Value-Based Payments: Insights from the Health Care Transformation Task Force Health Management Academy CEO Forum March 26, 2015 Confidential – Do Not Distribute
CMS is committed to value-based care, targeting >50% of payments in alternative models by 2018 Alternative “Obama administration wants 30% Payment to dramatically change how Models 50% doctors are paid” January 26, 2015 (eg ACOs) “ Linked to 55% Quality / Value As a very large payer in the system, (eg P4P 40% we believe we have a responsibility to adjustments) lead. For the first time, we’re going to set clear goals and establish a clear “ timeline for moving from volume to 15% Traditional FFS 10% value in the Medicare system. 2016 2018 HHS Secretary Burwell January 26, 2015 Source: Brookings Institute, Evolent. 1 Confidential – Do Not Distribute
HHS/CMS have launched a suite of programs and care improvement initiatives to achieve value payment goals Medicare Advantage Shared Risk ACO Shared Savings ACO Medical Homes: Advanced Medical Homes: Basic Multi-Site Bundling Single-Site Bundling Programs to Facilitate Care Improvement Data sharing; Waivers; Learning collaborative; Consumer incentives 2 Confidential – Do Not Distribute
The Task Force is a partnership aimed at accelerating system transformation to value-based care Providers Payers Partners Purchasers Patient Organizations 3 Confidential – Do Not Distribute
The Task Force’s guiding principles outline a financially and operationally viable and sustainable approach Shift 75% of our respective businesses to be under value-based care contracts by 2020 Design programs that provide reasonable returns to deliver the triple aim of better health, better care and reduced total cost of care at or below GDP growth Equip market players with all tools necessary to compete in new market focused on people-centered primary care Encourage multi-payer participation and alignment to create common targets, metrics, and incentives Share cost savings with patients, payers, and providers to ensure adequate investment in new care models Foster transparency of quality and cost metrics in a manner that is accessible to, and easily understood by, consumers Support the needs of disadvantaged populations and help strengthen the safety net providers who serve them 4 Confidential – Do Not Distribute
Task Force has sent strong private-sector market signal about desired pace and depth of health system change “Industry Group to Back Results-Focused Care” “Stakeholders Set Sights On Transformed Health Care System” “Major providers, insurers plan aggressive push to new payment models” 5 Confidential – Do Not Distribute
TF Work Groups are driving rapid-cycle product development, starting with improving the ACO model Improve the ACO Model Develop aligned public-private action-steps and recommendations to improve the design and implementation of the ACO model Develop Common Bundled Payment Framework Create detailed principles and tools to align and evaluate episode definitions/pricing for public/private payer bundled payment programs. New Model Development - Improving Care for High-cost Patients Create, test and recommend a delivery/payment model that allows a wide range of provider organizations, including in rural areas with little to no current MA/ACO penetration, to engage in population health by starting with highest-cost patients (top 5%). 6 Confidential – Do Not Distribute
Achieving the 75% target by 2020 will fundamentally alter the terms of competition for provider systems Capture access to patients and market share through ability to 1 manage total cost of care and customer experience Create a high-performing physician network needed to deliver 2 better care and increase in-system utilization 3 Manage a greater share of premium dollar Maximize accuracy and usefulness of data to improve care 4 management and ensure appropriate risk-adjustment 5 Invest in community health 7 Confidential – Do Not Distribute
Foundational capabilities needed to support transformation and succeed in new competitive landscape CEO Commitment to making visible decisions that favor population health agenda when volume and value agendas conflict Leadership and Governance Dedicated Value-based Organization Model to help integrate and optimize population health programs, and align and focus execution Delegated Risk at Scale to allow providers to intervene in the immediate, toward effective and efficient care Strategy Physician Alignment to drive clinical results through new clinical workflows that enable physicians to get better results and reduce administrative burden Structured Care Management Capabilities to focus specifically on building and delivering a new people-centered approach to care Operations Model Administrative and Technology Platform to integrate data, apply sophisticated rules to drive interventions, and facilitate care management 8 Confidential – Do Not Distribute
Medicare ACOs offer unique financial and operational opportunities while adding significant lives to platform ✓ Strong value returns given high shared Financial Value savings rate ✓ Insulation from regulatory risk and freedom Access to Waivers to engage in creative new initiatives through and Data waivers; access to valuable data ✓ Achieve meaningful physician mindshare Platform Scale & Pop and “lives on platform” to drive pop health Health Performance performance across LOBs ✓ Increase alignment with independent Physician and physicians; Drive brand affiliation with Patient Alignment Medicare patients ✓ Grow Value-Based Business and broaden Support Mission community impact; Drive national brand value through high-profile program 9 Confidential – Do Not Distribute
Modeling a business case helps understand all of the drivers impacting financial opportunity − − − − X + = Reduction Population Admin In-System Impact on Physician Membership Shared in FFS from Health Support Utilization Operating Quality Build Savings Population Returns Staff Costs Impact Income Incentives Health Definition • Lives under • Value created • Portion of • Performance • Incremental • Lost health • Impact to management, through value created payments for infrastructure system health system driven by clinical that belongs participating and variable margin from margin due breadth of program to the payer physicians costs to to clinical integrating network and impact and based on support the program care proposed coding partnership payer impact payer partners improvement terms partnership Revenues and expenses related to Gains / Losses to the traditional Value Based Facility Impact the direct operation of an health system business related to Business P&L Summary independent VBB market consequences of a VBB 10 Confidential – Do Not Distribute
If ACO can secure clinical savings and modest RAF improvement, Next Gen returns more value than Track 3 Revenue to Provider under Medicare ACO Models (% PMPM) Track 1 Track 3 Next Gen Assumptions • 90% quality • 90% quality • 2.5% discount • 30K lives (= 2.3% corridor) • 3% RAF improvement 10% 4.5% 6.8% 10.5% 8% 3.6% 5.4% 8.5% 6% 2.7% 4.1% 6.5% Saved vs 4% 1.8% 2.7% 4.5% Benchmark 2% - 1.4% 2.5% Clinical Savings 0% - - 0.5% (% PMPM) -2% - -0.8% -1.5% Exceeded -4% - -1.6% -3.5% Benchmark -6% - -2.4% -5.5% -8% - -3.2% -7.5% -10% - -4.0% -9.5% 11 Confidential – Do Not Distribute
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