Market Innovations in an Era
of Unprecedented Reform
Course Three – April 8, 2011
Presented by Patrick Gauthier,
Director
Overview
Learning Objectives
1. Understanding what is meant by
“innovations” and “market”
2. Appreciating the scope and magnitude of
the opportunities before us
3. Becoming conversant with Accountable
Care Organizations (ACOs)
4. Recognizing the prerequisites of readiness
and capabilities in order to ride the wave of
change
5. Declaring and committing to next steps
What is Innovation?
Two Types:
– Sustaining Innovations allow you to make
incremental changes in order to do what you’ve been
doing more efficiently or to produce a better outcome
doing it. Adding correction ribbon to the typewriter is an
example. Also allows you to maintain market share.
– Disruptive Innovations are fostered by outsiders who
want to upend markets and the way things are done
thereby totally transforming the business model.
Napster (pre-iTunes), NetFlix, and Craigslist are good
examples.
What’s a Business Model?
Four Dimensions:
• Customer Value Proposition (what are you
doing for whom that they cannot do for
themselves for less and why you?)
• Financial Model (how will you ensure profits)
• Key Business Processes ( what is your
“special sauce” in terms of how you do
things?)
• Key Resources (what are your unique
assets, technology, and who are your key
people?)
Elements of Disruptive
Innovation
• Technology simplifies what has previously
been complex
• Lower-cost financial model
• Value Network is economically coherent
(mutually reinforcing)
Source: C. Christensen
Business Model Innovations
•
From
Solution Shop – fee-for-service expertise to diagnose and solve
unstructured problems (imaging centers, law firms, consultants).
Charge for cost of inputs (expert time). Focus on diagnosis.
•
Value-Add Process (VAP) – assembling solutions of higher
value (restaurants, retailers, auto-makers). Charge for value of
outputs (assembled products). Focus on treatment after
diagnosis. Clinics and the use of less expensive “experts” are
good examples of VAP.
•
Facilitated Networks – models wherein people exchange things
with one another (insurance, mutual funds, eBay and WebMD are
examples). WebMD has begun building communities of people
with certain chronic conditions like diabetes. These models
harness vast amounts of data and technology architecture.
To
Source: C. Christensen
Examples of Health Care
Innovations
• Reforming health care financing (pricing,
premiums, policies, coinsurance,
financial eligibility, FFS, capitation,
episode and case rates, etc.)
• Health information technology (EMR,
HIE, MU, PHR, etc.)
• Internet and facilitated networks
• Pharmaceuticals and medical devices
• Medical education (behavioral medicine)
Examples of Health Care
Innovations
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•
•
•
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Neuro-Tech
Bio-Tech
Mobile Devices
Retail (Minute-Clinics, Wal-Mart)
Tele-Medicine
Web-based Providers
What is “The Market”?
• For our purposes, “the market” consists of
(though is certainly not limited to) the following:
•
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•
•
Block Grants
Drug Courts
Corrections
Medicare
Medicaid
S-CHIP
Commercial Health Insurance
Self-Insured Employers and Unions
Managed Care Organizations
Private Pay
Market Shift
Commercial
Insurance
Public
Financing
DOI
Federal
Agencies
Employers
State
Agencies
Brokers
10% 25%
Counties
and Cities
75% 90%
Insurance
Managed
Care
Networks
Health
Insurance
Exchanges
Medicaid
Managed Care
Plans
32+ Million
Uninsured
Corrections &
Courts
Managed
Care
Prevention
Networks
Housing &
Jobs
Standards
& Science
Types of Plans
• Self-Insured Plans (ERISA)
• Traditional Indemnity (fully-insured)
– Open access, higher coinsurance
• Managed Care Plans
–
–
–
–
MBHO (carve-out)
HMO (network-centric, referral-based)
PPO (wider network, medical necessity standards)
POS (combines HMO and PPO with coinsurance differentials)
• Consumer-Directed Health Plans
– High deductible, catastrophic claims
– Health Savings Accounts (HSA), Health Reimbursement
Accounts (HRA) and Flexible Spending Accounts (FSA)
Innovations in Health Insurance
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•
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Personal Spending Accounts (debit cards)
Hospital and Provider Quality Comparisons online
Hospital and Provider Cost Comparisons online
Personal Health Records (PHR)
Coverage Advisors
Treatment Advisors
Treatment Cost Advisors
Nurse Line
Health Risk Assessments and Health Risk Management Programs with Incentives ($)
Disease Management Programs
Choice of Networks
Defined, Exclusive Provider Networks
Prevention Benefits and Services
Accountable Care Organizations
Patient-Centered Medical Homes
Value-Based Insurance Design (VBID)
Top 10 Issues/Opportunities
2011-2014
(Source: Managed Care Executives Group, March, 2011)
1.
2.
3.
4.
5.
6.
7.
8.
Administrative Mandates (HIPAA 5010, ICD-10, etc.)
Care Management, Data Analytics, and Informatics.
Health Insurance Exchanges and Individual Markets.
New Provider Payment & Delivery Systems (ACOs, PCMHs, etc.)
Bending the Cost Curve.
Medicare and Medicaid.
Health Information Exchanges and EMRs.
Consumer's Role in the Modernization of Healthcare (social
networking, incentives, CDHP, etc.)
9. Reform Uncertainties.
10.Payer / Provider Interoperability.
Health Care Reform
Patient Protection and
Affordable Care Act (ACA)
The Act Does Several Things:
•Expands Insurance Coverage
•Institutes Insurance Reforms
•Builds Infrastructure to Provide Improved Health
Outcomes
•Puts In Motion Structural Changes to how Healthcare
Delivery is Structured & Financed
Goals of the Act:
•Increase Access
•Provide Comprehensive Care  Better Health Outcomes
•Control Costs
Most Provisions of ACA Are
Implemented Over The Next Four Years
 Phased Implementation Is Needed To:
 Build Needed Infrastructure
 Plan and Implement Provisions Well
 Changes To Benefits and Insurance Reforms Began To
Be Implemented In 2010
 Some Provisions Must Be Implemented Over Several
Years
 Major Coverage Expansion Occurs in 2014
 Longer-term Benefits Result From Sum of Structural and
Cultural Changes
Expanded Health Insurance Coverage 2014

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Insurance Coverage Expands From 83% to 94%
Individual Mandate Applies
Subsidies For Those Under 400% FPL
Medicaid Eligibility Set At 133% FPL
Medicaid Expands from 34 to 50 Million
25 Million Get Insurance Through State Exchanges
Market Results of Coverage
Expansion
 Result of Change in Coverage for non-elderly
individuals (by 2019)
 158 M will have coverage through employers
 50 M will have coverage through Medicaid/CHIP
 25 M will have coverage through exchanges
 26 M will have coverage through non-group plans
 26 M will remain uninsured
Source: Congressional Budget Office
Impact on Coverage Expansion
Prior to implementation of coverage expansion:
 39% of individuals served by State Mental Health Authorities
have no insurance
 61% of the individuals served by State Substance Abuse
Agencies have no insurance
Many of these individuals will be covered in 2014 (or sooner)—
most likely by the expansion in Medicaid
Impact of Affordable Care Act
Focus on coordination between primary care and specialty care:
 Significant enhancements to primary care

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Workforce enhancements
Increased funding to SAMHSA, HRSA and IHS
Bi-directional
 MH/SUD in primary care through FQHCs
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Primary care in MH/SUD settings through CMHCs and other
agencies
Services and technical assistance
 Health Homes and Accountable Care Organizations
Changes To Medicaid
 Medicaid Expansion to Childless Adults under 133% FPL
Increased FMAP amounts for expansion population
 2014 – 2016 100% FMAP
 2017 95%
 2018 94%
 2019 and thereafter 90%
 Benchmark Plans: Mental Health/Substance Use Disorder at Parity -
1/1/2014
 Amendment to Rehabilitation Option under Medicaid - 1/1/2013
 Expand Home and Community-Based Services
 FY2011 enacted
 State can participate for a five year period and can renew for an additional five
years
 Continued Medicaid Coverage for Foster Children – Expires 1/1/2019
 Reduction in Medicaid DSH – 10/1/2011
- Reductions based on State uninsured levels
Timelines for Provisions of Interest
2010
• Primary & Behavioral Health Integration
Grants
2010
Fall 2010
Prevention and Public Health
Fund
• Early Child Visitation State grants
20102014*
20102013*
Oct 2011*
• School Based Health
Center Grants, Services &
• Capitol
Grants to Behavioral
Health Accredited
Programs
• Medicaid Emergency
Psych (IMD) Demo
2010
• National Prevention &
Wellness Strategy
Jan 2011
• National Strategy for
Quality Improvement
Sept 2010
• Consumer Protections in Health Insurance
Plans
Oct 2010
• Smoking Cessation, Pregnant Women in
Medicaid
Oct 2010
• Home & Community Services Expand under
Medicaid
2012
• Medicaid Integration
Implemented
Jan 2011
• Health Homes Option under Medicaid
2013
• Medicaid Rehab Option
Expanded
Provisions of Health Reform
In Place Now
Consumer Protections Protect 194 million Americans
with private insurance :
Insurers can no longer deny children under 19
coverage for a preexisting condition
Insurance companies can’t cancel your policy if
you get sick or have not committed fraud
no more lifetime caps on how much insurers will
pay
You have a right to appeal, including external
appeal
Implications For States & Providers
 Need For Infrastructure To Work With Insurance
 Grant Funds Re-conceptualized in order not to Duplicate
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Insured Benefits (look for braiding and blending)
Medicaid Changes and State Insurance Mandates
Integration of MH/SU with Primary Care
Health Homes and Accountable Care Organizations
Electronic Health Records
Payment Reform Pilot Programs
Evidence Based Practices
Licensure and Credentialing Standards
One of the Most Important Innovations
you can Implement this Year
(if you haven’t already)
The market
not only
supports this
change,
in many
cases it will
be required
What are the Opportunities for
Innovation in the Market Today?
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
Managing Multiple Chronic Conditions (MCC)
Educating the Public
Medication Assisted Treatment
Population Mgmt
Accountable Care Organizations (ACO)
Patient-Centered Medical Home Model (PCMH) – Primary Care
Integration
Value-Based Insurance Design (VBID) and Evidence-Based Practices
(EBPs)
Behavioral Medicine
Pay-for-Recovery Outcomes/Quality/Value
Prevention
“Blending and Braiding” Systems of Care
Joint Ventures
Increased Competition
Accountable Care Organizations
(ACO)
Proposed Federal Regulations Released April 1, 2011 by HHS
Background: The Triple Aim
1. Improving health (outcomes)
2. Improving patient experience
3. Reducing per capita costs
Value
Accountable Care Organization
What is an Accountable Care Organization (ACO)?
• A group that would include a hospital, primary care
physicians, specialists, and possibly others involved in
coordinating care for shared (Medicare, Medicaid, or
other insurance) patients.
• The ACO's goal would be to ensure that the care
provided meets or exceeds quality benchmarks within the
fee-for-service structure.
• ACO members would share in resulting cost savings.
• Reform provided for the recently established Center for
Medicare and Medicaid Innovation, which is tasked in
part with developing new payment models that support
ACOs and health homes. Reform also requires CMS to
create a Medicare shared savings plan for ACOs by
January 1, 2012.
• Reform specifies several key elements and principles of
ACOs that will have to be included.
– An ACO’s service population must consist of at least 5,000 feefor-service Medicare beneficiaries.
– MH/SU providers and others participating in ACOs must deliver
patient-centered, evidence-based care and promote patient
engagement.
– They must also develop the ability to report on quality and cost
measures, which will be used as the basis for determining the
distribution of shared savings.
ACO: Core Capabilities
• Per NCQA
– Program Structure Operations: Clearly defined organizational and
leadership structure. The ACO arranges for pertinent healthcare services
and determines payment arrangements and contracting.
– Access and Availability: The organization ensures that it has sufficient
numbers and types of practitioners who provide primary and specialty
care.
– Primary Care: Primary care practices within the ACO provide patientcentered care.
– Care Management:
• The organization collects and integrates data from various sources, including,
but not limited to electronic sources for clinical and administrative purposes.
• The organization conducts an initial assessment of new patients’ health.
• The organization uses appropriate data to identify population health needs and
implements programs as necessary.
• The organization provides resources for, or supports, the use of patient care
registries, electronic prescribing and patient self-management.
ACO: Core Capabilities
• Per NCQA
– Care Coordination and Transitions: The organization can
facilitate timely information exchange between primary care,
specialty care and hospitals for care coordination and transitions.
– Patient Rights and Responsibilities: The organization has a
policy that states its commitment to treating patients in a manner
that respects their rights, its expectations of patients’
responsibilities, and privacy. A method is provided to handle
complaints and to maintain privacy of sensitive information.
– Performance Reporting: The organization measures and
reports clinical quality of care, patient experience, and cost. At
least annually, the organization measures and analyzes the areas
of performance and takes action to improve effectiveness in key
areas.
Goals &
Objectives
Improve Inpatient
Care Efficiency
Use Lower Cost
Treatments
Hospitals &
Specialists
Primary Care
Reduce
Adverse Events
Reduce Preventable
Readmissions
Reduce Preventable
ER Visits &
Admissions
Reduce
Unnecessary
Testing & Referrals
Improve Practice
Efficiencies
Improve Prevention
& Early
Diagnosis
Improve
Management of
Complex Cases
Improve Health
Outcomes
Use Lowest-Cost
Settings and
Providers
Lower Total
Healthcare
Costs
Four Levels of ACO
• Level 1 ACO: Primary care practices functioning together through an
IPA or other organizational mechanism and focusing on prevention
and improvement of care for ambulatory care-sensitive conditions.
• Level 2 ACO: Primary care practices and frequently-used
specialties, working together through an IPA or multi-specialty group
practice, and focusing on prevention and improvement of care for
ambulatory care-sensitive conditions and common specialty
procedures.
• Level 3 ACO: Primary care practices, specialists, and hospitals,
working together through an integrated delivery system or other
organizational mechanism, and focusing on all or most opportunities
for cost reduction and quality improvement.
• Level 4 ACO: Healthcare providers, public health agencies, and
social service organizations working jointly to improve outcomes for
a very broad patient population, including homeless individuals and
the uninsured.
ACO: Reimbursement Innovations
• Revised Capitation (Global Payment
Systems or Comprehensive Care
Payment Systems)
• Episode of Care Payment System
• Administrative Fees
• Net Savings
• Hybrid Models
Population Health Management
• ACOs must develop a process for identifying patients
who have complex needs (multiple chronic conditions) or
are at high risk of developing such needs and provide
them with wellness and prevention programs, disease
management, and complex case management, as
indicated
• ACOs must make available or support providers’ use of
electronic prescribing, electronic health records systems,
registries, and self-management tools
• MH/SUD providers must be prepared to work in this
environment and develop the necessary tools and
resources
Incentives to Participate in an ACO
• Identified population/market share
• Administrative fees for administrative
duties
• Reliable referral sources within network
• Common values and objectives
(coordination, cooperation, collaboration)
• Shared information (whole health)
• Shared savings (financial incentives)
Establishing Readiness and
Capabilities for ACOs
• Financial Infrastructure – track performance and
payments
• Reporting Infrastructure – UM, DM, CM as well as
utilization and practice trends
• Performance Management – disease-specific
dashboards, baselines, benchmarks and adherence to
best practices
• Data Aggregation – data warehousing, interoperability,
shared disease registries
• Clinical Data Exchange – shared procedures,
discharge plans, history
• Security – secure access to administrative and clinical
data based on authorized “roles” and authentication
protocols
Establishing Readiness and
Capabilities for Market Innovations
Information Technology Components
• EMR, EHR
• Pervasive Connectivity/Networking
• Data Analytics and Predictive Modeling
• Disease and Case Management Software
Applications (clinical decision support)
Next Steps
• Enable your organization for change
– Develop a strategic plan, business plan, and
*especially* a marketing plan that enables growth in
terms of market share and revenue
– Commit capital, develop a budget, and find
investors or partners if you need them
– Address staffing, outsourcing, and the need for
periodic expertise
– Plan for and implement your technology
infrastructure
– Commit to Performance Mgmt
Next Steps
• Manage your organization through change
– Set the course
– Establish and measure your expectations
– Keep distractions and competing priorities to a
minimum
– Hold people (including yourselves) accountable
– Align efforts so time and energy are not wasted
– Provide reinforcements, encouragement and rewards
(recognition)
Next Steps
• Manage your organization through change
– Become Learning Organizations (there is a lot to
learn!)
– Recruit, retain and train the right people in
administrative as well as clinical areas
– Innovate and grow from your Core Competencies
– Encourage some risk-taking, experimentation and
tolerate mistakes
– Conduct market research – what you don’t know can
hurt you
– Invest in your brand image and “dress the part”
– Use thoughtful scenario-based business modeling
and business case approaches to innovations
Thank You!
Questions and Contact
Patrick Gauthier, Director
AHP Healthcare Solutions
888-898-3280 ext. 802
pgauthier@ahpnet.com