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Is Your Organization Ready for Value-Based Payment: Commercial Shared Savings, Bundled Payments and Clinical Transformation? 2014 HFMA Southwest Ohio.

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Presentation on theme: "Is Your Organization Ready for Value-Based Payment: Commercial Shared Savings, Bundled Payments and Clinical Transformation? 2014 HFMA Southwest Ohio."— Presentation transcript:

1 Is Your Organization Ready for Value-Based Payment: Commercial Shared Savings, Bundled Payments and Clinical Transformation? 2014 HFMA Southwest Ohio May Institute May 15, 2014 Amol Navathe, M.D., PhD Managing Director, Strategy / Clinical Transformation, Navigant Consulting (Boston, MA) Christopher Kalkhof, MHA, FACHE Director, Strategy / Payment Transformation, Navigant Consulting (Chicago, IL)

2 Best Practice Financial/Benchmark Modeling and Impact on FFS
Today’s presentation Current and Emerging Risk Sharing/Risk-Based (“RS-RB”) Models: Commercial Shared Savings & Episodic Pricing Models Best Practice Financial/Benchmark Modeling and Impact on FFS Strategic Importance of Parallel Clinical Integration/Clinical Process Change Organization Readiness at the Operational and Clinical Levels Critical Success Factors: Population Health and Care Delivery Models Implementation Roadmap Development: Lessons Learned Page 2

3 Current and Emerging Risk Sharing / Risk-Based (“RS-RB”) Models – Commercial Shared Savings and Episodic Pricing Models Page 3

4 How will providers and payers operationalize all of this?
1. Post-Reform Approaches to Sustainable Margins: Systems of Care / Triple Aim Future Go-To-Market How will providers and payers operationalize all of this? Physicians / Hospitals / Other Consumers Payers Systems of Care Administrators (Finance, PHM & IT etc.) Outcomes Data and Payments Care Coordination Population Health Management Consumer Engagement KEY INITIATIVES Aging and Overweight Populations, More Expensive Diseases to Treat, New Payment Models, Physician Shortages & Reduced ESI Emerging Payments The payer - provider contracting process has often been characterized as being adversarial vs. collaborative... absent finding a common means to demonstrate measurable value… both parties gamble with their respective futures. Page 4

5 1. What Will my Payer Contract Portfolio and Payment Models Look Like in the Future?
Integrated Care Systems/HEC Capitation/ Global Comp Member Attribution Capitation + PBC ? < 50% Revenues 50%+ Revenues Shared Risk Population Management Shared Savings Condition/ Episode Bundling Risk to Provider ACOs TME Shared Savings Narrow Network Products Networks of Care Carve-Out Specialty Services Episodic Prices Graduated/Transitional Risk Strategic Alliances/JVs G. Case & Episode Payments Perf. Based Contracts (PBC) COE, Global Case Rates, Episodic Pricing + PBC PCP Incentives Fee-for- Service Performance- Based Programs P-4-P Hospital/Office Collaboration Integrated System Provider Integration Source: Navigant Best Practices Page 5

6 1. Revenue & Expense Management: Example - Value of Contract Modeling Capabilities
Increasing Clinical Integration and Financial Risk Levels / Complexity Dimension Shared Savings Bundled Payment Accountable Care Organization Overview Utilization Reductions Shared Between Payer and Provider – Incenting Quality over Quantity One payment per Defined Episode – Movement Away from Utilization Based Reimbursement Population Based Care that Rewards Integration, Quality, Outcomes and Efficiency Designed to Promote Cost Reduction Cost & Utilization Reduction Value Care Coordination Encouraged Required Quality Standards Optional Physician Alignment Must Align to Achieve Savings Source: Navigant Best Practices

7 1. Major Payer’s Criteria for commercial bundling partnership
The measures are nationally accepted as clinically appropriate so there is wide support for improving performance Real dollars are at stake for improvement For each measure, there is a range of performance targets representing a continuum from good care to outstanding care, so the model rewards performance & improvement Data is made available monthly, enabling the organizations to track progress and take action to manage their patient population The groups/partners have strong support from their leadership to implement new systems and act on the data Dynamic/actionable data and reports made available daily, monthly, quarterly, helping organizations to identify efficiency opportunities at a patient, practice and org. level Page 7

8 1. COMMERCIAL PAYER CONSIDERATIONS RE: EPISODIC PRICING
Acute Care IP Rehab Hosp OP Ctrs IRF / SNF / HH Physicians $ Knee, Hip, Spine & Other Ortho Current FFS Model E.G., Commercial Payer – FFS Ortho Services Diffuse collection of interests between physicians and hospitals… non-aligned Physician primary focus at practice level and/or ambulatory invested interests Declining economics incents physicians to compete directly with hospitals for higher dollar procedural and diagnostic services Volume rewarded regardless of quality and outcomes Pays each provider separately with no linkage to patient care coordination Payer cost containment through price, payment rules and utilization controls IT tools, Clinical and Financial Systems designed for traditional FFS business model Incents providers to focus on services which reimburse the most Other EP/SS Model Candidate Services: Oncology, Cardiac, Neuro-Sciences, High Risk Maternity/Neonate; Senior Care Chronic Care & Other Specialist/High Dollar IP Oriented Services Page 8

9 1. COMMERCIAL PAYER EPISODIC PRICING & SHARED SAVINGS: LIMITED DOWNSIDE RISK – Retrospective model
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10 1. COMMERCIAL PAYER EPISODIC PRICING & SHARED SAVINGS: SIGNIFICANT DOWNSIDE RISK - PROSPECTIVE MODEL
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11 1. COMMERCIAL PAYER EPISODIC PRICING & SHARED SAVINGS: Building the rates
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12 1. COMMERCIAL PAYER EPISODIC PRICING: Deficit Shared Savings Risk Sharing To Cap
Shared Savings Methodology: Net savings will be shared: 50% Provider / 50% Payer || 60% Provider / 40% Payer (if meet/exceed quality metrics) Claims are to be paid by Payer according to each participating provider’s current contracted payment methodology/reimbursements with Payer. The Provider does not assume any claims payment liability for any Payer par provider. Provider’s only downside risk is the multiple cap/stop-loss for Episodic budget. The episodic budgets are inclusive of Payer and member liability credit Provider’s efforts. Process and audit rights for an annual retrospective reconciliation of actual eligible claims incurred per episodic budget, on an individual patient case basis, across each eligible LOB. An interim payment during each contract year of surplus sharing... true up at year end. Net Deficits and eligible surpluses from the prior contract year will be carried forward next. Shared Savings Deficit Downside Cap = 1.5 – 2.0 x the episodic budget per case Shared Savings will be paid In addition to the FFS rate increases. Shared savings deficits do not impact agreed upon FFS rate increases during the contract term. Page 12

13 1. COMMERCIAL PAYER EPISODIC PRICING: BASELINE BUDGET and EPISODIC DEFINITION (HIP. KNEE & SPINE)
Baseline calculated from to actual total allowed paid claims for all Provider patients covered by eligible commercial LOBs across all Provider physician surgical sites. Episode Inclusions Admission/Surgery - Range of MS-DRGs, associated ICD-9 (diagnostic and procedural) and CPT codes for the hospital stay and all covered professional services provided during the admission stay. Co-morbidity inclusion/exclusion criteria, Length of time and services included post- discharge and Complications Covered Discharge/Post-Acute Care/Rehab - To agreed upon SNF, IRF and Home Care ICD9, CPT and other Procedural Codes (e.g., RUGs). Co-morbidity inclusion/exclusion, length of time and complications covered. Pre-Surgical Testing – Surgical consult, anesthesia consult, surgical team consult, patient and patient/family education, within 1 to 2 calendar days of the surgical procedure date. Transitional Care Monitoring – During the 90 day post-surgical discharge, patients at a higher risk of readmission will require transitional care monitoring. Page 13

14 1. COMMERCIAL PAYER EPISODIC PRICING: BASELINE BUDGET and EPISODIC DEFINITION (HIP. KNEE & SPINE)
Episode Exclusions All other testing prior to defining diagnosis and determination that surgery was appropriate. All other testing not in inclusion criteria and PAC services which exceed 90 days window.. Annual Baseline Budget Adjustments for each eligible episode of care to account for: Rate increases across its participating providers whom in the aggregate define the baseline. Payer product adjustments/benefit levels which impact member services utilization. Case mix/risk adjustment which occurs from member voluntary and involuntary attrition. Co-morbidity exclusion/inclusion criterion. A material change in historic Provider Specialist PCP referral relationships. Shared Savings Payments – Funds Distribution: Provider will receive the entire shared savings payment from Payer and will be solely responsible for distribution of any shared savings surplus internal to provider partners (FMV). Quality Metrics for patient quality/improved outcomes and financial incentive awards such as Generally Accepted Ortho Quality Metrics, Patient Satisfaction Measures, HCAHPS Inpatient Facility, Functional Outcome Measures, HOOS, KOOS, VR12 and Other Metrics. Other - such as care management/care navigation and transitional monitoring fees Page 14

15 Best Practices Financial / Benchmark Modeling and Impact on FFS
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16 E.G., Variables To Be Modeled
2. MODELING IMPACT OF RB-RS ARRANGEMENTS IS CRITICAL to negotiating success To assess the potential financial impact of value based payment arrangements such as commercial shared savings contracts, determine the margin/revenue impact on FFS revenues as well as potential avoidable costs/utilization with each major payer... financial/analytical models must be built. Margin Lever E.G., Variables To Be Modeled Margin Levers Modeled Utilization Rate and Mix Identify high risk patients and reduce avoidable utilization. Steer patients to appropriate site of care. Share savings potential from Payer Volumes Increase the number of managed lives under contract to drive more PMPM revenues Spread fixed costs over larger revenue base Unit Cost Reduce underlying cost structure to improve margin position Payer Payments Make decisions with fact base on impact of discounts for steerage vs. locking in current payment rates Shared Savings Retain negotiated % of shared savings Establish internal savings distribution formula that aligns hospital physician incentives Page 16

17 2. Levers for savings are often not obvious
Largest $$ savings from FFS... Avoidable readmissions, 1 day stays and E/D use Margin Lever Downstream Issues to Manage Margin Levers Modeled Utilization Rate and Mix Where is the avoidable utilization? Where can we shift patients to lower cost care sites/lower cost service mix? Where should we consider clinical process changes? Volumes How exactly will we grow lives in partnership with payers? What, if any, underlying discounts do we need to give to steer/retain volume? Unit Cost Which Value Imperatives need to be accelerated to get unit costs down? Greatest synergistic opportunities... admin & clinical? Payer Payments What discount rate, if any, will you give the payer? Pricing strategy by service area/service line? Shared Savings How do we distribute savings? What metrics, what targets, what weights? Impact if we expand physician network, grown lives? Page 17

18 Illustration: PMPM Savings Opportunities
2. Financial Budgeting & Planning for Risk Contracts: E.G. Building PMPM Budgets Based on Avoidable Cost Analysis2 Illustration: PMPM Savings Opportunities Starting PMPM Analysis Cost and Utilization Reductions Achieved Through Care Coordination and Clinical Process Change PMPM After Cost Reduction Source: Navigant Best Practices Page 18

19 Strategic Importance of Parallel Clinical Integration/Clinical Process Change
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20 3. Twin Pillars to Success Under Curve 2 Payment Models
Increases Value, Equitable & Sustainable Clinical Integration / Care Model Redesign Infrastructure / Operational Alignment Patient and Physician Engagement Coordinate and Manage Patient Populations Manage Financial Risk Payment Transformation Clinical Transformation High Efficiency Health Care Source: Navigant Best Practices Page 20

21 3. Our Pricing, Product, care Delivery Model Design Levers To Transition from Curve 1 to Curve 2
What Network Partners? Physician, Hospitals & Other What Pricing Strategy? FFS + P4P Shared Savings Episodic Bundling Full Risk IP/OP Increase vs. Decrease? Absent Parallel Clinical Integration/Clinical Process Change with Payment Model Change... How Will You Manage Risks? Which Products and Which Payers? Commercial Group ACOs & Other Medicare Advantage Managed Medicaid What Time Line? Y1 Y2 Y3 Y4 Source: Navigant Best Practices Management of Pricing, Product, Network, Operational, Clinical, Financial, Distribution Channel and Competitive Risks? Page 21

22 Prioritizing areas of focus based on payment model and areas of need:
3. Common analytics base links clinical and payment transformation Prioritizing areas of focus based on payment model and areas of need: Shared Savings Physician-Hospital relationships (e.g. IPA, self- employed) Governance model (e.g. dyad leadership) Chronic disease management and practice variations Bundles PAC facility preferred partnerships and associated workflows Implant and DME cost benchmarking Pre-op risk management (e.g. glycemic control) ACO High-risk patient management Demand matching across network Pharmacy utilization Cross-cutting Quality & Performance Metrics and Variation Analysis Page 22

23 Workshop Type #1: SCAMPs
3. TWO KEY WORKSHOPS GUIDE clinical transformation AND DRIVE CLINICIAN ENGAGEMENT Workshop Type #1: SCAMPs Standardized Clinical Assessment and Management Plans (SCAMPs) Utilized to dive into clinical decisions with high impact on outcomes and costs. Key to: Evidence-based care customized to treatment patterns Physician engagement and buy-in Workshop Type #2: RIEs Rapid Improvement Events (RIEs) Aimed at improving flow through operational bottlenecks or key process misalignments Focus on early consideration of “root cause analyses” Inter-disciplinary approach to improvement Allow for optimal buy-in and adoption into practice. Page 23

24 Organization Readiness Planning and Assessment Process at the Operational and Clinical Levels
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25 Longer term, how sustainable is our current FFS payment model?
4. Key Framing Questions: Preparing for payment and clinical transformation changes Longer term, how sustainable is our current FFS payment model? If we move away from our FFS to an early stage value-based payment models -- how do we minimize the risk of margin erosion? To optimize our net revenue/payment yield part of the margin equation: What employer, geographic and payer LOB’s should we target? What steerage/keepage opportunities exist and how do we best avoid cannibalizing our higher payments with the same patients? To optimize the labor/non-labor cost part of the margin equation: What types of avoidable costs and utilization need to be removed? What types of administrative costs can be reduced? Which incentives need to change, if any, to achieve the above? What operational and clinical process changes do we need to make to be successful under value-based payments? What risks do we need to plan for and manage? Page 25

26 Organizational Leadership/
4. What capabilities do systems need to add to be successful under RS-RB Payment Models? Capitation/ Global Comp Population Management Member Attribution Integrated Care Systems/HEC Change Management Patient Monitoring Predictive Modeling Payment Distribution Process Cost of Care Reduction Quality Improvement Focus Condition/ Episode Bundling Physician Leadership Strategic Leadership Clinical Decision Support Systems Focus on Prevention Risk to Provider Comprehensive Improvement Metrics Clinical & Operating Efficiency Outcomes Based Metrics Care Coordination Practice Variation Clinical & Financial Integration Reduce Avoidable Costs Improvement Metrics EBM Reporting / Tracking Tools Standardized Processes Organizational Leadership/ Governance Structure Analytic Tools Member Engagement P-4-P Hospital/Office Collaboration Integrated System Provider Integration Source: Navigant Best Practices

27 4. Your Operational and Clinical Readiness for Value Based Payments Starts with a risk assessment
Summary of Risks – Population Health Management & Risk Based Contracting Plan for Risks Invest in Capabilities to Avoid/Mitigate Risks Timelines are Important Develop Detailed Implementation Plans & Execute Manage Risks Across are Continuum Performance Accountability Start in… When? Alignment w/ Strategic Plan Results to Report Across Formal PMO Process Execution Risk Products, Pricing & Distribution Channel Risks EBM / PHM Clinical Care Model Risks Care Continuum Composition Risks Competitive Risks Financial, Capital & Budget Risks Payer Contracting & Value-Based Payment Risks Unified Analytics & Infrastructure Risks Page 27

28 Risk-Based Contracting Best Practices Measures
4. Readiness Ratings: performing a Finance/Contracting/ Infrastructure Gap Assessment Risk-Based Contracting Best Practices Measures Current State Assessment Revenue & Expense Management Financial Budgeting and Planning for Risk Contracts Managed Care Contracting Funds Flow, Rewards & Incentives Overall Risk & Financial Management Health Information Technology/Information Systems Note: The same type of readiness assessment would be performed on Clinical Delivery Operations, Provider Network Care Continuum, Market and Product Strategy and Unified Analytics-IT-Infrastructure. All areas combined, define organizational readiness for population health management and risk-based contracting Unprepared with No Plans Plans for Developing Capabilities Ready for Success Page 28

29 Pathway Toward High-Performance
4. MOVING TOWARD MANAGING POPULATIONS SHIFTs THE STRATEGIC IMPERATIVE TO HIGH SYSTEM PERFORMANCE Organizational elements complement functional capability building: Pathway Toward High-Performance Physician/Hospital Alignment Performance based on best practice benchmarks Cost Restructuring Efficient utilization of overhead in organization is mission critical Coordinated Care Continuum Clinical Integration and care management has to be coordinated across the entire continuum of care Care Management/Reimbursement Risk Management of variability in underlying utilization and costs in providing clinical services to patients Page 29

30 4. A Physician Alignment Readiness ASSESSMENT will clarify next steps
Stage 1 “Traditional” Stage 2 “Early Integration” Stage 3 “Mature Integration” Stage 4 “Advanced Integration” Stage 5 “Future Vision” Independent MD Individual Practice Mgt. Limited Physician/ Hospital Trust Economic Focus to Relationships Groups: Mostly Single Specialty Practices Emerging Collaboration - Physicians Understand Beyond Economics Mixed Employed/ Private Model Clinical Standards Strong Relationships Some Clinical Integration Large, Diverse Network Fully Aligned Hospital/ Physician Leadership Roles Well Defined Robust CI Large, Diverse Network Fully Aligned Strategic Physician Leadership Page 30

31 4. Quantifying the size of the performance Gap: Where are your physicians today?
Required Movement toward Best Practice Performance Expectations Evaluation of the current financial and operational gaps Best practice performance targets established in coordination with incumbent physician and administrative leaders Reliance upon legacy and / or performance expectations will hinder achieving high performance Page 31

32 4. Maximizing Physician engagement is A KEY SUCCESS FACTOR in clinical transformation
Both Payer & Integrated DS Payer Support Programs Integrated DS Services Shared Savings CCRN Direct Invest. EMR/ MU PCMH Program Support Practice Characteristics - # Physicians, Specialties, Patient Panel Size, Geography Practice Population Management Capabilities Integrated DS Affiliated PCPs Practice Patient Needs Customized Engagement Opportunities for Physicians & Practices Page 32

33 Critical Success Factors: Population Health and Care Delivery Models for RS-RB
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34 5. Evaluate your organization against MILESTONES FOR EACH POPULATION HEALTH CAPABILITY
Building Block Goal 1. IT Systems & Analytics Enable population health through world class tools and technology & data reporting 2. Quality & Performance Improvement Utilize data to inform QI / PI initiatives in order to achieve system wide quality goals 3. Physician Leadership & Alignment Achieve physician partnership to ensure access and to create and operate high quality delivery model 4. Care Coordination & Management Coordinate care across the continuum to deliver an efficient and cost effective delivery model 5. Finance/Underwriting Achieve financial model alignment to incentivize and reward success in population health 6. Contracting & Network Development Contract with specific payers and employers to grow lives, manage risk and achieve financial targets and develop a provider network to manage lives within the care model 7. Patient Engagement Engage patients in care decisions to maintain healthy populations and improve health of sick patients Page 34

35 Population Health Capabilities
* = Plan & provider requirement Population Health Capabilities IT Systems & Analytics Quality & Performance Improvement Physician Leadership & Alignment Care Coordination & Management Goal Enable population health via world class tools & data reporting Utilize data to inform QI / PI initiatives to achieve system wide quality goals Achieve physician partnership to create high quality delivery model Coordinate continuum of care to deliver cost-effective delivery model Key Elements Create a data repository for clinical and claims from all providers* Benchmark performance against risk-adjusted benchmarks* Predictive modeling* Care management program* Integrate data into office work flow and practice management systems Deliver patient specific alerts Create dashboards for network performance Increase patient engagement Process to evaluate the health needs of specific population* Goals to evaluate performance for ambulatory quality and hospital quality initiatives Quality and Patient Sat Metric Library* Mechanisms in place to standardize reporting of clinical and quality performance* Process to integrate results to current QI/PI initiatives and define additional initiatives* Physician leaders with the credibility and expertise to lead Aligned network of physicians Physician partners willing to change * Incentive models that align MD behavior with plan design* Tech adoption agreement with affiliate MDs* Clear performance expectations for MDs in quality programs* Measure against specified targets* Physicians engaged in designing care coordination model* Risk stratification process assigns specific providers * Transition of Care value streams Case management / clinical protocols for high volume diseases Standardized process for patient handoffs Physician office connectivity * Care coordination performance using standard metrics* Governance: To ensure appropriate decision rights and accountability. IT System & Analytics Interface disparate systems to create a data warehouse for clinical and claims from all providers* Benchmark network performance at all levels against risk-adjusted population benchmarks -Predictive modeling tools to proactively identify high-risk patients* Enroll high-pts at greatest risk for avoidable utilization into a care management program* Create longitudinal patient record across all providers and sites of care Deliver patient specific alerts based on variances from care plan Create reports and dashboards to analyze, monitor, and report network performance at the specialty, practice and individual physician level* Increase patient engagement through providing access to their own clinical and financial history * QI/PI Process to evaluate the health needs of specific population* Goals to evaluate performance for ambulatory quality and hospital quality initiatives (P4P, PQRS, HCC, PCMH, CMS 5Star etc.)* Quality and Patient Satisfaction Metric Library* Mechanisms in place to standardize the capture and reporting of clinical and quality performance* Process to integrate clinical and quality results to current QI/PI initiatives and to define additional initiatives* Physician Leadership & Alignment Physician leaders with the credibility and expertise to lead change Aligned network of physicians across specialties and geographies to ensure robust access to quality of care Physician partners willing to change current care patterns and work flow to meet population health requirements and network objectives* Incentive models in place that align physician behavior with plan design* Technology adoption agreement with affiliate physicians* Clear performance expectations for physicians participating in quality programs* Processes to share performance against specified targets* CCRN Physicians engaged in designing population health based care coordination model* Risk stratification process to identify high cost patients, then assign specific providers to manage high cost patients* Transition of Care value streams Case management / clinical protocols for high volume diseases and conditions Standardized process for managing patient handoffs Physician office connectivity to support care transitions* Monitor care coordination performance using standard metrics* Page 35

36 Goal Key Elements * = Plan & provider requirement Finance/Underwriting
Contracting & Network Development Patient Engagement Goal Achieve financial model alignment to incentivize and reward success in population health Contract with specific payers and employers to grow lives, manage risk and achieve financial targets and develop a provider network Engage patients in care decisions Key Elements Financial model alignment across facilities and professionals* Appropriate metrics to quantify population health performance* Relevant dashboards to monitor performance on ongoing basis* Mechanisms to integrate financial analytics into budgets* Actuarial capabilities Communication process to share results with stakeholders* CDM mappings and cost accounting system utilized as inputs into financial model Transparent funds flow and distribution process* Aligned contracting priorities with financial / budget model to manage transition to risk* Aligned payment models to incent performance* Internal alignment with key internal teams Employer specific partnerships to deliver new lives* Appropriate number of clinical resources * Ownership or strategic partnerships for aligned providers across continuum * Include ancillary providers* Aligned IT infrastructure across partners * Patient portal to engage patients* Communication process that presents clinical knowledge understandably* Training program on engaging and communicating with patients to create a sacred encounter Tools for nurse care managers to assess patient barriers Partnerships with community stakeholders Standard process for gathering pt. survey results* Shared decision-making process accounting for each patient’s’ unique needs* Governance: To ensure appropriate decision rights and accountability. Finance/Underwriting Achieve financial model alignment to incentivize and reward success in population health Financial model alignment across facilities and professionals* Appropriate metrics to quantify population health performance* Relevant dashboards to monitor performance on an ongoing basis* Mechanisms to integrate financial analytics into budgets* Actuarial capabilities Communication process to share results with appropriate stakeholders* CDM mappings and cost accounting system utilized as inputs into financial model Transparent funds flow and distribution process to reward stakeholders for quality and efficiency efforts* Contracting & Network Development Contract with specific payers and employers to grow lives, manage risk and achieve financial targets and develop a provider network Aligned contracting priorities with financial / budget model to manage transition to risk* Aligned payment models to incent performance in quality and costs* Internal alignment with key internal teams (PI, rev cycle, etc.) to operationalize and manage value-based contracts Employer specific partnerships to deliver new lives* Appropriate number of physicians, physician extenders, and other clinical resources required to care for target number of lives* Access to aligned facilities/providers across the full continuum through ownership or strategic partnerships* Ancillary providers (i.e. PBM, Dental, Optical, holistic health, centers of excellence, etc.) must be included* Aligned IT infrastructure across partners to effectively manage population health* Page 36 Page 36

37 Benchmarks & Best Practices Contracting
5. DATA ANALYTICS AND BENCHMARKED BEST PRACTICES MUST DRIVE REDESIGN OF YOUR ORGANIZATION Benchmarks & Best Practices Contracting Shared Savings Cliffs Episode definition and payments Direct Investment Population Management Risk stratification Care manager staffing ratios Information systems Evidence-based practice guidelines Practice variation management Process and workflow design Governance & Leadership Data Driven Analytics Contracting Costs Reimbursements Margin Populations & Risk Stratification Quality ACO quality metrics Differentiated services Process vs. Outcome Risk Management, Finance & Budgeting Revenue Management & Productivity Clinical Operations Page 37

38 5. ANALYTICS DRIVE DIRECT VALUE CAPTURE – PATIENT FLOWS
Illustration: Joints 30 Day Post Page 38

39 Post Acute Care Costs by Physician High IRF Spending (& variation)
5. ANALYTICS ENABLE EFFICIENT & TARGETED RE-DESIGN – PHYSICIAN VARIATION illustration Post Acute Care Costs by Physician High IRF Spending (& variation) Avg. Episode Cost # of Episodes Page 39

40 Implementation Road Map Development:
Financial/IT/Other Administrative and Operational Capabilities Organizational Re-design and Governance Physician Engagement and Communication Transitions in Care How Physicians Can Close the Performance Gap Key Risk Mitigation Issues to Address Page 40

41 6. RS/RB Contracting Gap Assessment Illustrative Implementation Roadmap – Roadmap Components
1. Executive Oversight 2. Finance & Managed Care Contracting 3. Market/ Product Strategy 4. Provider Network Contracting 5. Clinical Delivery Operations 6. Unified Analytics & Infrastructure Monthly Operating Reports Governance and organizational model alignment Risk Contract Budgets Preferred Pricing Methodology Funds Flow & Success Metrics Payer Specific FFS Negotiations & Execution Product Strategy Payer Negotiations for Risk Contracts Network Design & Distribution Channels Direct Employer Strategy Credentialing/Signing Providers Data Sharing & Reporting Joint Contracting with Payers for RS-RB Payments / Delegated Risk Medical Home, Disease Mgmt. & Clinical Programs/Protocols Population Health Management Medical Management at Clinic Level Avoidable Cost/Utilization Payer Risk Contract Analytics Provider Network Modeling & Funds Flow Predictive Modeling Page 41

42 6. ESTABLISH A POPULATION HEALTH ROADMAP to hit the milestones and achieve success
Phase 0 Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Pre-evaluation, Gap Assess., Strat. Planning Program Design and Initiation Process and Infrastructure Implementation Scaling and Dissemination Evaluation and Monitoring Synthesis, Learning, and Re-design Data Infrastructure and Analytics Population/Beneficiary Segmentation Org Structure, Staffing and Human Capital Financial Modeling and Results Workflow – Administrative, Clinical Reporting and Evaluation Navigating the roadmap along these key components requires: Sustained leadership across components of health system Analytics to identify opportunities, prioritize, and measure performance Definition of near-term  long-term value capture Near-term: generic vs. branded prescribing, PAC routing Mid-term: Post-acute care refinement, readmissions Long-term: comprehensive care management Systematic processes for workflow development Rapid Improvement Events (RIEs) for inter-disciplinary bottlenecks and cost drivers E.g., SCAMP (Standardized Clinical Assessment and Management Plan) development for key areas of need (post-op infections, prosthesis/implant infections, etc.) Care Management function development Page 42

43 Lessons Learned Page 43

44 7. Lessons Learned from value-based payment and clinical process change initiatives
When you change your core payment model and provide incentives to modify practice behavior to focus on optimal care with the lowest cost mix of services… you must also address how prepared your organization is prepared to manage clinical, operational, financial and competitive risks. For example: Are our analytics capabilities aligned to track/report/manage risk? Do we have the right configurations in our “Network” to navigate patients “in- network” and draw “shared savings” from other providers in the market beyond our own organization? Are our Finance/Accounting/Billing/IT operations prepared to manage value-based payments and associated performance metrics? How will we risk stratify patients and what clinical process changes will we need to make to manage high and moderate risk patients? How do we need to structure our organization to achieve results? Who will lead the change? How are we doing relative to our competitors and to systems in similar markets on contracting? On quality? On staffing and productivity? Page 44

45 "The best way to predict the future is to invent it." – Alan Kay
7. Preparing for the Future: integrated Clinical and Payment Transformation "The best way to predict the future is to invent it." – Alan Kay "The future belongs to those who see possibilities before they become obvious." – John Sculley “All organizations are perfectly designed to get the results they are now getting. If we want different results, we must change the way we do things.” – Tom Northrup What clinical and operational changes does your organization need to address to serve patients, retain the best staff and remain a financially sustainable organization in the post 2014 ACA business environment? Page 45

46 Today’s Presenters Amol Navathe, M.D., Ph.D.
Managing Director, Clinical Transformation, Navigant Consulting, Inc. 101 Federal Street | Suite 2700 | Boston, MA Office | Cell | As a Managing Director in Navigant’s Healthcare practice, Dr. Amol Navathe serves as a practicing physician, health economist and engineer with expertise in the utilization of advanced health data analytics and technology to improve healthcare delivery. He serves a diverse client base of payer, provider, and government clients on transformational payment and care delivery issues. His pioneering work on utilizing claims and clinical data to re-engineer the fundamental processes of care offers clients exceptional business, operational and patient management efficiency expertise. Dr. Navathe has applied his skills to delivery transformation and innovations, federal policy for health data infrastructure development, and the study of physician and hospital economic behavior. Through his extensive thought leadership, he is the founding co-editor-in-chief of “Health Care: The Journal of Delivery Science and Innovation.” He is also the founding director of the Foundation for Healthcare Innovation. Having served as Medical Officer and Senior Program Manager for the Office of the Secretary Department of Health and Human Services, Dr. Navathe led the $1.1 billion Comparative Effectiveness Research (CER) program. He is regarded as one of the chief architects of the nation’s CER and research data infrastructure strategy. Dr. Navathe led a $19M data infrastructure to create a multi-payer multi-claims database (MPCD), which promotes CER. He has led delivery systems to improve management of high-risk and high-cost patients through predictive analytics and brings his CER knowledge to driving evidence-based care. Christopher Kalkhof, FACHE Director, Payment Transformation, Navigant Consulting, Inc. 30 S. Wacker Drive | Suite 3100 | Chicago, IL Office | Cell | Chris is a senior healthcare executive with over twenty-eight years of operations, finance, managed care/contracting, M&A, strategic alliance and new business development experience across hospital, physician organization, post-acute care and health plan industry verticals. More recently, Mr. Kalkhof has worked on varied planning, development and implementation initiatives associated with post-reform care delivery and financing models designed for business model sustainability. Since joining Navigant, Chris has worked with some of the leading academic medical centers, health systems, health plans and medical groups around the country on the following strategic initiatives: Operational readiness for population health management and risk based contracting and strategy alignment Comprehensive managed care reimbursement benchmarking to support/revise pricing strategy and service line care continuums Commercial global case rate and episodic pricing model development and shared savings payment models for payer contract strategy development and negotiations, along with concurrent clinical transformation initiatives Best practices contract and rate amendment language for national health systems and payers Strategic alliance and joint venture development between health plans and provider organizations which cover product, value-based reimbursement, network composition, distribution channels and partnership zones M&A due diligence support of provider and health plan acquisitions Page 46


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