our transformational perspective
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Risk Capability and The Hard Work of Healthcare Transformation: “Connecting the Dots with Governance” SCHA tap Conference Hilton Head, South Carolina September 18, 2014. Our Transformational Perspective. Industry Transformation. How do local market conditions impact timing considerations? - PowerPoint PPT PresentationTRANSCRIPT
RISK CAPABILITY AND THE HARD WORK OF HEALTHCARE TRANSFORMATION:
“CONNECTING THE DOTS WITH GOVERNANCE”
SCHA TAP CONFERENCEHilton Head, South CarolinaSeptember 18, 2014
Our Transformational Perspective
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TIME
Industry Transformation
• How do local market conditions impact timing considerations?
• Can market-changing events create an urgent paradigm shift?
• What is my step-change business model risk?• Do I have the financial tools to adequately
analyze relevant states?
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Payer Movement to Value-Based Payment Models
Source: Availity Research, April, 2013
A Survey of the Commercial Payer Community
Increasing Portion of Business Supported By Value-Based Models
A Survey of the Commercial Payer Community
Per
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Per
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Increasing Portion of Business Supported By Value-Based Models
Which Service Lines Will You Focus OnOver Next 12-18 Months
Source: Availity Research, April 20134
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http://ehrintelligence.com/2013/08/23/acos-doubled-during-past-year-medicare-outpaced-commercial/
Risk Capable…ACO Adoption
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The Risk Capable Healthcare Organization
Risk Capable
Populations, Utilization,Costs, Budgets, Monitoring
“Over-managed,”
Portfolio,Multiple Models, Funds
Distribution
Structure, Governance, Alignment, Value
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Case Study Thumbnails
• Alabama Medicaid reform – a market-changing event
• Large orthopedics group – challenges around the corner
• National not-for-profit – revenue portfolio transformation
• National for-profit – preparing for changing markets
• BPCI pilots exploding
Markets are changing…..
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LEGAL EXPOSURE ASSOCIATED WITH RISK-BASED CONTRACTING
• Financial Impact and Consequences– Hospital executives, Board and physician leaders need to understand
the scope of what is at risk and potential implications of assuming this risk.
– Need to develop and implement into payor strategy for all payors:• Governmental
• Commercial –Blue Cross, etc.
• Employers –Direct Contract
LEGAL EXPOSURE ASSOCIATED WITH RISK- BASED CONTRACTING
• Leadership must have proper resources and skill set to evaluate and implement risk based strategies. Boards must know how to evaluate these new types of strategies:– Does hospital have the IT system to manage the risk-based
strategies?– Does hospital have clinical integration in place to assume risk?
LEGAL EXPOSURE ASSOCIATED WITH RISK- BASED CONTRACTING
• Implications of Development of Clinically Integrated Network• Expectations Have Changed:
– Payors will be expecting hospitals to behave in a different way.– Hospitals will be expecting physicians to behave in a different way.– Physicians and patients will be expected to be more engaged and
informed and to work together more closely.– Population health management
LEGAL EXPOSURE ASSOCIATED WITH RISK-BASED CONTRACTING
• Physician/Hospital Alignment– Hospitals who have financial relationship with physicians will be
changed as the reimbursement methodologies change.– Volume-based methodologies will transition to more specific clinical
and cost metrics• Value based purchasing
• Reducing re-admissions
• Reducing hospital acquired infections
– These new methodologies will need to be documented in new contracts with hospitals and physicians
• There will be growing pains
Physician Value Based Purchasing
Medicare as Passive Payer
Medicare as Active Purchaser
Who and When?
60% of Physicians
What Are the Standards?
Physician Risk – Medicare Payment
Physician Practice ExpenseNumber of PatientsMalpracticeStark/Anti-kickback/CMPCoding Compliance and Accuracy
Quality Metrics
Costs to Medicare
Quality Metrics
Costs to Medicare
Standards for Payment AdjustmentQuality
• PQRS
– Patient Safety
– Patient Experience
– Care Coordination
– Clinical Care
– Population Health
– Efficiency
• Outcome measures
– Avoidable admissions for heart failure, COPD, diabetes
– Avoidable admissions for UTI, dehydration, and pneumonia
– All-cause hospital readmissions
Cost
• Total Overall Costs (Medicare Parts A and B)
• Total Costs for patients with specific conditions
– COPD
– Heart Failure
– Coronary Artery Disease
– Diabetes
Medicare SpendingPer Beneficiary
Medicare SpendingPer BeneficiaryGets to Post-Acute Care SpendingGets to Post-Acute Care Spending
LEGAL EXPOSURE ASSOCIATED WITH RISK-BASED CONTRACTING
• Regulatory Requirements/Risk– Although the reimbursement/compensation methodologies may be
changing, the regulatory framework for hospital/physician relationships are still in place.
– Must still comply with:• Stark Law• Anti-kickback Statute• Antitrust Laws• Civil Monetary Penalty Rules• False Claims Act Laws
– ACOs provide some potential limited waiver-protection regarding compliance with these laws but this is not enough.
– Ultimately, may need changes in the regulatory framework to give providers the room they need to make transition to these new models.
LEGAL EXPOSURE ASSOCIATED WITH RISK-BASED CONTRACTING
• Other Potential Legal Implications– Development of exclusive high performing or narrow networks.
• Could a system be carved out of a certain service line within a market by a payor?
– Return of Economic Credentialing?• What happens to physicians who do not perform well under these new
risk-based methodologies?
• Employment status
• Medical staff membership status
• Participating provider status in payor network
LEGAL EXPOSURE ASSOCIATED WITH RISK-BASED CONTRACTING• Other Potential Legal Implications• Executive Qualifications/Compensation
– As these new reimbursement/compensation methodologies evolve, will a different type of executive leader be needed?
– What will necessary skill sets be?– What will executive compensation look like?– Role of physician leaders will be critical
Key Considerations
• Complexities in creating reliable forecasts and capital plans
• Federal and state uncertainties – “stroke of the pen” risk
• Operationalizing risk capability across multiple domains
• Articulating and demonstrating ROI on major current investments
• Compliance requirements across multiple providers
• Alignment around measurable participation criteria: quality, certifications, clinical protocols, payment incentives
• Accelerating transformation across the industry landscape
• Identifying and deploying the “right” tools to monitor progress and changes
• Continuous evaluation: measuring, reporting and adjusting
Achieving sustainable risk capability must consider:
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Barriers – Forbes insights
50%
46%
32%
32%
31%
Difficulty in fully engaging physicians
Complexity and unpredictable impact of VBP contracts
Decrease in profitability during transition
Lack of information management infrastructure
Lack of sufficient economic predictability
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Paralyzed by Confusion
Embracing the Opportunities
Existing in Denial
Resigned to Acceptance
High
RESILIENCY
Low
Low UNDERSTANDING High
A View on the Change Response
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The Risk Capable Healthcare OrganizationMaximize portfolio reimbursement to
foster financial success
Risk management in an efficient and profitable organization
Integrated provider network that
enhances the continuum of care
and creates value
Best practices for patient-centered care
Educated patients with accountability who utilize services appropriately
Provider criteria with defined metrics to
ensure compliance
Incentivized providers that manage quality and costs
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With You Today
Bill HannahMarket Leader - CFO Advisory ServicesDHG [email protected]
Matthew B. RobertsMemberNexsen Pruet, [email protected]
Scott E. HultstrandSpecial CounselNexsen Pruet, [email protected]