the changing landscape of health reform: the imperative for new payment models presented by: joel...

The changing landscape of health reform: The imperative for new payment models

Presented by: Joel Gilbertson Jack FriedmanSenior Vice President Senior Vice PresidentCommunity Partnerships Accountable Care Services and External Affairs and Payor Relations

Our presentation today

• Update on health care reform• Policy trends: The case for new models• 2014 advocacy priorities

Legislative environment

• Early lessons from health care reform• Paradigm shifts and the new imperatives• The role of governance

Accountable care

Providence Health & Services | 2014 GOVERNANCE CONFERENCE

Our voice in the long reform journey


Mission: Revealing God’s love for all, especially the poor and vulnerable.

Proverbs 31:9: Defend the rights of the poor and needy.

Our calling Our advocacy

Health care is a basic human right.

For decades we have advocated for a more just health care system with coverage for all.

While not perfect, the Affordable Care Act increases coverage for millions of uninsured, reducing their vulnerability to illness and financial distress.

Health care reform

The ACA: What’s in place, pending and to come

QualityHospital -acquired

conditions

Value-based purchasing

Readmissions

Efficiency/ geographic variation

Payment

CMS Innovation

Center

Accountable Care

Organizations

Bundled payments

Physician payments

Coverage

Immediate consumer

protections

Private insurance reforms

Medicaid expansion

Health insurance exchanges

Individual mandate

Finance Post-acute care

Payment reductions and

restraints

Waste, fraudand abuse

Independent Payment

Advisory Board

4Providence Health & Services | 2014 GOVERNANCE CONFERENCE

WA OR CA MT AK0%

20%

40%

60%

80%

100%

120%

140%

160%

EnrolledProjected

Medicaid expansion exceeds projections in three states

Total actual enrollment:

1,285,254No expansion

202,168 206,086

877,000

Projected136,000

Projected136,000

Projected700,000

100%

Data reflects only newly eligible enrollments and is current as of March 11, 2014

WA OR CA MT AK0%

20%

40%

60%

80%

100%

120%ProjectedEnrolled

Exchange enrollment has mostly slower start

Total actual enrollmentacross our five states:

1,044,212107,262

38,806

868,936

22,542

6,666

100%

Data current as of March 11, 2014

Projected 280,000

Projected183,000

Projected 37,626

Projected19,311

Projected691,000

Exchanges: Early enrollment observations

Income levels are lower

85 percent of enrollees are eligible

for subsidies

Similar in all five of our states

Mid-range coverage

Most popular choice are silver level plans

with 70/30 cost share

Lower premiums of narrow networks

preferred

Ages skewing older

Nearly one third of enrollees in our

states are 55-64 years of age

Adds risk for insurers, complexity for

providers

Five issues we are watching as exchanges roll out

2014 through 2015

New coverage models, uneven enrollment and risk management may increase market segmentation

Narrow networks control cost but consumers and legislators want more choice

Lower enrollment may delay ability of exchanges to become self-sustaining

A weak individual mandate may not drive enough future enrollment

Uncertainty about consumer ability to pay premiums and the impact on insurers and providers

2014 policy: The case for new business models


Health care costs stretch government budgets and drive

down reimbursement

Private and public payers turn to

alternative payment models

Consumer empowerment drives scrutiny and greater

transparency

Fee-for-service payments continuedownward trend

Medicare Parts A and BAnnual growth in per-beneficiary spending

Further cuts expected in 2014 and beyond

Medicare physician payment• Must be reformed; timing

uncertain• 24 percent cut set for

March 31• Cost of one-year patch:

$22 billion• Cost of overhaul or 10-

year patch: $128 billion

Medicare Advantage payment• CMS recently proposed an

estimated 6 percent reduction for 2015

• MA quality bonus ends in 2014, reducing payment for high performers (PHP) by about6 percent

Medicare hospital payment• 2 percent across-the-

board payment cut from budget will continue through 2023

• New “two-midnight” admissions criteria will reduce hospital payment if implemented in October


Reform of sustainable growth rate brings opportunity and risk

Current proposal encourages alternative payment models for Medicare physiciansProvides annual payment update of 0.5 percent from 2014 to 2018

• Two new tracks for payment increases in 2018 and beyond• Up to a 5 percent bonus for adoption of medical home model

1. A merit-based incentive payment system with rewards and penalties2. Rewards participation in alternative payment models

Risk: no source identified to fund the $128 billion cost of this plan, leaving hospital reimbursement open for more cuts

Risk: Other Medicare programs known as “extenders” not funded

Opposing political forces may drive consensus on shared-risk models

DemocratsFinancial realities of broken fee-for-service

system lead to support of shared risk models

Medicare reformer on deck:

New Senate Finance Committee Chair Ron Wyden (D-Ore.)


Alternative payment models on the rise

Oregon’s coordinated care model

Strong enrollment and financial incentives

90 percent of Oregon’s Medicaid enrollees are in CCOs

Total enrollment 727,000 with 400,000 more expected by 2022

Federal waiver requires 2 percent reduction in Medicaid spending trend

If 2 percent achieved, federal funds of nearly $2 billion available over 5 years

Coordinated care model attributes

Sustainable rate of cost growth

Providers, plans share risk

Core set of quality measures

Price, quality transparency and standard reporting

Integrated payment and delivery reform

Public wants less cost, more value and access


Health care = 17% GDP

Focus on mergers, affiliations

Scrutiny of community benefit

Tax exemption questionedDemand for

transparency Chargemasters indefensible

Our 2014 advocacy priorities

o Redesigning how clinical care is organized and paid for

o Ensuring coverage expansions are fair and sustainable

o Preserving flexibility to serve the unique needs of our communities

o Ensuring access for the most vulnerable among us

Providence Health & Services | 2014 GOVERNANCE CONFERENCE 16


Accountable care

Health reform and our shifting business model

Early lessons from health reform

• Cost over choice• Payor negotiations fierce• Provider networks narrowing• Government programs: total cost of care incentives• Primary care central: new incentives to manage

downstream costs• Marketplace seeing some relief

2012 health spending: Lowest increase in 53 years!

• $2.8 trillion• +3.7% over 2011• +4.6% general economy• 17.2% GDP in 2012• 17.3% in 2011• Hospitals +4.9%• Physicians +4.6%• Rx +.4% (generics!)• Out-of-pocket +3.8%

Fundamental paradigm shifts

• We cannot be at mercy of health plans• We must be upstream of the premium• Providence/Swedish-centric provider networks• Direct contracts with large employers• We influence employee health benefit design• At risk for episodes/total cost of care• At risk for three years or moreProvidence Health & Services | 2014 GOVERNANCE CONFERENCE

Fundamental paradigm shifts (cont’d)

• We’re cost centers first• Revenue centers second• Marginally effective care is waste• Everything, now………to• Most good for most people at least amount of cost


The new imperatives

• Form ACOs to capture covered lives• Measure lives, not admissions• Commit to total cost of care over time• Put PCMHs on steroids• Find and train population health management leaders• Continuously improve cost structure• Reserve capital for future losses• Get Triple Aim better—FASTProvidence Health & Services | 2014 GOVERNANCE CONFERENCE

Providence responding to new environment

• ACOs in WA, CA, MT • Providence/Swedish-centric networks• Boeing and Intel direct—total cost of care• Joints and heart surgery bundles• Managed Medicaid readiness• Partnering with plans for upside risk• Converting FFS Medicare to Medicare AdvantageProvidence Health & Services | 2014 GOVERNANCE CONFERENCE

Providence responding to new environment(cont’d)

• Medicare Advantage partnerships: PHP, Premera and United

• Medical groups preparing: coding, analytics, case management


The new math

Role of governance: Push management to be better!!

• Number of covered lives dedicated to our network• PMPM trend on employee health spend• Percent of low acuity ED visits going down or up• Risk returns in new MA products• HEDIS and CAHPS scores• Percent of medical admissions for ambulatory sensitive

conditions


Role of governance: Push management to be better!!(cont’d)

• C-section rate: Medicaid and commercial• Health care costs in last six months of life• Specialty referral rates/1000• Hospital bed days/1000


Thank you

Together, we answer the call of every person we serve: Know me, care for me, ease my way

the changing landscape of health reform: the imperative for new payment models presented by: joel...

Documents

health care reform

just health care system

projected enrollment

oregon health plan

exchange enrollment

enrollment forecasts

medicaid expansion enrollment

callingour advocacyhealth