenging to manage. Health reform, Dr. Batchlor stated, is a real opportunity for physicians, hospitals, and other organizations to work together to “create better mousetraps” in the Medi-Cal

Issue Brief No. 5 � December 2011

Building ACOs in the Safety Net:Lessons from HealthCare First South Los Angeles

Emma Dolan, MPP, MPH, Policy Analyst

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of theof theof Second National ACO Congress in Los Angeles. This roundtable focusedprimarily on a case study of HealthCare of HealthCare of First South Los Angeles, a safety net ACOinitiative that includes Daughters of Charity of Charity of Health Charity Health Charity System (DCHS), St. John’s WellChild andChild andChild Family and Family and Center, Family Center, Family St. Francis Center, the Southside Coalition of Community of Community ofHealth Centers, Los Angeles Department of Health of Health of Services, and a and a and number of private of private ofprimary andprimary andprimary specialty and specialty and care specialty care specialty physicians, in partnership with L.A. Care, Los AngelesCounty’s public health plan.

The panelists were Jim Mangia, CEO of St. of St. of John’s, Conway Collis, SeniorCounselor and Chief and Chief and Government Chief Government Chief Affairs Offi cer Offi cer Offi for DCHS, and Dr. and Dr. and Elaine Batchlor,the Chief Medical Chief Medical Chief Offi cer Offi cer Offi of L.A. of L.A. of Care. The session was moderated by moderated by moderated Dr. by Dr. by KevinGrumbach, who is Chair of the of the of Department of Family of Family of and Community Medicineat the University of California, of California, of San Francisco, as well as a practicing physician atSan Francisco General Hospital.

A numberA numberA of themes of themes of emerged from the roundtable, including the necessity ofevolution in the healthcare delivery system delivery system delivery to provide high-quality, effi cient effi cient effi care cient care cient in thesafety net;safety net;safety the diffi culties diffi culties diffi of overcoming of overcoming of access overcoming access overcoming and demographic and demographic and challenges to deliverintegrated, coordinated care; coordinated care; coordinated the importance of gaining of gaining of and gaining and gaining maintaining and maintaining and support maintaining support maintaining from support from supporta wide variety of variety of variety stakeholders; of stakeholders; of and the and the and primacy of primacy of primacy a of a of strong primary strong primary strong care primary care primary base uponwhich to build accountable build accountable build care organizations.

IMPLEMENTING HEALTHCARE REFORM: THE IMPORTANCEOF A STRONG DELIVERY SYSTEM

Dr. Batchlor began the panel with a discussion of the of the of changing Medi-Cal landscapein California, specifi cally specifi cally specifi stemming from the Affordable Care Act and the state’sSection 1115 waiver, under which many Medi-Cal fee-for-service enrollees will betransitioned into managed care. L.A. Care is undertaking pilots to better integratecare for certain populations, such as dual eligibles who are already transitioninginto managed care, and children with special healthcare needs. The plan is alsoworking with L.A. County on early expansion of insurance of insurance of coverage in preparationfor 2014.

L.A. Care is seeking to encourage the development of a of a of stronger healthcaredelivery system that can provide high-quality, coordinated care for an increasingnumber ofnumber ofnumber Medi-Cal of Medi-Cal of enrollees, Medi-Cal enrollees, Medi-Cal who have traditionally been traditionally been traditionally challenging to challenging to challenging manage.Health reform, Dr. Batchlor stated, Batchlor stated, Batchlor is a real opportunity real opportunity real for opportunity for opportunity physicians, for physicians, for hospitals, andother organizationsother organizationsother to work together work together work to together to together “create better mousetraps” better mousetraps” better in the Medi-Cal

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Published by Integrated Healthcare Association

© 2012 Integrated Healthcare AssociationAll rights reserved

Public reporting and provider tiering have opened up debate about the reliability of the underlying performance data and the appropriateness of its use.

INTRODUCTION

Data on healthcare provider performance are increasingly used by both purchasers and health plans to publicly report on health system performance and to design value-based purchasing initiatives, such as “tiered” physician networks. In these initiatives, providers are placed in cost-sharing tiers based on their cost and/or quality performance, and consumers face lower cost-sharing requirements when they choose higher-quality and/or lower-cost providers.

Public reporting and value-based purchasing initiatives are meant to provide con-sumers with more data on health system performance, as well as incentives to choose high value providers. There is limited data on whether and how public reporting and tiering have impacted consumer behavior, 1 but these practices have opened up debate about the reliability of the underlying performance data and the appropriateness of its use. This brief defi nes reliability, outlines why it is important, and introduces the debate on the reliability of data needed for public reporting and provider tiering.

WHAT IS RELIABILITY?

Consider a primary care physician who receives a score of 78% on a measure of cervical cancer screening. Does this score actually mean that the physician has only screened 78% of eligible patients under his or her care? This question deals with both validity — whether a measure accurately refl ects what you are attempt-ing to measure — and reliability, which describes how well the measure results actually capture true performance.

Reliability has three primary drivers: the fi rst is sample size, with larger patient populations driving more accurate results; the second is the presence of meaningful difference between those subject to measurement; and the third is measurement error. It ranges in value from zero to one, where zero means that any variability in the results is due to measurement error, and one means that the results perfectly capture variabil-ity in performance with no measurement error.

Reliability is one of the National Quality Forum’s (NQF) “Scientifi c Accept-ability” Measure Evaluation Criteria that must be satisfi ed in order for a measure to be considered for NQF endorsement. To meet NQF’s reliability requirements, a measure must be well-defined and precisely specified to allow for uniform implementation and comparability, and must also be tested to ensure that it produces consistent results over repeated tests.2

Issue Brief No. 6 � February 2012

Emma Dolan, MPP, MPH, Policy Analyst

Reliability in Publicly Reported Performance Data:Framing the Debate

1. For example, see Anna D. Sinaiko and Meredith B. Rosenthal, “Consumer Experience with a Tiered Physician Network: Early Evidence.” American Journal of Managed Care 2010;16(2): 123-130; Eric C. Schneider and Arnold M. Epstein, “Use of Public Performance Re-ports: A Survey of Patients Undergoing Cardiac Surgery.”

Journal of the American Medical Association 1998;279(20): 1638-1642

2. National Quality Forum (NQF), “Measure Evaluation Criteria.” January 2011. http://www.qualityforum.org/docs/measure_evaluation_criteria.aspx#note1.

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Sharing Our Knowledge

Since the inaugural National Accountable Care Organization Congress in October 2010, there was a flurry of both government and private sector activity to define and implement the ACO concept. With special emphasis on the burgeoning commercial ACOs that are springing up all over the country and, according to some experts, defining the future of the ACO movement, the second National ACO Congress brought together leading policymakers, experts, and those working at the frontline of ACO implementa-tion to provide unique and in-depth insights on what has been done so far, and what the ACO concept means for the future of healthcare. The three-day conference was packed with keynote presentations from AHIP, the Commonwealth Fund, the CMS Innovation Center, and others, as well as four pre-conferences and nineteen concurrent sessions that offered participants a chance to learn more about the Medicare Shared Savings and Pioneer ACO programs, the Premier ACO collaborative, private sector ACO partnerships, and Medicaid and safety net-focused ACOs.

As we prepared for the 2011 National Pay for Performance Summit, healthcare deliv-ery in the United States was set to experience unprecedented change. The Affordable Care Act put healthcare quality and payment reform front-and-center with plans for a national strategy for healthcare quality, performance measurement and reporting initiatives for Medicare and Medicaid providers, performance-based payments for hospitals and physicians, and numerous payment reform pilots and demonstration projects. The 2011 National Pay for Performance Summit was perfectly timed, as CMS had released many of the new regulations required under the Act, and participants heard from individuals within government about the impacts that these regulations will have on care delivery. Participants also learned from leaders in the field working to implement innovative quality improvement and payment reform programs. For decades, we have worked tirelessly to improve healthcare quality, access, and efficiency, and we see the Affordable Care Act as a validation of this work. The 2011 Pay for Performance Summit gave us, along with nearly 650 attendees, a chance to reflect on how far we have come, and what we need to do in order to move forward.

National Pay for Performance SummitSan Francisco, CA

National Accountable Care Organization CongressLos Angeles, CA(co-produced with the California Association of Physician Groups)

Pictured at right: 2011 National ACO Congress Keynote Panel: Juan Davila, Blue Shield of California; John Wray, Catholic Healthcare West (now Dignity Health); Ann Boynton, CalPerS; Steve McDermott, Hill Physicians Medical Group

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In late 2011, driven by the reported early successes of the CMS Acute Care Episode demonstration and the planned expansion of the project in 2012, both health-care delivery systems and commercial payers began gearing up to pay for medical treatment on the basis of the “episode of care” or “bundled payments” rather than fee-for-service or capitation. Bundled payment also represents a critical first step in aligning incentives that promote cooperation amongst physicians, hospitals, and health plans to advance both quality and cost improvement. Many providers and payers are considering bundled payment as a logical first step on the path toward full ACO implementation. At the First National Bundled Payment Summit, participants heard directly from government leaders about the impacts that new CMS regula-tions will have on care delivery. Attendees also heard from leaders in the field work-ing to implement episode bundled payment and related programs in both the public and private sectors. We came away from the conference full of new information about key issues – clinical, analytic, measurement, payment – and all the other factors in-volved in implementing a bundled payment program.

The Integrated Healthcare Association’s Pay for Performance (P4P) Stakeholders Meet-ing is the annual forum for all California P4P participants and other stakeholders to receive key program information, share successes and challenges, access P4P-related services, and discuss future program direction. Reflecting the importance of measuring and rewarding both quality and cost-efficiency, IHA celebrated its 10th year of physician organization measurement and reporting in 2011. This year’s program focused on: Total Cost of Care testing results; changes to the P4P Measure Set; transition to Value Based P4P; and best practices and learnings. And like every year, the physician organizations that demonstrated the highest level of achievement for the 2010 Measurement Year, as well as the physician organizations that demonstrated the most quality improvement, were announced and recognized during the luncheon awards ceremony.

National Bundled Payment SummitWashington, D.C.

California Pay for Performance Stakeholders MeetingLos Angeles, CA

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Michael Belman, M.D., Anthem Blue CrossGerald Bishop, M.D., AetnaDaniel Bluestone, M.D., Santé Community PhysiciansMichael-Anne Browne, M.D., Blue Shield of California Sophia Chang, M.D., California HealthCare FoundationMarjorie Ginsburg, Center for Healthcare DecisionsAlan Glaseroff, M.D., Humboldt-Del Norte IPAJennifer Gutzmore, M.D., Cigna Healthcare of CaliforniaSam Ho, M.D., UnitedHealthcareDavid Hopkins, Ph.D., Pacific Business Group on HealthDon Hufford, M.D., Western Health AdvantageMichael Kern, M.D., John Muir Health Philip Madvig, M.D., The Permanente Medical GroupRobert Margolis, M.D., HealthCare Partners

Steve McDermott, Hill Physicians Medical GroupArnold Milstein, M.D. (Chair), Stanford UniversityJerry Penso, M.D., Sharp Rees-StealySandra Perez, Office of the Patient AdvocateLeslie “Les” Schlaegel, Stanford UniversityLawrence Shapiro, M.D., Palo Alto Medical Foundation Neil Solomon, M.D., Health Net of CaliforniaRandy Solomon, Anthem Blue CrossUlrike Steinbach, Ph.D., Blue Shield of CaliforniaJulie Wade, GlaxoSmithKlineBart Wald, M.D., HealthCare PartnersMelissa Welch, M.D., Aetna Tom Williams, Dr.P.H., Integrated Healthcare Association

P4P Steering Committee

2011 Committees

Bart Asner, M.D., Monarch HealthCareJuan Davila, Blue Shield of CaliforniaAlain Enthoven, Ph.D., Stanford UniversitySam Ho, M.D., UnitedHealthcare Don Hufford, M.D., Western Health AdvantageSteve McDermott, Hill Physicians Medical Group

Arnold Milstein, M.D., Stanford UniversityAldo De La Torre, Anthem Blue CrossMartha Smith, Health Net of CaliforniaGreg Stevens, Aetna Bart Wald, M.D. (Chair), HealthCare PartnersPeter Welch, Cigna Healthcare of California

P4P Payment Committee

Michael Belman, M.D., Anthem Blue CrossSam Ho, M.D., UnitedHeathcareDavid Hopkins, Ph.D., Pacific Business Group on HealthSteve McDermott (Chair), Hill Physicians Medical Group

Arnold Milstein, M.D., Stanford UniversityJerry Penso, M.D., Sharp Rees-StealyBart Wald, M.D., HealthCare Partners

P4P executive Committee

Kristy Alvarez, Pacific Business Group on HealthMichael-Anne Browne, M.D., Blue Shield of California Cheryl Damberg, Ph.D., RANDEllen B. Fagan, Cigna Healthcare of CaliforniaJohn Ford, M.D., Family Practice PhysicianJoel Hyatt, M.D., Southern CA Permanente Medical Group

Stuart Levine, M.D., HealthCare PartnersJerry Low, Anthem Blue Cross Eileen O’Connor, Health Net of CaliforniaJerry Penso, M.D. (Chair), Sharp Rees-Stealy Paul Solari, M.D., GenentechAnn Woo, PharmD, Hill Physicians Medical Group

P4P Technical Quality Committee

Barry Arbuckle, Ph.D., MemorialCare Medical CentersBart Asner, M.D., Monarch HealthCareElaine Batchlor, M.D., L.A. Care Health PlanAlain Enthoven, Ph.D., Stanford University Graduate School of Business

Richard Jacobs, Cedars-Sinai Health SystemDavid Joyner, Blue Shield of CaliforniaSteve McDermott, Hill Physicians Medical GroupDonald Rebhun, M.D., HealthCare PartnersTom Williams, Dr.P.H., Integrated Healthcare Association

IHA executive Committee

Elaine Batchlor, M.D., L.A. Care Health PlanHenry Loubet, Keenan Donald Rebhun, M.D., HealthCare PartnersRichard Slavin, M.D., Palo Alto Medical Foundation

Barbara Wachsman, Disney WorldwideTom Williams, Dr.P.H., Integrated Healthcare Association

John Wray, Catholic Healthcare West (now Dignity Health)

IHA Membership and Nominating Committee

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Daniel Bluestone, M.D., Santé Community PhysiciansBruce Davidson, Ph.D., Cedars-Sinai Health SystemDan Gross, Sharp HealthCare David Hopkins, Ph.D. (Chair), Pacific Business Group on HealthPaul Katz, Intelligent HealthcareRanyan Lu, Ph.D., UnitedHealthcare

David Redfearn, Ph.D., Anthem Blue Cross Susanne Turnbull, AetnaErnest Valente, Ph.D., Blue Shield of CaliforniaMichael van Duren, M.D., Sutter Physician ServicesJeffrey Walter, Anthem Blue Cross

P4P Technical Efficiency Committee

Linda Barney, Sharp HealthCareElizabeth Campbell, Cedars-Sinai Health SystemMargo Carroll, Health Net of CaliforniaNeena Dhillon, Anthem Blue CrossEllen Fagan, Cigna Healthcare of CaliforniaSusan Galzerano, UnitedHealthcareJennifer Hastie, UnitedHealthcareNancy Hazlewood, Hazlewood ConsultingJennifer Helbock, UnitedHealthcareDeb Henning, Brown & Toland Medical GroupBrian Jeffrey, UnitedHealthcare

Greg Labow, Receivable Optimization, IncDavid Lankford, Blue Shield of CaliforniaSteve Linesch, MCS/GemcareElly Menegus, AetnaValerie Morse, UnitedHealthcareCecil Nyein, Anthem Blue CrossEdie Parker, Blue Shield of CaliforniaRamona Saragosa, Sharp HealthCareDave Schinderle, US BankJanet Von Freymann, Brown & Toland Medical GroupCarol Wanke, Sharp HealthCare

Division of Financial responsibility (DOFr) Work Group

Bart Asner, M.D. (Chair), Monarch HealthCareArminé Papouchain, Blue Shield of CaliforniaRichard Jacobs, Cedars-Sinai Health SystemBenjamin Katz, Cigna Healthcare of CaliforniaRonald Kaufman, M.D., Tenet CaliforniaStephanie Mamane, Brown & Toland Medical GroupJennifer Mitzner, Hoag Memorial Hospital

David Nace, M.D., McKessonJeff Rideout, M.D., TriZettoJames Robinson, Ph.D., UC Berkeley School of Public HealthSamuel Skootsky, M.D., UCLA Health SystemMartha Smith, Health Net of CaliforniaGreg Stevens, Aetna

Richard Sun, M.D., CalPERS

Bundled Payment Steering Committee

Jacob Asher, M.D., Cigna Healthcare of California (Chair)Douglas Gin, AetnaJill Harmatz, Blue Shield of California Douglas Moeller, M.D., McKesson Megan North, CAP Management ServicesStanley Padilla, M.D., Brown & Toland Medical Group

Virginia Ripslinger, St. Joseph Hospital – OrangeRon Ruckle, Cedars-Sinai Health SystemJay Sultan, TriZettoColleen Thilgen, Ingenix

Thomas Wilson, Monterey Peninsula Surgery Centers

Bundled Payment Technical Committee

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IHA Affiliate OrganizationsThe IHA Affiliate Program provides the opportunity for non-board organizations to formally engage with IHA and its leadership through strategic networking opportunities, communica-tions and IHA sponsored events. Affiliate Members include health plans, hospitals and health systems, and physician organizations. Affiliate Partners include vendor companies that provide a product, solution, or service to health plans, hospitals and health systems, and physician organizations.

AbbottArchimedesBristol-Myers SquibbThe Camden GroupCERECONS

2011 Affiliate Partners

Children’s Physicians Medical Group Santa Clara County IPASCAN Health Plan

Torrance Memorial Medical CenterUCLA Medical Group

2011 Affiliate Members

Davis Wright Tremaine LLPDiversified Data Design (DDD)/TransUnion Intelligent HealthcarePfizer, Inc.

IHA Staff

Dolores Yanagihara, M.P.H., Director, Pay for Performance ProgramCathleen Enriquez, M.B.A., Program Manager, Pay for Performance Program – QualityGail Rusin, M.B.A., Program Manager, Pay for Performance Program – EfficiencyBrian Goodness, Data Analyst, Pay for Performance Program

Tom Williams, Dr.P.H., President and CEO

Pay for Performance Program

Jett Stansbury, Director, New Program DevelopmentDan Cummins, Program Manager, Episode Payment ProgramNancy Hazlewood, Project Manager

Episode Payment Pilot and New Program Development

Cindy Ryan Ernst, Director, Administration & CommunicationsTom Davies, J.D., M.P.A., Senior Advisor, Affiliate ProgramEmma Dolan, M.P.H., M.P.P., Policy AnalystJennifer Kellar, Communications AnalystEileen DeGrazia, Office AdministratorSuzanne Estep, Executive Assistant

Office Administration and Communications

IHA Headquarters, located in the Kaiser Center on Lake Merritt in Oakland, California

Integrated Healthcare Association

300 Lakeside Drive, Suite 1975

Oakland, CA 94612

Office: 510.208.1740

Fax: 510.444.5482

www.iha.org

About the Integrated Healthcare AssociationThe Integrated Healthcare Association (IHA) is a not-for-profit multi-stakeholder leadership group that promotes quality improvement, accountability and affordability of healthcare in California. IHA administers regional and statewide programs, serves as an incubator for pilot programs and projects, and actively convenes all healthcare parties for cross sector collaboration on healthcare topics. IHA principal projects include the California Pay for Performance Program (the largest private physician incentive program in the U.S.), the measurement and reward of efficiency in health-care, administrative simplification, healthcare affordability, bundled episode of care payments, and accountable care organizations.