1. The New Health Care Landscape Medicare Waiver and ACOs Maryland Chapter, ACP John M. Colmers, VP Health Care Transformation and Strategic Planning Chair, Health Services Cost Review Commission January 30, 2015

2. The Context: Health Care System Challenges High costs Aging and sicker population Primary care shortage Health care disparities Fragmentation and variation

3. 3 Overall Score 64% “D”“D”

4. Unacceptable Disparities Mortality Amenable to Health Care by Race, State Variation, 2009-10

5. Funding from Payers Medicare/Medicaid reductions Private Payers –Move to defined contribution –Private Exchanges –Narrow Networks –Reference Pricing Growth in Consumerism 5

6. Fragmented Integrated Autonomous Competitive Expert-centered Proprietary Team-based Service-based Transparent Patient-centered In Response, a New Culture for Patient Care is Emerging IndividualPopulation

7. New Paradigm Improve the health of the population; Enhance the patient experience of care; Reduce the per capita cost of care.

8. Implications All this means: –Payment moves away from fee-for service The more you do the more you get paid 8

9. Implications All this means: –Payment moves away from fee-for service The more you do the more you get paid The better you do the better you get paid –Pressure to assume more risk –Need for integration and collaboration CHANGE IS HERE – CHANGE IS EVERYWHERE 9

10. In Maryland…a Different Response 10

11. Examples of Change New Medicare Waiver Growth in ACOs Sustainable Growth Rate (SGR) Fix Gain Sharing Patient Centered Medical Homes 11 Today’s topics

12. Maryland Hospitals are Paid Differently Maryland has set hospital rates since the mid- 1970s –Health Services Cost Review Commission Independent 7 member Commission Public utility model Serves as watchdog and regulator Maryland hospitals are waived from Federal Medicare payment methods (the Medicare waiver) –Increasingly difficult to pass “old” test All payers participate Unique in the country 12

13.  Cost containment  Equitable funding of uncompensated care  Stable and predictable payment system for hospitals  $1.8 billion additional federal funds  All payers fund GME  Transparency  Leader in linking quality and payment  Local access to regulators Value of the All Payer System 13

14. New Model at a Glance Approved by CMS 1/10/14 5 Year Demonstration –Calendar years 2014-2018 All-Payer total hospital per capita revenue growth ceiling –3.58% annual growth rate Medicare payment savings* –Minimum of $330 million in savings Triggers for evaluation * Includes services provided outside of Maryland 14

15. Other Components to Model Patient and population centered measures –Reduce Medicare readmission rate to national average –Reduce preventable conditions by 30% over 5 years –Monitoring and reporting other measures Patient experience of care Population health Other health expenditures Extensive evaluation by CMS 15

16. Demonstration Model Has Two Phases Phase 1 (5 years) –2014-2018 –Hospital inpatient and outpatient Phase 2 –Proposal submitted end of 2016 –Focus on controlling growth in total health spending –If approved, would begin in 2019 16

17. Timeline of All-Payer Model Development Phase 1 (5 Year Model)  Hospital global revenue model  Population- based  Preparation for Phase 2 focus on total care model and costs Short Term (2014) Mid-Term (2015-2017) Long Term (2016- Beyond) 17

18. Performance to Date 18

19. Operating Profits Compared to same period in FY14

20. Implications for Patients and their Families Quality safety and satisfaction scores can account for a significant amount of revenue –Requires hospitals to become more patient and family centered Expect greater care coordination –Improved transitions of care between settings e.g., clear instructions for patients on discharge Expect more outreach from providers –Particularly true for those with chronic illnesses Movement of care to the most appropriate setting –Right care, right time, right place, right price 20

21. Impact on Physicians New model compels hospitals to work even more closely with medical staffs All-payer gain sharing opportunities Relationship with other payment changes –ACO development 21

22. TPR Example 22

23. ACO DEVELOPMENT 23

24. ACO Development Modest but steady growth in Maryland Shared savings for “attributed” Medicare patients. –Must meet quality standards –Must meet minimum savings threshold –Attribution done retroactively MSSP – Two Tracks –Track 1: Upside gain/No downside risk –Track 2: Upside gain/Downside risk Pioneer ACO Model – none in Maryland 24

25. ACOs in Maryland ACO Legal or Name/Doing Business AsStart Date Accountable Care Coalition of Maryland Primary Care, LLC.July-12 Greater Baltimore Health AllianceJuly-12 Maryland Accountable Care Organization of Eastern Shore LLCJuly-12 Maryland Accountable Care Organization of Western MD LLCJuly-12 AAMC Collaborative Care NetworkJanuary-13 Lower Shore ACO, LLCJanuary-13 Maryland Collaborative Care, LLC.January-13 Northern Maryland Collaborative Care LLCJanuary-13 Southern Maryland Collaborative Care LLCJanuary-13 Accountable Care Coalition of Maryland, LLC.January-14 Johns Hopkins Medicine Alliance for Patients, LLCJanuary-14 Mid-Atlantic Primary Care ACOJanuary-14 Privia Quality Network, LLCJanuary-14 THP-Meritus ACO, LLCJanuary-14 UR Care LLCJanuary-14 25

26. ACO Results Nationally For ACOs begun in 2012 –26% (64 of 243) received bonus –ACOs reduced Medicare spending by $827 million and the 64 ACOs received $445 million –30 of 33 quality metrics improved For Pioneer ACOs –10 of original 32 ACOs have dropped out 26

27. New ACO Rules Proposed (Comment period ends 2/6/15) ACOs can stay in Track 1 for additional 3-year period Offer new Track 3 –prospective attribution –75% upside savings/loss New attribution approach –Includes more impact of advanced practitioners Increase access to Medicare patient data Change minimum savings/loss rates for Track 2 27

29. QUESTIONS? 29