Accountable Care: The Purchasers Perspective

1. Accountable Care: The Purchasers Perspective • March 23, 2016 • 12:00 – 1:00 pm ET

2. Welcome • Anne Gauthier • LAN Project Leader, • CMS Alliance to Modernize Healthcare (CAMH)

3. Session Objectives • Learn About • What the LAN is and how it can help purchasers get better value for the tremendous amount of money they’re spending on health care • Introduce the LAN approach to “population-based payment” and Accountable Care Organizations • Identify key lessons from purchasers’ initial efforts to implement ACOs in target markets • Engage • Ask your questions of the presenters

4. Agenda

5. Poll • What are the biggest barriers to purchasers pursuing Population-Based Payment (PBP) models like ACOs? Check up to three: • Lack of C-suite support • Concern about employee disruption • Lack of suitable provider partners • Poor quality health plan ACOs • High charges for use of ACOs • Corporate strategy: consumerism • Complexity of direct contracting • Geographic spread of workforce • Other: write in biggest barriers

6. Guiding committee Welcome • David Lansky • LAN Guiding Committee Member • CEO, • Pacific Business Group on Health

7. OPERATIONAL MODEL Critical path to broad adoption of Alternative Payment Models (APMs) Gather Innovations Establish Framework Develop Recommendations Drive Alignment Demonstrate Results • Leadership Groups • Partnerships • Research • LAN Engagement • APM Framework • Guiding Principles • Population-Based Payment Models • Clinical Episode Payment Models • Implementation Resources • Learning & Sharing • Measure & Track Progress • Payer Collaborative • Pilot Recommendations

8. Why is the LAN Important to Purchasers? • Shape: Unique opportunity to influence national payment policies as the healthcare sector transitions away from fee-for-service • Accelerate: Partner with providers and health plans to improve outcomes while lowering costs • Align: Harmonize payment approaches among private and public purchasers with consistent signals to providers • Leverage: Use ”real world” experience to effect broader health system change • Learn: Hear about other innovative purchasing initiatives in the private and public sectors

9. APM FRAMEWORK Population-Based Payment • At-a-Glance The framework is a critical first step toward the goal of better care, smarter spending, and healthier people. • Serves as the foundation for generating evidence about what works and lessons learned • Provides a road map for payment reform capable of supporting the delivery of person-centered care • Acts as a "gauge" for measuring progress toward adoption of alternative payment models • Establishes a common nomenclature and a set of conventions that will facilitate discussions within and across stakeholder communities

10. PBP Work Group Priority Areas

11. Important elements of ACO design • Common Purchaser Concerns • Requirement for PCP • Patient engagement • Formula for shared savings - one-sided or two-sided risk • Retrospective or prospective payment • Setting target price or budget - benchmark to regional or historical prices • Adoption of aligned APMs under shared savings - e.g. bundled payment • Term of contract; trend/price guarantees • Simple; focused on outcomes • Transparency of information to consumers • Incentives for consumer participation • Premium • Benefit design; cost-sharing • Desired service models (e.g., high-cost patients, behavioral health integration, urgent care, EHR/HIE …) • Member experience • LAN PBP Workgroup Priorities • Patient attribution • Financial benchmarking • Performance measures • Data sharing • Other:

12. How aco Market looks to purchasers in 2016 • Plan-sponsored • Additional charges for care coordination, IT, telehealth • Black box provider selection and design • Aggregate performance data, not granular • No clear performance advantages • Medicare-sponsored • Mostly one-sided risk • Prospective attribution, retrospective reconciliation • Mixed results • Direct contract • Workforce distribution key • Difficult to implement • Real provider readiness? From: Muhlestein et al. Projected Growth of Accountable Care Organizations. Leavitt Partners. December 2015.

13. Today’s Speaker • Jeff White • Director of Health Care Strategy • The Boeing Company

14. Boeing Business Environment • Business Realities • Emerging Competition • Supply Chain Management • Productivity Requirements • Health Care Profile • $2.6B in annual spend • 500K lives covered • 48 States • Top Preventable Conditions – Annual Spend & Patient Count: • Cancer - $128M (15K) • Osteoarthritis - $84M (15K) • Back - $76M (54K) • Heart Disease - $72M (25K) • Diabetes - $66M (15K)

15. Direct ACO Contracting Model • Preferred Partnership (ACO) • Improve Quality • Enhance Member Experience • Reduce Cost • Delivery Goals • Incentive Only • Maintain Employee Choice • Simplified Approach • Markets • Puget Sound (2015): • Providence-Swedish Health Alliance & their partners • UW Medicine Accountable Care Network & their partners • St. Louis (2016): Mercy Health Alliance & their partners • Charleston (2016): Roper St. Francis & their partners • LAN APM Framework Category 3B, APM built on fee-for-service architecture, with upside gainsharing and downside risk

16. Triple Aim • Improve Quality • Clinical Outcomes • Preventive Screenings • Health Status • Member Satisfaction • Enhance Member Experience • Access to PCPs & Specialists • After hours care • Call Center Triage • Electronic Communication • Reduce Cost • Aligned Financial Incentives • Shared Savings with Quality Gates • Medical, Prescription Drug and Behavioral Health in scope • Medical Home

17. ACO Plan Structure • Program Design • Mixed Model • Designated – Employee elects program during Annual Enrollment • Attributed – Majority of care is delivered at ACO Partner • ACO Network is ‘In-Network’ • PCP encouraged, but not required • No Gatekeeper • Financial Incentives for Employees • Lower Employee Premiums • Higher Company Funded HSA • $0 Primary Care Office Copay • $0 Generic Drugs

18. Early Learnings • Significant Work Effort • Contracting • Network Configuration • Data Flow and Vendor Integration • Early Communication • Provider Search Functionality • Plan Design Incentives • Member Experience • External Communication • Care Transformation • Embedded Medical Home • Multi-Year Approach • Transition of ‘Centralized Programs’ (e.g. Disease Mgmt.) to ACO

19. Preliminary Results • Improve Quality • Improvement in most metrics • Better controlling Blood Pressure, Diabetes, Cholesterol • Increased Screening Rates • Performance Improving on Depression Management • Higher Generic Fill Rates • Enhance Member Experience • 15% - 35% employees enrolled • Rating of 8.5 out of 10 • Reduce Cost • Results available later in 2016 • Partner Commitment • Long term Investment

20. Using plan-sponsored acos • David Lansky • LAN Guiding Committee Member • CEO, • Pacific Business Group on Health

21. San Francisco Health Service System • 4 Employers: City and County of San Francisco, SF Unified School District, SF Community College District and the Superior Court • 115,765 municipal employees, retirees and dependents (2016), 31% retirees • 97% of covered lives in SF Bay Area • 38% in SF • 93% active employees are in fully-insured, managed care HMOs • 41% Blue Shield • 58% Kaiser • 1% self insured PPO UHC 21

22. Total Cost of Health Coverage • 2011-12 benefit spend (including vision & dental) $694 million • At 7% trend, projected to be $1 billion in 2017-2018 (not taking into account membership growth) • In 2015-2016, benefit spend $790 million • Co-pays and deductibles are at-or-above market • Implemented plan-sponsored ACO (Blue Shield) in July 2012 • Reduced trend from 7% to 3%, following year trend 2% • The 2015 rates -2.78% overall trend (Kaiser rates -2%) Facility cost was and is the primary cost driver of unsustainable Trends followed by specialty pharma 22

23. HSS 2010 Request for Proposal For non-staff model HMO Sustainable employee benefits Value Based Design Wanted transparency in financial/clinical integration, integrated MD/hospital network to provide patient centered, coordinated evidence based care for value based reimbursement Patient Centered Medical Home movement beginning Improved quality metrics, care transitions, chronic and complex care management Blue Shield responded proposing 2 Accountable Care Organization(s) for active employees in San Francisco 23

24. Plan-Sponsored ACOs through Blue Shield Two separate ACOs announced April 1 for plan year beginning July 1, 2011 for members in San Francisco (in 2012 moved to calendar plan year) Since then we have added John Muir although SFHSS does not participate in oversight If targets are met, shared savings are divided among hospital, medical group, purchaser & employer(LAN APM Category 3A--APM built on fee-for-service architecture, with upside gainsharing) • Blue Shield • Hill Physicians Medical Group • Dignity Health: St. Marys & Saint Francis hospitals • University of California SF • 5,000 covered lives • Blue Shield • Brown & Toland Medical Group • Sutter: CPMC hospital (California, Davies, Pacific, St. Lukes) • 21,000 covered lives 24

25. High Risk Population • Risk Score: 1.74 • Large number of HIV+ members drive pharma spend • Average age 50.7 • Average contract size 1.83

26. Insurer (Purchaser) Trust and Transparency Culture Change to achieve common goalsInterdependencies: Partnerships – P3 • Employer Group (Payer) • Willing to partner in engaging members (employee and retiree) in: • Using system appropriately • Promoting prevention, screening and wellness • Data transparency Physician Group, Hospitals, (Providers) Trust and Transparency 26

27. Success Metrics: Triple Aim • Reduce Cost, Enhance Member Experience, Improve Quality • Implemented ACO July 2012 reduced trend from 7% to 3%, following year trend 2% to -2% • Decreased Admissions and Avoidable Hospital Days • Reduced Readmissions • Reduced/Flat ED Utilization • Establishment of Urgent Care Centers and increased utilization • Increase generic prescribing • Care management transitions acute inpatient-home & skilled nursing-home 27

28. Lessons Learned • Need to increase monitoring data and interventions when trends increase • Adequate care management staffing is essential both in hospital and in medical groups • Having care management staff available 7 days a week reduces ALOS by 0.5 days • Health Plan Pharmacy Benefit Management communication with Primary Care Providers and Physician Specialists is helpful • Employer plays important role in promoting use of appropriate level of care

29. Advice to Other Employers • Active participation in monitoring data and interventions through quarterly in-person meetings and monthly phone monitoring when trends increase is essential • Care management: Communication between inpatient hospitalists (MDs) and care managers (RNs), and Medical Group care managers (RNs) is essential • Hospitalists and care managers round on any Length of Stay longer than 4 days • Health Plan data management and timely reporting • Health Plan Pharmacy Benefit communication with Primary Care Providers and Physician Specialists re: generic fill rates, formulary compliance, dose review, transition communication • Promotion of Employer Prevention and Wellness planning by medical groups and insurer and implementation • Employer implementation of Choosing Wisely over use program as performance guarantees

30. Panel q&A

31. LAN Summit Spring, 2016 • April 25-26, 2016 • Sheraton Hotel • 8661 Leesburg Pike Tysons, VA 22182 • Registration Now Open! • Presentations Planned from Work Groups on Work Products • Call for Sessions Open! (due March 23rd) • https://www.lansummit.org

32. ENGAGE, LEARN, AND ACT The LAN will only succeed with robust stakeholder engagement across the field Visit www.hcp-lan.org Join the Discussion Follow Us Attend Webinars Access Resources Submit Comments Attend LAN-wide Meetings

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