Health Care Reform Perspectives and Implications Grand Rounds New England Baptist Hospital April 13, 2011 Bob Gibbons Alex Calcagno 1

Health Care Reform Perspectives and Implications Politics and Government - Potent Mix Elections/Appointments Elections/Appointments Policy Making Policy Making Engagement Engagement 2

Health Care Reform Perspectives and Implications Political Climate State Environmental Assessment State Environmental Assessment - Elections - Economy - State Revenues - Health Care Costs 3

Health Care Reform Perspectives and Implications Political Climate Policy Considerations Policy Considerations - Payment Reform - Cost Control - State Budget 4

Health Care Reform Perspectives and Implications Payment Reform Special Commission Special Commission - Established on heels of coverage reform - Examination of payment methodologies - Global Payment w/ACOs recommended - New Independent Board Recommended 5

Health Care Reform Perspectives and Implications Source: MHA Payment Reform (cont.) Fixed risk adj. amount Fixed risk adj. amount “ The ACO” 6 Current Fee-for-Service Payment System Global Payment System Specialist Primary Care Post Acute Provider Hospital $ Primary Care Hospital Specialist Post Acute $$$ $ Consumer/Patient Premium Dollar Health Insurance Co. Consumer/Patient Premium Dollar Health Insurance Co. Consumer/Patient Premium Dollar Health Insurance Co. Consumer/Patient Premium Dollar Health Insurance Co.

Health Care Reform Perspectives and Implications Payment Reform - Report MHA Position – “Support w/Caveats” MHA Position – “Support w/Caveats” Risk - Benefit design; Patient choice; Employer role - ACO Formation - Societal Needs - Oversight 7

Health Care Reform Perspectives and Implications Cost Control Ch. 288 Ch Small group reforms ( AHPs, Coops, Rate/Enroll 1 yr., rate shock ) - Limited/Tiered Networks ( small group ) - Wellness Pilot ( small group ) - Inpatient/outpatient costs,health status adjusted TME - Relative Prices, contract price tying prohibition - DOI Approval of Premiums ( CPI, MLR, Reserves ) - Administrative Simplification - Bundled Payments Pilot - Special Commission on Provider Price Reform - 8

Health Care Reform Perspectives and Implications Patrick Administration Bill Payment & Delivery Reform Payment & Delivery Reform Immediate Cost Control: Price Regulation Immediate Cost Control: Price Regulation Game Changer! Game Changer! 9

Health Care Reform Perspectives and Implications Policy Objectives ACOs by 2015 ACOs by 2015 Alternative Payment Methodologies Alternative Payment Methodologies “Med Mal Reform” “Med Mal Reform” Regulatory Oversight Enhanced Powers: AG, DOI, DHCFP Enhanced Powers: AG, DOI, DHCFP Payment Reform Coordinating Council Payment Reform Coordinating Council DPH Division of Health Planning DPH Division of Health Planning 10

Health Care Reform Perspectives and Implications Cost Control & Payment Reform Provider Impact Provider Impact - Payment Squeeze - Realignment (Redistribution?) - Accountability: Costs/Outcomes - PCP Focus - HIT investments 11

Health Care Reform Perspectives and Implications Cost Control & Payment Reform Next Steps Next Steps - Advocacy - Engagement 12

Federal Health Care Reform & Physician Payment Reform: A Physician Perspective Grand Rounds New England Baptist Hospital April 13, 2011 Alex. Calcagno Director, Federal Relations Massachusetts Medical Society

112 th Congress The Political Backdrop 14

Key Delivery System Reforms in the ACA Medicare Shared Savings (ACOs) - January 2012 Center for Medicare and Medicaid Innovation - January 2011 National Pilot on Payment Bundling - January 2013 Medical Homes CBO estimates $13 billion savings/10 years 15

Medicare Shared Savings Demos ACOs January 1, 2012 Voluntary organization of health care providers who agree to be accountable for the overall care, quality and cost of care for their Medicare patients. CMS and ACO share savings if the ACO meets quality standards and the cost of care is less than traditional FFS. General Statutory Requirements  Formal legal structure to receive & distribute savings  Sufficient # of primary care professionals  5,000 minimum beneficiaries  Contract for 3 years (minimum)  Leadership and management includes clinical and administrative  Defined process to 1)promote evidence based medicine 2) report data to evaluate quality and cost and 3) coordinate care  Demonstrate patient centered care

Proposed Rules & Regulatory Notices 4 Regulatory Notices released on March 31, 2011: Comments due June 6, 2011 CMS:Eligibility LeadershipGovernance Payment Models & Risk QualityBeneficiaries CMS: OIGWaives re Fraud issues (CMP, Anti-kickback, Stark) FTC- DOJAntitrust Issues IRSTax implication for tax exempt organizations 17

Medicare Shared Savings Model Eligibility ACO professionals ( MDs, physician assistants, nurse practitioners and clinical nurse specialists) in group practice arrangements; Networks of individual ACO professionals Partnerships or joint venture arrangements between hospitals, acute care hospitals and ACO professionals Acute care hospitals paid under IPPS, Critical Access hospitals In combination with the above, can include Federally Qualified Health Centers, Rural Health Centers, post acute facilities and Medicare enrolled providers and suppliers

Legal and Governance Structure  ACO must have a “formal legal structure to receive and distribute payments for shared savings” and the authority to conduct business under state law  “Provides all ACO participants with appropriate proportional control over decision-making”  Board must be 75% ACO Participants and include beneficiaries Leadership and Management  Detailed requirements to demonstrate clinical and administrative alignment re quality, cost efficiencies and patient centered care 19

Payment Models & Risk 2 models: All ACO contracts are for 3 years  One sided risk model (Track 1): Shared savings for first two years with shared savings of risk and losses in the third year ( limited risk) “on ramp”  Two sided risk model ( Track 2):Shared savings and losses for all three years All ACO participants are paid under FFS Formula based on last 3 years of Part A and Part B to develop benchmarks and minimum savings, shared savings and losses Primary care belong to one ACO; hospitals and specialists, several 20

Quality Measurements Five Domains Patient/Caregiver Experience of Care Care Coordination Patient Safety Preventative Health At risk populations/Frail Elderly 65 quality measurements for 2012 – only report on, following years report and achieve 50% of primary care must be “meaningful EHR users” Must meet quality measurements. 21

Beneficiaries Each ACO must have at least 5,000 beneficiaries Beneficiaries will be assigned to the ACO based on primary care usage ( internal medicine, general, family, geriatric) CMS requesting comment Beneficiaries will be assigned to an ACO based on the primary care physician from whom they receive the plurality of their primary care Beneficiaries will be assigned retrospectively to an ACO. Beneficiary choice – opt out 22

Threshold Issues Infrastructure Support Risk Management Risk Adjustments Patient Choice – “leakage” Profitability - % of “shared savings” Retrospective assignment Financing Time frame – 3 years too limited? Quality measurements – metric does not exist 23

MMS: Key ACO Issues Series of focus groups, working meetings across MA One size doesn’t fit all Adoption must be voluntary Foster and promote innovation –Multiple organizational models –Multiple payment methodologies Oversight body: 2/3rds should be providers ACOs must be physician-led 24

ACOs : Key MMS Issues, cont. Quality measures must be scientifically valid Independent development of risk adjusters Professional liability reform/Defensive medicine Expand peer review protections Ease self-referral and anti-trust rules Liability of the ACO as an entity AMA “How To” : 25

26 IPAB – Independent Payment Advisory Board 15 member Commission Similar to base close commission – authorized to find $13.3 billion starting in 2014 if overall Medicare spending exceeds targets. Initial focus on insurers, pharmacy and physicians. In 2019 other providers are included Value Index Modifier Similar to MA GIC: Authorizes CMS to develop profiles on individual physicians, based on Medicare and private payer data that could be posted on a “Physician Compare” web site. CMS “to the extent practicable,” should make sure the information is statistically valid and reliable” Geographic variation: practice costs vs. utilization Cost Containment Provisions Cost Containment Provisions

Physician Payment Reform Medicare Physician Payment Reform (SGR) 29% cut January 1, 2012 MedPac Recommendations – October 2011 In Ma, cost of medical practice up over 30%, Medicare up 1% AMA Task Force: –7 national medical specialty groups and 7 state medical societies 3 phases : short term stability, interim transitional payment, permanent solution 3 phases : short term stability, interim transitional payment, permanent solution 27

Defensive Medicine – Medical Malpractice Reform 112 th Congress – renewed interest post ACA MMS supports University of Michigan Model initiated in 2001 Culture of patient safety, apology, investigatory period, access to court if necessary Open cases fell from 300 to fewer than 60 Premiums have dropped dramatically; for example, annual OB/GYN premiums are $30,000 compared to approximately $100,000 outside of the system. The Culture has changed, less pressure to practice defensive medicine Solution must be bipartisan to succeed 28

Doctors Day at the State House May 9, 2011 Let Your Voice Be Heard …

30 For More Information www. massmed.org Alex. Calcagno