Payment Models that Support Medical Home and ACO Principles : Maryland’s Experience

1. Payment Models that Support Medical Home and ACO Principles: Maryland’s Experience Web Seminar April 25, 2013 Follow this event on Twitter Hashtag: #AHRQIX

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5. Innovations Exchange Web Event Series Archived Event Materials Available within two weeks under Events & Podcasts http://www.innovations.ahrq.gov Next Events Thursday May 9, 2013 1-2pm ET A Close Look at Care Coordination within Patient-Centered Medical Homes: West Virginia’s Experience Wednesday June 5, 2013 1-2pm ET Building Health Information Exchanges to Support Accountable Care Organizations and Medical Homes: Delaware’s Experience 5

6. Today’s Event Moderator Meredith B. Rosenthal, PhD Professor of Health Economics and Policy Harvard School of Public Health 6

7. Motivation: Goals of New Accountability Contracts • When we seek root causes of quality gaps and cost problems, fragmentation rears its head • Payment reform can reduce fragmentation by making a single entity accountable for all care • Incentives and performance measurement are the key levers • Patient-centered medical homes are one such concept and a building block for others including accountable care organizations 7

8. Patient-Centered Medical Home Basics • Joint Principles: physician-directed care; whole person orientation; coordinated and integrated care; quality and safety; enhanced access; payment system that rewards value (i.e., not resource-based relative value scale) • National Committee for Quality Assurance has a measurement tool that has de facto become another definition • Broadly, a set of structures, processes that improve access and reliability of care with a focus on individual patient needs and payment to support all of the above

9. Initiatives Are Proliferating • Private/public Patient-Centered Medical Home pilots have proliferated across the country • All major national carriers are sponsoring some kind of pilot or initiative • Two Medicare demonstrations • Numerous existing and emerging Medicaid and other State –sponsored initiatives • Hoped for effects: improved access and quality of care (population health); improved care coordination and aggressive management of high-risk patients will equate to cost savings

10. Payment Incentives to Support Medical Homes • Fee for service is incompatible with medical home concepts: huddles, between visit monitoring, care coordination, and support for self management are not reimbursable • Payers may add a care management fee – per member per month – to cover these costs • Such mixed payment may also soften productivity incentives • Pay for performance or shared savings used to get practices focused on quality, downstream costs 10

11. Contracting Challenges with Medical Homes • Multi-payer environment may make it hard for practices to fully step off hamster wheel • Small primary care practices (arguably the place we want transformation the most) not good candidates for high-powered incentives • Shared savings subject to enormous random variation with small numbers of patients • Need to guard against possible unintended consequences of patient access problems, provider financial losses 11

12. Zoom Out to Accountable Care Organizations • Regardless of how successful medical homes are, primary care cannot fix fragmented care alone • Building medical neighborhoods and entities large enough to manage total costs (i.e., Accountable Care Organizations) is required • At a minimum payers should provide incentives for hospitals and specialists to work with medical homes (e.g., BlueCross BlueShield Michigan) 12

13. Risk Sharing Arrangementsto/from ACO Risk Corridor Maximum shared savings = 7.5%* Slope = -0.6 Total spending for ACO patients Target Spending 108.3%* 112.5% * 116.7%* $0 87.5%* 2% minimum savings Year1 max shared loss=5%* Year2 max shared loss=7.5%* Year 3 max shared loss=10%* 13 *Percent of target

14. Key Takeaway Points • Integrated health care delivery requires payment approaches with greater accountability for total costs and outcomes • Policy initiatives are simultaneously working to encourage implementation of specific clinic models to manage populations and complementary payment mechanisms • A spectrum of mixed payment and risk sharing approaches are available • Key issues of balancing appropriate risk, incentives against potential unintended consequences 14

15. Presenter Ben Steffen, MA Executive Director Maryland Health Care Commission 15

16. Studies in 2009 showed Tools to enhance primary care are limited in Maryland law Higher payment for primary care alone would be inadequate Legislation in 2010 established Authority of the state to launch a multi-payer PCMH pilot Exemption for a cost-based incentive payment tied to PCMH Authority for carriers to establish single carrier PCMH programs with incentive-based reward structure (shared savings) and data sharing Maryland Program History

17. Maryland Health Care Commission • Convene stakeholders to form multi-payer Patient-Centered Medical Home (PCMH) program: state action exemption to Federal anti-trust • Develop standards and approval process for single payer PCMH programs (2 programs recognized as of March 2013) • Participation in multi-payer: 5 commercial and 6 Medicaid managed care organizations 17

18. Overview: Multi-Payer Pilot • Pilots sites included 52 participating practices: including7 solo physician; 1 nurse practitioner-led; 18 small (2-5 practitioners); 18 medium (6-10 practitioners); 8 large (11+ practitioners); 2 federally qualified health centers • Practices are broadly dispersed across Maryland • 330 providers including physicians and nurse practitioners • Participation agreement binds providers and payers 18

19. Multi-Payer PCMH Program

20. What We Have Accomplished • Reached 250,000 privately insured and Medicaid patients • National Committee for Quality Assurance (NCQA) Patient-Centered Medical Home Recognition achieved by 52 practices with two-thirds achieving Level II or III at first milestone by March 2012 and all Level I practices submitted for Level II or III by January 2013 • All practices participated in quality reporting by submitting 2011 and 2012 data: 7 of the Maryland measures are core or alternate under the Office of the National Coordinator (ONC) meaningful use; 8 of the 33 are ACO measures

21. Key Features: Payment Model Fee-For-Service Primary care practices continue to be reimbursed under their existing fee-for-service payment arrangements with health plans + Fixed “Transformation” Payment Primary care practices receive a per patient per month fee (paid semi-annually) between $3.50 and $6.00 Practices must achieve NCQA recognition; invest a portion of fixed payment in care coordination Incentive Payment (Shared Savings) Primary care practices receive a share of actual savings generated by reducing total cost of care through improved patient outcomes Practices must report on a set of clinical quality and utilization measures with requirements increasing over 3 years

22. “Total cost of care” includes all health services regardless of whether the services are provided by the Patient-Centered Medical Home practice Budget is set by practice’s baseline period costs inflated by state-wide trend (7.4% in 2010-2011) Practices whose total cost of care is below budget are eligible to receive shared savings payments Practices receive from 30-50% of shared savings depending on the number of quality metrics reported Multi-Payer Shared Savings

23. Only patients attributed to the practice in both years are included in the calculations Patient-level cost adjustments address outliers: patients that died; trauma cases excluded; costs for patient are capped $75,000 Savings calculations generated from All Payer Claim Data Base: savings trend is established by 2010-2011 cost analysis with non-participating practices Multi-Payer Shared Savings

24. Shared Savings Results

25. All but 1 practice reported some quality metrics from electronic health records; 23 practices generated savings Moderate relationship between reduced hospital days and lower average cost Weaker relationship between reduced emergency room visits and lower costs Sample too small to access relationship between reduced readmissions and lower costs Random variation drove some savings; trimmed savings for practices that produced savings less than 10% Did Practices Generate Savings?

26. Impact of Cap for Private Carriers Shared Savings Payment Reduced under 10% Cap 11 Practices

27. Key Considerations • Applying the Payer Agnostic Model • Consistent shared savings model; multi-payer model similar to one-sided accountable care organization model • Alignment of quality metrics across initiatives • Link reward structure with state improvement goals • Broaden participation to carriers with small market share • Build trust in All-Payer Claims Database (attribution and shared savings) • Sustaining Practice Transformation • External practice transformation support is critical • Transformation team embedded in the state • Ongoing funding is key

28. Key Considerations • Care Coordination and Management • Providers have opportunity to define the mix and should be held accountable for results • Combination of provider-based, payer-based, and community-based support may work best • Electronic Health Technology is Essential to Success • National Committee for Quality Assurance PCMH Level 2 recognition requires electronic health records • Standardized carrier data feeds needed • Link PCMH practices to Health Information Exchange (HIE) initiatives and encourage HIEs to develop tools to support new care models

29. Evolving Existing Efforts • Enhance primary care functions • Enhance coordination by engaging and link providers • Develop community health workforce • Align and link data systems including Health Information Exchanges (HIE) capabilities for clinical management and All-Payer Claims Database for provider efficiency and quality measurement

30. Evolving Advanced Primary Care Programs Planning Testing • Increase # of transformed practices • Increase payer participation • Engage communities • Standardize quality and efficiency measures • Link to broader population health goals Community Integrated Medical Home 30 6 months 3 years

31. Respondent Craig Jones, MD Executive Director Vermont Blueprint for Health 31

32. Vermont Experience Blueprint Model • Advanced Primary Care Practices • Community Health Teams (core, extended) • Multi-Insurer Payment Reforms • Health Information Infrastructure • Evaluation and Reporting • Community Self-Management Programs • Learning Health System (support, activities) 32

33. Vermont Experience Financial Support Mechanism Product All Insurers Payment Reform # 1 $PPPM - NCQA score PCMH Transformation All Insurers Payment Reform # 2 Shared Costs Community Health Teams Blueprint Grants Project Management Blueprint Grants Practice Facilitators Blueprint Grants Self Management Workshops Blueprint Contract Clinical Registry & Data Quality Blueprint Contract Evaluation, Analytics, Modeling & Reporting

34. Comments and Considerations • Is higher payment enough? What supports and infrastructure are important for durable transformation? • To what degree can primary care organize more holistic team based services? • To what degree can primary care impact total healthcare expenditures and costs? • Importance and complexity of establishing common attribution and payment methods across all insurers 34

35. Comments and Considerations What payment or blend of payments lead to effective and sustainable change? • Capacity payment/investment • Quality based payment • Outcomes based payment • Shared savings What will prevail? … savings, savings, savings, or an effective blend of payments and infrastructure investments 35

36. Vermont Experience: What’s in the Works • Continued expansion: PCMHs, community health teams, Support and Services at Home (SASH) • Front load community health teams • Data systems and data quality • Comparative assessments and practice profiles • Hub and spoke (addiction, mental health disorders) • Foundation for next phases of reforms (ACOs, etc.) 36

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38. The Innovations Exchange • Visit our Web site: http://www.innovations.ahrq.gov/ • Learn more about Maryland’s Program, Vermont’s Program, and Blueprint Videos • Follow us on Twitter: #AHRQIX • Send us email: info@innovations.ahrq.gov 38