how to transition into a successful risk-based aco · 2015 2016 2017 −1.5m −1.0m −0.5m...

TRANSITIONING INTO A SUCCESSFUL RISK-BASED ACO

Transitioning Into a Successful Risk-Based ACO

Part 1: Why Transition To Risk And How To Protect Your ACO

June 5, 2018 1pm EST


Presenters

John Schmitt, Ph.D., FASHCRM -- Managing DirectorReliance Consulting Group

Chuck Newton -- Senior Vice PresidentRisk Strategies


• Speaker presentations• Risk taking in the context of MACRA • The move toward ACO risk: results & analysis• Financial protection for your ACO• Risk Readiness Assessment (Webinar Part 2, June 19th at 1pm EST)

• Discussion Questions and Answers

• Close

Agenda


Health care in America is experiencing unprecedented change.

In 2018, health care continues to dominate the headlines.

There is widespread belief that realigning financial incentives for healthcare providers is critical to reigning in costs.

CMS is forcing this transformation through Medicare policy and regulation. States, commercial payors and private employers are all following their lead.

Health Care Landscape


Effects of Medicare Access and CHIP Re-authorization Act of 2015 (MACRA)

MACRA Act of 2015

Eliminated Sustainable

Growth Rate (SGR)

Introduced Quality Payment Program

(QPP)

Merit-Based Incentive Payment

System (MIPS)

Alternative Payment Models

(APMs)


Advanced Alternative Payment Models (APMs)Advanced APMs include:

• Comprehensive ESRD Care (CEC)• Comprehensive Primary Care Plus (CPC+)• MSSP Tracks 1+, 2, and 3• Next Generation ACO Model (NGACO)• Oncology Care Model (OCM) two-sided• Comprehensive Care for Joint Replacement (CCJR)

MSSP Track 1 is NOT considered an Advanced APM

Only Advanced APMs qualify for MIPS exemption

Not taking risk (i.e. doing nothing) and being subject to MIPS has a potential cost


Risk Saves CMS Money Impetus of expanding risk models

CMS Administrator Seema Verma said that the ACOs that have been willing to take on risk have saved money, while those that haven't appear to be increasing Medicare spending.

"The presence of these upside-only tracks may be encouraging consolidation in the marketplace, reducing competition and choice for our beneficiaries," she said. "While we understand that systems need time to adjust, our system cannot afford to continue with models that are not producing results."

(Source: “Verma draws the line on Medicaid limits, ACO risk Contracts”, Modern Healthcare A.M., May 8, 2018)


The Move Toward ACO RiskGrowth in Two-Sided Risk ACOs, 2015-2017

Source: Risk Based ACOs Prove Successful, Accountable Care News, January 2018

15

48

86

100−

80 −

60 −

40 −

20 −

0 −

2015 2016 2017

−1.5M

−1.0M

−0.5M

−0.0M

ACO

sBeneficiaries (M

illions)

Note: *The number of beneficiaries covered by 2017 ACOs will not be known until the results are released in 2018. Source: Evolent Health analysis of 2016 performance data from MSSP, Next Generation ACO and Pioneer ACO models.

Two-Sided ACOs accounted for 75% of growth in total lives

covered by ACOs from 2015-2016

0.5M

1.2M

TBD*

# of ACOs in Two-Sided Risk Models # of Lives in Two-Sided Risk ACOs


Risk-based ACOs Generate More SavingsDistribution of ACOs and Aggregate Savings


90% 71%

10%29%

Two-Sided Risk Models

One-Sided Risk Models

% of ACOs % of Aggregate Savings vs Benchmark

Source: Evolent Health analysis of 2016 performance data from MSSP, Next Generation ACO and Pioneer ACO models.


Risk-based ACOs: CMS Fares BetterAggregate ACO Savings vs CMS Payments


Aggregate Savings vs BenchmarkAggregate Shared Savings Payments by CMS

One-Sided Risk Models

Two-Sided Risk Models

Source: Evolent Health analysis of 2016 performance data from MSSP, Next Generation ACO and Pioneer ACO models.

In one-sided models, CMS paid out $72M

more than ACOs saved

In two-sided models ACOs saved $67M more

than CMS paid out

$613M

$541M

$220M$153M


No Risk, No Reward

“If accountable care organizations (ACOs) had moved from the upside-only Track 1 of the Medicare Shared Savings Program (MSSP) and assumed downside risk, they would’ve earned an additional $966 million if they qualified for the 5 percent bonus for Advanced Alternative Payment Models (AAPMs).

Source: No Risk, No Reward: ACOs would’ve made $966M more in downside risk model, John Gregory, Health Exec January 2018

Under their [Avalere Health] simulation, 372 of 410 Track 1 ACOs – 91 percent of all participants – would’ve financially benefited from taking on downside risk, with an aggregate net payment increase of $966 million”


Employers Should Push ACOs Towards Risk“As experts jest, if ACO providers don’t take on the financial risk of caring for their

population of patients (for example, only shared savings), it is like “vegan

barbeque…or gin and tonic without the gin.” Payers’ ability to change provider

behavior is likely to be negligible if they only reward providers with small bonuses

for effective care a year after the fact. Greater financial accountability would

encourage providers to promote preventive care and look for ways to cut waste.”

Source: Two Ways Employers Should Push ACO Arrangements To Evolve, Roslyn Murray & Suzanne F. Delbanco, Health Affairs, April 9, 2018


The amount ofrisk is too

great

Concerns about unpredictable

changes in CMS rules

Desire for more reliable financial

projections

Concerns about past

performance

40%40%

36%40%

Source: National Association of ACOs

Risk Objections


Environmental Summary

Healthcare in America is experiencing unprecedented change.

• Focus on controlling costs while improving quality

• Substantial pressure to realign provider incentives and take risk

Providers must ask themselves:• How should we organize?• How will we deliver care? In what settings?• How much risk should we take?• How can we protect ourselves?


Employee Health Plan

Shared Savings and/or Loss

Bundled Payments

Capitation

Direct to Employer Contracts

Provider Owned Health Plans

LEVELS OF RISK


RISK ASSUMED

Financial Risk

• Balance Sheet• Margin Erosion• Long Term Viability

Liability

• Vicarious & Direct• Provider Selection/

Credentialing• Coordination of

Care• Disease/Case

Management• Quality Assurance• Marketing

Cyber

• HIPAA Regulations• Protection of PHI• Data Breaches

Management

• Mergers/ Acquisitions

• Anti-Trust• Employment Issues


RISK MITIGATION• Actuaries• Attorneys• Information Technology

Hire Outside Expertise

• Downside maximums• Trend calculations• Attribution methodology

Use Contractual Limitations

• Avoid settlement errors• Force contractual audit provisionResults Validation

• Technology• Clinical integration• Evidence based practices

Make Necessary Infrastructure Investment

• Stop-Loss• Liability

Transfer Risk Through Commercial Insurance


INSURANCE SOLUTIONS

Aggregate Stop-lossSpecific Stop-lossSurety BondsBundled Payments Stop-lossManaged Care Errors & OmissionsDirectors And Officers LiabilityCyber Liability


AGGREGATE STOP-LOSS

Provides protection against abnormal frequency of claims in total.

Appropriate for MSSP Tracks 1+, 2, and 3 and Next Generation ACOs

Also possible for commercial and Medicaid ACOs with 2-sided risk.

Cross population aggregates are an option for ACOs with multiple risk based contracts.


Aggregate Stop LossExample - How an aggregate stop loss policy can provide financial protection to an ACO

ACO Type MSSP Track 3Assigned Beneficiaries 10,000 Performance Year Benchmark - PMPY $10,500Performance Year Benchmark - Annualized $105,000,000

Loss Sharing Limit as a Percentage of Benchmark 15%Loss Sharing Limit in Dollars $15,750,000

Aggregate Stop Loss Attachment Point as a Percentage of Benchmark 103.0%Aggregate Stop Loss Attachment Point in Dollars $108,150,000

Actual Expenditure - PMPY $11,214 Actual Expenditure - Annualized $112,140,000

Actual Expenditure as a percentage of Benchmark 106.8%ACO Loss Share Rate 40.0%ACO's Liability to CMS $2,856,000

Amount Insured through Aggregate Stop Loss $1,596,000 ACO's Liability Net of Stop Loss Recovery $1,260,000


SPECIFIC STOP-LOSS Provides protection against high claims on individuals Protection against abnormal severity of individual

members rather than abnormal frequency of claims in total

Can incorporate substantial levels of self-insurance depending upon risk appetite

Self-insurance can be funded in a variety of ways including through a captive insurance company

Should be considered for all risk based contracts Not appropriate for Medicare MSSP ACOs at this time

due to CMS truncation at the 99th percentile NextGen ACOs are now given the option to be

uncapped and purchase their own specific stop-loss at levels commensurate with their risk appetite


SURETY BONDS Meet CMS requirement for a

repayment mechanism Are a cost effective alternative

to a Letter of Credit (LOC) Keep the ACO’s capital intact

and does not require a UCC filing


ACO Risk Readiness

#1 Learn to think like a payer

#2 View risk as a “friend”

#3 Remember the triple aim

#4Assess risk readiness

(using our free tool in Part 2 of our webinar)

#5 Close readiness gaps using the right tools

FIVE CRITICAL STEPS


Next…In this webinar, we have addressed why an ACO should consider taking risk

and how the financial solvency of your ACO can be protected.Join us on June 19th at 1pm EST for our second webinar:

Part 2: How to Prepare for Risk


Q&A

John Schmitt, Ph.D., FASHCRMManaging Director

Reliance Consulting Group, LLC423.304.4343

[email protected]

Chuck NewtonSenior Vice President

Risk Strategies 804.647.8360

[email protected]

www.acoexhibithall.com

http://www.acoexhibithall.com/

how to transition into a successful risk-based aco · 2015 2016 2017 −1.5m −1.0m −0.5m...

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