aco financial systems guide

8/13/2019 ACO Financial Systems Guide

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Best Practices Guide for

Designing Accountable

Care Financial Systems

Daniel J. Marino, President & CEO


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About Health Directions

Health Directions is the premier provider of ConsultingServices to Academic Medical Centers, Physician Practices

and Hospitals. We support our clients in achieving their

optimal financial performance.

Health Directions delivers its entire suite of PracticeSolutions (financial turnaround, revenue cycle management,

operations, strategic planning, compensation, EMR

implementation and practice transition) through an

experienced team of health care professionals. Health Directions has been assisting hospitals and physicians

in improving their financial performances since 1985.

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Agenda

Current Trends in Healthcare and ACOs

Overview of Health Information Technology

Financial Structure of ACOs

Case Study

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Healthcare is Going

Through Dramatic Changes

5

A Storm is Coming


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Current Trends in Health Care

The U.S. spent over $2.4 trillion in health care in 2010, yetmost of the information exchange is rudimentary

$7,681 per resident of the US

16.2% of GDP

By 2019, health spending growth is expected to outpace

increases in both wages and inflation

Premiums for health insurance are up 131% since 1999

U.S. is adopting EMR technology at a much slower rate than

other industrialized nations

Care remains fragmented and uncoordinated

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Fragmented Patient Care Coordination

Has Substantial Impact

Primary care physicians overtaxed and unable to effectivelymanage chronically ill patients

Manual processes contribute to medical errors

Reimbursement, chronic disease management, and

preventive care objectives are not aligned

Minimal attention given to clinical outcomes, due to

difficulty in measuring the patients full cycle of care

Government promoting EMR technology as means of

changing reimbursement, slowing the rise in spending and

promoting care coordination

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Health Systems of Yesterday

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Independent Organizations with

Individualized Goals


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What is Driving the Cost of Healthcare?

Technologic Advances Prescription Drugs

Aging of the Population

Administrative Costs

7% of total spending

Chronic Disease

Account for over 75% of healthcare spending

Preventable Diseases consume 80% of spending

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Milken Institutes

Avoidable Cost Projections

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$23$17

$0

$10

$20

$30$40

$50

$60

$70

$80

Avoidable Medical Costs, 2023

Avoidable

Medical

Costs, 2023

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(Billions)

Cost Avoidance Methods Early detection of

disease

Management of existing

disease

Appropriate follow-up of

test results

Preventing negative drug

interactions

Making previous test

results available to all

clinicians Wellness education

Source: Health Care Advisory Board, Future of Care Management:

Strategic Forecast and Investment Blueprint 2008-2009, The Milkin Institute Report, October - 2007


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The Forces of Change

Local Dynamics

HITECH and ACA

The Push for HIT

Interoperability

Strengthen HealthcareNetwork

Management of Chronic

Diseases and Preventative

Care

Rise of HealthcareCosts

Practice acquisition and

community outreach

Over 75% of healthcare

spending

Challenges to Medicare

and Medicaid

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Reform Initiatives Underway

EHR Incentive Program

- Government has an aggressive timeline

- Health system will need process for attestation

Integrated health systems moving forward with health

information technology initiatives Large physician group and IDNs establishing private health

information exchanges

Pioneer ACO program

Patient center medical home (PCMH)

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How do we make the measures meaningful from a care

delivery perspective?


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What is an ACO?

Must be a legal entity Have an taxpayer identification number Be comprised of eligible group of ACO participants

ACO professionals in group practices Networks of individual practices of ACO professionals

Partnerships or joint venture arrangements between hospitalsand ACO professionals

Hospitals employing ACO professionals (providers)

Have a mechanism for shared governance

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ACOs In 2009


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ACOs in 2012


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Health Care Reform and Accountable

Care

Accountable Care Organization (ACO) Local healthcare organization and a related set of providers that can

be held accountable for the cost and quality of care delivered to a

defined population

At a minimum includes primary care physicians, specialists, and

hospitals Manage populations of patients in a community

Incorporate a active care management methodology within a patient

longitudinal health record

To deliver coordinated and efficient care to a defined

population

ACOs that can show shared savings will receive financial incentives

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Accountable Care Drivers

Patient Longitudinal/Community Health Record The ACOplatform should be based on longitudinal patient record (i.e., no

matter where the patient is being treated, there is one

overarching longitudinal record)

Active Care Management - utilizes (evidence-based) careprotocols or pathways to notify all the participants involved in

care delivery, including the patient, of their roles and

responsibilities and required interventions

Hierarchical Data Security Controls that allow for a multi-layered, configurable role-based security model to ensure

compliance with privacy and confidentiality regulations.

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Critical Factors in Developing

Accountable Care

Highly Effective Leadership

Organizational Commitment

Clinical Integration Up Front Investment

Performance Based Incentives

Technology Infrastructure

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Highly Effective Leadership

Ongoing vision, strategy and direction to reform of care

delivery

Vision of care is beyond the 4 walls of the hospital

Credible physician leaders

Multi-disciplinary leadership team

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Organizational Commitment

Organizational-wide focus that includes providers

within the community

Commitment of resources

Paradigm shift in care delivery

Encounter focused to patient-centeredness

Openness to new care delivery models

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Clinical Integration

Clinical integration facilitates the coordination of patient careacross conditions, providers, settings, and time in order to achieve

care that is safe, timely, effective, efficient, equitable, and

patient-focused

To achieve clinical integration:

Promote changes in provider culture

Redesign payment methods and incentives

Incorporate technical support tools

Focus on chronic disease management Measure clinical outcomes

Focus is on creating a organizational-wide quality infrastructure

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Source: AHA description of clinical integration


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Approach: Four Pillars of


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Keys to Creating a Quality Infrastructure

of Clinical Integration A successful clinical integration program requires a comprehensive approach

that includes:

Engaging physicians in leadership

Addressing shortcomings of the current reimbursement system

Providing infrastructure and support for chronic disease management

initiatives

Clinical Integration focuses on continuous improvement with outcomes and

reducing costs, this is dependent upon building a strong culture of committed

physicians

To sustain organizational-wide commitment, the program must include:

Pay-for-performance system that recognizes and rewards physicians for

improved patient care outcomes

Evidence-based guidelines developed from industry leadership groups Extensive training programs for physicians and their staff

Information technologies designed to provide physicians with the support

necessary to drive better patient outcomes more efficiently

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How a Clinical Integration

Program Works

Identify top impact areas for employers Chronic diseases, wellness, injury management

Benefit costs, absenteeism, health life styles

Utilize Best Practices of Evidence-Based Medicine

Establish Performance Targets Annually

Obtain Contracts to Reward Improvement

Provide Physicians Tools, Training & Feedback

Develop Physician Progress Reporting Systems

Reward Performance At End of Year

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Performance Based Incentives

Payer negotiated performance-based terms for providerreimbursement

Outcome/performance based incentives for physicians

Employed versus community providers

Incentives for other network components

Home health, rehabilitation, long term care

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New Roles Immerging Within Accountable

Care

Primary Care Physicians shifting from episodic care providers to

Coordinated Care Providers

Nurses evolving into Patient Care Coaches

Assists patients who need additional support following medical

treatment plans

Assist with patient compliance within clinical care plans

Collaborative Care Teams defined as teams focused on developing,

refining and executing evidence based programs

Teams assist primary care physicians and specialists adapt best

practices in care management and patient interaction in adopting

the quality outcome techniques and promoting shared learning

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M C HIT Q i A k d B


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Most Common HIT Questions Asked By

Hospital Leadership

How do we create interoperability across acute, ambulatoryand community solutions?

Do we connect to our regional HIE, another private HIE or

start our own?

How do we connect to our patients in our community?

How do we support community providers in rural

communities who may not be on an EMR

How do we connect to providers with multiple EMRsolutions?

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Transformation #1

From silos with diverse goals. . .

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. . .to shared systems with a single goal.

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AccountableCare


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Hospitals Taking The Lead To Connect Care

Pressures to clinically

integrate care

Connect with providers in the

community

Better access to patients

Increase market share and

expand footprint

Provider and population

analytics

Health Information

Exchange

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HIE and Connected Care

Primary objective of a Health Information Exchange: Toshare healthcare information among a variety of

healthcare providers using networking technology

Critical HIE Attributes:

Data accessibility

Reliability

Accuracy

Security

Long-term sustainability

The HIE governance model set the standard for data

exchange process and system integrity

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Healthcare of Today..

Data Is King

CIO of a Large West Coast IDN states:

We are spending more capital on IT infrastructure in FY2011

than on Facility Improvements

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Clinical Disease Registry is Key to

Connection

Clinical Disease

Registry (CDR)

supports Clinical

Integration goals ofconnecting care,

tracking clinical

outcomes and

comparing againstevidence-based

protocols

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Hospital(s)

Community Providers

Clinical

Disease

Registry

Employed

PhysiciansAncillaries


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Solution Sets/Tools to ACOs

EMR

Electronically captures structured data related to clinical patient services,

incorporates CDSS, provides for increased patient access to care

Health Information Exchange

Incorporates interoperability among network providers, captures clinical

outcome data across network and community, supports network wide

clinical integration program

Clinical Data Repository/Disease Registry

Captures clinical data across acute care, ambulatory settings and community

patient population

Data Warehouse/Business Intelligence

Incorporates data from multiple data sources (finance, practice

management, disease registry, acute and ambulatory systems), provides for

multi-dimensional reporting

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Financial Structures

of ACOs

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Financial Goals of an ACO

To bend the cost curve Reduce unnecessary services, reduce cost and improve

quality

Manage the health of a defined population

Position an organization for value-based

reimbursement

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The Big Question

If we reduce inpatient services which drives a

lot of our systems revenues, wont this reduce

our overall bottom line?

Whats the incentive?

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Managing the Cost CurveCost Reductions Drivers

Delivering safe and effective care Using analytics to identify

variations in care

Coordinating care across the

continuum

Reducing care gaps

Identifying and management ofhigher risk population segments

Value Drivers

Transition from fee for service to

value-based reimbursement

model

Enterprise-focused costreductions in care delivery

Increase market share through

clinical integration and care

management

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MedicalCo

st

Time

5 10%

Reduction


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Where Do You Start in Building the ACO?

Set realistic expectation Unreasonable to expect healthcare providers to immediately acceptfull accountability for costs and quality

Transitional approaches will be required to facilitate change

Incorporate a multi-year process based on standards ofperformance, program compliance, provider comparisons

and measured improvements

Governance model and clinical program operating

committees will drive change

Organizational commitment and investment are required

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ACO Structure Costs Components

4 Categories of Cost1. Network Development and Management

ACO Management and staff

Health system management resources and infrastructure

Contracting capabilities

Financial and management information support systems Compensating physician leaders

Legal and consulting support

2. Care Coordination, Quality Improvement and Utilization

Management

Disease registry

Care coordination and discharge follow-up

Integration of inpatient and ambulatory service lines

Medication management

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ACO Structure Costs Components

4 Categories of Cost (continued)1. Clinical Information Systems

Electronic health record (EHR/EMR)

Health information exchange

Intra-system interoperability (hospitals, medical practices,

laboratory, others)2. Data Analytics

Analytics of care patterns and modeling

Quality reporting and costs

Population health management

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How Do You Begin to Establish Value?

Understanding the data

Tracking of clinical outcomes


Identifying the cost of care

Population Health Management

Contracting

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Understanding the Data

Traditional fee for service models focuses on claim

submission for encounters

Claims data is inherent within organizations You know what occurs with your patients

Key factors include chronic diseases, 30 day readmissions, 30ER visit rates, prevention

Incorporate payer claims data Access to claims data is critical to success

Helps to identify care leakage Very important in managing risk based contracts

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5 Typical Categories of Clinical Integration1) Medical and Technical Infrastructure

- ePrescribing, EHR, electronic references

2) Clinical Effectiveness

- Clinical outcomes, performance against standards3) Efficiency

- Use of electronic technology, automation of documents, ordersand results, provider compliance

4) Patient Safety- HIPAA and other patient safety requirements

5) Patient Experience

- Patient satisfaction scores

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HD Cli i l I t ti P


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HDs Clinical Integration Program

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Prepare & Build Launch & Start-up Optimize & Improve Enhance

3 Months 3 Months 6 Months

Year 1 Year 1 Year 1 Year 2

Governance,

Organizational

Structure

Organizational

Alignment,

Program

Infrastructure

Coordinated Care

Management

Technology

Infrastructure

CI Readiness

Legal Structure

Culture Building

Performance Incentive

Measurement Strategy

Process Maps

Performance Measures

Clinical Care Plan

IT Strategy

Clinical Disease Registry

Provider Engagement

Roles and Responsibilities

Clinical Interventions

Care Coordination Programs

Patient Engagement

CI Value Report

Payer Contracting

Financial Models and Reports

Hands-on Project Management, Coaching, Training and Support

Cli i l P f I iti ti *


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Clinical Performance Initiatives*

Year 1

Diabetic Care Outcomes

Asthma Care Outcomes

30-day Readmission Rate

Hospitalist Effectiveness

Coronary Artery Disease

Congestive Heart Failure Outcomes

Depression Screening

Smoking Cessation

Flu Vaccinations

Community-Acquired Pneumonia

Child Immunizations Patient Satisfaction

Generic Prescribing

*To be validated and approved by CI Governance

Year 2

CPOE

Cardiac Surgery Outcomes

Orthopedic Surgery Outcomes

Obstetrics: Post Partum Care

Obstetrics: Post Partum Depression

Ophthalmology: Diabetic Retinopathy Peer Satisfaction

System-wide Cost Index

Specialty Care Referral Rate

Year 3

Cancer Care Outcomes

MRI Utilization Rates

Surgical Care Improvement: Inpatient

Surgical Care Improvement: Outpatient

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Tracking of Clinical Outcomes

Start with Meaningful Use Data

Key value drivers of payer contracting:

Management of chronic diseases

Reducing the 30 day hospital readmission rate

Reducing the 30-day emergency room visit rate

Improved prevention and early diagnosis Improved access to care

Clinical Effectiveness

Clinical Outcomes become the basis for measuring provider performance,

evidence based incentives and predictive modeling

Clinical measure should be developed by the physician-led qualityimprovement

Physician scorecards that measure outcomes, compliance, and performance

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Success Criteria of CI

The physician and hospital leadership have tocollaboratively promote the program

Program design, implementation and compliance must

be physician led

Go slow.clinical integration will not occur overnight Must incorporate incentives to reward behavior

Establish individual incentives based on individual

criteria

Establish a residual fund for future investments, future

years incentives or specially bonuses

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Integrated Care Drives Results

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Performance

Driven Value

Cost per

Beneficiary

0 Yr 1 Yr 2 Yr 3 Yr 4

Identifying The Cost Of Care


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Identifying The Cost Of Care

What is the cost of care of a diabetic patient to the

organization?

Begin with tracking patient activity across the care

continuum during a period of time Ambulatory encounters

Acute encounters Ancillaries, Rx, etc.

Claims data is the key Organizations have access to their own claims data

Need to incorporate payer claims data (identify patients leaking from

the system) ACOs will be asked to manage to the cost of care and

assume the risk

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Once cost of care is identified,need to compare against the population

Questions to answer:

1) Given the payer population, is our patient more or less sicker?

2) Does the community have higher chronic disease outcomes?

3) Do we have more admissions, readmissions, ED visits?

Population outcomes become the denominator and/or

target.

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Dartmouth Atlas

Effective

care areas

SensitiveCare areas

Opportunities

for improved

care

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Compare Your Performance

30-Day Hospital Readmission Rate

30-Day Emergency Room Visit Rate

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Highest Lowest National Ave.Medical

Conditions

18.9% 11.5% 16.1%

Surgical

Procedures

19.0% 7.5% 12.7%

Highest Lowest National Ave.

Medical

Conditions

23.8% 13.9% 18.9%

Surgical

Procedures

19.2% 10.9% 15.2%

Source: Dartmouth Atlas of Health Care, 2009


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Back To the Big Question

If we reduce inpatient services which drives a

lot of our systems revenues, wont this

reduce our overall bottom line?Whats the incentive?

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No Single Answer

Create systems of value based reimbursement Reducing unnecessary inpatient stays has value Improved chronic disease management through intervention

Wellness and prevention

Incorporate the employers

Promote advanced care in the community

Inpatient care will shift to more higher acute (sicker)

patients

Will need to evaluate patient demand versus supply

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There Really Is No Single Answer


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There Really Is No Single Answer

Management of chronic diseases and prevention willlead to a reduction of unnecessary inpatient stays could

lead to more complicated inpatient stays

Hospital margins are higher on surgical and advance medical cases

than chronic disease admissions

Shared saving models or performance based

reimbursement has to off-set some of the decreased

inpatient costs

ACOs need to promote higher quality care which coulddrive higher patient demand

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Case Study of

Accountable CareOrganization

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Background

General Hospital and large independent primary care groupcome together to form an ACO

Apply to participate in CMS ACO with 15,000 beneficiaries

ACO will be reimbursed on a FFS model and share savings

Minimal clinical integration exists between the hospital and

medical group

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Where does the ACO begin?

Answer Establish shared governance

Evaluate the ACO population cohort

Build care management programs to begin managing the

population cohorts

Identify the data and technology required to support the

ACO

Build the ACO performance reporting

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El t f ACO


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Elements of ACO Performance Management

Population analytics/predictive modeling

Understanding of beneficiary mix related to cost of care, cost increases anddistribution

Proactive management of costs and outcomes

Care Management Programs, interventions and care gap management

Management of care within cohort groups, process and protocols, structures and

roles

Interventions and outcomes

Technology Infrastructure Support a patient longitudinal record

Integrate data and coordinate care

ACO Reporting Tracking of internal patient outcomes

Performance related to 33 ACO measures

Intervention or program reports

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Importance of Performance Management

Population analytics and predictive modeling tool is required to understandour ACO cohort

Breakdown of cohorts by risk category (end of life, high, medium and low risk)

Comparison of ACO cohort to community and national population

Helps with understanding the two types of inherent risk categories

Insurance risk: Typically unavoidable costs out of the control of providers,

occurs as a result of natural activities, causes or events

Performance (clinical) risk: Avoidable costs in the control of the ACO and

influenced through coordination of care, identification of care gaps and

interventions

Multi-dimensional business analytics combined with clinical intelligence to

maximize performance outcome capabilities

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Example of Cohort Distribution


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Example of Cohort Distribution(Interventions)

Patient Morbidity

Cost

Moderate

Risk

Standard

Risk

5%15%80%

High riskcohort is the

greatest

opportunity

for cost

savings

Transition Interventions

Transition

interventionprograms

across all

cohorts

High

Risk

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Care Management Advanced coordinated care management comes through redesign of our

patient care delivery system Redesign of care management begins with:

Defining infrastructure, roles and responsibilities

Identifying and implementing effective interventions that integrate process

outcomes with clinical outcomes

Types of programs

Transition

Care coordination

Extensivist

Outreach/call center

End of life

Need to track interventions and program outcomes within a clinical diseaserepository

Build CRM tool to supports programs and patient engagement

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Example of Care Management Structure


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Example of Care Management Structure(Interventions)

Care Management

CRM Tool

Extensivist

Clinic

Transition

Clinic

Outreach

Prevention

Nurse Nav.

Diabetes

Nurse Nav.CHF

Complicated

Diabetes

Nurse Nav.

PCP/RHC

Nurse Nav.

PCP/RHC

Exten. Clc.

Transitions

(Acute to

Amb.)

High RiskModerate

Risk

Standard Risk

(care gaps)

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I iti l C M t T l


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Initial Care Management Tools

Clinical Disease Repository Tool

CDR to tracking process outcomes across the care continuum

CRM Tool CRM tool to be used to manage the care coordination across the

care management programs

Provide for tracking of the following: Identify patient within the specific program

Provide care direction

Engage the patient

Track the process outcome

Intervention Tools

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Inherent Technology Issues


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gy

Requiring Resolution Data collection & exchange

Collecting the right data in the right fields at the point of care Manual intervention and non-standard interface requirements

Moving the right data to the right places for care coordination

Data Integrity

Assurance that the data we are looking at is valid and associated with

the proper patient

Patient identity and coordinated clinical information

Overlapping Vendor Offerings

Deciding which products to use for which functions when functionality

overlaps Coordination of the Hospitals and Medical Groups technical

offerings

Deciding which organization will provide which technology solutions

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Integrated Technology Long-term Model


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Medical

Group

Patient Identity Management Tool

Clinical Disease

Repository

Performance

Management

Analytics

Call Center

Care

Models/

CDSS

Patient

Portal

Care Management

CRM Tool

Integrated Technology Long term Model

Discharge

Management

Health Information Exchange:Aggregate Data/Tags Populations

Clinical Analytic Gateway exports criteria specific content

Employed

PCPs

Specialty

ClinicsLabs eRx Hospitals

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CMS

Claims

Data

Where Do We Begin In Clinically


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Where Do We Begin In Clinically

Integrating Care?

Establish a burning platform for

change

Identify programs for care

coordination and qualitytracking

Physicians must lead the care

coordination initiativesThe goal is to coordinate patient care and posit ion physicians and

General Hospital for success by leveraging quality.

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Options For Physicians & General Hospital

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Physicians

Level ofCollaboration

Hospital Organization As Level of

Collaboration

1) Do Nothing

Maintain FFS Model

Negotiate contracts under

current strategy

Tolerate fee schedule

reductions

2) Provider Driven Medical

Home Model

Coordinate care within

practice s population

Establish value around

chronic disease outcomes

Use outcomes to create

value with payers

High

LowHigh

4) Clinically Integrate Care

Tracking quality across

continuum

Establish a patient

longitudinal record

Prepare for value based

contracting

3) Hospital Coordinated Care

Model

Focus on cost reduction

Increase in health

information technology

Connect providers to acute

care setting


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Requirements for ACO Physicians

Care coordination must be physician-led

Physicians must be represented at a decision-making level

across all levels of the organization

From governance down to the unit level

Metrics generated with the participation of physicians will

ensure the greatest physician buy-in

Giving physicians a stake in the outcomes of process

improvement initiatives matters

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Progress To Date

Over 6 months into Pioneer ACO

Beginning to share data with acute and ambulatory

arena, and the clinical disease registry

Will begin tracking outcomes by disease cohort at the

end of the month

Looking to expand ACO program with other payers

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To Summarize.


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To Summarize.

Our Healthcare Climate is Changing

and we all will be affected

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Summary

Healthcare is going through a transformation

Changes in healthcare delivery and bending of the cost curve

will make all of us more accountable

Adoption and integration of information technology is a big

driver of change

New financial models will align incentives and modify

behaviors

Continue to manage the cultural change

Aligned objectives will prepare you for accountable care

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Daniel J. Marino

President & CEOHealth Directions, LLC

Two Mid America Plaza, Suite 1050

Oakbrook Terrace, IL 60181

Phone: 312-396-5414

[email protected]

Contact

@HDirections
http://www.healthdirections.com/http://www.healthdirections.com/

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