1

U  N  C        H  E  A  L  T  H        C  A  R  E        S  Y  S  T  E  M

   U  N  C        H  E  A  L  T  H        C  A  R  E        S  Y  S  T  E  M

   U  N  C        H  E  A  L  T  H        C  A  R  E        S  Y  S  T  E  M

   

Perinatal Quality in the world of value-based care?

May 8, 2014

Alan D. Stiles, MD Sr. Vice President

2

U  N  C        H  E  A  L  T  H        C  A  R  E        S  Y  S  T  E  M

   

Disclosures

I have no relevant financial relationships with the manufacturer(s) of any commercial product(s) and/or provider(s) of commercial services discussed in this CME activity.

I do not intend to discuss an unapproved/investigative use of a commercial product/device in our presentation.

3

U  N  C        H  E  A  L  T  H        C  A  R  E        S  Y  S  T  E  M

   

Areas for discussion

The current state of “transition” in delivery of health care

Value-based care—ACOs and quality

Children and NC Medicaid “future ACOs??”

How will children and particularly neonatal intensive care fit into ACOs?

4

U  N  C        H  E  A  L  T  H        C  A  R  E        S  Y  S  T  E  M

   

Higher quality leads to lower costs

Value = Quality/Cost

Value (outcomes and cost) is increasingly the measure for payment

Risk by providers is part of the new

competitive environment

5

U  N  C        H  E  A  L  T  H        C  A  R  E        S  Y  S  T  E  M

   

What is the “big picture?” The Affordable Care Act (“ObamaCare”) is in motion—More insured less self-pay in the future?

The current “Market Share” evolving to “Population health”

“Consolidation” of hospitals, practices, and health care systems into larger integrated systems

Aim of health care is to be “patient-centered” using a primary care “medical home” as the “key stone” of the care structure

Payment for care transitioning to “value” from “fee for service”

“Wellness” not “care of illness” is the new goal for health care

6

U  N  C        H  E  A  L  T  H        C  A  R  E        S  Y  S  T  E  M

   

Wel

lnes

s Inpatient Rehab

Home Health & Hospice

Outpatient Rehab

SNFs

Homecare

The “New” Health Care System—Patient-Centered Full Continuum of Care

Specialty Secondary Tertiary/ Quaternary Post-acute

System Integration of physicians and hospitals: “Clinical Integration”

Primary

Service to Defined Populations for Medical Care

Primary Care

Medical Homes

Outpatient Specialty

Care

Community Hospital

Inpatient Care

Medical Center/ Tertiary

Quaternary Care

Medical Neighborhood Greatest Costs

Accountable Care Organizations (ACOs)

7

U  N  C        H  E  A  L  T  H        C  A  R  E        S  Y  S  T  E  M

   

Steps in transitioning to “value-based” care

1.  Redesign care focusing on quality and expense management

2.  Establish an integrated care system (Clinical Integration) and identify the population for care

3.  Transition reimbursement from fee for service only to value-based care and “risk”

Value=Quality/Expense

Cutting costs cannot be the only focus

“Clinical Integration”: partnership of providers (physicians, hospitals, others)

Data (clinical and financial) and analytics are critical for success

8

U  N  C        H  E  A  L  T  H        C  A  R  E        S  Y  S  T  E  M

   

NC has 7 well developed ACOs (more than 20 others in development)

Providers coordinate care for a population of patients

Community Care of North Carolina saved state $55M in 2010 with PCMH model

Expanded role of PCPs to coordinate care for patients across care settings

Health Care Structures

Definition Models Examples

Accountable Care

Organization(ACO)

Primary Care Medical Homes (PCMH)

Population Health

~13M Medicare Advantage members across the US (27% of total Medicare beneficiaries)

Global payment for a defined population

Narrow or Tiered Network

(Capitation)

Traditional Health Care Structures

Independent providers or integrated

Health Care System

Fee-for-Service or Fee-for-Service with quality metrics volume driven revenue

Majority of US Health Care Systems with owned or independent physician practices

9

U  N  C        H  E  A  L  T  H        C  A  R  E        S  Y  S  T  E  M

   

What is an Accountable Care Organization (ACO)?

A provider-based organization: •  Responsible for healthcare needs of a defined population;

•  Goals of improving health, improving efficiency, and improving patient satisfaction;

•  Must include primary care physicians (for Medicare ACOs)

•  Produces shared savings or other financial measures to align incentives: Moves from “Fee for Service” to “Fee for Value” assuming “risk”

Providers = Medical care professionals, hospitals and

others .

10

U  N  C        H  E  A  L  T  H        C  A  R  E        S  Y  S  T  E  M

   

Revenue approaches for ACOs

1.  Bundled Payments Predetermined payment for an episode of care (hospital and physician or physician or hospital only)

2.  Shared Savings Share reduced cost of care, assuming quality is maintained, between the payer and provider by a predetermined formula

3.  Pay for Performance/Value Based Purchasing/Risk Contracts Quality metrics (with or without cost targets) predetermined as targets with payment based on outcome

All are based on delivering value, not volume alone

Performance is judged on the health outcomes of the population the ACO manages

11

U  N  C        H  E  A  L  T  H        C  A  R  E        S  Y  S  T  E  M

   

The transition to value-based care aims to reduce hospitalizations and ED visits, resulting in “savings”

2515

1515

25

26

25

19

12

0102030405060708090100

Future

100% 10

3

Current

100%

5

5

IP Spend* OP Spend Ancillary Rx Specialist* PCP Shared Savings

Perc

ent o

f cur

rent

spe

nd

10% savings to be used for incentive payments among providers and payors

*Key question: How to balance the decrease in hospital and specialist revenue?

Growth in population (volume) served by the “value based care” hospital and specialist physicians

Source: Hypothetical percent of spending estimated in a static volume population from Cornerstone Healthcare internal study

12

U  N  C        H  E  A  L  T  H        C  A  R  E        S  Y  S  T  E  M

   

NC Medicaid Restructuring

State leaders have concluded NC Medicaid is “broken” and in need of a major overhaul to bring better care and efficiency

Primary goals are predictable Medicaid cost and an overall reduction in cost

State leaders believe restructuring NC Medicaid is necessary

Initially favored moving to Medicaid Managed Care through groups with experience in other states

•  NC Department of Health and Human Services (DHHS) established a Medicaid Advisory Group to review Medicaid issues and develop proposal to reduce costs and improve care

•  Medicaid Advisory Group proposed ACO shared savings model for NC Medicaid focusing on medical care (not behavioral health)

•  Proposal supported by DHHS and the Governor but has not been addressed by the NC Legislature

•  Workgroups formed in the NC Hospital Association, NC Medical Society, and other interested groups to develop plans for possible Medicaid ACO implementation in mid 2015

What is it? Status

13

U  N  C        H  E  A  L  T  H        C  A  R  E        S  Y  S  T  E  M

   

NC Medicaid

§ ~1.8 million unduplicated eligibles covered

§ ~926k children covered

§ >45% of babies born are covered

§ ~30% of recipients consume 75% resources

14

U  N  C        H  E  A  L  T  H        C  A  R  E        S  Y  S  T  E  M

   

53%

47%

Enrollees  

24%

76%

Children

Adults/Aged/Disabled

                                           Payments  

Distribution of NC Medicaid Enrollees and Payments by Enrollment Group, FY2010

15

U  N  C        H  E  A  L  T  H        C  A  R  E        S  Y  S  T  E  M

   

Children’s care in ACOs: A flock of “odd ducks”

Children with Chronic Illness

Well Children

NICU

16

U  N  C        H  E  A  L  T  H        C  A  R  E        S  Y  S  T  E  M

   

How will ACOs deal with Children? It is complicated!

•  Employer based health plans are providing insight into children’s care in ACOs

•  Children present a large population with low risk

•  Most care is “preventive” and acute care for self-limited illnesses (lower cost)

•  Quality Measures? (CHIPRA sets Child Core Measures)

•  Unpredictable or less predictable risk: accidents, catastrophic illness, NICU care (all are low frequency)

•  Growing pool of children with chronic illness (regional care)

17

U  N  C        H  E  A  L  T  H        C  A  R  E        S  Y  S  T  E  M

   

Background

5% of Children < 17 yo (~50,000) incur 54% of the cost for children’s care in Medicaid

Who are these children and what can be saved on cost while maintaining or improving quality of care?

18

U  N  C        H  E  A  L  T  H        C  A  R  E        S  Y  S  T  E  M

   

Medicaid Hospital Claims for < 17 yo

Claims

NICU Hematologic Respiratory Other

Other

11%

Respiratory

25%

Hematologic

NICU

47%

16%

Hospital Claims by Diagnosis Group 2009-2011

19

U  N  C        H  E  A  L  T  H        C  A  R  E        S  Y  S  T  E  M

   

NICU patients and children with chronic illness

Children with Chronic Illness

Other

Resp Cardiac

NICU Patients

20

U  N  C        H  E  A  L  T  H        C  A  R  E        S  Y  S  T  E  M

   

Can ACOs manage NICU care? Maybe? No choice?

•  Cost containment with good outcomes cannot occur without application of evidence based care and sustained quality measures

•  Rates of prematurity are predictable

•  Some significant opportunities for savings around preventable problems (e.g. CLBSI), length of stay, and transitional care

•  Transitional care for NICU graduates, an opportunity

•  Prematurity prevention: the most effective cost reduction tool (and the hardest to implement)

•  Only 1 proposed Core Child Quality Measures relates directly to NICU: (CLABSI) with 6 others related to prenatal care

Impacting NICU costs is resource intense requiring partnership with physicians and hospitals