Best Practices Guide for Designing Accountable Care Financial Systems

Daniel J. Marino, President & CEO

About Health Directions

Health Directions is the premier provider of Consulting Services to Academic Medical Centers, Physician Practices and Hospitals. We support our clients in achieving their optimal financial performance. Health Directions delivers its entire suite of Practice Solutions (financial turnaround, revenue cycle management, operations, strategic planning, compensation, EMR implementation and practice transition) through an experienced team of health care professionals. Health Directions has been assisting hospitals and physicians in improving their financial performances since 1985.
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Agenda
Current Trends in Healthcare and ACOs Overview of Health Information Technology Financial Structure of ACOs Case Study

Current Trends in Healthcare

Healthcare is Going Through Dramatic Changes

A Storm is Coming

Current Trends in Health Care

The U.S. spent over $2.4 trillion in health care in 2010, yet most of the information exchange is rudimentary By 2019, health spending growth is expected to outpace increases in both wages and inflation Premiums for health insurance are up 131% since 1999 U.S. is adopting EMR technology at a much slower rate than other industrialized nations Care remains fragmented and uncoordinated
$7,681 per resident of the US 16.2% of GDP

Fragmented Patient Care Coordination Has Substantial Impact

Primary care physicians overtaxed and unable to effectively manage chronically ill patients Manual processes contribute to medical errors Reimbursement, chronic disease management, and preventive care objectives are not aligned Minimal attention given to clinical outcomes, due to difficulty in measuring the patients full cycle of care Government promoting EMR technology as means of changing reimbursement, slowing the rise in spending and promoting care coordination
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Health Systems of Yesterday

Independent Organizations with Individualized Goals

What is Driving the Cost of Healthcare?

Technologic Advances Prescription Drugs Aging of the Population Administrative Costs
7% of total spending

Chronic Disease
Account for over 75% of healthcare spending Preventable Diseases consume 80% of spending

Milken Institutes Avoidable Cost Projections

Avoidable Medical Costs, 2023
(Billions)

$80 $70 $60 $50 $40 $30 $20 $10 $0

$76

$23

$17

Avoidable Medical Costs, 2023

Cost Avoidance Methods Early detection of disease Management of existing disease Appropriate follow-up of test results Preventing negative drug interactions Making previous test results available to all clinicians Wellness education

Source: Health Care Advisory Board, Future of Care Management: Strategic Forecast and Investment Blueprint 2008-2009, The Milkin Institute Report, October - 2007

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The Forces of Change

The Push for HIT Interoperability
HITECH and ACA

Management of Chronic Diseases and Preventative Care

Over 75% of healthcare spending

Local Dynamics

Strengthen Healthcare Network

Practice acquisition and community outreach

Rise of Healthcare Costs

Challenges to Medicare and Medicaid

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Reform Initiatives Underway

EHR Incentive Program
- Government has an aggressive timeline - Health system will need process for attestation

Integrated health systems moving forward with health information technology initiatives Large physician group and IDNs establishing private health information exchanges Pioneer ACO program Patient center medical home (PCMH) How do we make the measures meaningful from a care delivery perspective?
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What is an ACO?
Must be a legal entity
Have an taxpayer identification number Be comprised of eligible group of ACO participants Networks of individual practices of ACO professionals Partnerships or joint venture arrangements between hospitals and ACO professionals Hospitals employing ACO professionals (providers)

ACO professionals in group practices

Have a mechanism for shared governance

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ACOs In 2009

ACOs in 2012

Health Care Reform and Accountable Care

Accountable Care Organization (ACO)
Local healthcare organization and a related set of providers that can be held accountable for the cost and quality of care delivered to a defined population
At a minimum includes primary care physicians, specialists, and hospitals Manage populations of patients in a community Incorporate a active care management methodology within a patient longitudinal health record

To deliver coordinated and efficient care to a defined population

ACOs that can show shared savings will receive financial incentives

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Accountable Care Drivers

Patient Longitudinal/Community Health Record The ACO platform should be based on longitudinal patient record (i.e., no matter where the patient is being treated, there is one overarching longitudinal record) Active Care Management - utilizes (evidence-based) care protocols or pathways to notify all the participants involved in care delivery, including the patient, of their roles and responsibilities and required interventions Hierarchical Data Security Controls that allow for a multilayered, configurable role-based security model to ensure compliance with privacy and confidentiality regulations.

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Critical Factors in Developing Accountable Care

Highly Effective Leadership Organizational Commitment Clinical Integration Up Front Investment Performance Based Incentives Technology Infrastructure

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Highly Effective Leadership

Ongoing vision, strategy and direction to reform of care delivery
Vision of care is beyond the 4 walls of the hospital

Credible physician leaders Multi-disciplinary leadership team

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Organizational Commitment
Organizational-wide focus that includes providers within the community Commitment of resources Paradigm shift in care delivery
Encounter focused to patient-centeredness

Openness to new care delivery models

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Clinical Integration
Clinical integration facilitates the coordination of patient care across conditions, providers, settings, and time in order to achieve care that is safe, timely, effective, efficient, equitable, and patient-focused To achieve clinical integration:
Promote changes in provider culture Redesign payment methods and incentives Incorporate technical support tools Focus on chronic disease management Measure clinical outcomes

Focus is on creating a organizational-wide quality infrastructure

Source: AHA description of clinical integration

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Approach: Four Pillars of Clinical Integration

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Keys to Creating a Quality Infrastructure of Clinical Integration

A successful clinical integration program requires a comprehensive approach that includes: Engaging physicians in leadership Addressing shortcomings of the current reimbursement system Providing infrastructure and support for chronic disease management initiatives Clinical Integration focuses on continuous improvement with outcomes and reducing costs, this is dependent upon building a strong culture of committed physicians To sustain organizational-wide commitment, the program must include: Pay-for-performance system that recognizes and rewards physicians for improved patient care outcomes Evidence-based guidelines developed from industry leadership groups Extensive training programs for physicians and their staff Information technologies designed to provide physicians with the support necessary to drive better patient outcomes more efficiently

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How a Clinical Integration Program Works

Identify top impact areas for employers
Chronic diseases, wellness, injury management Benefit costs, absenteeism, health life styles

Utilize Best Practices of Evidence-Based Medicine Establish Performance Targets Annually Obtain Contracts to Reward Improvement Provide Physicians Tools, Training & Feedback Develop Physician Progress Reporting Systems Reward Performance At End of Year

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Performance Based Incentives

Payer negotiated performance-based terms for provider reimbursement Outcome/performance based incentives for physicians
Employed versus community providers

Incentives for other network components

Home health, rehabilitation, long term care

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New Roles Immerging Within Accountable Care

Primary Care Physicians shifting from episodic care providers to Coordinated Care Providers Nurses evolving into Patient Care Coaches Assists patients who need additional support following medical treatment plans Assist with patient compliance within clinical care plans Collaborative Care Teams defined as teams focused on developing, refining and executing evidence based programs Teams assist primary care physicians and specialists adapt best practices in care management and patient interaction in adopting the quality outcome techniques and promoting shared learning

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Health Information Technology

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Most Common HIT Questions Asked By Hospital Leadership

How do we create interoperability across acute, ambulatory and community solutions? Do we connect to our regional HIE, another private HIE or start our own? How do we connect to our patients in our community? How do we support community providers in rural communities who may not be on an EMR How do we connect to providers with multiple EMR solutions?

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Transformation #1

From silos with diverse goals. . .

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. . .to shared systems with a single goal.

Accountable Care

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Hospitals Taking The Lead To Connect Care

Pressures to clinically integrate care Connect with providers in the community

Better access to patients

Increase market share and expand footprint Provider and population analytics

Health Information Exchange

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HIE and Connected Care

Primary objective of a Health Information Exchange: To share healthcare information among a variety of healthcare providers using networking technology Critical HIE Attributes:
Data accessibility Reliability Accuracy Security Long-term sustainability

The HIE governance model set the standard for data exchange process and system integrity
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Healthcare of Today.. Data Is King

CIO of a Large West Coast IDN states:
We are spending more capital on IT infrastructure in FY2011 than on Facility Improvements

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Interoperability and Accountable Care

True health interoperability takes disparate medical data maintained in different formats and transforms into an integrated meaningful multidisciplinary patient record Sophisticated HIE systems support accountable care through the following:
Offer flexibility Connect to many EMR systems (transfer and receive CCD/CCR) Exchange patient information Aggregate data from major clinical systems Semantically harmonize clinical data Support comprehensive decision making at the point of care

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Clinical Disease Registry is Key to Hospital(s) Connection

Clinical Disease Registry (CDR) supports Clinical Integration goals of connecting care, tracking clinical outcomes and comparing against evidence-based protocols

Clinical Disease Registry Employed Physicians Ancillaries

Community Providers
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Solution Sets/Tools to ACOs

EMR Electronically captures structured data related to clinical patient services, incorporates CDSS, provides for increased patient access to care Health Information Exchange Incorporates interoperability among network providers, captures clinical outcome data across network and community, supports network wide clinical integration program Clinical Data Repository/Disease Registry Captures clinical data across acute care, ambulatory settings and community patient population Data Warehouse/Business Intelligence Incorporates data from multiple data sources (finance, practice management, disease registry, acute and ambulatory systems), provides for multi-dimensional reporting

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Financial Structures of ACOs

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Financial Goals of an ACO

To bend the cost curve Reduce unnecessary services, reduce cost and improve quality Manage the health of a defined population Position an organization for value-based reimbursement

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The Big Question

If we reduce inpatient services which drives a lot of our systems revenues, wont this reduce our overall bottom line? Whats the incentive?
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Managing the Cost Curve

Cost Reductions Drivers Delivering safe and effective care Using analytics to identify variations in care Coordinating care across the continuum Reducing care gaps Identifying and management of higher risk population segments Value Drivers Transition from fee for service to value-based reimbursement model Enterprise-focused cost reductions in care delivery Increase market share through clinical integration and care management
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Medical Cost

Reduction

5 10%

Time

Where Do You Start in Building the ACO?

Set realistic expectation
Unreasonable to expect healthcare providers to immediately accept full accountability for costs and quality Transitional approaches will be required to facilitate change

Incorporate a multi-year process based on standards of performance, program compliance, provider comparisons and measured improvements Governance model and clinical program operating committees will drive change Organizational commitment and investment are required

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ACO Structure Costs Components

4 Categories of Cost
1. Network Development and Management ACO Management and staff Health system management resources and infrastructure Contracting capabilities Financial and management information support systems Compensating physician leaders Legal and consulting support 2. Care Coordination, Quality Improvement and Utilization Management Disease registry Care coordination and discharge follow-up Integration of inpatient and ambulatory service lines Medication management

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ACO Structure Costs Components

4 Categories of Cost (continued)
1. Clinical Information Systems Electronic health record (EHR/EMR) Health information exchange Intra-system interoperability (hospitals, medical practices, laboratory, others) 2. Data Analytics Analytics of care patterns and modeling Quality reporting and costs Population health management

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How Do You Begin to Establish Value?

Understanding the data Tracking of clinical outcomes Clinical Integration Identifying the cost of care Population Health Management Contracting

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Understanding the Data

Traditional fee for service models focuses on claim submission for encounters Claims data is inherent within organizations
You know what occurs with your patients

Key factors include chronic diseases, 30 day readmissions, 30 ER visit rates, prevention Incorporate payer claims data
Access to claims data is critical to success Helps to identify care leakage Very important in managing risk based contracts

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Clinical Integration
5 Typical Categories of Clinical Integration 1) Medical and Technical Infrastructure - ePrescribing, EHR, electronic references 2) Clinical Effectiveness - Clinical outcomes, performance against standards 3) Efficiency - Use of electronic technology, automation of documents, orders
and results, provider compliance

4) Patient Safety - HIPAA and other patient safety requirements 5) Patient Experience
- Patient satisfaction scores
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HDs Clinical Integration Program

Prepare & Build 3 Months Year 1 Launch & Start-up 3 Months Year 1 Optimize & Improve 6 Months Year 1 Year 2 Enhance

Governance, Organizational Structure Organizational Alignment, Program Infrastructure Coordinated Care Management Technology Infrastructure

Hands-on Project Management, Coaching, Training and Support CI Readiness Legal Structure Culture Building Performance Incentive Measurement Strategy Process Maps Performance Measures Clinical Care Plan IT Strategy Clinical Disease Registry Provider Engagement Roles and Responsibilities Clinical Interventions Care Coordination Programs Patient Engagement CI Value Report Payer Contracting Financial Models and Reports

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Clinical Performance Initiatives*

Year 1
Diabetic Care Outcomes Asthma Care Outcomes 30-day Readmission Rate Hospitalist Effectiveness Coronary Artery Disease Congestive Heart Failure Outcomes Depression Screening Smoking Cessation Flu Vaccinations Community-Acquired Pneumonia Child Immunizations Patient Satisfaction Generic Prescribing

Year 2
CPOE Cardiac Surgery Outcomes Orthopedic Surgery Outcomes Obstetrics: Post Partum Care Obstetrics: Post Partum Depression Ophthalmology: Diabetic Retinopathy Peer Satisfaction System-wide Cost Index Specialty Care Referral Rate

Year 3
Cancer Care Outcomes MRI Utilization Rates Surgical Care Improvement: Inpatient Surgical Care Improvement: Outpatient
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*To be validated and approved by CI Governance

Tracking of Clinical Outcomes

Start with Meaningful Use Data Key value drivers of payer contracting:
Management of chronic diseases Reducing the 30 day hospital readmission rate Reducing the 30-day emergency room visit rate Improved prevention and early diagnosis Improved access to care Clinical Effectiveness

Clinical Outcomes become the basis for measuring provider performance, evidence based incentives and predictive modeling Clinical measure should be developed by the physician-led quality improvement Physician scorecards that measure outcomes, compliance, and performance
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Success Criteria of CI
The physician and hospital leadership have to collaboratively promote the program Program design, implementation and compliance must be physician led Go slow.clinical integration will not occur overnight Must incorporate incentives to reward behavior Establish individual incentives based on individual criteria Establish a residual fund for future investments, future years incentives or specially bonuses
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Integrated Care Drives Results

Performance Driven Value Cost per Beneficiary

Yr 1

Yr 2

Yr 3

Yr 4
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Identifying The Cost Of Care

What is the cost of care of a diabetic patient to the organization? Begin with tracking patient activity across the care continuum during a period of time
Ambulatory encounters Acute encounters Ancillaries, Rx, etc.

Claims data is the key

Organizations have access to their own claims data Need to incorporate payer claims data (identify patients leaking from the system)

ACOs will be asked to manage to the cost of care and assume the risk
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Population Health Management

Once cost of care is identified, need to compare against the population Questions to answer:
1) Given the payer population, is our patient more or less sicker? 2) Does the community have higher chronic disease outcomes? 3) Do we have more admissions, readmissions, ED visits?

Population outcomes become the denominator and/or target.

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Dartmouth Atlas
Effective care areas Sensitive Care areas Opportunities for improved care

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Compare Your Performance

30-Day HospitalHighest Readmission Rate Lowest
Medical Conditions Surgical Procedures 18.9% 19.0% 11.5% 7.5% National Ave. 16.1% 12.7%

30-Day Emergency Room Visit Rate

Highest Medical Conditions Surgical Procedures 23.8% 19.2% Lowest 13.9% 10.9% National Ave. 18.9% 15.2%
Source: Dartmouth Atlas of Health Care, 2009 55

Back To the Big Question

If we reduce inpatient services which drives a lot of our systems revenues, wont this reduce our overall bottom line? Whats the incentive?

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No Single Answer
Create systems of value based reimbursement
Reducing unnecessary inpatient stays has value Improved chronic disease management through intervention Wellness and prevention

Incorporate the employers Promote advanced care in the community Inpatient care will shift to more higher acute (sicker) patients
Will need to evaluate patient demand versus supply

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There Really Is No Single Answer

Management of chronic diseases and prevention will lead to a reduction of unnecessary inpatient stays could lead to more complicated inpatient stays
Hospital margins are higher on surgical and advance medical cases than chronic disease admissions

Shared saving models or performance based reimbursement has to off-set some of the decreased inpatient costs ACOs need to promote higher quality care which could drive higher patient demand

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Case Study of Accountable Care Organization

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Background
General Hospital and large independent primary care group come together to form an ACO Apply to participate in CMS ACO with 15,000 beneficiaries ACO will be reimbursed on a FFS model and share savings Minimal clinical integration exists between the hospital and medical group

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Where does the ACO begin?

Answer
Establish shared governance Evaluate the ACO population cohort Build care management programs to begin managing the population cohorts Identify the data and technology required to support the ACO Build the ACO performance reporting

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Elements of ACO
Performance Management
Population analytics/predictive modeling Understanding of beneficiary mix related to cost of care, cost increases and distribution Proactive management of costs and outcomes Programs, interventions and care gap management Management of care within cohort groups, process and protocols, structures and roles Interventions and outcomes Support a patient longitudinal record Integrate data and coordinate care Tracking of internal patient outcomes Performance related to 33 ACO measures Intervention or program reports
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Care Management

Technology Infrastructure ACO Reporting

Importance of Performance Management

Population analytics and predictive modeling tool is required to understand our ACO cohort
Breakdown of cohorts by risk category (end of life, high, medium and low risk) Comparison of ACO cohort to community and national population

Helps with understanding the two types of inherent risk categories

Insurance risk: Typically unavoidable costs out of the control of providers, occurs as a result of natural activities, causes or events Performance (clinical) risk: Avoidable costs in the control of the ACO and influenced through coordination of care, identification of care gaps and interventions

Multi-dimensional business analytics combined with clinical intelligence to maximize performance outcome capabilities

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Example of Cohort Distribution

(Interventions)
Cost Transition Interventions 80% 15% 5%
Transition intervention programs across all cohorts High risk cohort is the greatest opportunity for cost savings
Standard Risk Moderate Risk High Risk

Patient Morbidity
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Care Management
Advanced coordinated care management comes through redesign of our patient care delivery system Redesign of care management begins with:
Defining infrastructure, roles and responsibilities Identifying and implementing effective interventions that integrate process outcomes with clinical outcomes Transition Care coordination Extensivist Outreach/call center End of life

Types of programs

Need to track interventions and program outcomes within a clinical disease repository Build CRM tool to supports programs and patient engagement

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Example of Care Management Structure

(Interventions) Care Management CRM Tool
Moderate Risk High Risk Transitions (Acute to Amb.) Extensivist Clinic

Standard Risk (care gaps)

Outreach

Nurse Nav. Diabetes Nurse Nav. CHF Nurse Nav. PCP/RHC

Complicated Diabetes Exten. Clc. Nurse Nav. PCP/RHC

Prevention

Transition Clinic
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Initial Care Management Tools

Clinical Disease Repository Tool
CDR to tracking process outcomes across the care continuum

CRM Tool
CRM tool to be used to manage the care coordination across the care management programs Provide for tracking of the following:
Identify patient within the specific program Provide care direction Engage the patient Track the process outcome

Intervention Tools

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Inherent Technology Issues Requiring Resolution

Data collection & exchange
Collecting the right data in the right fields at the point of care Manual intervention and non-standard interface requirements Moving the right data to the right places for care coordination

Data Integrity
Assurance that the data we are looking at is valid and associated with the proper patient Patient identity and coordinated clinical information

Overlapping Vendor Offerings

Deciding which products to use for which functions when functionality overlaps

Coordination of the Hospitals and Medical Groups technical offerings

Deciding which organization will provide which technology solutions
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Integrated Technology Long-term Model

Employed PCPs CMS Claims Data Labs eRx Hospitals Specialty Clinics Medical Group

Patient Identity Management Tool

Aggregate Data/Tags Populations Clinical Analytic Gateway exports criteria specific content Care Management CRM Tool

Health Information Exchange:

Clinical Disease Repository

Discharge Management

Call Center

Care Models/ CDSS

Patient Portal

Performance Management Analytics

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Where Do We Begin In Clinically Integrating Care?

Establish a burning platform for change Identify programs for care coordination and quality tracking Physicians must lead the care coordination initiatives
The goal is to coordinate patient care and position physicians and General Hospital for success by leveraging quality.
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Options For Physicians & General Hospital

High

2) Provider Driven Medical Home Model

Coordinate care within practice s population Establish value around chronic disease outcomes Use outcomes to create value with payers

4) Clinically Integrate Care

Tracking quality across continuum Establish a patient longitudinal record Prepare for value based contracting

Physicians Level of Collaboration

1) Do Nothing
Maintain FFS Model Negotiate contracts under current strategy Tolerate fee schedule reductions

3) Hospital Coordinated Care Model

Focus on cost reduction Increase in health information technology Connect providers to acute care setting High

Low

Hospital Organization As Level of Collaboration

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Requirements for ACO Physicians

Care coordination must be physician-led Physicians must be represented at a decision-making level across all levels of the organization
From governance down to the unit level

Metrics generated with the participation of physicians will ensure the greatest physician buy-in Giving physicians a stake in the outcomes of process improvement initiatives matters

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Progress To Date
Over 6 months into Pioneer ACO Beginning to share data with acute and ambulatory arena, and the clinical disease registry Will begin tracking outcomes by disease cohort at the end of the month Looking to expand ACO program with other payers

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To Summarize. Our Healthcare Climate is Changing

and we all will be affected

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Summary
Healthcare is going through a transformation Changes in healthcare delivery and bending of the cost curve will make all of us more accountable Adoption and integration of information technology is a big driver of change New financial models will align incentives and modify behaviors Continue to manage the cultural change Aligned objectives will prepare you for accountable care
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Contact

Daniel J. Marino President & CEO

Health Directions, LLC Two Mid America Plaza, Suite 1050 Oakbrook Terrace, IL 60181 Phone: 312-396-5414 dmarino@healthdirections.com
www.healthdirections.com

@HDirections

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