CCO 2.0 Financial Policy

Stakeholder Roundtable

April 30, 2018 2:00 p.m. to 5:00 p.m.

800 NE, Oregon Street, Portland, OR 97232 Portland State Office Building Room 1C

# Time Item Presenter

1 2:00 - 2:15 Welcome & Introductions Laura Robison

2 2:15-3:00

OHA Presentation:

CCO 2.0 Project Overview, Timeline, Charge from Governor Brown

First Five Years of the CCO Model, Lessons Learned, OHPB Guidance

Policy Development Focused on Sustainable Costs & Financial Framework

Tim Sweeney &

Chelsea Guest

3 3:00 – 4:30 Roundtable Discussion of CCO 2.0

Policy Goals & Options

Roundtable

Participants

4 4:30 – 5:00 Public Comment Public

Conference Call and Webinar Available: Phone Line: 1-888-398-2342 Participant Code: 3732275 To register for the webinar please click on the following link: https://attendee.gotowebinar.com/register/6508728795268567298

CCO 2.0: Sustainable

Health Care Spending

Public Engagement and Input Sessions

Stakeholder Roundtable

April 30, 2018

HEALTH POLICY

Health Policy and Analytics

Agenda

• Introductions & Your Background

• CCO 2.0 Project Overview

– Timeline & Governor’s Letter

• First Five Years of the CCO Model

– Current Model & Lessons Learned

• CCO 2.0 Policy Development for Sustainable Costs

– Questions and Goals

– Proposed Policy Options

• Roundtable Discussion

• Public Comment

Project Overview and How You Fit In

CCO 2.0 PROJECT OVERVIEW

Overview

• Coordinated Care Organizations (CCOs) started in 2012

with the goal of achieving the Triple Aim:

– Better care

– Better health

– Lower health care costs

• Lots of data have been collected over the past five years on:

– What CCOs are doing well and need to improve on

– What gaps we still have in data

• In the next 5 year contract (CCO 2.0), we have the chance

to change requirements, reward CCOs in new ways, and

test out new ideas

•4

5

• The first contract cycle for CCOs is ending December 31, 2019

• OHA and the Oregon Health Policy Board (OHPB) are

launching the “CCO 2.0” process to explore and develop new

ideas and policy recommendations to improve CCOs in the

future

High-level Timeline for CCO 2.0

• CCO 2.0 contracts begin

2020

• Procurement process = (OHA puts out a request for proposals or applications and the CCO submits a proposal or application)

2019

• Policy development

• Public input

2018

• CCO 2.0 OHPB listening sessions

• Committee reports

• CCO 1.0 maturity assessment

2016-2017

We are here

6

The Governor has asked the Oregon Health Policy Board

to provide recommendations in four areas:

• Maintain sustainable cost growth

• Increase value-based payments and pay for

performance

• Focus on social determinants of health and equity

• Improve the behavioral health system

Governor Brown’s Vision

Oregon Health Policy Board Policy development process

1. Created policy questions from looking at data from first

five years of CCOs

2. Policy options drawn from previous work (e.g. state

committees, stakeholder recommendations) and

research into best practices

3. Narrowed list based on applicability to CCO 2.0,

feasibility, readiness, impact, and timelines

Work plans available at: www.Health.Oregon.gov

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What we hope to do today

• Share an overview of CCO 2.0 and describe the ongoing

work focusing on ensuring sustainable spending and

adequate financial oversight of CCOs

• Hear from you!

– Are we missing any important strategies to reach our policy

goals and advance the CCO model?

– Do you have any significant concerns or feedback on the

potential strategies?

• Feedback will help shape the straw model of policy

options presented to OHPB in June

8

Lessons Learned and Areas to Improve Upon

FIRST FIVE YEARS OF CCOS

Importance of Sustainable Healthcare Costs

Ensuring the fiscal sustainability of the Oregon Health Plan

is critical to Oregon’s efforts to make sure that Oregonians

have access to high quality health care services they need

• Coordinated Care Model aims to control spending not by

reducing access, but by:

– Investing in preventive care,

– Paying for value,

– Integrating services, and

– Improving health outcomes to reduce health care costs in the

long run

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Lessons Learned: CCO 1.0

• What’s working?

– Oregon’s sustainable growth rate targets work

– CCOs respond to incentive payments by improving the health

quality measures targeted by incentives

– Investing in preventive care helps limit state spending growth

and reduces high-cost services

• What challenges exist?

– Integrating care is challenging and silos continue to exist at the

provider level

– Comparing CCOs to each other is challenging on multiple fronts

– Tackling cost drivers with sustainable solutions

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External (OHSU) Waiver Evaluation

• Informed Lessons Learned, Overall CCO 2.0 Policy

Development & OHPB Direction to OHA

• Key Recommendations for Costs-Related Policy

Development:

– Increase the portion of CCO payments awarded for quality &

access, and raise the bar for awards

– Greater CCO reporting on VBPs

– Evaluate options for limiting prescription spending growth

13

Questions to Guide Policy Development

• Is 3.4% still the proper growth target for the entire CCO

2.0 contract period?

• What cost drivers threaten achievement of sustainable

growth rate (3.4%) in future years?

• What cost drivers warrant additional analysis to help

OHA and CCO partners continue to meet growth

targets?

• What strategies could increase CCO financial

accountability while preserving flexibility to operate within

global budget?

14

Continue to Achieve Cost Containment and Sustainable

Health Care Spending Growth in the CCO Model

CCO 2.0 POLICY

DEVELOPMENT & DISCUSSION

Financial Policy Framework

• The following are the financial categories OHA is

currently exploring under the sustainable cost policy

topic for CCO 2.0:

1. Sustainable Spending Targets

2. Rate Development & Reimbursement

3. Financial Incentive Payments

4. Risk Mitigation

5. Financial Reporting and Reserves

6. Encounter Data

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Sustainable Spending TargetsPotential Strategies

Policy Goal: Maintain an aggressive spending target, and evaluate the

drivers of health care spending at CCO and program level using data-

driven solutions

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Evaluate and inform adjustments to Oregon’s

sustainable spending target based on national

trends and emerging data

2 Build a evaluation program to measure CCO

performance and efficiency

1

Evaluating Efficiency and Performance

• Types of tools that may be used to evaluate CCO

performance and efficiency:

1. Episode Groupers: Generally evaluates and groups episodes

of care for a specific illness/condition to identify waste and

inefficiencies at a variety of levels

2. Total Cost of Care: Generally evaluates the average cost

and/or resource intensity of services against multiple

benchmarks

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-4

-3

-2

-1

0

1

2

3

4

-6 -4 -2 0 2 4 6Cost

Resource Intensity

Rate Development & ReimbursementPotential Strategies

Policy Goal: Ensure rate development methodology rewards and promotes cost containment, quality, and efficiency

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Implement a variable profit margin (specified in the

waiver) to reward CCOs for high performance

based on efficiency and quality

2 Revise the reimbursement policy for hospital and

non-hospital services to incentivize quality and

promote utilization in high-value services

1

Variable Profit & CCO Performance

• Current waiver specifies details underlying

the variable profit strategy:

– Payment Mechanism: CCO-specific adjustment to

profit load in capitation rates based on the CCO’s

performance (paid throughout the year)

– Payment Accountability: CCOs held to Medical

Loss Ratio standard of 85%; expenses evaluated in

rate development

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Reimbursement & CCO Payment Flow

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CCO Provider Network

CCOs Receive Capitation

Rates from OHA Coordinated Care

Organizations

CCOs pay providers

to provide care to

their Members

CCO

Members

CCO members

access services

OHA reviews costs and

services provided to

members in rate

development

Reimbursement Background

• Importance of Reimbursement

– Cost per service, or unit cost, continues to rise for medical services,

driving overall cost growth in the program

– Reimbursement can be used as a cost containment strategy

• Current State

– OHA only adjusts reimbursement in rate development if the CCO’s

overall rate of growth is not sustainable or is an outlier in the program

• Regulations: Per CMS rule, OHA can adjust reimbursement

in rate development or require CCOs to reimburse at specific

levels to achieve quality/value, either by:

1. Setting a min/max reimbursement schedule

2. Tying a uniform dollar/percentage to quality

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Reimbursement - Non-Hospital

Policy Goal: Adjust reimbursement in rate development process to

promote quality and evidence-based practices, and discourage low-

value care

Policy options to explore for non-hospitals:

• Option 1: Identify evidence-based bundles of care most likely to

drive value and take into account during rate development

• Option 2: Use rate development to incentivize (dis-incentivize)

high (low) value treatments outside current performance metrics

Ensuring CCO flexibility: A reimbursement policy that focuses on rate setting

evaluation would financially incentivize CCOs to provide high quality care, without

requiring specific levels of reimbursement that may inhibit VBP adoption and CCO

flexibility

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Reimbursement Background - Hospitals

CMS Requirements: OHA needs to adjust how hospitals are

reimbursed to meet the recent CMS Managed Care Rule, which

requires OHA to reduce “pass-through” payments not tied to quality

and/or value

Current State: All Oregon hospitals participate in a provider

assessment program, which splits reimbursement into two types:

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CCO Reimbursement68%

OHA Directed Payment32%

Current State

1. CCO reimbursement by service (OHA sets

minimum reimbursement)

2. OHA directed payments based on the

hospital assessment program; most of

these payments are not tied to

quality/value

Reimbursement - Hospital

Policy Goal: Meet CMS’s requirement, and tie hospital

reimbursement to value and quality that is partially paid as a “pass -

through” arrangement

Policy options to explore for hospital reimbursement:

• Option 1: Create a hospital efficiency and quality metrics program that

governs the amount of OHA directed payments that go to hospitals and

align with CCO performance program

• Option 2: Set a minimum and/or maximum reimbursement schedule

for hospital reimbursement based on efficiency and/or quality metrics

• Option 3: Mixture of Option 1 and 2

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Rate Development & ReimbursementPotential Strategies

Policy Goal: Ensure rate development methodology rewards and promotes cost containment, quality and efficiency

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Create a risk-sharing arrangement with CCOs

(bonus or variable profit) when savings are

achieved across the program to incentivize

reductions in costs

4 Include the sustainable rate of growth target as a

contract requirement and hold CCOs accountable to

achieving the target or reducing costs

3

Financial Incentive PaymentsPotential Strategies

Policy Goal: Incentivize CCOs to continue to improve quality and spend

payments on activities that improve quality, and ensure accountability

27

1 Adjust the operation of the CCO Quality Pool to

function as a withhold, versus a bonus

• Align incentives for CCOs, providers, and

communities to achieve quality metrics

• Create consistent reporting of all CCO

expenses related to medical costs and

incentive arrangements

CCO Quality Pool: Bonus vs. Withhold

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Bonus Arrangement

(current)

Withhold Arrangement

(policy option)

Timing of PayoutBy June 30th the year following the contract period

MetricsSelected by Metrics & Scoring Committee

Quality Pool

MaximumQuality pool limited to 5% of

actuarially sound rates (CMS

regulation)

Capitation rates excluding

withhold amounts must be

actuarially sound (CMS

regulation)

Rate

Development Quality pool revenue and

expenses are excluded from

capitation rate development

Quality pool revenue and

expenses from withhold are

included in actuarially sound

rate development

Bonus

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Certified

Capitation Rate

$100 PMPM

Bonus $5

CCO Quality Pool: Bonus vs. Withhold

Withhold

Certified

Capitation Rate

$105 PMPM

(paid $100 and $5

withheld)

Withhold $5

Risk MitigationPotential Strategies

Policy Goal: Develop strategies to mitigate risk related to

low frequency, high-cost conditions and treatments

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2 Expand current risk corridor programs

1 Establish a statewide reinsurance pool for CCOs

administered by OHA to spread the impact of low

frequency, high cost conditions and treatments

across program

Risk Corridor Background

• OHA instituted a few risk corridors in the first five years

to share risk related to specific services and members

(i.e., Hepatitis C DAA drugs, etc.)

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Upper 120%

Lower 80%

CCO Expenses

CCO ExpensesCCO Expenses

Payment to OHA

Payment to CCO

Low CCO Expenses compared to

Revenue

(CCO owes money to OHA)

Higher CCO Expenses compared

to Revenue

(OHA owes money to CCO)

Expenses close to revenue

(no sett lement)

Risk Corridor

Financial Reporting and ReservesPotential Strategies

Policy Goal: Enhance financial oversight and reporting framework

to ensure CCO solvency, accountability, and consistency

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Enhance current reporting tools (i.e., Exhibit L) and

reevaluate reserve requirements1

Move to NAIC reporting standards including Risk

Based Capital (RBC) approach to evaluate solvency2

Create a statewide reserve pool in addition to CCO-

specific reserve requirements in the event of an

insolvency

3

NAIC vs. Current Reporting

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• NAIC Reporting

– Consistent, national reporting standards already in use by

insurers

– Risk-based solvency standards and robust oversight framework

– Reconciliation to rate development and additional CCO program-

specific supplementary schedules would be needed

• Current Reporting (Exhibit L)

– Unique to Oregon’s CCO program

– Flexible based on financial reporting needs but will continue to

require ongoing work by OHA and CCOs to achieve consistency

in reporting and risk-based solvency standards

– Reconciliation incorporated within Exhibit L to rate setting reports

Current Reserve Calculation Versus RBC

• Current CCO Reserve Calculation

– Each CCO is required to maintain restricted reserves of

$250,000 plus an amount equal to 50% of the CCO’s average

fee-for-service liability above $250,000

– For purposes of calculating the average fee-for-service liability,

the CCO can elect to use enrollment data or historical expense

data

• NAIC Risk Based Capital (RBC)

– Method developed by the NAIC to measure the minimum

amount of capital that an insurance company needs to support

its overall business operations

– Risk-based capital is used to set capital requirements

considering the size and degree of risk taken by the insurer.

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Encounter DataPotential Strategies

Policy Goal: Ensure services provided and associated costs are

reported consistency and accurately

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Institute a validation study that samples CCO

encounter data and reviews against provider

charts for accuracy (AZ Model) with financial

implications

2 Require complete encounter data with paid

amounts and additional detail for value-based

payment arrangements

1

Final ThoughtsIntersection with Other CCO 2.0 Focus Areas

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Value Based Payment

Sustainable Costs

Social Determinants

of Health

Behavioral Health

CCO 2.0 POLICY DISCUSSION

ROUNDTABLE

Policy Options Revisited

Sustainable Spending Targets

1. Evaluate and inform spending targets

2. Evaluation tool to assess total costs of care

Rate Development & Reimbursement

1. Variable profit margin

2. Reimbursement policies for hospital & non-hospital services

3. Risk-sharing arrangements and shared-savings policies

4. Growth targets in CCO contracts

Financial Incentive Payments

1. Move Quality Pool to a withhold arrangement

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Policy Options Revisited

Risk Mitigation

1. Statewide reinsurance pool administered by OHA

2. Expand current risk corridor programs

Financial Reporting and Reserves

1. Enhance financial reporting framework and solvency

standards

2. Statewide reserve pool in addition to CCO-specific

reserves

Encounter Data

1. Validation study

2. Requirements for additional detail for VBP

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Roundtable & Input

• Thoughts about evaluating efficiency in the CCO model?

– Are there other types of tools we should be looking at?

• Is variable profit is a viable financial incentive to improve

efficiency and quality?

• How else can we better align the financial framework with

policy goals?

• How do we improve consistency and transparency in

financial and data reporting for the CCO program?

• How do we better align solvency and reserves requirements

with the risk of the CCO program?

• How do we manage risk and outlier costs across the

program?40

PUBLIC COMMENT

NEXT STEPS

Next Steps

• Please send in written public comments and feedback by

May 15

– Send input to the CCO 2.0 email address: CCO2.0@state.or.us

• Next Meeting: May 22nd 10:00 a.m. – 1:00 p.m.

– What else do you want to explore during the next meeting?

– What else do you need by next meeting to review?

– Will have additional window for written comment after May 22

meeting

• Oregon Health Policy Board Meeting on June 5, 2018

– Present draft policy recommendations

– Continued public input in the summer

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March April May June July August Sept Oct Nov Dec

2018

March 6Oregon Health Policy Board(OHPB)

3/15 Introductory Webinar on CCO

Development of draft policy recommendations

Review/refinement of policy recs

PHASE I

Operationalizing recommendations

CCO 2.0 Policy Development Timeline

Topic Area Work PlansDeveloped

MILESTONES

June 5 OHPB EXTENDED PUBLIC COMMENT

Aug 7 OHPBPublic

Meetings

Draft Policy RecommendationsDeveloped

Final Policy Recommendations Review

Online survey open for

2.0 feedback

Public input collected for policy development phase

PHASE IIPHASE III

Public Input

on proposed recs

Public input summarized for OHPB review

Oct 2OHPB

CCO 2.0 Final OHPB review

Policy options reviewed and discussed at existing public

committee meetings

Tribal Engagement

March 1 Meeting:Overall Timelines/ Structure Presented

April 11 Meeting: • Review tribal

engagement plan• Identify Tribes wanting

1:1 consultations• Share work plans• Request written feedback

on any initial ideas they’d l ike for consideration

May Meeting: Tribal webinars in each of the four topic areas on the policy options

June/July Monthly Meetings: • Review feedback from

Tribes• Discuss 1st straw

proposal

Individual 1:1 tribal

consultations

Statewide

Forums

August Meeting: Review draft OHPB report

Written Comments

Due

CCO

2.0

QUESTIONS?