Medicare Accountable Care Organizations: The Value …...AccountableCareInstitute.com 6/18/14...

AccountableCareInstitute.com

6/18/14

Accountable Care Institute

Medicare Accountable Care Organizations: The Value Proposition Art Jones, MD

http://www.accountablecareinstitute.com

http://www.healthmanagement.com


How to Submit Questions

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AccountableCareInstitute.com 3

HMA Experts

Dr. Art Jones, MD Principal Chicago

Lynne Fagnani Principal Washington, D.C.

Moderator Presenter



Why Move from Fee-for-Service?

• We have decades of experience refining our system to successfully respond to this incentive

• Shifting to value shifts resources that could be generating visits

• Can revenue be sustained during efforts to shift from volume-based to value-based care?

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Medicare Shared Savings Plan (MSSP) ACOs Starting Date Number of ACOs

Pioneer ACOs

January 1, 2012 32

Medicare Shared Savings Plan (MSSP) ACOs

April 10, 2012 27

July 1, 2012 87

January 1, 2013 106

January 1, 2014 123

Subtotal 343

TOTAL 375

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Premier Hospital and Health System Member Survey Fall 2013 on MSSP ACOs

Implementation Schedule Percent of 454 respondents

In place 26.6%

In place by end of 2013 7.2%



No plan for MSSP ACO 23.1%

No response 11.5%

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Practice Transformation without a

financial model is not

sustainable.


Low Accountability

Moderate Accountability

Acco

unta

bilit

y

Financial Risk

Continuum of Risk-Based Contracting

High Accountability

AccountableCareInstitute.com 9

Practice Redesign or Payment Reform



Transition to Value-Based Care

Aligned Payment Transformation

Prac

tice

Tran

sfor

mat

ion

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Successful Transformation to Accountable Care will Require

1. Clinical integration 2. Data analytics and connectivity 3. Targeted and innovative model of care 4. Multi-payer outcomes-based payments 5. Patient engagement/wellness programs 6. Leadership committed to practice

transformation 7. Financial investment with a long-term

outlook on return on that investment 11



Factors in Determining Financial Outcome

• Beneficiary assignment

• Establishing the benchmark

• Updating the benchmark

• Calculation of shared savings and losses

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Attribution to an ACO • If the beneficiary receives the plurality of his or

her primary care services from primary care physicians within the ACO (A plurality means a greater proportion of primary care services as measured in allowed charges).

• For beneficiaries who have not received a primary care service from a primary care physician, if the beneficiary receives the plurality of his or her primary care services from other ACO professionals within the ACO, including: non-primary care physicians, nurse practitioners, clinical nurse specialists, and physician assistants.

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Benchmark Spend • Risk adjusted average per capita spend of

Parts A and B • Trend forward based on national growth

rate and change in HCC scores • Weighting of 3 calendar year experience

– First year 10%

– Second year 30%

– Third year 60%

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Benchmark Spend • Separate calculations for population groups

– End stage renal disease

– Disabled

– Aged/dual eligible

– Aged/non-dual eligible

• Truncate annualized expenditures above the 99th percentile for each population group

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Benchmark Spend • Single per capita spend (blended score)

– Blended enrollment type – By weighting fraction of year enrolled in each

type

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Benchmark Spend Annual Adjustment • For continuously enrolled beneficiaries

– HCC prospective risk score change – Demographic score – If overall risk score > benchmark, increase by

demographic score – If overall risk score < benchmark, apply the HCC

ratio as well • For newly assigned populations

– HCC prospective risk score and demographic score • Flat dollar amount for growth in national

expenditures 17



MSSP Shared Savings Options

• Track 1 shared savings only model (one-sided model)

• Track 2 shared savings and losses model (two-sided model)

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Calculating Shared Savings and Losses Track 1 Track 2

MSR 2 -3.9% based on membership 2% fixed

Maximum upside share

50% of difference between actual and benchmark

60% of difference

Upside cap 10% of benchmark spend 15% of benchmark spend

Downside MLR N/A 2%

Maximum downside risk

N/A 60% of difference between actual and benchmark

Downside cap year one

N/A 5% of benchmark spend

Year two N/A 7.5% of benchmark spend

Year three N/A 10% of benchmark spend

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Minimum Savings Rates Beneficiaries Minimum Savings Rate

(HIGH END TO LOW END)

5000-5999 3.9-3.6

6000-6999 3.6-3.4

7000-7999 3.4-3.2

8000-8999 3.2-3.1

9000-9999 3.1-3.0

10000-14999 3.0-2.7

15000-19999 2.7-2.5

20000-49999 2.5-2.2

50000-59999 2.2-2.0

60000+ 2.0

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Monitoring Progress • Quarterly:

– First Friday of the month following the quarter (completion factor)

– Prospective assignment

• Annual: – Last day of a 3-month claims run out period

(completion factor)

– Retrospective assignment

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Projected Revenue (hypothetical; varies by benchmark cost)

Savings Total dollars 5,000 members

Total dollars 10,000 members

PMPM *10,000 membership only

1% 0 0 0

2% 0 0 0

3% 0 $2,150,666 $16.90*

4% $1,351,600 $2,867,555 $22.53

5% $1,689,500 $3,584,443 $28.16

6% $2,027,400 $4,301,332 $33.79

7% $2,365,300 $5,018,220 $39.42

8% $2,703,200 $5,735,109 $45.05

9% $3,041,100 $6,451,998 $50.69

10% $3,379,000 $7,168,886 $56.32

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33 Quality of Care Measures in 4 Domains Each domain weighted 25%

• Patient/caregiver experience (7) • Care coordination/patient safety (6) • Preventive health (8) • At-risk population (12):

– Diabetes (6) – Hypertension (1) – Ischemic vascular disease (2) – Heart failure (1) – Coronary artery disease (2)

• 7 measures without comparable data to guide benchmarks

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Quality Multiplier to Shared Savings ACO Performance level (percentile

national benchmark from MA and FFS plans or ACO participants)

Multiplier

90+ 100%

80-89 92.5%

70-79 85.0%

60-69 77.5%

50-59 70.0%

40-49 62.5%

30-39 55.0%

<30 0

Must meet >= 30 for at least 1 measure in each domain to get savings

CMS warning if fail to meet >=30 for at least 70% of measures

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Projected Revenue (hypothetical; varies by benchmark cost)

Savings 5,000 members PMPM

Reduction based on scoring the MC mean on

quality PMPM

1% 0 0 0 0

2% 0 0 0 0

3% 0 0 0 0

4% $1,351,600 $22.53 $946,120 $15.77

5% $1,689,500 $28.16 $1,182,650 $19.71

6% $2,027,400 $33.79 $1,419,180 $23.65

7% $2,365,300 $39.42 $1,655,710 $27.59

8% $2,703,200 $45.05 $1,892,240 $31.54

9% $3,041,100 $50.69 $2,128,770 $35.48

10% $3,379,000 $56.32 $2,365,300 $39.42

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Number of ACOs Average/year Range

Start-up costs 35 $2 million $300,000-$6.7 million

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MSSP Projected First Year Savings Prospects (Source: National Association of ACO Survey Nov. 2013)



Projected Care Management Expense (hypothetical)

Low intensity Medium intensity

High intensity Expense PMPM

Care Manager and outreach worker team to Member

ratio

1:1,000 1:150 1:70

Scenario #1 70% 18% 12% $15.62

Scenario #2 80% 10% 10% $12.69

Scenario #3 90% 5% 5% $8.92

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Projected Administrative Expense Expense 5,000 members 10,000 members

Salary & fringe CEO, COO, CMO,

Controller

Consulting

IT

Provider incentive

Other

Overhead

Total PMPM PMPM

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Hypothetical Net Revenue PMPM (5,000 members) (hypothetical)

Savings Max Qual CM#1

CM#2

CM#3

Mean Qual CM#1

CM#2

CM#3

1% -$28.56 -$25.63 -$21.86 -$28.56 -$25.63 -$21.86

2% -$28.56 -$25.63 -$21.86 -$28.56 -$25.63 -$21.86

3% -$28.56 -$25.63 -$21.86 -$28.56 -$25.63 -$21.86

4% -$6.03 -$3.10 $.67 -$12.79 -$9.86 -$6.09

5% -$.40 $2.53 $6.30 -$8.85 -$5.92 -$2.15

6% $5.23 $8.16 $11.93 -$4.91 -$1.98 $1.79

7% $10.86 $13.79 $17.56 -$.96 $1.97 $5.74

8% $16.49 $19.42 $23.19 $2.98 $5.91 $9.68

9% $22.13 $25.06 $28.83 $6.92 $9.85 $13.62

10% $27.76 $30.69 $34.46 $10.86 $13.79 $17.56

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Pioneer ACO Results for 2012 (Updated CMS announcement January 30, 2014)

• 669,000 attributed individuals to 32 ACOs • All outperformed industry benchmarks on 15

quality measures • 9 produced savings that exceeded the minimal

savings threshold and also met quality reporting requirements

• Cost trend as a whole increased 0.3% vs. cohort of 0.8% with savings derived from reduced hospitalizations/readmits generating gross savings of $147 million

• 2 dropped out; 7 changed to MSSP ACOs 30 30



• 114 MSSP ACOs began operations in 2012 • 54 had lower than expected expenditures • 29 delivered large enough reductions to be

able to share in the saving, generating $126 million in savings

• All but 5 satisfactorily reported on their quality measures (2 of whom generated savings)

• 4 were in Track 2 (2 generated savings) 31

MSSP Interim Financial Results (CMS announcement January 30, 2014)



Unanswered Questions • Discrimination against historically high value providers

• Impact of quality performance on year 2 savings

• Total ROI (savings minus start-up minus operational cost minus lost FFS revenue)

• Adequate savings to incent providers at the practice level

• Ability to manage “leakage” and beneficiary engagement

• Rebasing benchmarks

• Alignment with non-Medicare ACO incentives

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Contact Information

• Lynne Fagnani [email protected]

• Art Jones [email protected]

(800) 678-2299 www.healthmanagement.com

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Medicare Accountable Care Organizations: The Value …...AccountableCareInstitute.com 6/18/14...

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