1. Region 1 IDN Winter Advisory Council 2.28.18
The Journey to Alternative Payment Models: How to Speak the “Local” Language
Region 1 IDN
Winter Advisory Council
Lynn Guillette
VP – Payment Innovation, Dartmouth-Hitchcock
Finance Director – Region 1 IDN

2. Objectives for Today
Translate “Finance Lingo” to “Normal Person Lingo”
Review Oversimplified Alternative Payment Model Financial Reconciliation
Re-visit Medicaid APM Roadmap and Timeline

3. New Hampshire’s DSRIP Promise to CMS
This initiative will provide a short term federal investment, such that by the end of the demonstration the behavioral health infrastructure will be supported through the state’s managed care delivery system using alternative payment methodologies, without the need for demonstration authority.
The Medicaid service delivery plan should address “what approaches service delivery providers will use to reimburse providers to encourage practices consistent with IDN objectives and metrics, including how the state will plan and implement a goal of 50% of Medicaid provider payments to providers using Alternative Payment Methodologies by 2020”.

4. Learning and Action Network (LAN): Alternative Payment Model Framework
Category 1
Fee for Service –
No Link to Quality & Value
Category 2
Fee for Service - Link to Quality & Value A
Foundational Payments for Infrastructure & Operations B
Pay for Reporting C
Rewards for Performance D
Rewards and Penalties for Performance
Category 3
APMs Built on Fee For Service Architecture
APMs with Upside Gainsharing
APMs with Upside Gainsharing / Downside Risk
Category 4
Population-Based Payment
Condition-Specific Population-Based Payment
Comprehensive Population-Based Payment
Payments are based on volume of service.
At least a portion of payments vary based on quality or efficiency of service.
Some payment is linked to effective management of a segment of the population or episode of care. Payments are still triggered by delivery of services but with opportunities for shared savings or 2-sided risk.
Payment is not directly triggered by service delivery so payment is not linked to volume.

5. Revenue Terminology Finance Lingo Normal Person Lingo Charges
Gross Patient Service Revenue
Contractual Allowances
Net Patient Service Revenue
Payor Mix
Sticker Price
Revenue for services provided to our patients based on our sticker price
Sticker Price discounts
Revenue for services provided to our patients based on discounted sticker price
Revenue categorized by where the payments for service to patients come from

6. “Technical” vs. “Professional”
Technical revenues relate to hospital stays and ancillary services like labs, x- rays, and pharmaceuticals
Professional revenues relate to services provided by a physician or other practitioner (e.g. a licensed clinical social worker)

7. What do we mean by “Cost”?
Definition #1
Definition #2
The amount paid by someone for services provided by someone else
Examples of these “costs” are
Patient Co-Pays and Deductibles
Private insurance company payments to providers
Medicare and Medicaid payments to providers
Insurance premiums
The amount paid by someone to provide services to someone else
Examples of these “costs” are
Wages
Office rent
Utilities
Taxes
Supplies
Loan repayments
When “cost” is discussed in the public arena, almost everyone means Definition #1

8. Who Pays the Bills? Finance Lingo Normal Person Lingo
Governmental Payors
Commercial Payors
Self-Pay
Charity
Health Insurance Exchange Marketplace
Medicare, Medicaid…
Anthem, Aetna, Cigna…
Patients without insurance
Patients without the ability to pay for their care
Where you buy ObamaCare

9. These Are Delivery Models…
Not Payment Models
Patient-Centered Medical Home
Center of Excellence
Accountable Care Organization (ACOs)

10. These Are Payment Models… The Risk Continuum
Fee-For- Service
Pay for Reporting
Pay-For-Performance
Bundled Payments or Episodes of Care Payments
Upside Gainsharing
Upside Gainsharing / Downside Risk
Condition-Specific Population-Based Payments
Comprehensive Population-Based Payments

11. LAN Category 1 and 2 Payment Models
Finance Lingo
Normal Person Lingo
Fee-For-Service (FFS)
Pay-For-Reporting
Pay-For-Performance
Bundled Payment or Episode-of-Care Payment
The most traditional of healthcare payment models. Providers are paid for each service performed. There is no incentive for providers to implement preventative care strategies, prevent hospitalization, or take any other cost-saving measures.
Getting paid for each office visit or lab test provided to a patient (FFS model) + bonus payment for reporting certain metrics for quality and efficiency
Getting paid for each office visit or lab test provided to a patient (FFS model) + bonus payment for achieving certain metrics for quality and efficiency
Pays healthcare providers for specific episodes of care such as an inpatient hospital stay for a hip replacement surgery. There is only a set amount of money to pay for the entire episode of care, regardless of how much it actually costs the healthcare providers to deliver that care.

12. LAN Category 3 Payment Models
Finance Lingo
Normal Person Lingo
Upside Gainsharing (“Shared Savings”)
Upside Gainsharing / Downside Risk
(“2-Sided Risk”; “Shared Risk”)
Opportunity to get a bonus payment from the insurance company for hitting cost and quality targets as part of a contract to manage health of a specific patient population. If actual costs are in excess of cost target, no liability to repay the difference between excess and target.
Best case scenario: Same as Upside Risk
Worst case scenario: Having to pay a financial penalty to the insurance company for missing cost and quality targets as part of a contract to manage health of a specific patient population. Missing cost target means the actual costs are in excess of the cost target.

13. LAN Category 4 Payment Models
Finance Lingo
Normal Person Lingo
Condition-Specific Population-Based Payment
(“Partial Capitation”)
Comprehensive Population-Based Payment
(“Global Budget”; “Full Capitation”)
Providers get a per member, per month (PMPM) payment for patients assigned to them by an insurance company. Patients are generally assigned to a particular provider because the patient has actively selected that provider as their primary care provider (PCP). Payment rates are tied to expected usage regardless of whether the patient visits more or less. Under partial capitation models, only certain types or categories of services are paid on a per member, per month basis such as primary care, or a clinical condition like diabetes.
A fixed total dollar amount paid annually for all care delivered. This fixed total is based on expected use and providers do not receive additional dollars if patient care costs exceed the annual budgeted amount.
Note: Payment models in Category 3 and 4 that do not have link to quality will not count towards CMS’ definition of advanced alternative payment models

14. Health Care Reform Finance Lingo Normal Person Lingo
Value-based arrangements
Delivery of care models tied to an alternative payment model intended to deliver better health, better care experience, and lower costs
Framework developed by the Institute of Healthcare Improvement in with three elements, then known as the “Triple Aim”:
Better Health
Better care experience
Lower Costs
The framework has recently been updated to include a 4th element to acknowledge the need for an engaged and productive health care delivery workforce that finds joy and meaning in their work:
Better experience providing care

15. Risk Contracts Finance Lingo Normal Person Lingo
Attributed Lives or Covered Members or Assigned Patients or Aligned Beneficiaries or At-Risk Lives
Revenue At-Risk
Patients who have been assigned by their health plan to a provider because these patients have historically gotten primary care services from this doctor or nurse practitioner
Payments to providers from insurance companies that get paid under the terms of a risk contract

16. Oversimplified Shared Risk Reconciliation Illustration
Shared Savings
Shared Loss
Cost Target = $100
Actual Costs = $90
Savings = $10
Share of Savings = 50%
Bonus Payment Received = $5
Actual Costs = $110
Cost Target = $100
Loss = $10
Share of Loss = 50%
Financial Penalty Owed = $5

18. The Region 1 IDN Finance Committee has been reconfigured to focus on APM development

19. Thank you for your interest!