PGP to ACO: The Corps of Discovery

1. 1 PGP to ACO:The �Corps of Discovery� AMGA TEP Group August 20, 2010 Shashank Kalokhe, PhD, MBA Associate Administrator for Value Based Contracting & Coordinated Care Everett Clinic F. Douglas Carr, MD, MMM Med. Dir., Education & System Initiatives Billings Clinic

2. 2 PGP Demonstration Overview Section 412 of BIPA 2000 (P.L. 106-554) No change in Medicare FFS payments Performance payments earned from savings from patient management Payments linked to financial & quality performance Quality assessed using 32 ambulatory care measures Claims and clinical record based measures AMA & NCQA developed, NQF endorsed/reviewed Y1: Diabetes, Y2: + HF & CAD, Y3: + HTN & CA screening Y1-3 Flu & Pneum PGP Quality Thresholds: Absolute or Relative Targets :benchmarks or >10% improvement in gap (100%- baseline) 10 physician groups representing 5,000 physicians & >200,000 Medicare FFS beneficiaries 3 year demonstration, extended to 5 performance years (2005-2010)

3. 3 Physician Group Practices

4. 4 Common Basis for Strategies among the PGP Groups 1. Focus: High Cost Areas Components of Medicare Expenditures For Billings Clinic (base year) Inpatient 40% Hospital OP 24% Part B 22% SNF 7% Home Health 3% DME 4% Reduce avoidable admissions, ER visits, etc 2. Focus: Chronic Care & Prevention High prevalence and high cost conditions Provider based chronic care management Care transitions Palliative care

5. 5 Results PGPs Improve Quality All physician groups improved clinical management of patients, with increase in quality scores on average (PY1-3): 10 percentage points on the ten diabetes measures 11% on the ten CHF measures 6 % on the seven CAD measures 10% on the two cancer screening measures 1 % on the three hypertension measures PY-4: All groups achieved >92% of targets PGPs Share Savings Aggregate savings* 4 yr. = $171.9M Six physician groups earned over $85.9 million in performance payments over four years Five physician groups earned $38.7 million in performance payments in performance year 4 Five physician groups earned $25.3 million in performance payments in performance year 3 Four physician groups earned $13.8 million in performance payments in performance year 2 Two physician groups earned $7.3 million in performance payments in performance year 1 PQRI incentive payments awarded to all groups based on quality measure performance

6. 6 Transitioning PGP to ACO CMS desires �Version 2.0� demonstration Initial interest for starting 7-2010, now 1-2011 May be answer to challenge of ACO by 1-2012, as mandated by PPACA Teleconferences in Spring, meeting end of May, with follow-up since then All features are still in discussion , but what we know to date is�.

7. 7 Attribution Method 1: Current Demonstration method. CPT codes: 99201 through 99215 (office or other outpatient services) Specialties: all. Assignment rule: plurality of Medicare allowed charges for specified E&M visits. Physician extenders: included. Results: 62% assignment (45-70%) 80% of E&M visits (63-86%) Method 7: Proposed future method CPT codes:99201 through 99215 (office or other outpatient services) 99304 through 99340 (nursing facility services and Domiciliary, Rest Home, or Custodial Care Services) 99341 through 99350 (home services) Primary care specialties: 1 (general practice) 8 (family practice) 11 (internal medicine) 38 (geriatric medicine) Assignment rule: plurality of Medicare allowed charges for E&M visits, with primary care specialties (first) or all specialties (if no primary care physician visits). Physician extenders: included in second stage (all specialty assignment). Results: 80% assignment (75-84%) 93% of E&M visits (89-95%)

8. 8 Risk Adjustment HCC (Hierarchical Condition Categories) Based on all diagnoses submitted during the year to CMS; average is 1.0 Importance of specificity (4th/5th digits) and comprehensiveness (Problem Lists) IM audit: 50% had only 1 Dx/visit-claim Registry/problem list build for Diabetes; renal insufficiency/CRF Persistence of diagnosis, conditions ~40% COPD not occurring next year, paraplegia, etc. V1:retrospective V2: prospective, same as Medicare Advantage; usually a lower # 1st Proposal discounting risk growth by national FFS growth (1.4%) + MA growth (1.1%)=2.5% 2nd Proposal is �normalization� (FFS Growth) + 1.75% ? >3% 3rd Proposal is �coding intensity offset� of average annual difference in risk score growth between PGP and FFS stayer cohorts from 2006 to 2009 multiplied by the PGP site-specific stayer rate (FFS Growth) + 0.8% ?>2% 4th Proposal is to Cap yearly growth at ~0.8% above normalization adjustment

9. 9 Target Version 1 Metric is per capita expenditures Base year CY2004, no rebasing over 3?5 years Calculate the rate of growth of per capita expenditures of attributed population versus comparison group population, taken from the same local counties Medicare Part A + B Individually Risk adjusted Case cap of $100K If delta of rate of growth >2%, then bonus is created Version 2 Metric is per capita expenditures Base is average of prior 3 years trended forward using the national FFS growth rate by OACT Each organization�s target is their baseline plus the national FFS per capita actual dollar increase from base to performance year Minimum savings threshold is defined by a sliding scale based on the number of assigned beneficiaries

10. 10 Threshold Version 1 2% for all org If >2%, CMS keeps first 2%, shares 80/20 of next 3% (cap 5%) Quality/Financial=50/50 Cumulative, no rebasing but losses >2% are carried over Version 2 Based on 95% 1-tailed confidence interval 2% is @ 28K 5K? >4.65% For ~14,000? 2.75% (Medicare growth ~5+%) Once threshold met, CMS will do first dollar share, 50/50 Cap is 5% Quality share increases from 80?90? 100% yearly, thus a gate before financial efficiency is recognized

11. 11 Future Quality Measures Start with PQRI-GPRO measure set, with deletions (24) Add Meaningful Use required measures (3) COPD measures (4) Inpatient measures/Transitions of care (6) Frail elderly (3) Thus 24 old measures and 16 new ones = 40 P4R for new measures in Year 1 Equal weighting of each Module, with equal weight of measures within each module Target set at prior year Median performance of the PGPs with proportional percentage credit below that mark. �Q-NET�- Electronic tool for capturing information-Sampling methodology

12. 12 Observations from �Version 1� PGP lessons may be hidden in the details Success in individual DM programs may be lost in the overall financial analysis Look more broadly at interventions HF as 1� Dx is only 13% of all admissions for HF patients But All Cause admissions were reduced 40% by intervention Demo Methodology Flaws Investment in resources/infrastructure (cash flow, risk) Financial bar high, demo too short (?5 years) Lack of real-time data from CMS Attribution of beneficiaries (retrospective) Methodology for comparison groups too restrictive; �compares groups with themselves� Risk adjustment (HCC) based on Dx Coding All of the organizations met quality targets, minority met financial targets

13. 13 Observations - continued Foundation of payment model is fee for service, further reinforced by retrospective overlay of cost target Does not account for differences in comparison group expenditure growth rates in various regions that determine cost targets Lack of aligned incentives between medical group and hospital No patient level incentive to anchor with PCP

14. 14 Challenges & Lessons Learned Efficiencies of care Population focus Roles of care delivery system Care Management, Medication Reconciliation, Transitions, Advance Directives Evaluate the $/timelines potential of interventions; total costs analysis IT leverages Organizational capacities and culture Senior leadership support; Change Management Current versus ideal workflows Multidisciplinary teams, Chronic vs Acute Care, Medical Home Coding (Dx Coding? HCC risk adjustments) IT role and data infrastructure EMR enhancements: Not off-the-shelf (�certification�) Registries: Problem Lists vs claims data, location of patient Documentation/searchable fields, POC reminders & CDM Performance metrics

15. 15 Observations on Version1?2 National comparison in target setting is positive Attribution for PCP focuses on accountable level of delivery and optimal utilization Lack of transparency for beneficiary/provider challenging Focus on diminishing the random variation shifts risk from CMS to providers and sets unattractive threshold, jeopardizing adoption in rural/smaller markets. Concern of risk adjustment �gaming� is overemphasized by CMS, and ignores the result of delivery system improvement (EHR, registry development, case management, market forces on risk attraction) that is desirable Quality measurement extends appropriately to inpatient arena and in transitions of care. Need to keep this relevant to clinical practice and aligned with other required measures (PQRI, MU, Core Measures, etc) to reduce administrative burdens/costs.

16. 16 Design is Important Attribution Beneficiary Participation Comparator Group Risk Adjustment Infrastructure Investment Requirements Financial Design- Threshold Rapid Performance Feedback Shared Savings in the long-term: stepping stone to capitation?

17. 17 Assessment of Readiness as ACO is Vital Primary care Integration across care continuum, along with primary care focus Governance, core values consistent with ACO goals Legal structure Critical mass of patients Patient centricity Clinical decision support, medical management

18. 18 Assessment of Readiness as ACO is Vital EHR/Technology Data management and reporting capability Ability to establish actuarial cost and utilization targets Track record, experience with gain-sharing/risk arrangements spanning the continuum of services Aligned provider incentives

19. 19 Questions?