How to Transition Into a Successful Risk-based ACO · 2015 2016 2017 −1.5M −1.0M −0.5M...
Transcript of How to Transition Into a Successful Risk-based ACO · 2015 2016 2017 −1.5M −1.0M −0.5M...
TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO
Transitioning Into a Successful Risk-Based ACO
Part 1: Why Transition To Risk And How To Protect Your ACO
June 5, 2018 1pm EST
TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO
Presenters
John Schmitt, Ph.D., FASHCRM -- Managing DirectorReliance Consulting Group
Chuck Newton -- Senior Vice PresidentRisk Strategies
TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO
• Speaker presentations• Risk taking in the context of MACRA • The move toward ACO risk: results & analysis• Financial protection for your ACO• Risk Readiness Assessment (Webinar Part 2, June 19th at 1pm EST)
• Discussion Questions and Answers
• Close
Agenda
TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO
Health care in America is experiencing unprecedented change.
In 2018, health care continues to dominate the headlines.
There is widespread belief that realigning financial incentives for healthcare providers is critical to reigning in costs.
CMS is forcing this transformation through Medicare policy and regulation. States, commercial payors and private employers are all following their lead.
Health Care Landscape
TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO
Effects of Medicare Access and CHIP Re-authorization Act of 2015 (MACRA)
MACRA Act of 2015
Eliminated Sustainable
Growth Rate (SGR)
Introduced Quality Payment Program
(QPP)
Merit-Based Incentive Payment
System (MIPS)
Alternative Payment Models
(APMs)
TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO
Advanced Alternative Payment Models (APMs)Advanced APMs include:
• Comprehensive ESRD Care (CEC)• Comprehensive Primary Care Plus (CPC+)• MSSP Tracks 1+, 2, and 3• Next Generation ACO Model (NGACO)• Oncology Care Model (OCM) two-sided• Comprehensive Care for Joint Replacement (CCJR)
MSSP Track 1 is NOT considered an Advanced APM
Only Advanced APMs qualify for MIPS exemption
Not taking risk (i.e. doing nothing) and being subject to MIPS has a potential cost
TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO
Risk Saves CMS Money Impetus of expanding risk models
CMS Administrator Seema Verma said that the ACOs that have been willing to take on risk have saved money, while those that haven't appear to be increasing Medicare spending.
"The presence of these upside-only tracks may be encouraging consolidation in the marketplace, reducing competition and choice for our beneficiaries," she said. "While we understand that systems need time to adjust, our system cannot afford to continue with models that are not producing results."
(Source: “Verma draws the line on Medicaid limits, ACO risk Contracts”, Modern Healthcare A.M., May 8, 2018)
TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO
The Move Toward ACO RiskGrowth in Two-Sided Risk ACOs, 2015-2017
Source: Risk Based ACOs Prove Successful, Accountable Care News, January 2018
15
48
86
100−
80 −
60 −
40 −
20 −
0 −
2015 2016 2017
−1.5M
−1.0M
−0.5M
−0.0M
ACO
sBeneficiaries (M
illions)
Note: *The number of beneficiaries covered by 2017 ACOs will not be known until the results are released in 2018. Source: Evolent Health analysis of 2016 performance data from MSSP, Next Generation ACO and Pioneer ACO models.
Two-Sided ACOs accounted for 75% of growth in total lives
covered by ACOs from 2015-2016
0.5M
1.2M
TBD*
# of ACOs in Two-Sided Risk Models # of Lives in Two-Sided Risk ACOs
TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO
Risk-based ACOs Generate More SavingsDistribution of ACOs and Aggregate Savings
Source: Risk Based ACOs Prove Successful, Accountable Care News, January 2018
90% 71%
10%29%
Two-Sided Risk Models
One-Sided Risk Models
% of ACOs % of Aggregate Savings vs Benchmark
Source: Evolent Health analysis of 2016 performance data from MSSP, Next Generation ACO and Pioneer ACO models.
TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO
Risk-based ACOs: CMS Fares BetterAggregate ACO Savings vs CMS Payments
Source: Risk Based ACOs Prove Successful, Accountable Care News, January 2018
Aggregate Savings vs BenchmarkAggregate Shared Savings Payments by CMS
One-Sided Risk Models
Two-Sided Risk Models
Source: Evolent Health analysis of 2016 performance data from MSSP, Next Generation ACO and Pioneer ACO models.
In one-sided models, CMS paid out $72M
more than ACOs saved
In two-sided models ACOs saved $67M more
than CMS paid out
$613M
$541M
$220M$153M
TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO
No Risk, No Reward
“If accountable care organizations (ACOs) had moved from the upside-only Track 1 of the Medicare Shared Savings Program (MSSP) and assumed downside risk, they would’ve earned an additional $966 million if they qualified for the 5 percent bonus for Advanced Alternative Payment Models (AAPMs).
Source: No Risk, No Reward: ACOs would’ve made $966M more in downside risk model, John Gregory, Health Exec January 2018
Under their [Avalere Health] simulation, 372 of 410 Track 1 ACOs – 91 percent of all participants – would’ve financially benefited from taking on downside risk, with an aggregate net payment increase of $966 million”
TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO
Employers Should Push ACOs Towards Risk“As experts jest, if ACO providers don’t take on the financial risk of caring for their
population of patients (for example, only shared savings), it is like “vegan
barbeque…or gin and tonic without the gin.” Payers’ ability to change provider
behavior is likely to be negligible if they only reward providers with small bonuses
for effective care a year after the fact. Greater financial accountability would
encourage providers to promote preventive care and look for ways to cut waste.”
Source: Two Ways Employers Should Push ACO Arrangements To Evolve, Roslyn Murray & Suzanne F. Delbanco, Health Affairs, April 9, 2018
TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO
The amount ofrisk is too
great
Concerns about unpredictable
changes in CMS rules
Desire for more reliable financial
projections
Concerns about past
performance
40%40%
36%40%
Source: National Association of ACOs
Risk Objections
TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO
Environmental Summary
Healthcare in America is experiencing unprecedented change.
• Focus on controlling costs while improving quality
• Substantial pressure to realign provider incentives and take risk
Providers must ask themselves:• How should we organize?• How will we deliver care? In what settings?• How much risk should we take?• How can we protect ourselves?
TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO
Employee Health Plan
Shared Savings and/or Loss
Bundled Payments
Capitation
Direct to Employer Contracts
Provider Owned Health Plans
LEVELS OF RISK
TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO
RISK ASSUMED
Financial Risk
• Balance Sheet• Margin Erosion• Long Term Viability
Liability
• Vicarious & Direct• Provider Selection/
Credentialing• Coordination of
Care• Disease/Case
Management• Quality Assurance• Marketing
Cyber
• HIPAA Regulations• Protection of PHI• Data Breaches
Management
• Mergers/ Acquisitions
• Anti-Trust• Employment Issues
TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO
RISK MITIGATION• Actuaries• Attorneys• Information Technology
Hire Outside Expertise
• Downside maximums• Trend calculations• Attribution methodology
Use Contractual Limitations
• Avoid settlement errors• Force contractual audit provisionResults Validation
• Technology• Clinical integration• Evidence based practices
Make Necessary Infrastructure Investment
• Stop-Loss• Liability
Transfer Risk Through Commercial Insurance
TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO
INSURANCE SOLUTIONS
Aggregate Stop-lossSpecific Stop-lossSurety BondsBundled Payments Stop-lossManaged Care Errors & OmissionsDirectors And Officers LiabilityCyber Liability
TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO
AGGREGATE STOP-LOSS
Provides protection against abnormal frequency of claims in total.
Appropriate for MSSP Tracks 1+, 2, and 3 and Next Generation ACOs
Also possible for commercial and Medicaid ACOs with 2-sided risk.
Cross population aggregates are an option for ACOs with multiple risk based contracts.
TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO
Aggregate Stop LossExample - How an aggregate stop loss policy can provide financial protection to an ACO
ACO Type MSSP Track 3Assigned Beneficiaries 10,000 Performance Year Benchmark - PMPY $10,500Performance Year Benchmark - Annualized $105,000,000
Loss Sharing Limit as a Percentage of Benchmark 15%Loss Sharing Limit in Dollars $15,750,000
Aggregate Stop Loss Attachment Point as a Percentage of Benchmark 103.0%Aggregate Stop Loss Attachment Point in Dollars $108,150,000
Actual Expenditure - PMPY $11,214 Actual Expenditure - Annualized $112,140,000
Actual Expenditure as a percentage of Benchmark 106.8%ACO Loss Share Rate 40.0%ACO's Liability to CMS $2,856,000
Amount Insured through Aggregate Stop Loss $1,596,000 ACO's Liability Net of Stop Loss Recovery $1,260,000
TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO
SPECIFIC STOP-LOSS Provides protection against high claims on individuals Protection against abnormal severity of individual
members rather than abnormal frequency of claims in total
Can incorporate substantial levels of self-insurance depending upon risk appetite
Self-insurance can be funded in a variety of ways including through a captive insurance company
Should be considered for all risk based contracts Not appropriate for Medicare MSSP ACOs at this time
due to CMS truncation at the 99th percentile NextGen ACOs are now given the option to be
uncapped and purchase their own specific stop-loss at levels commensurate with their risk appetite
TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO
SURETY BONDS Meet CMS requirement for a
repayment mechanism Are a cost effective alternative
to a Letter of Credit (LOC) Keep the ACO’s capital intact
and does not require a UCC filing
TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO
ACO Risk Readiness
#1 Learn to think like a payer
#2 View risk as a “friend”
#3 Remember the triple aim
#4Assess risk readiness
(using our free tool in Part 2 of our webinar)
#5 Close readiness gaps using the right tools
FIVE CRITICAL STEPS
TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO
Next…In this webinar, we have addressed why an ACO should consider taking risk
and how the financial solvency of your ACO can be protected.Join us on June 19th at 1pm EST for our second webinar:
Part 2: How to Prepare for Risk
TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO
Q&A
John Schmitt, Ph.D., FASHCRMManaging Director
Reliance Consulting Group, LLC423.304.4343
Chuck NewtonSenior Vice President
Risk Strategies 804.647.8360
www.acoexhibithall.com