2016 STATE OF REFORM
Models of Provider Risk and Value Based Payment
Panelists: Jay Johnson, Network Services,
Confluence Health
Sue Dietz, National Rural ACO Consortium
Cindy Ehnes, Esq., COPE Health Solutions
Poll of audience:

Who currently takes full risk contracts from government or
commercial payers?

Who takes some form of sub-capitation for various services?

Who participates in commercial or government programs that
reward cost reductions against a base?

Who believes that they will be in full risk programs within in 3 to 5
years?
THE WHY, THE WHAT & THE HOW OF
PROVIDER RISK CONTRACT MODELS
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State of Reform: The ‘Why’ Of Provider Risk Contracting
Sue Dietz
Regional Vice-President
The Speed of Change is Increasing
Secretary Burwell’s historic announcement
“Our first goal is for 30% of all Medicare provider payments to be in
alternative payment models that are tied to how well providers care
for their patients, instead of how much care they provide – and to do it by
2016. Our goal would then be to get to 50% by 2018.
Our second goal is for virtually all Medicare fee-for-service
payments to be tied to quality and value; at least 85% in 2016 and
90% in 2018.”
Only 36 percent of the 1,201,363 professionals who were eligible to
participate in 2012 participated in PQRS, so how is that going to happen?
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How Will the Secretary Achieve Her Goal?
•
•
•
•
•
Readmissions
MU
PQRS
MIPS
CCJR
• MSSP
• BPCI
• PCMH
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MACRA: 2019 – 2025 (AKA “Doc Fix”)
Medicare and CHIP Reauthorization Act of 2015
Increased federal deficit by $141 billion over next 10yrs
Three key provisions:
(1) Sustainable Growth Rate
repeal and annual updates
(2) Merit based payment
system (MIPS)
(3) Alternative Payment
Models (APMs)
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Measurement year 2017-2018. Benchmark set in 2019.
Score 1-100
July 2017 – CMS provides
feedback on scores
July 2018 – CMS provides
Claims data
Set benchmark in 2019
Below – Penalty
Above - Bonus
Certified PCMH highest potential score for the CPIA category
Quality Score Tied to Payment
No MIPS if in a Qualified APM
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11
Public Reporting Impact of MIPS
The ‘What’ of Successful Provider Risk Models
• COPE Health Solutions offers an extensive line of health care consulting and
workforce development services for providers and payers seeking to
succeed in the new value-based payment environment while developing
the diverse talent needed to fill future health care roles
• Cindy is an attorney licensed in California and Colorado who served as Gov.
Schwarzenegger's Director of the CA Department of Managed Health Care
for seven years, where she oversaw health insurance services for 21 million
Californians.
• Regulated business and financial solvency for 105 health plans & 220 Riskbearing Medical Groups
• Drafted & enforced RBO oversight regulations
Current Market Drivers:
• CMS is aggressively promoting alternative payment models (e.g. ACOs now
serving 8 M & population health initiatives)
• MACRA advances CMS desire to have most Medicare payments tied to
value by 2018. A most powerful steering wheel!
• Medicaid Managed Care has penetrated most State programs
• Medicaid Plans & Private payers are increasingly seeking risk-based
contracts with narrow network partners
• Medicare Advantage participation is more attractive
The onus is on providers to take action or fall behind as Payers strategize to
move risk and site of care.
Despite Push to VBP, Most Providers Still Have “One Foot in Each Canoe”
• Most current health plan payments remain discounted Fee-for-Service with
back-end UM
• Still >75% Fee-for-service contracts (even in CA…home of capitated
managed care)
• Adequate risk contracts are increasing but dependent on Payers willingness
and perceived ‘value’ – i.e. – quality, efficiency, and total costs of care.
• High infrastructure costs to transition from inpatient, acute care to chronic
care management
• Integration of HIT & Mobile Health management
• Critical need to reduce cost while improving both quality of care & patient outcomes
Elements of a Successful Business Case for Risk Contracting
Financial alignment: Payment linked with patient attribution,
desired behaviors and outcomes that the health system can
influence
Health
System,
Medical
Center,
partners &
affiliate care
providers
Changes to core business models to support payment for
outcomes vs volume
Reduction in use of expensive acute care services where
payment model incentivizes
Tailored, high-performing but lower-cost affiliated care
networks that limits ‘patient or member leakage’ to control &
reward longer term initiatives
Case management and transitions-of-care for high risk patients
Planning to radically shift care to community, retail and home
based services over time
Unified HIT and data analytics to segment and manage
population risk at a patient/member level
Skilled, trained, diverse community-based workforce
Spectrum of Provider Risk Contracting
Fee-for-service:
Negotiated
payment based on
volume of service
Shared savings: Shared
savings if interim costs
are less than target
Performance-based,
fee-for-service:
Negotiated payment for
volume plus
additional incentives for
managing costs, quality,
and patient
experience
Full capitation: All
savings and losses are
assumed by provider
Risk sharing: Shared
savings and shared
losses
Models of Provider Risk Contracting
THE ‘HOW’ OF CLIMBING THE RISK
LADDER
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
A Health Plan or Payor “Partner”: Are you adversaries or friends, what is the trust
level? Can you get out of losing arrangements?

Contracts: Who are your partners? What are the incentives?

Fee For Service squirrel cage spinning while transitioning to Value Based Care – a
huge challenge.

Incentives under FFS compared to Risk or Value Based Care.

Benefit / Premium levels: Who sets the rates?
CLIMBING THE RISK LADDER:
KEY ITEMS TO CONSIDER AS YOU MOVE
FORWARD
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
The Physician as Payor / center of the spoke – Implications?
“Better Health” is only 20% driven by the health care system!

Patient Attribution: Managed Care Lite / Heavy. Many valuebased programs rely on algorithms to allocate the patient to the
Group / PCP. Old style HMO requires a PCP – patient relationship.

Rising Risk Patients: the 5% – 50% equation.

Medical Director Rules: Velvet glove / steel fist?

Prior Auth rules: Who is the insurance company now?
CLIMBING THE RISK LADDER:
KEY ITEMS TO CONSIDER AS YOU MOVE
FORWARD
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
Networks: Adequacy standards.

Intellectual Capital – Who remembers how to do all this? West
Coast phenomenon: UMGA, the experts have left the room.

State of Washington Health Reform in the 90’s: Failure then,
success now under the ACA? What did we learn? Patient
choice and satisfaction issues?
CLIMBING THE RISK LADDER
KEY ITEMS TO CONSIDER AS YOU MOVE
FORWARD
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
IT systems that drive population health?

Build or buy services?

Accounting and Actuarial Skills?

Cash Flow Issues – IBNR (is not an app!)

Claims Payment systems and issues: who controls YOUR
checkbook?

Stop Loss: What is it? How much do I need?
CLIMBING THE RISK LADDER:
KEY ITEMS TO CONSIDER AS YOU MOVE
FORWARD:
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