1. Accountable Care Organizations Mata Binteris Managed Care Partners Lawrence Practice Managers October 12, 2011

2. Medicare Physician Group Practice Demonstration Project Five-year demonstration project (2005 – 2010) at ten group practices. First Medicare P4P initiative for physicians. CMS rewards groups for coordinating the overall care delivered to Medicare patients and for improving the quality and cost efficiency of health care services. Over first four years of demonstration, the practices achieved nearly $98 million in savings and qualified for $78 million in incentive payments. Demonstration is basis for accountable care organization section in health care reform legislation and has broad legislative support. 2

3. Patient Protection and Affordable Care Act of March, 2010 CMS is required to establish “a shared savings program that promotes accountability for a patient population and coordinates items and services under parts A and B, and encourages investment in infrastructure and redesigned care processes for high quality and efficient service delivery.” Program is to be effective January 1, 2012. 3

4. The Act and Accountable Care Organizations “Groups of providers of services and suppliers…may work together to manage and coordinate care for Medicare fee-for-service beneficiaries through an accountable care organization.” 4

5. Act Requirements for ACOs - 1 Be willing to become accountable for the quality, cost and overall care of the Medicare fee-for-service beneficiaries assigned to it, enter into an agreement with the Secretary of Health & Human Services for not less than a three-year period, have a formal legal structure that allows for the organization to receive and distribute payments for shared savings to participating providers, 5

6. Act Requirements for ACOs - 2 have a sufficient number of primary care practitioners to care for the number of Medicare beneficiaries assigned to it (minimum 5,000), have a leadership and management structure that includes clinical and administrative systems, define processes to promote evidence-based medicine and patient engagement, report on quality and cost measures, and coordinate care, “such as through the use of telehealth, remote patient monitoring and other such enabling technologies,” 6

7. Act Requirements for ACOs - 3 demonstrate that it meets “patient-centeredness” criteria specified by HHS, such as the use of patient and caregiver assessments or the use of individualized care plans, submit measurement data as required by HHS for the evaluation of the quality of care furnished by the ACO; such data may include transitions across health care settings, including hospital discharge planning and post-hospital discharge follow-up by ACO professionals, and achieve the quality performance standards established by HHS. 7

8. CMS Proposed Rule CMS Demonstration Project -> Law passed by Congress -> CMS Proposed Rule -> Comment Period -> CMS Final Rule Currently awaiting Final Rule 8

9. Proposed Rule: Beneficiary Participation - 1 Beneficiaries are assigned to an ACO after the performance year based on each beneficiary’s use of ACO primary care physicians (general and family practice, internal and geriatric medicine). Patient visits to RHCs and FQHCs are not counted in the assignment of beneficiaries. ACO providers must notify all Medicare beneficiaries that the provider is in an ACO. 9

10. Proposed Rule: Beneficiary Participation - 2 Beneficiaries may see any Medicare provider, not just ACO providers. ACO and ACO providers may not limit beneficiaries’ utilization of non-ACO providers. 10

11. Proposed Rule: ACO Structure & Governance ACOs may use almost any form of organization. ACO providers must have 75% control of the governing body. Governing body must be representative of participating providers and include at least one Medicare beneficiary. May be necessary or appropriate to include someone from a community stakeholder organization on the board. ACO must have board-certified Medical Director (full-time?) and a physician-directed Quality and Process Improvement Committee. 11

12. Proposed Rule: Provider Participation ACO physicians on which beneficiary assignment is based may only participate in one ACO. Specialists, hospitals and other providers may participate in more than one ACO. CMS incentivizes ACOs which include RHCs and FQHCs as participating providers. CMS may limit addition of providers to an ACO during the three-year contract period. 12

13. Proposed Rule: Provider Reimbursement Payments continue to be made to the ACO’s providers under the Original Medicare fee-for-service program, parts A and B, in the same manner as they would otherwise be made. The ACO and ACO providers are notcapitated. The ACO is not involved in receiving fee-for-service payments from CMS and redistributing them to providers. 13

14. Proposed Rule: Quality Measures ACO must report on 65 quality measures in five domains: patient experience care coordination patient safety preventive health at-risk populations/frail elderly health Scoring on quality measures impacts eligibility for and amount of shared savings and losses. 14

15. Proposed Rule: Antitrust If ACO providers collectively have over 50% market share, the ACO must receive a favorable ruling from the Justice Department and FTC before it will be able to participate in the Medicare Shared Savings Program. 15

16. CMS Proposed Rule: Two Models ACOs enter into three year agreements with CMS. One-sided risk model: sharing of savings only for the first two years; sharing of savings and losses in the third year. Two-sided risk model: sharing of savings and losses for all three years. 16

17. Proposed Rule: Sharing the Savings Savings = difference between: a) the benchmark established by CMS and b) actual expenditures, if less than the benchmark Subject to the minimum savings rate, if the ACO meets the quality performance standards established by CMS and if the benchmark established by CMS is greater than actual expenditures incurred by beneficiaries assigned to the ACO, the ACO will be eligible, in each year of the three-year contract, to receive a portion of the savings. 17

18. Proposed Rule: Net Sharing Rate CMS only wants to share savings that are earned through enhanced care coordination and quality of care. CMS will reduce gross savings amounts by 2% in one-sided model to account for normal variations in health care spending. Gross savings less 2% is the net sharing rate in one-sided model. 18

19. Proposed Rule: Caps on Payouts Limits on payouts for savings and losses: Shared savings are capped at 7.5% of benchmark for years one and two in one-sided model, 10% for year three and all years in two-sided model. ACO repayment of losses is capped at 5% of benchmark in year three of one-sided model and year one of two-sided model. Cap increases to 7.5% and 10% for years two and three in two-sided model. Repayment of losses is not required unless losses exceed 2% of benchmark (minimum loss rate). 19

20. Proposed Rule: Per Capita Benchmark Per capita benchmark is: estimate of the average per capita Medicare parts A and B expenditures for Medicare beneficiaries assigned to the ACO based on three years of historical data adjusted for beneficiary characteristics and other factors; updated by projected Medicare national growth index oldest of the three historical years is weighted at 10%, middle year weight is 30% and most recent year is weighted at 60% 20

21. Benchmark Computation Monthly Part A Per Capita Cost(1) $275.14 Monthly Part B Per Capita Cost(1)$285.51 $560.65 Annual A & B Per Capita Cost $6,227.80 Actual benchmark will include three years of Medicare costs updated for national growth trend in Medicare spending. 2008 Douglas County per capita cost per CMS for aged beneficiaries. Part A cost is w/o IME, DSH, GME 21

22. Medicare Eligibles – Douglas County Medicare Advantage(1) Medicare Eligibles 12,184 Less MA Enrolled 1,081 11,103 Part D(1) Medicare Eligibles 12,184 Less Part D Enrolled 6,515 5,669 (1) Per CMS September, 2011 22

23. Minimum Savings Rate(1) (1) MSRs applicable to one-sided model. 23

24. Minimum Savings Computation Per Capita Cost (benchmark) $6,200 ACO Participants X 11,000 $68,200,000 3% Minimum Savings Rate $2,046,000 24

25. ACO Operations 25 Patient Care Information Systems Medical Management Administration & Management

26. Patient Care Make sure each ACO beneficiary has a medical home; maintain registry of patients and their medical homes. Providers perform annual health assessment of each ACO beneficiary. Providers and patients agree on a care plan for the year and reduce it to writing. Using the providers’ annual assessments combined with medical and Rx claims data, identify patients with chronic conditions and at-risk patients with other than chronic conditions. 26

27. Patient Care - 2 Create and maintain registry of patients with chronic conditions. Create and maintain registry of at-risk patients with other than chronic conditions. Note: Registries need to be expanded if provider or medical and Rx claims data indicates an individual has become at-risk since last annual assessment. Use predictive modeling to augment providers’ identification of patients with potential for high utilization of health care resources. Advise providers of patients identified as at-risk based on results of predictive modeling. 27

28. Patient Care - 3 Identify gaps in care. Notify provider and patient of care gap. Make periodic contact with patients with at-risk conditions and those with chronic conditions to make sure they are complying with care plan. Send patients and physicians reminders to have age and gender appropriate tests and screenings; alternatively, call or otherwise personally contact patients regarding tests and screenings. 28

29. Patient Care - 4 Monitor gaps in care and non-compliance with care plans. Work to close gaps and decrease non-compliance. Coordinate discharge planning and re-admit prevention. Coordinate care to maximize outcomes and control unnecessary costs. Help patients navigate the health care system and coordinate care among different providers. Maintain medical home 24/7 patient call-in capability and ask-a-nurse information line. 29

30. Patient Care - 5 Maintain patient website that a) permits patients to communicate with providers, make appointments and order prescription refills and b) gives patients access to health information and self-management tools. Maintain provider portal which facilitates access to information about all services furnished to patients regardless of provider. 30

31. Information Systems Capture or retrieve Medicare medical and Rx claims data. Integrate providers’ patient assessments with medical and Rx claims data. Track all provider services and costs related to one illness or injury and all services and related costs for a patient for a year or multiple years. Track outcomes. Identify cost and utilization trends. 31

32. Information Systems - 2 Create patient/provider data files to include patient demographics, patient utilization of the provider’s and other providers’ services, patient compliance with care plans, outcomes, application of evidence-based standards of care, compliance with clinical protocols. Compare medical costs and utilization to external data bases. Track readmissions. Measure utilization and changes in utilization following initiatives and interventions. Furnish data to management for CMS reporting. 32

33. Medical Management As early as possible identify and then manage high cost or medically complex cases. For services not available from PHO providers, assist, to the extent permitted by Medicare, in making referrals to providers that have demonstrated superior outcomes and cost controls. Record inpatient admission at time of admission and alert utilization management function. Perform concurrent review during hospitalization. Evaluate readmissions. 33

34. Medical Management - 2 Perform post-discharge review; use post-discharge reviews as a learning and teaching tool. Create and disseminate clinical protocols. Establish provider performance measures, evaluate provider performance and implement improvements. Counsel providers on performance improvement. 34

35. Admin & Management Measure patient and provider experience and satisfaction. Provide patient clinical and non-clinical education and communication. Provide non-clinical education to providers. Evaluate changes in utilization following initiatives and interventions, e.g., does push to increase office visits correlate with reduction in ED visits? Evaluate outcomes and coordinate actions to improve if necessary. 35

36. Admin & Management - 2 Evaluate utilization and cost data, compare to external databases and coordinate efforts to improve adverse cost and utilization trends. Coordinate actions and interventions based on results of population-level predictive modeling. Monitor gaps in care and initiate action to close prolonged or high-risk gaps. Provide “medical home” support for practices. 36

37. Admin & Management - 3 Use patient/provider data files and other reports to evaluate patient demographics, patient utilization of ACO and out-of-area providers, patient compliance with care plans, outcomes, application of evidence-based standards of care and provider compliance with clinical protocols. Compile and submit reports to CMS. Distribute savings checks to PHO providers. 37

38. Why Consider Becoming a Medicare ACO? Agreement is with CMS, not a third party payer as is the case with Medicare Advantage plans; better “us” than “them.” Competitors may form ACOs. If providers don’t do it on their own, CMS may give the job to third party payers. Good practice for future risk sharing arrangements with commercial third party payers. 38

39. Why Consider Not Becoming a Medicare ACO? There are not 5,000 non-Medicare Advantage, non-RHC/FQHC beneficiaries in ACO primary care physician practices. There’s not a reasonable expectation that savings of 4% or more of the benchmark can be achieved. Loss of practice independence. Cost is prohibitive. The potential shared savings is not worth the trouble. 39