Medicare ACO Proposed Rule: What Physicians Need to Know Member Webinar May 3, 2011

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Barbra Young
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1 Medicare ACO Proposed Rule: What Physicians Need to Know Member Webinar May 3, 2011

2 Agenda Background Summary of Key Provisions Shared Savings Bonus Calculation Concluding Take-Aways Questions and Answers 2

3 Release of ACO-Related Documents On March 31, the Federal Government released four coordinated documents on establishing ACOs: 1. CMS proposed rule for Shared-Savings Program/ACO model 2. CMS- Office of Inspector General (OIG) notice on waivers* * 3. Federal Trade Commission (FTC)- Department of Justice (DOJ) Proposed Statement of Antitrust Enforcement Policy ** 4. Internal Revenue Service (IRS) notice regarding need for additional tax guidance** Comments due June 6th Comments due May 31 ** Additional member call specifically on barriers to clinical integration scheduled for May 9 th at 1p ET 3

General Reaction The Medicare ACO shared savings proposed regulation is an important first step towards implementing a program from the ACA that attempts to improve

6 General Reaction The Medicare ACO shared savings proposed regulation is an important first step towards implementing a program from the ACA that attempts to improve quality of care while reducing Medicare Expenditures. However, substantial changes are needed to make the program attractive to potential participants and operationally viable.

7 Summary of Key Provisions

8 Summary ACOs will continued to be paid based on FFS They can receive a shared saving payment if: actual spending is below a benchmark, and if they meet quality performance requirements CMS proposes two options: One-Sided Model Years 1 & 2: Shared savings only Year 3: Shared savings and losses Minimum Savings Rate: 2.0%-3.9% Shared savings: 50%/50% (bonus cap of 7.5%; loss cap of 5%) 25% withhold to be returned after 3 rd year Two-Sided Model Years 1, 2, & 3: Shared savings and losses Minimum Savings Rate: 2.0% Shared savings: 60% ACO/40% CMS, but share first dollar savings (bonus cap 10%; loss cap of 5% Y1, 7.5% Y2, 10% Y3) 25% withhold to be returned after 3 rd year

9 Eligible Participants Allows a number of provider types to participate: Professionals (MDs, DOs, PAs, NPs, or CNS) in group practices Networks of individual practices Partnerships or joint ventures between hospitals and professionals Hospitals employing physicians or other clinical professionals Other groups of providers as CMS determines appropriate 9

all potential ACOs will be automatically accepted into the

10 Application Process Groups of providers will submit an application (to be developed) to CMS Three-year agreement Not all potential ACOs will be automatically accepted into the program No limit on number that can participate Estimated at ACOs 10

11 Governance and Structure 75% control of the governing body must be held by ACO participants and control must be proportionate for each participant Each ACO participant must have at least one representative on the governing body, chosen by the ACO participant organization that he or she represents At least one Medicare beneficiary served by the ACO but otherwise unconnected to the ACO 11

12 Leadership & Management ACO s operations must be managed by an executive officer, manager or general partner Clinical management oversight must be managed by a full-time senior-level medical director who is a board-certified physician, licensed by the state in which the ACO operates and who is physically present on regular basis in an ACO location 12

Beneficiaries Assignment Beneficiaries will be retrospectively assigned Based on primary care services utilization data Prior 3 years No Lock-In Notification

13 Beneficiaries Assignment Beneficiaries will be retrospectively assigned Based on primary care services utilization data Prior 3 years No Lock-In Notification Provider must notify beneficiaries: They are participating in the ACO program The patient s claims data may be shared within ACO (but patient may opt-out) 13

14 Quality Measures CMS proposes 65 quality measures in 5 domains: 1. Patient experience of care 2. Care coordination 3. Patient Safety 4. Preventive health 5. At-Risk populations Performance Score: Equal weighting of five domains into one overall quality score For year 1, ACOs required to collect and submit data. For subsequent years, CMS will set performance benchmarks that must be met to quality for incentive payments Those with higher scores are eligible for greater incentive payments 14

15 Quality Measures Patient/Caregiver Experience 1. Getting Timely Care, Appointments, and Information 2. How Well Your Doctors Communicate 3. Helpful, Courteous, Respectful Office Staff 4. Patients Rating of Doctor 5. Health Promotion and Education 6. Shared Decision Making 7. Health Status/Functional Status Care Coordination 8. Risk-Standardized, All Condition Readmission Day Post Discharge Physician Visit 10. Medication Reconciliation 11. Uni-dimensional self-reported survey that measures the quality of preparation for care transitions 12. Diabetes, Short-Term Complications (AHRQ Prevention Quality Indicator (PQI) #1) 13. Uncontrolled Diabetes (AHRQ PQI #14) 14. Chronic Obstructive Pulmonary Disease (AHRQ PQI #5) 15. Congestive Heart Failure (AHRQ PQI #8) 16. Dehydration (AHRQ PQI #10) 17. Bacterial Pneumonia (AHRQ PQI #11) 18. Urinary Infections (AHRQ PQI #12) 19. Percent All Physicians Meeting Stage 1 HITECH Meaningful Use Requirements 20. Percent of PCPs Meeting Stage 1 HITECH Meaningful Use Requirements 21. Percent of PCPs Using Clinical Decision Support 22. Percent of PCPs Who Are Successful Electronic Prescribers Under The erx Incentive Program 23. Patient Registry Use Patient Safety 24. Healthcare Acquired Conditions Composite: Foreign Object Retained After Surgery Air Embolism Blood Incompatibility Pressure Ulcers, Stages III and IV Falls and Trauma Catheter-Associated UTI Manifestations of Poor Glycemic Control Central-Line Associated Blood Stream Infection Surgical Site Infection 25. AHRQ Patient Safety Indicator Composite o Accidental Puncture or Laceration o Iatrogenic Pneumothorax o Postoperative DVT or PE o Postoperative Wound Dehiscence o Decubitus Ulcer o Central Venous Catheter-Related Bloodstream Infections o Postoperative Hip Fracture o Postoperative Sepsis 26. Health Care-Acquired Conditions: CLABSI Bundle Preventive Health 27. Influenza Immunization 28. Pneumococcal Vaccination 29. Mammography Screening 30. Colorectal Cancer Screening 15

16 Quality Measures (Cont.) 31. Cholesterol Management for Patients with Cardiovascular Conditions 32. Adult Weight-Screening and Follow-Up 33. Blood Pressure Measurement 34. Tobacco Use Assessment and Tobacco Cessation Intervention 35. Depression Screening At-Risk Population/Frail Elderly Health 36. Diabetes Composite (All or Nothing Scoring): Hemoglobin A1c Control (<8%) Low Density Lipoprotein (<100) Blood Pressure <140/90 Tobacco Non Use Aspirin Use 37. Diabetes Mellitus: Hemoglobin A1c Control (<8%) 36. Diabetes Mellitus: Low Density Lipoprotein (LDL-C) Control in Diabetes Mellitus 39. Diabetes Mellitus: Tobacco Non Use 40. Diabetes Mellitus: Aspirin Use 41. Diabetes Mellitus: Hemoglobin A1c Poor Control (>9%) 42. Diabetes Mellitus: High Blood Pressure Control in Diabetes Mellitus 43. Diabetes Mellitus: Urine Screening for Microalbumin or Medical Attention for Nephropathy in Diabetic Patients 44. Diabetes Mellitus: Dilated Eye Exam in Diabetic Patients 45. Diabetes Mellitus: Foot Exam 46. Heart Failure: Left Ventricular Function (LVF) Assessment 47. Heart Failure: Left Ventricular Function (LVF) Testing At-Risk Population/Frail Elderly Health (Cont.) 48. Heart Failure: Weight Management 49. Heart Failure: Patient Education 50. HF: Beta-Blocker Therapy for Left Ventricular Systolic Dysfunction (LVSD) 51. HF: ACE Inhibitor or ARB Therapy for LVSD 52. HF: Warfarin Therapy for Patients with Atrial Fibrillation 53. Coronary Artery Disease (CAD) Composite: All or Nothing Scoring Oral antiplatelet therapy prescribed for patients with CAD Drug therapy for lowering LDL-cholesterol Beta-blocker therapy for CAD patients with prior myocardial infarction (MI) LDL level <100mg/dl ACE inhibitor or ARB therapy for patients with CAD and diabetes and/or LVSD 54. Coronary Artery Disease: Drug Therapy for Lowering LDL-Cholesterol 55. Coronary Artery Disease: Beta-blocker therapy for CAD patients with prior MI 56. Coronary Artery Disease: LDL level <100mg/dl 57. Coronary Artery Disease: ACE inhibitor or ARB therapy for patients with CAD and diabetes and/or LVSD 58. Hypertension: Blood Pressure Control 59. Hypertension: Plan of Care 60.Chronic Obstructive Pulmonary Disease: Spirometry Evaluation 61. Chronic Obstructive Pulmonary Disease: Smoking Cessation Counseling Received 62. Chronic Obstructive Pulmonary Disease: Bronchodilator Therapy Based on FEV1 63. Falls: Screening for Fall Risk 64. Osteoporosis Management in Women Who Had a Fracture 65. Monthly INR for Beneficiaries on Warfarin 16

17 Shared Savings Calculation Example 17

18 Begin Here American ACO has 60,000 beneficiaries ACO s Shared Savings Bonus ($2,400,000 25%) = $1,800,000 $10,000 per capita benchmark $9,800 per capita minimum savings rate (MSR) (2%) $9,700 per capita actual spending How an ACO Bonus Payment is Calculated (Track 1, Year 2) $600,000 remains in withhold $200/beneficiary $100 savings/beneficiary Up to 50/50 Shared with CMS Based on Quality Score Quality Score = 80% Calculate Shared Savings Quality Score (80%) x (50% Shared Savings) = 40% CMS $200 per bene ACO Receives ($40/bene) x (60,000 benes) = $2,400,000 Minus 25% CMS Shared Savings Bonus ($260/bene) x (60,000 benes) = $15,600, ($100 per beneficiary) x 40% = $40/beneficiary to ACO CMS receives $200/ bene + ($100/bene x 60%) = $60/bene TOTAL = $260/bene 18

19 Concluding Take-Aways 19

20 The Bottom Line. $600,000 withhold $2,400,000 ACO Share TOTAL SAVINGS $18,000,000 $15,600,000 CMS Share In Reality: 87%/13% Split 20

21 Timeline Expenditure Benchmarks 6 months claims runout 3 months analysis % of the baseline benchmark 30% of the baseline benchmark 60% of the baseline benchmark Third Quarter 2012 Baseline benchmark is established January 2012 Program begins 21

22 Investment Estimate of ACO Investment CMS (based on a range of an estimate of ACOs) AHA** (200-bed, single hospital system ) AHA ** (1200-beds, 5-hospital system) Average* $1,800,000 $6,400,000 $14,000,000 *Average amounts represent estimated costs for the start-up and ongoing costs for year 1. **Draft estimates based on pending case studies. Includes start-up and ongoing costs for a typical year. Some costs may have already been incurred or allocated to other budgets. 22

23 ACO Proposed Rule Next Steps Identifying key issues in comment process Membership calls Governance meetings Meetings with executive branch officials Getting Congress to share hospital concerns with CMS 23

24 Medicare ACO Proposed Rule: What Physicians Need to Know Member Webinar May 3, 2011

25 P G P Demons tration P rojec t and Medicare S hared S avings Program: Accountable Care Organizations Nicholas Wolter, M.D. Billings Clinic Physician Leadership Forum May 3, 2011 Health Care, Education and Research

26 CMS-PGP Demonstration CMS PGP Objectives Encourage coordination of Part A & Part B Coordinate care for chronically ill and high cost beneficiaries in an efficient manner Decrease the growth in Medicare spending over the next 3 years Timeline Base Year: Calendar Year 2004 Performance Year 1: April 1, March 31, 2006 Performance Year 2: April 1, March 31, 2007 Performance Year 3: April 1, March 31, 2008 Performance Year 4: April 1, 2008 March 31, 2009 Performance Year 5: April 1, March 31, 2010

10 Organizations Physician Group Practices Everett, WA Everett Clinic Marshfield, WI Marshfield Clinic Integrated Delivery Systems Springfield, MO St Johns Danville, PA-Geisinger Billings,

27 10 Organizations Physician Group Practices Everett, WA Everett Clinic Marshfield, WI Marshfield Clinic Integrated Delivery Systems Springfield, MO St Johns Danville, PA-Geisinger Billings, MT-Billings Clinic St. Louis Park, MN Park Nicollet Winston-Salem, NC-Novant- Forsyth Academic & Network Org. Middletown, CT Integrated Resources for Middlesex Area (IRMA) Ann Arbor, MI - University of Michigan Bedford, NH-Dartmouth Hitchcock

28 PGP Demo Concepts Medicare Fee For Service continues as before Only risk is Business Risk for the PGP If PGP is able to reduce the rate of growth of Medicare spending for the cohort under its care compared to a local comparison, CMS will share part of its savings with PGP Savings is a function of expenditure control and health status changes Budget neutral project for CMS Meeting Financial Target= Gate Once Open, PGP s portion dependent on meeting Quality Measures

29 PGP Project Financial Model SAVINGS >2% 20% CMS Q: Quality E: Efficiency Y1 Y2 Y Q 0.4 Q 0.5 Q 80% Performance Pay 0.7 E 0.6 E 0.5E

30 CMS PGP Quality Measures Outpatient Total 32 + flu and pneumonia vaccines Year 1: Diabetes Year 2: Year 1 plus HF and CAD Year 3: Year 2 plus Hypertension and colorectal and breast cancer screenings PGP Quality Thresholds: Absolute or Relative Targets benchmarks or >10% improvement in gap (100%- baseline) Taken from the Doctor s Office Quality measurement set in Thus some of the target measurements are not the current quantitative benchmark.

31 The demonstration uses a total of 32 measures that focus on common chronic illnesses and preventive services HbA1c Management HbA1c Control Diabetes CHF CAD Preventive Care Left Ventricular Function Assessment LV Ejection Fraction Testing Antiplatelet Therapy Drug Therapy for Lowering LCL-C BP Management Weight Management Beta-Blocker Therapy Prior MI Blood Pressure Screening Blood Pressure Control Blood Pressure Control Plan of Care Lipid Measurement BP Screening Blood Pressure Breast Cancer Screen LDL Cholesterol Level Patient Education Lipid Profile Colorectal Cancer Screen Urine Protein Testing Beta-Blocker Therapy LDL Cholesterol Level Eye Exam Ace Inhibitor Therapy Ace Inhibitor Therapy Foot Exam Influenza Vaccination Pneumonia Vaccination Warfarin Therapy Influenza Vaccination Pneumonia Vaccination 7

32 Common Basis for Strategies among the PGP Groups 1. Focus: High Cost Areas Components of Medicare Expenditures For Billings Clinic (base year 2004) Inpatient 40% Hospital OP 24% Part B 22% SNF 7% Home Health 3% DME 4% Reduce avoidable admissions, ER visits, etc 2. Focus: Chronic Care & Prevention High prevalence and high cost conditions Provider based chronic care management Care transitions Palliative care Financial Savings are INPATIENT driven. Quality Measures are OUTPATIENT driven.

33 Overview of the innovative payment/delivery model Physician Group Practice Demonstration Testing the concept that physician group practices can better coordinate care (Part A&B) than other delivery models to reduce rate of growth in per-capita expenditures while improving quality Types of organizations: 2 MSGP, 2 AMC, 5 IDS, 1 PHO Shared Savings Model: FFS continues; CMS shares % of calculated savings Rate of growth of PGP compared to same county comparison Individually risk adjusted (HCC) Attribution by plurality of office visits, All-Specialty Retrospective, blinded to both organization and beneficiary, changes yearly Absolute Threshold for demonstrating savings: 2%, Cap: 5% Sharing is 80% only on savings >threshold but < cap Data feedback intended on quarterly basis 32 Quality measures (outpatient only, process + outcomes) create a gate for 50% of shared savings payment

34 Impact Clinical interventions universally applied to all patients, payer-neutral Increased focus on population management and chronic disease Increased outpatient utilization, decreased inpatient utilization. Examples: 40% reduction of HF hospitalizations ($3M+ revenue) for only 15% pop 20% reduction in 1 day psych hospitalizations Planned visits, improved PCP access to reduce emergency visits Chronic condition management for anticoagulation, HF, lipids, diabetes, & 24/7 nurse triage Risk stratification with case management for complex patients Improved coordination for transitions in care Significant spending on EMR optimization & quality reporting/documentation All 10 orgs with significant quality achievement (year 4, all >92% of targets) Savings: Year 1: $9.5M, 2 org $7.3M --Year 2: $17M, 4 orgs $13.8M Year 3: $32.3M, 5 orgs $25.3M --Year 4: $37.8M, 5 orgs $31.7M 4 yr. Savings Total= $97M, $86M shared with 6 orgs, 1 org captured >50% total 4 th year savings payment reflects 1.7% of net patient expenditures For most, savings < reduced revenues and business costs of implementation Risk adjustment was significant factor in performance Quarterly data proved difficult to interpret; 18 months True patient engagement did not occur due to the attribution status

35 Non-Risk Adjusted Expenditures Per Beneficiary Per Year Expenditures $14,500 $14,000 $13,500 $13,000 $12,500 $12,000 $11,500 $11,000 $10,500 $10,000 $9,500 $9,000 $8,500 $8,000 $7,500 $7,000 $6,500 $6,000 $5,500 BY PY1 PY2 PY3 PY4 Group1 Group2 Group3 Group4 Group5 Group6 Group7 Group8 Group9 Group10 Program Year

36 Risk Adjusted Expenditures Per Beneficiary Per Year $10,000 $9,500 $9,000 Expenditures $8,500 $8,000 $7,500 $7,000 $6,500 $6,000 Group1 Group2 Group3 Group4 Group5 Group6 Group7 Group8 Group9 Group10 $5,500 BY PY1 PY2 PY3 PY4 Program Year

37 Total Medicare PGP Savings/(Losses) $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 PGP Yr1 PGP Yr2 PGP Yr3 PGP Yr4 $5,000,000 $0 ($5,000,000) Group 1 Group 2 Group 3 Group 4 Group 5 Group 6 Group 7 Group 8 Group 9 Group 10

38 Advice about implementation Attribution needs to be at level where care is managed Prospective and transparent to provider and patient (engagement) Large % of Billings Clinic s patients were seen on specialty outreach National Comparison Targets and absolute growth (ACA language) Using rate can perpetuate historical regional clinical/payment variation Threshold needs to be rational, attainable 95% CI is a statistical constraint that may discourage adoption/reform 5,000 lives 4.65% threshold! (Medicare growth= % year) Assures random variation doesn t contribute, but doesn t acknowledge negative random variation Should risk corridors (+ and -) exist? Consider withhold, pay at end of 3 year contract to assure savings Sharing needs to be first dollar if threshold met Risk Adjustment integral to process; allow for adequate growth Risk increases with adoption of EHR and improved care coordination Organizations demonstrating quality attract risk (Billings Clinic had same per capita growth rate as the most successful organization in PGP, yet did not demonstrate savings under formula) Quality Measures need to focus on high cost/ high volume diseases National Standardization of measures EHR certification should require ability to document and report this data Timely Data Turnaround

39 Comparison P G P Demons tration ( ) to the PGP Trans itions Demons tration ( )

40 Physician Group Practice vs. ACO Rule Design Element PGP Track #1 Track #2 Bottom Line Shared Savings Bonus ACO = 80% CMS = 20% ACO = 50% CMS = 50% ACO = 60% CMS = 40% Bonus Cap 5% 7.5% 10% Down-side Risk None 5% (Y3) 5% (Y1), 7.5% (Y2), 10% (Y3) Share in First Dollar Savings No No (Y1, Y2) Yes (Y3) Yes Quality Measures Access to Data All retrospective Some prospective Some prospective

Improving Quality of Care for Medicare Patients: Accountable Care Organizations

Improving Quality of Care for Medicare Patients: Accountable Care Organizations DEPARTMENT OF HEALTH & HUMAN SERVICES Centers for Medicare & Medicaid Services Room 352-G 200 Independence Avenue, SW Washington, DC 20201 Office of Media Affairs MEDICARE FACT SHEET FOR IMMEDIATE RELEASE