The Nuts and Bolts of Arkansas

Health Care:Crafting a New

SystemJoseph W. Thompson, MD, MPH

Arkansas Surgeon General

Director, AR Center for Health Improvement

Healthcare Financing in Transition • 1928 Penicillin discovered • 1944 first patient treated• 1941 WWII Wage controls / Employers’ response• 1957 Hill Burton Act stimulates hospitals• 1965 Medicare / Medicaid established• 1973 Federal HMO Act• 1990s Employer / Medicaid HMO expansions• 1997 State Children’s Health Insurance Program• 2003 Medicare Modernization Act• 2011 Patient Protection and Affordable Care Act

2000 2004 2006 2008 2010$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$4,582 $5,969

$6,745 $8,135 $7,849

$1,773

$2,414

$3,183

$3,085 $3,967

Employee

Company

28%

32%

72%

73%

$8,383

$9,928

$11,220

* National average27% employee and 73% company

29% 66%*

27%34%*

71%

68%$6,355

$11,816

Changing Cost Allocations for Arkansas Families’ Annual Insurance Premiums

Source: AHRQ, Medical Expenditure Panel Survey (2000-2010 Tables of private-sector data by firm size and state (Table II.D.1) and II.D.2). Available at www.meps.ahrq.gov/mepsweb/data_stats/quick_tables_search.jsp?component=2&subcomponent=2.

U.S. Census Bureau. 2010 health insurance coverage status for counties and states: Interactive tables. Small Area Health Insurance Estimates Web site. http://www.census.gov/did/www/sahie/data/interactive/. Published 2012. Accessed January 2, 2013.

Arkansas Uninsured By County (19-64 years of age)

Percent:

20.0 - 22.4

22.5 - 24.9

25.0 - 29.9

30.0 - 34.9

35.0+

MedicaidARKids First A

ARKids First BMedicaid

for Pregnant Women

Medicare

Currently Uninsured:~550,000

Private Insurance

Medicaid Disability*

Medicaid—Extremely low-income parents*

Current Health Insurance Distribution

New Health Insurance Distribution

Medicaid—Extremely low-income parents*

MedicaidARKids First A

ARKids First B

Medicare

Private Insurance

Sliding Scale Subsidiesfor Private Insurance through the Exchange

(~150,000-200,000 newly insured)

Medicaid Expansion(~250,000 newly insured)

Medicaid Disability*

Private Insurance/Medicaid

Overall State Vision

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Population-based care delivery•Medical Homes•Health Homes

Objective

Care delivery strategies

Enablinginitiatives

•Improving the health of the population•Enhancing the patient experience of care•Reducing or controlling the cost of care

Health information technology adoption

Payment innovation

Health care workforce development

Consumer engagement and personal responsibility

Episode-based care delivery•Acute conditions, defined procedures

Expanded coverage for health care services

8

Arkansas Health System Improvement Agency Organizational StructureState Leadership

State Leadership

Implementation

& Coordination

Implementation

Workgroup

Participation

Steering Group: DHS, ADH, BCBS,

QualChoice, United, ACHI

AID (Exchange)DHS (Mcd eligibility &

expansion) EBD

UAMSADH & ACHI

Higher Ed (2- & 4 yr)

AFMCUAMS

DISMedicaid

GovernorMike Beebe

Payment & Quality ImprovementMr. John Selig

Insurance Exchange

CommissionerJay Bradford

WorkforceChancellor Dan Rahn& Dr. Paul Halverson

Health Information Technology

Mr. Ray Scott

Governor’s Policy Staff & Dr. Joe Thompson

ACHI

Goals of Workforce Strategic Planning

Support the implementation of and transition to team-based care that is patient-centered, coordinated, evidence-based, and efficient

Enhance and increase the use of health information technology (HIT)

Increase the supply of and improve the equitable distribution of primary care providers

Adopt new financing, payment, and reimbursement policies and mechanisms

Health Information Technology

Over 3,000 primary care providers and hospitals committed to EHRs adoption and have received

nearly $140M(through Feb 2013)

State Health Alliance for Records Exchange (SHARE) Currently more than 2,300 secure message users from about 271 health care locations in Arkansas

U.S. Department of Commerce Broadband Technology Opportunities Program ($128M)

Goals

Reward high quality care and outcomes

Ensure clinical effectiveness

Promote early intervention and coordination to reduce complications and associated costs

Encourage referral to higher-value downstream providers

Preliminary working draft; subject to change

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Payers recognize the value of working together to improve our system, with close involvement from other stakeholders

Coordinated multi-payer leadership…

▪ Creates consistent incentives and standardized reporting rules and tools

▪ Enables change in practice patterns as program applies to many patients

▪ Generates enough scale to justify investments in new infrastructure and operational models

▪ Helps motivate patients to play a larger role in their health and health care

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Populations serve require care in three domains

Acute andpost-acute

care

Prevention,screening,

chronic care

Supportivecare

Patient populations(examples)

Care/payment models

• Healthy, at-risk• Chronic, e.g.,

‒ CHF‒ Diabetes

Patient-centered medical homes

• Acute medical, e.g.,‒ CHF‒ Pneumonia

• Acute procedural, e.g.,‒ Hip replacement

Focused episodes

• Developmental disabilities

• Long-term care• Behavioral health

(mental illness / substance abuse)

Health homes

Patient Centered Medical Homes

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Why primary care and PCMH?

Most medical costs occur outside of the office of a primary care physician (PCP) , but PCPs can guide many decisions that impact those broader costs, improving cost efficiency and care quality

PCP Patients & families

Specialists

Community supports Hospitals, ERs

Ancillaries (e.g., outpatient imaging, labs)

Preliminary working draft; subject to change

Medical Home: Comprehensive Primary Care Initiative 69 primary care practices

Receiving FFS + enhanced payments Improving patient experience: care

coordination, access, communication Practices responsible for ALL patients Quality, cost and transformation

milestones will be evaluated

PMPM began October ‘12 Medicare $8-40; risk-adjusted Medicaid +$3 kids; +$7 adults Private ~$5

Must meet targets Quality, performance, transformation

Shared savings model year 2-4 Expansion in Summer 2013

http://innovations.cms.gov/initiatives/Comprehensive-Primary-Care-Initiative/index.html

Preliminary working draft; subject to change

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Spending Breakdown for CHF 30-day Episodes with and without a Readmission

21

Number of Episodes

Index Readmits PAC OPD Physician Other

$5,936

$0

$2,510

$288 $337 $368

Index Readmits PAC OPD Physician Other

$6,305

$10,569

$3,975

$379$1,453 $832

% Total Costs 63% 0% 27% 3% 4% 4%

% Total Costs 27% 45% 17% 2% 6% 4%

24%

76%

N=4,992 CHF episodes

Source: Medicare FFS claims data, 2010

Avg Total Episode Cost = $23,511

Avg Total Episode Cost = $9,440

Readmit

s

No readmits

Episode Strategies for Care

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PRELIMINARY WORKING DRAFT; SUBJECT TO CHANGE

2012: episode-based payment was launched or 5 episodes, statewide

Most relevantpayor types

•Medicare•Commercial*•Medicaid*

Key sources of value

Readmission and post-acute stays, cost of implant

Hip and kneereplacement

Acute/post-acuteheart failure

Pregnancy and delivery

Upper respiratory infections

•Medicaid*•Commercial*

Eliminating unnecessary inductions, C-sections, and extended length of stay in the hospital

•Medicare•Commercial*•Medicaid*

Encouraging hospitals to extend reach beyond point of discharge

•Medicaid*•Commercial

Eliminating inappropriate use of antibiotics and radiology

Accountableprovider

Orthopedicsurgeon

Deliveringphysician

Hospital

Diagnosingphysician

ADHD•Medicaid*•Commercial

Matching care to guidelines for pharmacotherapy vs. counseling

Treatingphysician orpsychologist

* Implemented or in process; others to followSOURCE: Arkansas Payment Improvement Initiative

2013: Wave 2 Episodes launch

▪ Wave 2a (April 2013)

▪ Tonsillectomy

▪ Cholecystectomy

▪ Colonoscopy

▪ Oppositional Defiant Disorder (ODD)

▪ Wave 2b to follow (Fall 2013)

▪ PCI & CABG

▪ COPD exacerbation/Asthma exacerbation

▪ Neonatal Care

▪ ODD / ADHD

▪ Wave 2a (April 2013)

▪ Tonsillectomy

▪ Cholecystectomy

▪ Colonoscopy

▪ Oppositional Defiant Disorder (ODD)

▪ Wave 2b to follow (Fall 2013)

▪ PCI & CABG

▪ COPD exacerbation/Asthma exacerbation

▪ Neonatal Care

▪ ODD / ADHD

Preliminary working draft; subject to change

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APII scope and pace of rollout

2012

2013

2014

• 5 episodes, statewide, affecting 5-10% of spend for Medicaid, BCBS

• 69 medical homes for ~10% of Arkansans: MCaid, MCare, BCBS

• Reports and risk affecting >2,000 hospitals, physicians, other professionals

• Multi-payor portal for providers to enter dataand receive reports

• 15-20 episodes, >20% of spend

• Pediatric medical homes

• Reports and payment to >5,000 providers

• Multi-payor care model for care coordination

• EMR connectivity to multi-payor provider portal

• 50+ episodes, >40% of spend

• All primary care medical homes, >80% of Arkansans

• Reports and payment affecting >80% of providers

• Health informationexchange

Financial goal: 10% reduction in spend by 2017, followed by sustained reduction in trend*

*Reflects goal publicly communicated by Arkansas Medicaid; similar success case for BCBS

Arkansas Health Benefits Exchange

• Arkansas with potential of 450,000 newly covered lives

• Pursuing Federal-state partnership model• Opportunity to strengthen competitive market• Majority of expansion in rural underserved

areas• Plans offered by private insurance

companies

New Health Insurance Distribution

Medicaid—Extremely low-income parents*

MedicaidARKids First A

ARKids First B

Medicare

Private Insurance

Sliding Scale Subsidiesfor Private Insurance through the Exchange

(~150,000-200,000 newly insured)

Medicaid Expansion(~250,000 newly insured)

Medicaid Disability*

Private Insurance/Medicaid

Progress on Private Insurance Exchange• Exchange determines basic benefit package,

plan participation, consumer support

• Arkansas implementing state-federal partnership model

• Major reforms for health insurance market

• Upcoming steps:– Finalization of basic benefit package– Private plans submit bids (late Spring)– Outreach and education (Summer)– Enrollment (October 2013)– Coverage (1/1/2014)

Arkansas’s Private Option• Utilize health insurance exchange to purchase

insurance coverage for those <138% FPL

• Qualified high-silver policies offered to all

• Federal funding via Affordable Care Act starting January, 2014

• Essential health benefit plan with private provider payment rates

• Medically frail, dual eligible and children on Medicaid excluded

• Some existing Medicaid beneficiaries transitioned

Arkansas’s Private Option

• Plan doubles the size of the state exchange; shrinks share of Medicaid

• Less disruption in services for people who would move between Medicaid and private insurance because of change in income

• Reduce size of Medicaid program by transitioning pregnant women, medically needy, ARHealthNetworks, and others to Exchange while still ensuring coverage

• Entice more insurance companies to participate in Exchange

• Boost state revenues above original estimate with more federal dollars flowing into state’s health care system

• Eliminates employer exposure to $25-38M per year in penalties

How does expansion help the state?• One-time opportunity to strive for complete

coverage and “catch-up” to richer states through healthcare coverage

• Address unmet healthcare needs of citizens

• Fiscally advantageous– 100% federally funded with opt-out provision– Takes over for existing state patchwork coverage– Relieves state from financing uncompensated care– Assists county and municipal governments– Estimated $1B in new funding stimulates economy

RAND Report: The Economic Impact of the ACA on Arkansas• Unbiased, external assessment• Model of full implementation of ACA

– subsidies toward the purchase of private insurance through the health insurance exchange

– Medicaid expansion

• Results– 400,000 newly insured Arkansans– 2,300 Lives saved annually– Net increase on state GDP of $550 million annually– 6,200 jobs created

www.ACHI.net