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ECG Management Consultants, Inc. The Shift From Volume to Value: Emerging Reimbursement and Alignment Models August 22, 2014 Ms. Purvi B. Bhatt, Senior.

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Presentation on theme: "ECG Management Consultants, Inc. The Shift From Volume to Value: Emerging Reimbursement and Alignment Models August 22, 2014 Ms. Purvi B. Bhatt, Senior."— Presentation transcript:

1 ECG Management Consultants, Inc. The Shift From Volume to Value: Emerging Reimbursement and Alignment Models August 22, 2014 Ms. Purvi B. Bhatt, Senior Manager Mr. Sean T. Hartzell, Senior Manager

2 Agenda I.Market Trends II.Alignment Models III.Innovative Payment Models IV.Case Studies V.Key Takeaways Appendix A – Alignment Model Examples \313186(pptx)-E2

3 I. Market Trends \313186(pptx)-E2

4 I. Market Trends Key Issues \313186(pptx)-E2 Evidenced by significant federal, state, and commercial payor initiatives, strategic direction, and financial urgency (governmental). Health systems focused on eliminating waste. Strong physician partnerships critical to driving change and protecting market share. Systems focused on efficiencies must restructure contracts to be rewarded for improved value. The burning platform is here. Providers largely dependent on a productivity-based system and cannot simply “flip a switch.” As utilization is taken out of the system (through focused medical/chronic disease/population management initiatives), hospital and specialist financial performance at risk if contracts not restructured. The pacing of the movement to value-based care is critical. Critical (no matter what provider type) to focus on efficiencies, measurement, and quality. Essential to execute strategy that closely aligns organization with preferred care partners. Not all organizations can or should strive for the end-state model (in its totality).

5 I. Market Trends End-State Model \313186(pptx)-E2 Independent Providers Hospital Outcomes Provider Organization Management/Governance Clinical Protocols Disease Management Wellness Integrated EHR Performance Measurement Reporting Disease Registry Joint Payor Contracting Employee Health Plan (EHP) Funds Flow Design Aligned Incentives Independent Providers Employed Physicians Hospital CIN Home Health SNF Pharmacy Other Fragmented Delivery System Home Health SNF Pharmacy Other The end-state model is a clinically integrated network (CIN) of providers who follow common clinical protocols, have aligned measures and incentives based on improved value, and obtain joint payor contracts. Employed Physicians

6 I. Market Trends A Time for New Alliances \313186(pptx)-E2 In Central and Southern Georgia, 23 hospitals form a not-for-profit LLC called Stratus Healthcare. This new network is a partnership allowing the member hospitals to collaborate while remaining independent. georgia 23 Hospitals Form Care Alliance Three Philadelphia-area health systems form an alliance to work collaboratively to improve care and meet demands of health reform. The initial focus is to jointly manage the healthcare benefit plans of the systems' employees and their families.. Philadelphia Three Leading Health Systems Form New Initiative This new alliance will bring together more than 30 facilities, including 6 of the 10 that make up Indiana's Suburban Health Organization. “Healthcare reform has required healthcare systems to think differently than in the past,” – Vincent Caponi, CEO. Indianapolis Three Health Systems Create Accountable Care Consortium “The goals of population health management may be encouraging rampant consolidation across the healthcare industry, but some systems are pushing back and seeing whether they can achieve the same results with looser arrangements.” – Modern Healthcare, July 2013

7 I. Market Trends The Spectrum of Integration Traditional medical staff/hospital relationship. Physicians are “customers” of the hospital. Competition over outpatient services and revenue streams. FFS mechanisms predominate. Organizational models created to achieve physician/hospital integration (e.g., joint ventures [JVs], employment). Physician-only models may include entering into managed care risk (e.g., independent practice association [IPA]). Focus is on creating structures that align strategic and financial goals – typically of one aspect of the healthcare delivery system (e.g., a service line, an outpatient service, physician recruitment, payor type). Systems and processes in place to measure quality and cost across a continuum (e.g., hospital, physicians, pharmacy, outpatient services). Selective participation of physicians who are willing to comply with set protocols and outcome measures. Pursuit of new models of clinical care delivery to enhance the management of chronic disease and coordination of care overall. All characteristics of clinical integration with a greater degree of financial integration and interdependence. Ability to approach the market and payors with an integrated system (i.e., hospitals, physicians, and other providers of care). Culture is totally focused on the success of the system versus individual components (e.g., hospital versus physician group) \313186(pptx)-E2 Independent/ Competitive Independent/ Competitive Segmented Integration Segmented Integration Clinical Integration Clinical Integration Provider Network/ACO

8 II. Alignment Models \313186(pptx)-E2

9 II. Alignment Models How Physicians Are Organizing \313186(pptx)-E2 Single- Specialty Group Multispecialty Group Professional Services Agreement (PSA) Loose; little interrelationship. Difficult to realize economies of scale. More integrated relationship. Possible hospital financial support. Equity JV Hospital Employment Shared services, lower cost. Little negotiating power. More risk sharing. Rewards for improved performance. Physicians are choosing to organize themselves in response to changing payor dynamics. Service Line Management Ultimately, group dynamics will play into the preferred relationship/tactic. Management Services Organization( MSO) IPA/ PHO 1 1 PHO = Physician Hospital Organization.

10 II. Alignment Models Alignment Approaches and Their Characteristics Alignment Approach Ability to Maintain Financial Autonomy/ Independence Ability to Leverage Infrastructure Development Costs Ability to Facilitate Clinical Collaboration Ability to Manage Care Across Continuum Ability to Pursue Joint Contracting With Payors Single-Specialty GroupHighLowMedium/HighLowHigh Multispecialty GroupHighLowMedium/HighMediumHigh MSOHighMediumLow PHOMedium/High HighMedium/HighMedium IPAMedium/High HighMedium/HighMedium Service Line Management Medium/HighLowHighMedium/HighMedium Equity JVMediumLow Medium PSAMedium HighMediumMedium/High Hospital EmploymentLowHigh \313186(pptx)-E2 There are a variety of approaches for pursuing alignment, yet the requirements for infrastructure and capabilities related to population management will vary. 9

11 II. Alignment Models Range of Provider/Payor Collaborations \313186(pptx)-E2 Range of Payor and Provider Collaborative Models Traditional Contractual Relationship JV Clinical Programs Infrastructure Research JV Financial Integration Clinical Integration ACO Incentive Arrangement Providers are contemplating a range of payor collaborative models, a thoughtful network strategy, and models for building appropriate insurance capabilities. Merged Organization Degree of Clinical/Financial Integration Level of Commitment Complexity and Financial Investment Single Organization/O wnership Potential Upside Major Considerations Network Strategy Need for Premium Access Need for Insurance Capabilities Risk Contract

12 A provider organization’s strategy must consider how it fits into the full continuum of care and its vision for future care delivery. II. Alignment Models Network Participation Tiers \313186(pptx)-E2 Network formation typically includes participation tiers, allowing organizations to choose the most appropriate level of their commitment and exclusivity related to clinical integration efforts. Level of Commitment and Exclusivity Typical Network Tiers Network Core Ownership (if necessary). Governance. Risk sharing. Surplus sharing. Network Core Ownership (if necessary). Governance. Risk sharing. Surplus sharing. Network Participants No governance or decision- making participation. FFS with shared savings. For example, home health agency. Network Contractors No governance or decision-making participation. FFS only. For example, radiology group. Network Affiliates Participation in decision making. Potential risk sharing. For example, aligned independent medical group.

13 II. Alignment Models Alignment of Payment Models With Network Goals \313186(pptx)-E2 The funds flow is an important tool for creating alignment among the participating providers with both the immediate and longer-term goals of the network. CharacteristicFirst GenerationSecond GenerationUltimate Goal Emphasis Gain experience. Develop capabilities. Generate modest financial/ cost improvement. Leverage experience. Expand capabilities. Participate in associated savings. Market/promote experience. Capitalize on capabilities. Engage in population health management. ScopeEHP only. EHP. Medicare Advantage (MA) and/or commercial plans. Medicaid HMO contracts. EHP. MA and/or commercial plans. Self-funded employer plans. Medicaid HMO contracts. Level of RiskModerate upside opportunity.Shared savings.Shared risk. Business Requirements/ Capabilities Evolving.More advanced.Advanced. Possible Transition Over Time Level of Risk

14 III. Innovative Payment Models \313186(pptx)-E2

15 III. Innovative Payment Models Clinically Integrated Models \313186(pptx)-E2 Providers share responsibility for cost or utilization and have a significant positive gain for achieving targets. Members or owners share financial risk directly or through membership in another organization. Members may not account for more than 30% of physicians in local market. Patient-centered care focused on common understanding of desired outcomes. Broad network of providers. Integrated IT and efficient information exchange. Compliance with utilization review and performance standards. System-wide efficiencies across providers. Centralized ownership. Care is provided in accordance with quality targets. The quality of care is reviewed and monitored. There are provisions for adequate peer review if quality targets are not achieved. Payments are based on historical activity to avoid referral incentives. This model involves separate, independent, and unilateral contracting decisions. Offers and counteroffers between individual providers and payors are conveyed by PHO messenger. Objective information is communicated to providers regarding proposed contract terms. Financial Integration P4P “Messenger” Model Third-Party Messenger Physician/Hospital Alignment Merger/ Acquisition Merger/ Acquisition Coordinated Care Clinical Integration Less Integrated More Integrated Range of Clinical Integration Potential Models of Integration Independent Contracting Decisions “United Front” Risk Sharing

16 III. Innovative Payment Models Range of Value-Based Payment Models \313186(pptx)-E2 1 Medical homes that receive extra dollars for patient management. Clinical and Financial Integration Complexity/Broader Capabilities Required Source: Healthcare Financial Management Association, “Accountable Care: The Journey Begins,” August FFS Medical Home 1 Bundled Payment Payment for Episodes of Care Total Cost of Care/ Shared Savings Global Payment With Performance Risk and P4P Global Payment With Financial Risk P4P Risk Continuum Associated With Various Reimbursement Structures As more risk is introduced into payment methodologies, providers are moving toward greater integration and scale to efficiently develop capabilities for value-based models. Greater Risk/Potential Upside

17 Payor initiatives are putting downward pressure on provider reimbursement. Those providers positioned for a value-based system will emerge as market leaders. III. Innovative Payment Models Contracting Vehicles \313186(pptx)-E2 The economic reality of reform has caused enormous changes in the insurance industry; plans are differentiating themselves through the creation of innovative products. P4P Disease Manage- ment Managed Medicaid Narrow Networks Dual Eligibles Health Exchanges MA Patient- Centered Medical Home (PCMH) Commercial EHPs Shared Savings Shared/ Full Risk Bundled Payments

18 III. Innovative Payment Models Range of Potential Risk Arrangements Ideally, as a provider network matures, it will adopt payment models with increasingly more risk. With the increased risk should come the opportunity to earn a greater percentage of shared savings, because the network/entity will be more accountable for cost and quality. As organizations become more adept at managing risk and enhance their clinical integration through care process redesign and better health IT, they can transition from risk-free or one-sided risk models to two-sided risk models in which organizations suffer a loss if they spend more than their projected global medical spending amount \313186(pptx)-E2 Gain Sharing/One-Sided/ Asymmetric Model “Two Sided”/ Symmetric/Shared- Risk Model Global Risk/Partial Capitation Model Global payment arrangements (total cost of care models) range from shared savings (e.g., gain sharing, “one sided” track) within an FFS environment to shared-risk and ultimately to global-risk (e.g., capitation) arrangements with quality bonuses.

19 III. Innovative Payment Models Critical Success Factors in Full-Risk Contracting Overall, there are major clinical, financial, operational, and strategic requirements that will drive successful population health management. Meeting of financial strength requirements to accept risk. Legal structure in place to receive and distribute payments. Broad base of clinical and administrative leadership. Clear lines of authority and accountability among related entities. Alignment of compensation/funds flow programs. Adequate incentives for population. Alignment of incentives. Sufficient primary care size for population management. Clinical consideration for specialty management and/or involvement for patients with chronic conditions. Hospital partnership. Support of the transformation of the care process to a team approach. Use of physician extenders. Group visits, e-visits, or other forms of patient encounters. Communication tools to facilitate integration of practice teams. Patient satisfaction monitoring. Patient attribution method in place. Governance and Management Provider Composition/Practice Source:Adapted from the AMGA Accountable Care Organization Readiness Assessment, \313186(pptx)-E2 18

20 III. Innovative Payment Models Critical Success Factors in Full-Risk Contracting (continued) 19 Chronic care management processes. PCMH practices. Predictive analytical tools to identify high-risk patients. Case managers assigned to high-risk patients. Systems in place to manage transitions of patient care settings. Medication reconciliation. Behavioral health programs integrated into care management plans. Home health and other extended care programs integrated into care management plans. Patient communication established as standard practice. Patient follow-up and reminder systems. Follow-up visits and referrals scheduled at time of initial encounter. Systems to manage population costs. System-wide measures and performance tracking of quality and efficiency. Episode-based resource-use metrics linked to quality metrics. Public reporting on outcomes/costs. Common EHR across providers. Practice guidelines/clinical protocols embedded in EHR. Appropriate alerts for clinical decision support. Processes to improve coding. Registries for chronic disease patients. E-prescribing used by PCPs. Formularies for generics. Electronic patient communication. Care Management/Coordination Accountability/Reporting Source:Adapted from the AMGA Accountable Care Organization Readiness Assessment, \313186(pptx)-E2

21 IV. Case Studies \313186(pptx)-E2

22 IV. Case Studies Example #1 – Nonurban Hospital With Local Providers 250-bed hospital, 40 miles outside of major metropolitan city. Inpatient market share in the core market is high. Payor market is consolidated, and the local Blue Cross plan is dominant. The medical community is predominantly composed of small, independent, single-specialty physician practices. A significant proportion of the primary care base, while generally loyal to the hospital, is economically aligned with a regional network of primary care practices. The hospital is preferred by affiliated physicians and patients. Multiple clinical affiliations augment local expertise. Quality, excellence, and continuous improvement are areas of ongoing emphasis for the organization. Costs and utilization are lower compared to other area hospitals. Limited experience with pilots for care management of specific patient populations. Background Most of the covered lives cared for by the hospital and the medical community are “owned” by the regional primary care network. Market share of covered lives will be a key measure of indispensability in the future, replacing today’s emphasis on market share of beds, discharges, and/or specialists. Local PCPs have growing expertise to support the management of care for specific populations. Most nearby competitors have achieved greater economic alignment with physicians and have a larger base of employed PCPs. Hospital-centric mind-set means health system model is underdeveloped. Despite pilot initiatives around care coordination, the care model remains fragmented, with generally uncoordinated care transitions. Success in new care delivery models and under new payments models will require more than improved performance on traditional metrics. Financial capacity to fund growth is limited. Considerations for the Future \313186(pptx)-E2 21

23 IV. Case Studies Example #1 – Nonurban Hospital With Local Providers (continued) The key to being relevant in the future is to strengthen existing relationships and establish new ones that add value, capture new markets, and accelerate the development of new competencies and capabilities. Build the competencies required to be successful as healthcare reform drives delivery and payment system changes. Enhance financial strength and market position to continue to operate as an independent hospital/health system. Develop a system of community care that is no longer hospital-centric, reaches out proactively, and engages all providers and the patient. Shift focus from managing episodes of hospital-based care to managing the health of a population, thereby requiring clinical integration \313186(pptx)-E2 22 Secure an economically aligned referral base in order to be indispensable in the primary market.

24 IV. Case Studies Example #1 – Nonurban Hospital With Local Providers (continued) \313186(pptx)-E2 The previous investments and commitment by the physicians and the hospital in cultivating a strong partnership, implementing technology, and engaging in continuous improvement provide a strong foundation for the medical community to build upon. Strong physician/hospital relationships and shared decision making. Platform for exchanging electronic health data. PHO. Platform for exchanging electronic health data. PHO. Culture that supports physicians in delivering the best care. Infrastructure that encourages and facilitates collaboration. Population health management tools and delivery of targeted, cost-effective care. Continuous quality improvement initiatives. Pilots with EHP. Continuous quality improvement initiatives. Pilots with EHP. Bundled payment initiatives. Financial incentives for high-quality, low- cost care to a large patient cohort. Economic alignment between PCPs and specialists. Improved geographic access to primary care. Health system model with stronger linkages across system of care. Evidence-based protocols and care guidelines. Coordinated care transitions using decision support tools and reporting capabilities. Cost discipline maintenance. Capitalizing on existing expertise. Economic alignment between PCPs and specialists. Improved geographic access to primary care. Health system model with stronger linkages across system of care. Evidence-based protocols and care guidelines. Coordinated care transitions using decision support tools and reporting capabilities. Cost discipline maintenance. Capitalizing on existing expertise. Transforming Care Delivery System

25 IV. Case Studies Example #2 – Nonurban CIN \313186(pptx)-E2 Improve Outcomes Gain Efficiencies Deliver Value to the Populations the CIN Serves Vision Guiding Principles Support Local Autonomy and Independence Collaborate With Independent Providers Who Choose to Work Together Provide Options for Degree of Involvement Engage Physicians Focus on Innovating to Create Value for Purchasers and Patients More than a dozen inpatient facilities and over 1,000 employed physicians formed a CIN focused on improving the quality and efficiency of care being delivered. The CIN members will collaborate and innovate to:

26 Integrated IT. – Health information exchange. – Population health/utilization data warehousing. – Disease registries. Utilization, medical management, and care design. – Utilization review. – Standard protocol development and compliance. – PCMH. – Standardized care transitions. – Care management and infrastructure. Contracting. – Collective negotiations. – Risk-based contracting/shared risk. – Network formation and contract execution. – Funds flow design and planning. Managed care administration – Risk management support. – Data analytics and reporting. – Surplus and deficit accounting and distribution. IV. Case Studies Example #2 – Nonurban CIN (continued) \313186(pptx)-E2 Two main functional areas have been identified to provide benefit to members of the CIN: (1) payor contracting and (2) shared services. Vendor contracts and pricing. – Supply chain. – Insurance. – Consulting. Provider credentialing. Best practices and education. – Evidence-based practice guidelines. – Quality improvement. – Staff “in-services.” – Industry trends. – Regulatory compliance. Medical delivery support. – Telemedicine. – Physician staffing/rotations. – Medical transport. Centralized corporate/other functions. – Human resources (HR)/benefits. – Revenue cycle. – IT. – Pharmacy. Payor Contracting Shared Services

27 IV. Case Studies Example #2 – Nonurban CIN (continued) The CIN will begin with consistent measurements and the development/refinement of programs for major chronic conditions, using the EHP as a starting point. The CIN will evaluate payor contracting opportunities to expand population management capabilities to additional patient populations. As a first step in this process, it will evaluate MA \313186(pptx)-E2 The ultimate goal is to evolve the CIN through the management of a series of phased-in populations. EHP. MA. Commercial contracts. New Medicare or Medicaid programs. State health exchange. Direct-to-employer contracting. CIN. First Generation Second Generation Ultimate Goal A single EHP network will be developed by year-end 2014 aimed at improving the health of employees through clinical integration and reducing the total cost of care.

28 V. Key Takeaways \313186(pptx)-E2

29 Organizations can leverage the new care model and position themselves in the competitive healthcare market as a high-quality, high-value provider. V. Key Takeaways So What Does It All Mean? \313186(pptx)-E2 Patient Engagement and Communication Coordinated Care Comprehensive Care New demands from patients and payors are forcing care delivery changes in hospitals and physician practices. Practice Responses Access New Demands for Care Schedules with same-day open access and/or extended hours. New delivery model (PCMH). New patient encounter types (e-visits, ). Stratification of patient panel at start of visit to off-load physician schedule. Dedicated care managers or disease management PCMHs. Coordination with dentists, pharmacists, and nutritionists for preventive care. Provision of services at schools, employers, etc. Evidence-based practices. PCP collaboration with specialists to set expectations for referral coordination. Standards for information sharing (e.g., patient discharge notes, medication reconciliation). Organization-wide standard protocols for patient follow-up. Patient portals, chat rooms, e-visits. Group visits. Education champions in each practice. Online scheduling. In-office resource centers. Telephone calls for patient follow-up. 28

30 \313186(pptx)-E2

31 Presenter Biographies Ms. Purvi B. Bhatt, Senior Manager, ECG Management Consultants, Inc. Ms. Bhatt works with providers and health systems as they transition from volume- to value-based delivery systems, analyzing quality and financial data; facilitating stakeholder discussions regarding a culture of collaboration, creativity, and accountability; and developing ACO/delivery-based strategies. She has master’s degrees in business administration and health services administration from the University of Houston and a bachelor of arts degree in psychology from the University of Texas at Austin. Ms. Bhatt can be reached at or Mr. Sean T. Hartzell, Senior Manager, ECG Management Consultants, Inc. Mr. Hartzell is the co-leader of the firm’s transaction advisory service line, which focuses on developing and disseminating the firm’s thought leadership in the areas of transaction planning, facilitation, and implementation, and he has published thought leadership pieces and spoken nationally on these topics. He received a master of business administration degree from the Darden Graduate School of Business at the University of Virginia and a bachelor of science degree in operations research and industrial engineering from Cornell University. Mr. Hartzell can be reached at or \313186(pptx)-E2

32 Appendix A Alignment Model Examples \313186(pptx)-E2

33 Appendix A Alignment Model Examples 1 A \313186(pptx)-E2 Collaborators Location/ DateDetailsOutcomes Horizon BCBS, PCPs, and New Jersey Academy of Family Physicians New Jersey, 2011 Pilot PCMH program included eight practices and 24,000 Horizon members. Horizon paid practices a care coordination fee ($2 to $3 per member per month [PMPM]) to support practice transformation and for the provision of additional services under the PCMH model, in addition to existing FFS reimbursement. Practices are also eligible for additional payments for meeting quality and utilization outcomes. An expanded version of the program is now implemented in 48 practices serving 154,000 Horizon members. 8% higher rate in improved diabetes control (HbA1c). 6% higher rate in breast cancer screening. 6% higher rate in cervical cancer screening. 10% lower cost of care (PMPM). 26% lower rate in emergency room (ER) visits. 25% lower rate in hospital readmissions. 21% lower rate in hospital inpatient admissions. 5% higher rate in the use of generic prescriptions. California Public Employees’ Retirement System (CalPERS) and Multiple High- Quality Hospitals California, 2008 CalPERS limited what it would pay for hip and knee replacements to $30,000. Found several hospitals willing to stick to threshold amount. Some CalPERS members have 100% coverage, including travel costs, when electing to receive these procedures at participating facilities. CalPERS has since applied thresholds to colonoscopies, cataract surgeries, and arthroscopies. Members required to pay for charges above threshold when using outpatient hospitals instead of ASCs. In 2008, hip and knee replacement cost CalPERS $55 million, and hospital bills ranged from $15,000 to $110,000 with no discernible difference in quality. In 2011, the average price per surgery dropped nearly 28% to $23, Source: Oregon’s Office for Health Policy and Research, Alternative Payment Methodologies.

34 Appendix A Alignment Model Examples 1 (continued) A \313186(pptx)-E2 1 Source: Oregon’s Office for Health Policy and Research, Alternative Payment Methodologies. 2 Source: Deloitte report on Texas Medicaid reform. Collaborators Location/ DateDetailsOutcomes BCBS Illinois and Advocate Health Care Illinois, 2011 Began shared savings program for fully and self-insured commercial PPOs in Chicago area. Performance and cost standards were implemented for physicians, who would be penalized for failure to meet them. In the first 6 months of 2011, hospital admissions per member decreased 10.6% compared with ER visits fell 5.4%. Texas Medicaid, MCOs, and Network Physicians and Hospitals 2 Texas, 2012 Medicaid managed care contracts in Texas require MCOs to conduct gain-sharing programs in which network physicians and hospitals share a portion of an MCO’s savings resulting from reduced utilization and inappropriate admissions. Contracts also include a Quality Challenge Award whereby 4% of an MCO’s capitation is withheld based on eight quality measures. If an MCO does not achieve performance levels, future monthly capitation payments will be adjusted by an appropriate portion of the 4% at-risk amount. Unearned funds are redirected to the Quality Challenge Award. Potential savings related to readmissions is $120 million in the first year. The state found that most preventable admissions were related to mental health conditions. The program underwent substantial changes in 2014 to emphasize incremental improvement, rather than quality challenge and at-risk measures. This is part of Texas’ broader effort to shift from FFS to managed care for Medicaid populations. New York Medicaid Program and Health Plans Contracting With Medicaid New York, 2002 New York Medicaid offering quality-based bonuses and performance-based auto-assignment incentives to health plans. Using HEDIS and CAHPS measures to develop quality and patient satisfaction benchmarks. Created quality incentive score based on a scale of 150 points. During first 4 years of program, New York paid nearly $71.5 million in bonuses. The state saw an increase in enrollment plans that it deems as high quality. A study by The Commonwealth Fund reported that appropriate postpartum care rose from 49% to 68%.

35 Appendix A Alignment Model Examples 1 (continued) A \313186(pptx)-E2 Collaborators Location/ DateDetailsOutcomes Oregon Health Plan (Medicaid) and Healthcare Providers – Care Coordination Organizations (CCOs) Oregon, 2012 Initiative calls for the formation of a cross-functional network of all healthcare providers working together to provide medical services to persons covered under the Oregon Health Plan. As of September 2013, 16 CCOs are in operation. CCOs participate in quality pool funding, which is a pool totaling 2% of the aggregate CCO payments. The payments are made completely outside of the capitation rates. Oregon plans to increase the incentive percentage on an annual basis and has a waiver in place that allows the supplemental pool to grow to 5%. Oregon publishes Quarterly Progress Reports, showing the performance of the CCOs on 33 designated measures. Of these measures, 17 are linked to incentive payments, and the remaining measures are data the CCOs are required to submit to the state to be reported publicly. Oregon believes one of the most successful aspects of its program is the state’s strong relationships with the CCOs. One of the reasons for these strong relationships is that Oregon designates a single point of contact who is made available to the CCOs to address all questions regarding quality measures and the reporting and analyzing of their results. Utilization and spending data in 2013 compared to 2011: – ER visits down 9%. – ER spending down 18%. – Hospitalization for congestive heart failure down 29%. – Hospitalization for obstructive pulmonary disease down 28%. – Hospitalization for adult asthma down 14%. – Primary care outpatient visits up 18%. – Adoption of EHRs up 29%. 1 Source: Oregon’s Office for Health Policy and Research, Alternative Payment Methodologies.

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