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HFMA Presentation:
Value Driven Care Update
January 15, 2018
Melinda Hancock
Chief Financial Officer
VCU Health
Jeffery Gruen, MD, MBA
Chief Innovation Officer and Chief Medical Officer
Innosight1
Jeffery Gruen, MD, MBA
Chief Innovation Officer and Chief Medical Officer
Innosight
2
3
POLITICS
Trump Officials, After Rejecting Obama Medicare Model, Adopt One Like ItJan 10, 2018
“The current administration would like to reverse everything associated with the Affordable Care Act and the Obama administration,” Dr. Fisher said. “But this week’s announcement shows that there is a bipartisan consensus on the need to change the way we deliver and pay for health care.”
- Dr. Elliot Fisher, Dartmouth
Provider Profit Margins Falling
Source: Congressional Budget Office, Sept. 2016
Disruption Accelerating
The new
flexible
delivery
platform?
The new
asset light
health
system?
Ubiquitous
health
services on
demand?
The new
health plan/
provider?
Inpatient Model Being Disrupted
0%
Inpatient
+23%
Outpatient
Inpatient Disruption Will Accelerate Over Next 10 Years
CMS Increasing Value Payments
MACRA legislation allowed for slower transitional shift to value in 2017 and 2018—in 2019, implementation accelerates significantlyMedicare value-based reimbursement trends will continue to drive increased adoption on the commercial side
Commercial Payors Also Increasing Value Payments
9
45% spend tied to value in 2016; goal of 75% by 2020
45% spend tied to value
43% spend tied to shared savings; goal of 50% by 2018
Provider MIPS CMS Payment Dollar Risk Increasing
Those remaining largely in Medicare fee-for-service will see increasing Medicare reimbursement swings based on quality and cost
Increasingly incentivized to participate in “Alternative Payment Models” across all payers, all bearing a more-than-nominal amount of
downside risk in a variety of arrangements
+4%+5%
+7%+9%
-4%
-5%-7%
-9%
+9%
-9%
+9%
-9%
+9%
-9%
2019 2020 2021 2022 2023 2024 2025+
MEDICARE ACO PARTICIPATION IN WESTERN REGION
Source: Centers for Medicare and Medicaid Services
• Less than 20% of MSSP ACOs are located in the Western Region
• About 30% of Next Generation ACOs are located in the Western Region
WESTERN REGION MEDICARE ACO RESULTS
Source: Centers for Medicare and Medicaid Services
• Based on the most recent available results, the highest performing Medicare ACO (MSSP) earned more than $7.4M, with the lowest performing ACO (Next Generation) losing $5.2M
2015 MSSP ResultsCommonwealth Primary Care ACO $7,404,173
Revere Health $6,300,913
Scottsdale Health Partners, LLC $4,568,301 John Muir Health Medicare ACO $3,305,157
National ACO $3,069,100
Rainier Health Network $2,981,335 Silver State ACO LLC $2,686,857 Premier Choice ACO, Inc $2,676,462
Arizona Connected Care, LLC $2,239,894
Advanced Premier Physicians ACO $1,849,761 Copeland - Beajow Medical Institute, Chtd DBA Internal Medicine Associates $1,580,006 Antelope Valley ACO $1,398,168
2016 Results Western NG ACO
Prospect $938,839 MemorialCare ($5,240,146)
Legislative and Regulatory Changes Adding Pressure
2018 Hospital Outpatient Prospective Payment System Update
Dec 21 Short-Term Spending Bill
Tax Law
• Individual mandate repeal 13 million fewer insured by 2026
• Overall higher deficit jeopardizes Medicare spend
• Extends CHIP only through March• Does not address delaying DSH cuts
• Payments for 340B drugs cut by 20+%• More procedures removed from inpatient-only list
Trump’s CMS Not Backing Away From “Value”
Design differences aside, the push towards value is bipartisan
New CMS Bundles: January 9, 2018
Inpatient Episodes
• Disorders of the liver excluding malignancy, cirrhosis, alcoholic hepatitisAcute myocardial infarction
• Back & neck except spinal fusion• Cardiac arrhythmia• Cardiac defibrillator• Cardiac valve• Cellulitis• Cervical spinal fusion• COPD, bronchitis, asthma• Combined anterior posterior spinal fusion• Congestive heart failure• Coronary artery bypass graft• Double joint replacement of the lower extremity• Fractures of the femur and hip or pelvis• Gastrointestinal hemorrhage• Gastrointestinal obstruction
• Hip & femur procedures except major joint• Lower extremity/humerus procedure except hip,
foot, femur• Major bowel procedure• Major joint replacement of the lower extremity• Major joint replacement of the upper extremity• Pacemaker• Percutaneous coronary intervention• Renal failure• Sepsis• Simple pneumonia and respiratory infections• Spinal fusion (non-cervical)• Stroke• Urinary tract infection
Outpatient Episodes
• Percutaneous Coronary Intervention (PCI)
• Cardiac Defibrillator
• Back & Neck except Spinal Fusion
CMS Incentivizing Outpatient Care
Procedures Removed from inpatient-only list for 2018:
1. Total knee arthroplasty
2. Laparoscopy, surgical, repair of paraesophageal hernia with implantation of mesh
3. Laparoscopy, surgical, gastric restrictive procedure; removal of adjustable gastric restrictive device component only
4. Laparoscopy, surgical, gastric restrictive procedure; removal and replacement of adjustable gastric restrictive device component only
5. Laparoscopy, surgical, gastric restrictive procedure; removal of adjustable gastric restrictive device and subcutaneous port components
6. Laparoscopy, surgical prostatectomy, retropubic radical, including nerve sparing, includes robotic assistance, when performed
Providers are beginning to realize severity of situation
Safe Early Warning Sign Red Alert!
Customer Loyalty Stable or Increasing Slow decline Rapid decline
Venture CapitalInvestment
Little or noneSubstantial seed and early
stage activitySubstantial growth stage
activity
Industry Entrant Activity
Little or noneGrowth at the low-end or
fringe of the marketEntering or present in
mainstream
Customer Habit Shift Habits are stable Change at the fringes Change in the mainstream
Business Model Innovation
Entrants are me-too copycats Entrants exploring new modelsEntrants succeeding with new
models
Profit MarginsStable or increasing due to
top-line growthSlow decline or increasing due to cost management
Rapid decline
Our client surveys and interactions indicate that healthcare executives believe industry is already in or are fast approaching the Red Alert stage
But don’t feel they are prepared to change.
80%Recognize the
need to transform in response to
changing markets31%
Are very confident that
their company is prepared to change
Source: “Are Business Leaders Caught in a Confidence Bubble,” Innosight Survey, 2017;
https://www.innosight.com/insight/are-business-leaders-caught-in-a-confidence-bubble/
MANY ORGANIZATIONS TAKING MORE STRATEGIC APPROACH TO VALUE DRIVEN CARE DESIGN
COMPETING ON HEALTH INNOVATION PLATFORM(Health Innovation Model, Assets and Capabilities Repository)
TRANSFORMATION ACore Growth & Repositioning
TRANSFORMATION BNew Growth
• Reposition core as needed
on key Jobs to be Done
• Complementary and adjacency
growth
• Cost transformation,
as needed
• M&A and partnerships
• Jobs to be done
• Business model innovation
• System / value network
development
• Test and learn plans
and implementation
• M&A and partnerships
CAPABILITIES LINK
Shared resources and capabilities, while managing
the interface between A & B in
the right way
FUTURE-BACK STRATEGY
The New Approach to Building Value Driven Care Programs
Innovation Assessment
Strategic Opportunity Areas (SOA)
Determine the scope, scale and timing of transformative innovation required and its contribution to future growth gap / organization objectives
Structure and define SOAs to focus innovation activities and drive action by tying them to consumer needs, emerging business models, and tech
Create business model framework for each SoA to help teams innovate beyond tech or product and consider breadth of innovation levers to drive success
Care Model Assessment
Growth gapCustomer-
centered SOAs
Business Model
Canvas for SoAs
What might ’Compete on Health’ look like?
I N D I V I D U A L
H E A L T H
Exposure
management
Social services
and resources
Integrated care
delivery
World-class
academic research
Personal
genomics
On-going
monitoring
Healthy lifestyle
advice
Customized behavioral
support
A BTRANSFORMATION A
Reposition Today
TRANSFORMATION B
Create Tomorrow
1. Zero in on the post-disruption job
to be done
2. Innovate your business model to deliver against the job
3. Determine and monitor new
metrics
4. Implement aggressively
1. Identify constrained markets
2. Iteratively develop a business
model to serve that market
3. Use partnerships, acquisitions, and
new hires to succeed against a
new competitive set
A & B SUCCESS FACTORS
Melinda Hancock
Chief Financial Officer
VCU Health
22
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Our Academic Health Center…
The VCU Health System is an urban, comprehensive academic
medical center in central Virginia established to preserve and
restore health for all people, to seek the cause and cure of
diseases through innovative research, and to educate those
who serve humanity.
24
VCU Health System by The Numbers…
12,500Team Members
830+Physicians
200+Clinical
Specialties
5,000+Students & Residents
VCU Medical Center• 805 licensed acute care beds • 37,938 inpatient discharges• 714,669 clinic visits• 23% share of the Richmond metro
inpatient market • 93,354 emergency department visits,
and is the region's only Level I Trauma Center
VCU Community Memorial Hospital• 99 licensed acute care beds• 2,682 inpatient discharges• 23,005 emergency department visits• 161 licensed long-term care beds
Children’s Hospital of Richmond• Pediatric specialty hospital• 60 licensed long-term care beds
MCV Physicians• ~830-physician,
faculty group practice• Most comprehensive
scope of clinical services in the Commonwealth
• Provides all teaching and training for medical students and residents
Virginia Premier Health Plan• 209,000 members
Medicaid Health Maintenance Organization
25
Value Based Care and VCU Health
26
Transition to Value Based Care Mandatory Programs Voluntary Programs Governmental/Commercial/Internal Complex Care Clinic/Care for Advanced Health Management
Access to Care Ambulatory presence Parking, parking, parking Geographic reach
Partnerships Department of Human Resource Management Little Clinics Open to new definitions of partnerships
Mandatory Payment Reform is Everywhere
27
VBP
RRP
HAC
CJR
PQRS/VM
MU
MIPS/APM
SNF VBP
HH VBP
Cost = Spend
28
➢ Medicare cost is from the perspective of Medicare
➢ Attributed to the hospital by discharge and to the physician by plurality of services
➢ For example, Medicare Spend per Beneficiary
▪ 3 days prior to admission
▪ The admission
▪ Any claim initiated within 30 days of discharge
▪ Part A and B
Fundamental Formula
29
30
Internally
Identified
Opportunity
CMS Value
Based
Purchasing*
CMS
Readmission
Reduction
Program*
CMS Hospital
Acquired
Condition
Program*
CMS Merit-
Based
Incentive
Payment
Program*
Anthem
QHIP®*
Vizient
Q&A
Ranking
Reference
% $$ left
on table
Hospital Acquired Infections X X X X X
Mortality X X X X
Readmissions X X X X X
Pt Experience/STAR Service X X X X X
Spend/Cost/Efficiency X X X X
Throughput/LOS X X X X
Safety: PSIs X X X X
Access to Care X X X
High Reliability Culture X
$2,879,589
$1,086,554
$878,822 $795,709 $755,709
$310,000 $-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
0% 5% 10% 15% 20% 25% 30%
Do
llars
Lef
t o
n T
able
, FFY
18
, ac
ross
pro
gram
s, M
CV
H
% Weighting in Vizient Q&A Rankings
Quality, Safety, Service Measures: Relative WeightsHAIs
Mortality Total
Readmission/Care CoordinationTotalPatient Experience Total
Efficiency/Spend/MSPB
LOS/Throughput
Patient Safety for SelectedIndicators (PSI)
X0
Alignment of Quality, Safety,
Service Priorities
Acute: VBP/RRP/HAC
31
($3,000,000)
($1,000,000)
($2,000,000)
$4
$6,000,000
($4,000,000)
($3,000,000)
($2,000,000)
($1,000,000)
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
Readmission Hospital Acquired Condition Value Based Purchasing
Current Total Incentive
Base of $100,000,000 of Medicare Part A Revenue
Decision Tree for QPP
32
Am I in an APM?
Is it an Advanced APM?
Do I meet the volume or
revenue criteria?
Yes
Yes
Yes
NoDo I meet minimum criteria?
No NeitherYes
No
No (Option of Partial Qualifying, if not, then MIPS Path)
MIPS Optimization
33
$1,000,000$1,250,000
$1,750,000
$2,250,000
-$1,000,000-$1,250,000
-$1,750,000
-$2,250,000
$2,500,000 $2,500,000 $2,500,000 $2,500,000
2019 2020 2021 2022
Incentive Penalty 10% Bonus
Practice with $25M in Medicare fee schedule payments
Does not include the adjustment factor of up to 3X per year
Anthem
34
Currently 30% of Anthem providers are value based
Website lists 3 methods:1) ACOs: currently 118 ACOS2) P4P3) Bundles
Source: http://marketrealist.com/2015/04/anthem-mergers-acquisitions-target-medicaid-medicare/
Aetna
35
• Currently at 30% value based with a goal of 75% by the end of the decade
• Specifically calls out:– ACOs (currently in 62 ACOs)
– Bundles
– P4P: 7 efficiency metrics and up to 20 quality metrics
– Medical Homes (currently 1 million members)
– High Performance Networks (760k members)• Source: http://www.forbes.com/sites/brucejapsen/2015/05/15/value-based-care-may-drive-aetna-bid-for-cigna-or-humana/#4e60fee6512d
• http://www.ehcca.com/presentations/pfpsummit10/curran_1.pdf
Documentation, Documentation, Documentation
36
Hips: With Fractures
37
Post Acute Networks
38
• Formalizing preferred providers by post acute provider type
• Hold preferred providers accountable based on quality metrics/outcomes
• Share data on routine basis
• Partner on streamlined protocols
• Gain share or put dollars at risk
SNF Criteria Grids
39
➢ Criteria includes: Skills and Service Availability, Coverage, Capacity, Safety & Quality
Appendix
Voluntary Bundles in Virginia
41
Bundles (BPCI Model 2 and 3)
Source: https://innovation.cms.gov/initiatives/map/index.html#model=
Bundle Data: CABG
42
All Innovation Models in Virginia
43
Source: https://innovation.cms.gov/initiatives/map/index.html#model=
HEALTH SYSTEM 2017 APM PARTICIPATION
4%
4%
4%
4%
12%
15%
19%
27%
27%
31%
50%
0% 10% 20% 30% 40% 50% 60%
I don’t know
Medicare Shared Savings Program Accountable Care Organization…
Medicare Shared Savings Program Accountable Care Organization…
Comprehensive End-Stage Renal Disease Care Model
Oncology Care Model (OCM)
Next Generation Accountable Care Organization
Bundled Payment for Care Improvement (BPCI)
Commercial/other payer risk-based payment contracts
Comprehensive Care for Joint Replacement (CJR)
Comprehensive Primary Care Plus (CPC+)
Medicare Shared Savings Program Accountable Care Organization…
In which Alternative Payment Models (APMs) are your system currently participating (2017 performance year)? (Please check all that apply.)
Source: Huron & Health Management Academy
HEALTH SYSTEM PLANNED PARTICIPATION
4%
4%
8%
8%
8%
12%
15%
19%
31%
0% 5% 10% 15% 20% 25% 30% 35%
I don’t know
Medicare Shared Savings Program Accountable CareOrganization Track 2
Medicare Shared Savings Program Accountable CareOrganization Track 3
Next Generation Accountable Care Organization
Medicare-Medicaid Accountable Care Organization
Medicare Shared Savings Program Accountable CareOrganization Track 1+
Comprehensive Primary Care Plus (CPC+)
Medicare Shared Savings Program Accountable CareOrganization Track 1
New commercial/other payer risk-based contracts
Is your system currently considering participating in any of the following models for the first time, to begin in 2018?
Source: Huron & Health Management Academy
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