Gulf Coast and LA HFMA Payer SummitValue-based contracts… same healthcare business?

Richard R. Vath, MDFMOLHS SVP/Chief Clinical Transformation OfficerPresident Health Leaders Network and Medicare ACO

Universal Belief

The current cost of acute, post-acute, outpatient, and ambulatory healthcare is not sustainable for patients, employers and payers. Healthcare value is being questioned by all.

Providers must compete on their ability to deliver predictable, high quality care at predictable costs and with a better patient experience.

Confidential – Do Not Distribute

Managing risks

for the health of a population

Roadmap Implementation

Risk-based Care Market Leader

• Current capabilities and readiness

• Existing gaps

• Organizational goals and mission

• Pace and sequencing of risk approach

• Priority populations

• Unique sub-markets

• Three-year contracting strategy

• High-level plan, plus actionable plans across four capabilities categories*

• Sequencing and cost estimates

• High-priority recommendations to close capabilities gaps

• Care management staffing projections

*Categories depicted in figure on the right, and include Care Continuum, Physician Alignment, Organizational Capacity and IT and Data Analytics.

Care Continuum

Organizational Capacity

IT and Data Analytics

Physician Alignment

Roadmap Features

Key Considerations

Future State

Strategic Path to Risk-based Care

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Clinical Integration - Foundation for Risk Capabilities

• Common Protocols• Physician-Guided Quality Best

Practice Dissemination• Clinical Metric Selection• Peer Review; Transparency• Build Network Culture

Analytics

Network Development

IT Infrastructure and Capability

Cross-continuum Coordination

CLINICAL INTEGRATION

Collaboration PlatformOrganizational Structure & Planning

• Strong Primary Care• Communication • Referral Management• Population-Based Programs• Shift to Ambulatory Management• Transitions of Care

• Stakeholder Engagement• Value Proposition• Participation Criteria• Physician Leadership• Incentive Design

• Clinical Metrics and Results• Cost Analytics• Standard vs. Ad-hoc Reporting• Risk Identification• Regulatory vs. Operational

• Payor Contracting Strategy• Physician Governance• Committees and Decision-Making• Financial Structure• Organizational Incentive Alignment

• EMR and EHR• Clinical and Financial• Patient Engagement Tools• Integration with Existing Systems

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The Case for Clinical Integration

• CMS set a goal - 50% of Medicare payments in value-based models by 2018

• MACRA accelerated this with an incentive-based payment system (MIPS) starting 1/1/17

• MACRA created more global risk models for providers with 5% bonus in years ‘20-’24

• APMs – CMS creates Advanced Bundles for specialists

• What CMS does, commercial plans eventually follow

Characteristic Current System Future System

Care Delivery ModelFragmented care delivery; focus on

treatment and “sick care”

Coordinated, cross-continuum care; focus on wellness, prevention and patient

engagement

Care ManagementAligned around care episodes; acute

focusAligned around managing populations and

conditions; ambulatory focus

Infrastructure Focus Bricks and mortarTechnology and data integration

(data -> information -> knowledge)

Payment Based on quantity of services rendered Rewarded for quality of care

Strategic Orientation Maximize volume Maximize value

Movement towards Value-based Care

• Provider-organized networks can coordinate delivery and management of care through Clinical Integration and succeed in value based contracts

• Use of technology to measure and track quality improvements and demonstrate value

• Proactive-approach to evidenced-based quality practices driven by physicians

Benefits of Clinical Integration

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8© 2014 Valence Health. All rights reserved.

Increasing risk allows clinical/financial benefits

P4P

Fee For Service

Clinical and Economic Opportunity

Clinical Integration

Population Health Management

Bundled Payments

Shared Risk

Full Risk

Health Plan

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The Next Generation ACO Model Offers A Financial Construct Similar To That Of A Health Plan

High

Medium

Low

Level of Financial Risk

Next Gen

ACO

Potential Financial Return and Risk Per Life

Le

ve

l o

f

Infr

as

tru

ctu

re &

Tra

ns

form

ati

on

PSHP

Track 3 MSSP

Typical Payer Deal

Track 1 MSSP

Bundled Payments

What is the currency of value based contracts?

Attributed lives are the currency for value based contracts. Primary care providers, not specialists, determine attributed lives.

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Value based Contracting Steps - Financial

1. Clinically Integrated Network (CIN) determines which Primary Care Providers will participate in contract

2. Payer applies attribution methodology to define CIN population under contract

3. Actuaries project total costs for medical care and Rx and assign benchmarks for each

4. CIN negotiates shared savings/shared loss tiers based on degree below or above cost targets

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12© 2014 Valence Health. All rights reserved.

Key Differentiators Exist Between Medicare Programs

MSSP ACO Next Generation ACO Medicare Advantage

Network Open with retrospective attribution Open with retrospective but includes

voluntary patient alignment option

Closed HMO or Controlled PPO

Benchmark Historical expenditures Historical expenditures adjusted for

regional trending

County based benchmarks

Minimum Savings

Rate or Discount

Achievement of 2.0% - 3.9%

minimum savings rate triggers

shared savings

Discount of 0.5% to 4.5% applied to

benchmark

None

Risk Adjustment

Methodology

Fixed for entire three year

agreement

Adjusted annually with +/- 3%

annual limits

Annually adjusted

Quality Program Quality acts as trigger for

participation in savings

Achievement of quality target

equates to 1% lift

Stars quality metrics drive ~5%

bonus to benchmarks for 4+ Star

rating (out of 5 Stars)

Upside/Downside

Risk

50% shared savings

OR

60-75% shared risk

80% shared risk

OR

100% risk for Parts A and B; option

to build contracted network and pay

claims (Health Plan like option)

100% risk for Parts A and B

Supplemental

Benefits

None Beneficiary coordinated care reward

$50 annually; other limited

Various product enhancements

available

Minimum #

Beneficiaries

5,000 General: 10,000

Rural: 7,500

None for risk based contract

Drive medical savings through clinical interventions to drive down total medical expense –Transitions, Complex Care, and Advanced Illness Programs

Increase benchmark by up to 3% by accurately capturing patient acuity through ICD10 coding

Achieve 30 Centers for Medicare & Medicaid Services (CMS) established quality metric thresholds to improve benchmark by up to 1%

Align process and strategic goals across the network by bringing together primary care and specialties, and leverage provider networks to achieve savings – Pharmacy, Post-acute

Success In Risk Contracts Is Driven By 5 Value Levers

Risk Adjustment

Quality

Network

Clinical Programs

Value Levers

Technology solutions that aggregate data and identify impactable opportunities, drive engagement and management of high risk populations, and support robust tracking and measuring of performance

Technology

Funds Flow Framework When Successful

• Allocate at least 60% of shared savings funds

• Distribution based on participation and quality criteria determined by Quality and Care Management Committee and approved by the Board

Physicians

Health Leaders Network

Operations

Shared Savings Funds from Payor

Up to 30%* retained to fund ACO operations

*If 30% retained revenue exceeds operating expenses, the Board shall determine how to allocate surplus between reserves for future expenditures and the physician incentive pool

• Receive 10% of shared savings funds for their involvement and engagement to improve quality and reduce costs, as well as repayment of initial investment

System/Hospitals

Represents the “incentive pool,” which shall include at

minimum 70% of all shared savings funds

At least 60% allocated to physician incentives

10% allocated to system/hospital

HLN Today

CONTRACT PIPELINE and CURRENT CONTRACTS

1105SCP

Signed

6

Negotiating Finalizing

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PARTICIPATING PROVIDERS

Total

EmployedIndependent

AHP

436321348

Adult Primary CarePediatrics

Specialists

13172

554

COVERED LIVES

Commercial80,551

Next Gen~22,000

MA14,294

Covered LivesProviders

Contract Type

50,571FMOLHS onlyShared Savings/Risk

Blue Cross/Blue Shield FMOLHS Health PlanCovered Lives

ProvidersContract Type

16,477HLNShared Savings

Humana MA

Next Generation ACO

United ACOCovered Lives

ProvidersContract Type

14,294FMOLHS onlyShared Savings/Risk

Covered LivesProviders

Contract Type

13,503HLNShared Savings

Covered LivesProviders

Contract Type

~22,000 FMOLHS/BRCRisk

119,273Total

Updated: January 2018

Health Leaders AllianceStrategic Roadmap

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Existing Network Structures Within Current CINs OR HLA Network Current State

774 PCPs

Top 5 Specialties

account for 733

physicians; Across

all 121 specialties

there are 2,823

specialists

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Specialty TOTAL

Family Practice 164

Internal Medicine 265

Internal Medicine and Pediatrics 6

Pediatrics 322

Pediatrics/Internal Medicine 12

Geriatric Medicine 5

Emergency Medicine 183

Radiology 165

OB/GYN 155

Neurology 116

Hospitalist 114

Questions

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