Is Your Organization Ready
for Value-Based Payment:
Commercial Shared Savings,
Bundled Payments and
Clinical Transformation?
2014 HFMA Southwest Ohio
May Institute
May 15, 2014
Amol Navathe, M.D., PhD
Managing Director, Strategy / Clinical
Transformation, Navigant Consulting
(Boston, MA)
Christopher Kalkhof, MHA, FACHE
Director, Strategy / Payment
Transformation, Navigant Consulting
(Chicago, IL)
TODAY’S PRESENTATION
1. Current and Emerging Risk Sharing/Risk-Based (“RS-RB”)
Models: Commercial Shared Savings & Episodic Pricing Models
2. Best Practice Financial/Benchmark Modeling and Impact on FFS
3. Strategic Importance of Parallel Clinical Integration/Clinical
Process Change
4. Organization Readiness at the Operational and Clinical Levels
5. Critical Success Factors: Population Health and Care Delivery
Models
6. Implementation Roadmap Development:
7. Lessons Learned
Page 2
1. CURRENT AND EMERGING
RISK SHARING / RISK-BASED
(“RS-RB”) MODELS –
COMMERCIAL SHARED
SAVINGS AND EPISODIC
PRICING MODELS
Page 3
1. POST-REFORM APPROACHES TO SUSTAINABLE
MARGINS: SYSTEMS OF CARE / TRIPLE AIM
How will providers and payers
operationalize all of this?
Future Go-To-Market
Systems of
Care
Payers
Administrators
Emerging
Payments
Physicians /
Hospitals / Other
KEY INITIATIVES
Care Coordination
Population Health
Management
Outcomes Data and
Payments
Consumer
Engagement
(Finance, PHM & IT etc.)
Consumers
Aging and Overweight Populations, More
Expensive Diseases to Treat, New Payment
Models, Physician Shortages & Reduced ESI
The payer - provider contracting process has often been characterized as being
adversarial vs. collaborative... absent finding a common means to demonstrate
measurable value… both parties gamble with their respective futures.
Page 4
1. WHAT WILL MY PAYER CONTRACT PORTFOLIO AND
PAYMENT MODELS LOOK LIKE IN THE FUTURE?
Integrated Care
Systems/HEC
Risk to Provider
Capitation/
Global Comp
Member
Attribution
Shared
Risk
Population
Management
Condition/
Episode
Bundling
PCP
Incentives
P-4-P
Fee-forService
Perf.
Based
Contracts
(PBC)
PerformanceBased Programs
Hospital/Office
Source: Navigant Best Practices
Capitation
+ PBC
G. Case &
Episode
Payments
Shared
Savings
COE,
Global
Case
Rates,
Episodic
Pricing +
PBC
ACOs
TME Shared Savings
Narrow Network Products
Networks of Care
Carve-Out Specialty
Services
Episodic Prices
Graduated/Transitional Risk
Strategic Alliances/JVs
Collaboration
Provider Integration
Integrated System
Page 5
Page 5
1. REVENUE & EXPENSE MANAGEMENT: EXAMPLE VALUE OF CONTRACT MODELING CAPABILITIES
Increasing Clinical Integration and Financial Risk Levels / Complexity
Dimension
Shared Savings
Accountable Care
Organization
One payment per
Defined Episode –
Movement Away from
Utilization Based
Reimbursement
Population Based Care
that Rewards
Integration, Quality,
Outcomes and
Efficiency
Designed to Promote Cost Reduction
Cost & Utilization
Reduction
Value
Care Coordination
Encouraged
Required
Required
Quality Standards
Optional
Optional
Required
Physician Alignment
Must Align to Achieve
Savings
Must Align to Achieve
Savings
Required
Overview
Source: Navigant Best Practices
Utilization Reductions
Shared Between Payer
and Provider –
Incenting Quality over
Quantity
Bundled Payment
Page 6
1. MAJOR PAYER’S CRITERIA FOR COMMERCIAL
BUNDLING PARTNERSHIP
The measures are nationally accepted as clinically appropriate so there is wide support
for improving performance
Real dollars are at stake for improvement
For each measure, there is a range of performance targets representing a continuum
from good care to outstanding care, so the model rewards performance & improvement
Data is made available monthly, enabling the organizations to track progress and take
action to manage their patient population
The groups/partners have strong support from their leadership to implement new
systems and act on the data
Dynamic/actionable data and reports made available daily, monthly, quarterly, helping
organizations to identify efficiency opportunities at a patient, practice and org. level
Page 7
1. COMMERCIAL PAYER CONSIDERATIONS RE: EPISODIC PRICING
Current FFS Model
E.G., Commercial Payer – FFS Ortho Services
Knee, Hip, Spine & Other Ortho
$
$
$
$
Acute
Care
IP
Rehab
Hosp
OP
Ctrs
IRF /
SNF /
HH
$
Other EP/SS Model Candidate Services:
» Oncology, Cardiac, Neuro-Sciences, High
Risk Maternity/Neonate; Senior Care
Chronic Care & Other Specialist/High Dollar
IP Oriented Services
» Diffuse collection of interests between
physicians and hospitals… non-aligned
» Physician primary focus at practice level
and/or ambulatory invested interests
» Declining economics incents physicians to
compete directly with hospitals for higher
dollar procedural and diagnostic services
» Volume rewarded regardless of quality and
outcomes
» Pays each provider separately with no linkage
to patient care coordination
» Payer cost containment through price,
payment rules and utilization controls
» IT tools, Clinical and Financial Systems
designed for traditional FFS business model
» Incents providers to focus on services which
reimburse the most
Page 8
1. COMMERCIAL PAYER EPISODIC PRICING & SHARED SAVINGS:
LIMITED DOWNSIDE RISK – RETROSPECTIVE MODEL
Page 9
1. COMMERCIAL PAYER EPISODIC PRICING & SHARED SAVINGS:
SIGNIFICANT DOWNSIDE RISK - PROSPECTIVE MODEL
Page 10
1. COMMERCIAL PAYER EPISODIC PRICING & SHARED
SAVINGS: BUILDING THE RATES
Page 11
1. COMMERCIAL PAYER EPISODIC PRICING: DEFICIT
SHARED SAVINGS RISK SHARING TO CAP
Shared Savings Methodology:
»
Net savings will be shared:
› 50% Provider / 50% Payer || 60% Provider / 40% Payer (if meet/exceed quality metrics)
»
Claims are to be paid by Payer according to each participating provider’s current contracted
payment methodology/reimbursements with Payer.
› The Provider does not assume any claims payment liability for any Payer par provider.
› Provider’s only downside risk is the multiple cap/stop-loss for Episodic budget.
› The episodic budgets are inclusive of Payer and member liability credit Provider’s efforts.
»
Process and audit rights for an annual retrospective reconciliation of actual eligible claims
incurred per episodic budget, on an individual patient case basis, across each eligible LOB.
› An interim payment during each contract year of surplus sharing... true up at year end.
»
»
»
»
Net Deficits and eligible surpluses from the prior contract year will be carried forward next.
Shared Savings Deficit Downside Cap = 1.5 – 2.0 x the episodic budget per case
Shared Savings will be paid In addition to the FFS rate increases.
Shared savings deficits do not impact agreed upon FFS rate increases during the contract term.
Page 12
1. COMMERCIAL PAYER EPISODIC PRICING: BASELINE
BUDGET AND EPISODIC DEFINITION (HIP. KNEE & SPINE)
»
Baseline calculated from 1-1-13 to 12-31-13 actual total allowed paid claims for all Provider
patients covered by eligible commercial LOBs across all Provider physician surgical sites.
»
Episode Inclusions
› Admission/Surgery - Range of MS-DRGs, associated ICD-9 (diagnostic and procedural) and
CPT codes for the hospital stay and all covered professional services provided during the
admission stay.
– Co-morbidity inclusion/exclusion criteria, Length of time and services included postdischarge and Complications Covered
› Discharge/Post-Acute Care/Rehab - To agreed upon SNF, IRF and Home Care ICD9, CPT
and other Procedural Codes (e.g., RUGs).
– Co-morbidity inclusion/exclusion, length of time and complications covered.
› Pre-Surgical Testing – Surgical consult, anesthesia consult, surgical team consult, patient and
patient/family education, within 1 to 2 calendar days of the surgical procedure date.
› Transitional Care Monitoring – During the 90 day post-surgical discharge, patients at a higher
risk of readmission will require transitional care monitoring.
Page 13
1. COMMERCIAL PAYER EPISODIC PRICING: BASELINE
BUDGET AND EPISODIC DEFINITION (HIP. KNEE & SPINE)
»
Episode Exclusions
› All other testing prior to defining diagnosis and determination that surgery was appropriate.
› All other testing not in inclusion criteria and PAC services which exceed 90 days window..
»
Annual Baseline Budget Adjustments for each eligible episode of care to account for:
› Rate increases across its participating providers whom in the aggregate define the baseline.
› Payer product adjustments/benefit levels which impact member services utilization.
› Case mix/risk adjustment which occurs from member voluntary and involuntary attrition.
› Co-morbidity exclusion/inclusion criterion.
› A material change in historic Provider Specialist PCP referral relationships.
»
Shared Savings Payments – Funds Distribution:
› Provider will receive the entire shared savings payment from Payer and will be solely
responsible for distribution of any shared savings surplus internal to provider partners (FMV).
»
Quality Metrics for patient quality/improved outcomes and financial incentive awards such as
Generally Accepted Ortho Quality Metrics, Patient Satisfaction Measures, HCAHPS Inpatient Facility,
Functional Outcome Measures, HOOS, KOOS, VR12 and Other Metrics.
»
Other - such as care management/care navigation and transitional monitoring fees
Page 14
2. BEST PRACTICES FINANCIAL /
BENCHMARK MODELING AND
IMPACT ON FFS
Page 15
2. MODELING IMPACT OF RB-RS ARRANGEMENTS IS
CRITICAL TO NEGOTIATING SUCCESS
To assess the potential financial impact of value based payment arrangements such as commercial
shared savings contracts, determine the margin/revenue impact on FFS revenues as well as potential
avoidable costs/utilization with each major payer... financial/analytical models must be built.
Margin Levers Modeled
Margin Lever
Utilization Rate
and Mix
Volumes
E.G., Variables To Be Modeled
» Identify high risk patients and reduce avoidable utilization.
» Steer patients to appropriate site of care. Share savings
potential from Payer
» Increase the number of managed lives under contract to
drive more PMPM revenues
» Spread fixed costs over larger revenue base
Unit Cost
» Reduce underlying cost structure to improve margin position
Payer Payments
» Make decisions with fact base on impact of discounts for
steerage vs. locking in current payment rates
Shared Savings
» Retain negotiated % of shared savings
» Establish internal savings distribution formula that aligns
hospital physician incentives
Page 16
2. LEVERS FOR SAVINGS ARE OFTEN NOT OBVIOUS
Margin Levers Modeled
Largest $$ savings from FFS... Avoidable readmissions, 1 day stays and E/D use
Margin Lever
Downstream Issues to Manage
Utilization Rate
and Mix
» Where is the avoidable utilization? Where can we shift patients to
lower cost care sites/lower cost service mix?
» Where should we consider clinical process changes?
Volumes
» How exactly will we grow lives in partnership with payers?
» What, if any, underlying discounts do we need to give to
steer/retain volume?
Unit Cost
» Which Value Imperatives need to be accelerated to get unit costs
down? Greatest synergistic opportunities... admin & clinical?
Payer
Payments
» What discount rate, if any, will you give the payer? Pricing
strategy by service area/service line?
Shared
Savings
» How do we distribute savings? What metrics, what targets, what
weights? Impact if we expand physician network, grown lives?
Page 17
2. FINANCIAL BUDGETING & PLANNING FOR RISK CONTRACTS: E.G.
BUILDING PMPM BUDGETS BASED ON AVOIDABLE COST ANALYSIS2
Source: Navigant Best Practices
Cost and Utilization Reductions Achieved Through
Care Coordination and Clinical Process Change
PMPM After
Cost Reduction
Starting PMPM Analysis
Illustration: PMPM Savings Opportunities
Page 18
3. STRATEGIC IMPORTANCE OF
PARALLEL CLINICAL
INTEGRATION/CLINICAL
PROCESS CHANGE
Page 19
3. TWIN PILLARS TO SUCCESS UNDER CURVE 2 PAYMENT
MODELS
Manage Financial Risk
Coordinate and Manage Patient Populations
Patient and Physician Engagement
Infrastructure / Operational Alignment
Clinical Integration / Care Model Redesign
Increases Value, Equitable & Sustainable
Source: Navigant Best Practices
C LINICAL T RANSFORMATION
PAYMENT T RANSFORMATION
High Efficiency Health Care
Page 20
3. OUR PRICING, PRODUCT, CARE DELIVERY MODEL DESIGN
LEVERS TO TRANSITION FROM CURVE 1 TO CURVE 2
What Network Partners?
Physician, Hospitals & Other
What Pricing
Strategy?
FFS + P4P
Shared Savings
Episodic Bundling
Full Risk
Absent Parallel
Clinical
Integration/Clinical
Process Change with
Payment Model
Change... How Will
You Manage Risks?
IP/OP Increase vs.
Decrease?
Source: Navigant
Best Practices
Y2
Y3
Commercial Group
ACOs & Other
Medicare
Advantage
Managed
Medicaid
What Time Line?
Y1
Which Products and
Which Payers?
Y4
Management of Pricing, Product, Network, Operational, Clinical,
Financial, Distribution Channel and Competitive Risks?
Page 21
3. COMMON ANALYTICS BASE LINKS CLINICAL AND
PAYMENT TRANSFORMATION
Prioritizing areas of focus based on payment model and areas of need:
Shared Savings
Bundles
ACO
Physician-Hospital
relationships (e.g.
IPA, self- employed)
PAC facility preferred
partnerships and
associated workflows
High-risk patient
management
Governance model
(e.g. dyad leadership)
Implant and DME cost
benchmarking
Demand matching
across network
Chronic disease
management and
practice variations
Pre-op risk
management (e.g.
glycemic control)
Pharmacy utilization
Cross-cutting Quality & Performance Metrics and Variation Analysis
Page 22
3. TWO KEY WORKSHOPS GUIDE CLINICAL TRANSFORMATION AND
DRIVE CLINICIAN ENGAGEMENT
Workshop Type #1: SCAMPs
Workshop Type #2: RIEs
» Standardized Clinical Assessment
and Management Plans (SCAMPs)
» Rapid Improvement Events (RIEs)
» Utilized to dive into clinical decisions
with high impact on outcomes and
costs. Key to:
» Aimed at improving flow through
operational bottlenecks or key
process misalignments
1.
Evidence-based care
customized to treatment
patterns
1.
Focus on early
consideration of “root cause
analyses”
2.
Physician engagement and
buy-in
2.
Inter-disciplinary approach
to improvement
3.
Allow for optimal buy-in and
adoption into practice.
Page 23
4. ORGANIZATION READINESS
PLANNING AND ASSESSMENT
PROCESS AT THE OPERATIONAL
AND CLINICAL LEVELS
Page 24
4. KEY FRAMING QUESTIONS: PREPARING FOR PAYMENT AND
CLINICAL TRANSFORMATION CHANGES
1. Longer term, how sustainable is our current FFS payment model?
2. If we move away from our FFS to an early stage value-based payment models -how do we minimize the risk of margin erosion?
3. To optimize our net revenue/payment yield part of the margin equation:
a) What employer, geographic and payer LOB’s should we target?
b) What steerage/keepage opportunities exist and how do we best avoid cannibalizing
our higher payments with the same patients?
4. To optimize the labor/non-labor cost part of the margin equation:
a) What types of avoidable costs and utilization need to be removed?
b) What types of administrative costs can be reduced?
c) Which incentives need to change, if any, to achieve the above?
5. What operational and clinical process changes do we need to make to be
successful under value-based payments?
6. What risks do we need to plan for and manage?
Page 25
4. WHAT CAPABILITIES DO SYSTEMS NEED TO ADD TO BE
SUCCESSFUL UNDER RS-RB PAYMENT MODELS?
Capitation/
Global Comp
Population Management
Member Attribution
Change Management
Risk to Provider
Predictive Modeling
Cost of Care Reduction
Condition/
Episode
Bundling
Physician
Leadership
Clinical & Operating Efficiency
Practice Variation
Improvement Metrics
Analytic Tools
P-4-P
Hospital/Office
Source: Navigant Best Practices
Patient Monitoring
Quality Improvement Focus
Strategic
Leadership
Integrated Care Systems/HEC
Payment Distribution
Process
Clinical Decision
Support Systems
Comprehensive
Improvement Metrics
Focus on Prevention
Outcomes Based Metrics
Care Coordination
Clinical & Financial
Reduce Avoidable
Integration
Costs
EBM
Reporting /
Standardized
Organizational Leadership/
Processes Tracking Tools
Governance Structure
Member Engagement
Collaboration
Provider Integration
Integrated System
4. YOUR OPERATIONAL AND CLINICAL READINESS FOR VALUE
BASED PAYMENTS STARTS WITH A RISK ASSESSMENT
Summary of Risks – Population Health Management & Risk Based Contracting
» Plan for Risks
» Invest in Capabilities to
Avoid/Mitigate Risks
» Timelines are Important
» Develop Detailed
Implementation Plans &
Execute
» Manage Risks Across
are Continuum
» Performance
Accountability
» Start in… When?
» Alignment w/ Strategic
Plan
» Results to Report Across
Formal PMO Process
PRODUCTS,
PRICING &
DISTRIBUTION
CHANNEL RISKS
PAYER
CONTRACTING &
VALUE-BASED
PAYMENT RISKS
EXECUTION RISK
EBM / PHM
CLINICAL CARE
MODEL RISKS
FINANCIAL,
CAPITAL &
BUDGET RISKS
CARE CONTINUUM
COMPOSITION
RISKS
COMPETITIVE
RISKS
UNIFIED
ANALYTICS &
INFRASTRUCTURE
RISKS
Page 27
4. READINESS RATINGS: PERFORMING A FINANCE/CONTRACTING/
INFRASTRUCTURE GAP ASSESSMENT
Risk-Based Contracting
Best Practices Measures
Current State
Assessment
Revenue & Expense Management
Financial Budgeting and Planning for Risk Contracts
Managed Care Contracting
Funds Flow, Rewards & Incentives
Overall Risk & Financial Management
Health Information Technology/Information Systems
Note: The same type of readiness assessment would be performed on Clinical Delivery
Operations, Provider Network Care Continuum, Market and Product Strategy and Unified
Analytics-IT-Infrastructure. All areas combined, define organizational readiness for population
health management and risk-based contracting
Unprepared with No Plans
Plans for Developing
Capabilities
Ready for Success
Page 28
4.
MOVING TOWARD MANAGING POPULATIONS SHIFTS THE
STRATEGIC IMPERATIVE TO HIGH SYSTEM PERFORMANCE
Organizational elements complement functional capability building:
» Physician/Hospital Alignment
Pathway Toward High-Performance
› Performance based on best practice
benchmarks
» Cost Restructuring
› Efficient utilization of overhead in
organization is mission critical
» Coordinated Care Continuum
› Clinical Integration and care management
has to be coordinated across the entire
continuum of care
» Care Management/Reimbursement
Risk
› Management of variability in underlying
utilization and costs in providing clinical
services to patients
Page 29
4. A PHYSICIAN ALIGNMENT READINESS ASSESSMENT
WILL CLARIFY NEXT STEPS
Stage 1
“Traditional”
Stage 2
Stage 3
“Early
“Mature
Integration” Integration”
» Independent
MD
Individual
Practice Mgt.
» Groups:
Mostly Single
Specialty
Practices
» Limited
Physician/
Hospital Trust
» Emerging
Collaboration
- Physicians
Understand
Beyond
Economics
» Economic
Focus to
Relationships
Stage 4
“Advanced
Integration”
» Mixed
Employed/
Private Model
» Clinical
Standards
» Strong
Relationships
» Some Clinical
Integration
» Large,
Diverse
Network
» Fully Aligned
Hospital/
Physician
» Leadership
Roles Well
Defined
» Robust CI
Stage 5
“Future
Vision”
» Large,
Diverse
Network
» Fully Aligned
Strategic
Physician
Leadership
Page 30
4. QUANTIFYING THE SIZE OF THE PERFORMANCE GAP:
WHERE ARE YOUR PHYSICIANS TODAY?
Required Movement toward Best
Practice Performance
Expectations
» Evaluation of the current financial
and operational gaps
» Best practice performance targets
established in coordination with
incumbent physician and
administrative leaders
» Reliance upon legacy and / or
performance expectations will
hinder achieving high
performance
Page 31
4. MAXIMIZING PHYSICIAN ENGAGEMENT IS A KEY
SUCCESS FACTOR IN CLINICAL TRANSFORMATION
Integrated DS Affiliated PCPs
Both Payer &
Integrated DS
Shared
Savings
Direct
Invest.
Payer Support
Programs
EMR/
MU
PCMH
Integrated DS
Services
Program
Support
CCRN
Practice Characteristics - # Physicians, Specialties, Patient Panel Size, Geography
Practice Population Management Capabilities
Practice Patient Needs
Customized Engagement Opportunities
for Physicians & Practices
Page 32
5. CRITICAL SUCCESS FACTORS:
POPULATION HEALTH AND CARE
DELIVERY MODELS FOR RS-RB
Page 33
5.
EVALUATE YOUR ORGANIZATION AGAINST MILESTONES FOR
EACH POPULATION HEALTH CAPABILITY
Building Block
Goal
1. IT Systems &
Analytics
Enable population health through world class tools and
technology & data reporting
2. Quality &
Performance
Improvement
Utilize data to inform QI / PI initiatives in order to achieve
system wide quality goals
3. Physician Leadership Achieve physician partnership to ensure access and to create
and operate high quality delivery model
& Alignment
4. Care Coordination &
Management
Coordinate care across the continuum to deliver an efficient
and cost effective delivery model
5. Finance/Underwriting
Achieve financial model alignment to incentivize and reward
success in population health
Contract with specific payers and employers to grow lives,
6. Contracting &
manage risk and achieve financial targets and develop a
Network Development provider network to manage lives within the care model
7. Patient Engagement
Engage patients in care decisions to maintain healthy
populations and improve health of sick patients
Page 34
* = Plan & provider
requirement
Improvement
Alignment
Goal
Care Coordination &
Management
Enable population health
via world class tools &
data reporting
Utilize data to inform QI /
PI initiatives to achieve
system wide quality goals
Achieve physician
partnership to create high
quality delivery model
Coordinate continuum of
care to deliver costeffective delivery model
Key Elements
POPULATION
HEALTH
CAPABILITIES
Quality & Performance
Physician Leadership &
IT Systems & Analytics
• Create a data repository
for clinical and claims
from all providers*
• Benchmark performance
against risk-adjusted
benchmarks*
• Predictive modeling*
• Care management
program*
• Integrate data into office
work flow and practice
management systems
• Deliver patient specific
alerts
• Create dashboards for
network performance
• Increase patient
engagement
• Process to evaluate the
health needs of specific
population*
• Goals to evaluate
performance for
ambulatory quality and
hospital quality
initiatives
• Quality and Patient Sat
Metric Library*
• Mechanisms in place to
standardize reporting of
clinical and quality
performance*
• Process to integrate
results to current QI/PI
initiatives and define
additional initiatives*
• Physician leaders with
the credibility and
expertise to lead
• Aligned network of
physicians
• Physician partners
willing to change *
• Incentive models that
align MD behavior with
plan design*
• Tech adoption
agreement with affiliate
MDs*
• Clear performance
expectations for MDs in
quality programs*
• Measure against
specified targets*
• Physicians engaged in
designing care
coordination model*
• Risk stratification
process assigns specific
providers *
• Transition of Care value
streams
• Case management /
clinical protocols for high
volume diseases
• Standardized process
for patient handoffs
• Physician office
connectivity *
• Care coordination
performance using
standard metrics*
Governance: To ensure appropriate decision rights and accountability.
Page 35
* = Plan & provider requirement
Key Elements
Goal
Finance/Underwriting
Contracting & Network
Development
Patient Engagement
Achieve financial model alignment
to incentivize and reward success
in population health
Contract with specific payers and
employers to grow lives, manage
risk and achieve financial targets
and develop a provider network
Engage patients in care decisions
• Financial model alignment
across facilities and
professionals*
• Appropriate metrics to quantify
population health performance*
• Relevant dashboards to monitor
performance on ongoing basis*
• Mechanisms to integrate
financial analytics into budgets*
• Actuarial capabilities
• Communication process to share
results with stakeholders*
• CDM mappings and cost
accounting system utilized as
inputs into financial model
• Transparent funds flow and
distribution process*
• Aligned contracting priorities with
financial / budget model to
manage transition to risk*
• Aligned payment models to
incent performance*
• Internal alignment with key
internal teams
• Employer specific partnerships to
deliver new lives*
• Appropriate number of clinical
resources *
• Ownership or strategic
partnerships for aligned
providers across continuum *
• Include ancillary providers*
• Aligned IT infrastructure across
partners *
• Patient portal to engage patients*
• Communication process that
presents clinical knowledge
understandably*
• Training program on engaging
and communicating with patients
to create a sacred encounter
• Tools for nurse care managers to
assess patient barriers
• Partnerships with community
stakeholders
• Standard process for gathering
pt. survey results*
• Shared decision-making process
accounting for each patient’s’
unique needs*
Governance: To ensure appropriate decision rights and accountability.
Page
Page
36 36
5. DATA ANALYTICS AND BENCHMARKED BEST PRACTICES
MUST DRIVE REDESIGN OF YOUR ORGANIZATION
Benchmarks & Best Practices
Data Driven Analytics
»
»
Contracting
›
›
›
›
› Shared Savings Cliffs
› Episode definition and payments
› Direct Investment
» Population Management
› Risk stratification
› Care manager staffing ratios
› Information systems
» Evidence-based practice guidelines
› Practice variation management
› Process and workflow design
» Governance & Leadership
Contracting
»
Costs
Reimbursements
Margin
Populations & Risk Stratification
Quality
› ACO quality metrics
› Differentiated services
› Process vs. Outcome
»
Risk Management, Finance &
Budgeting
»
»
Revenue Management & Productivity
Clinical Operations
Page 37
5. ANALYTICS DRIVE DIRECT VALUE CAPTURE – PATIENT
FLOWS
Illustration: Joints 30 Day Post
Readmit
Home & Home
Health
0 episodes
ER
33 episodes
SNF
5 episodes
Other
28 episodes
Home & Home
Health
309 episodes
All Client
Episodes
487 episodes
Scheduled
SNF
446 episodes
22 episodes
Other
115 episodes
Home & Home
Health
1 episodes
Other*
8 episodes
SNF
2 episodes
Other
5 episodes
Avg Allowed
# Episodes per Episode
0
$0
No Readmit
0
$0
Readmit
0
$0
No Readmit
5
$37,827
Readmit
3
$59,736
No Readmit
25
$37,977
Readmit
18
$28,449
No Readmit
291
$13,117
Readmit
2
$50,223
No Readmit
20
$21,528
Readmit
19
$41,889
No Readmit
96
$26,878
Readmit
0
$0
No Readmit
1
$21,898
Readmit
1
$26,858
No Readmit
1
$26,881
Readmit
1
$41,733
No Readmit
4
$43,702
Readmit %
0%
0%
11%
6%
9%
17%
0%
50%
20%
Page 38
5. ANALYTICS ENABLE EFFICIENT & TARGETED RE DESIGN – PHYSICIAN VARIATION ILLUSTRATION
High IRF Spending
(& variation)
# of Episodes
Avg. Episode Cost
Post Acute Care Costs by Physician
Page 39
6. IMPLEMENTATION ROAD MAP
DEVELOPMENT:
»
FINANCIAL/IT/OTHER
ADMINISTRATIVE AND
OPERATIONAL CAPABILITIES
»
ORGANIZATIONAL RE-DESIGN
AND GOVERNANCE
»
PHYSICIAN ENGAGEMENT AND
COMMUNICATION
»
TRANSITIONS IN CARE
»
HOW PHYSICIANS CAN CLOSE
THE PERFORMANCE GAP
KEY RISK MITIGATION ISSUES
TO ADDRESS
Page 40
6. RS/RB CONTRACTING GAP ASSESSMENT ILLUSTRATIVE
IMPLEMENTATION ROADMAP – ROADMAP COMPONENTS
Road Map
Component
M1
M2
M3
M4
M5
M6
M7
M8 +
1. Executive
Oversight
• Monthly Operating Reports
• Governance and organizational model alignment
2. Finance &
Managed Care
Contracting
• Risk Contract Budgets
• Funds Flow & Success Metrics
• Preferred Pricing Methodology • Payer Specific FFS Negotiations & Execution
3. Market/
Product
Strategy
• Product Strategy
• Network Design & Distribution Channels
• Payer Negotiations for Risk Contracts • Direct Employer Strategy
4. Provider
Network
Contracting
• Credentialing/Signing Providers • Joint Contracting with Payers for RS-RB
• Data Sharing & Reporting
Payments / Delegated Risk
5. Clinical
Delivery
Operations
• Medical Home, Disease Mgmt. & • Population Health Management
Clinical Programs/Protocols
• Medical Management at Clinic Level
6. Unified
Analytics &
Infrastructure
• Avoidable Cost/Utilization
• Payer Risk Contract Analytics
• Provider Network Modeling & Funds FlowPage 41
• Predictive Modeling
Page 41
6. ESTABLISH A POPULATION HEALTH ROADMAP TO HIT
THE MILESTONES AND ACHIEVE SUCCESS
Population/Beneficiary
Segmentation
Financial Modeling and
Results
Workflow –
Administrative, Clinical
Org Structure, Staffing
and Human Capital
Data Infrastructure and
Analytics
Reporting and Evaluation
Phase 0
Phase 1
Phase 2
Phase 3
Phase 4
Phase 5
Pre-evaluation,
Gap Assess.,
Strat. Planning
Program
Design and
Initiation
Process and
Infrastructure
Implementation
Scaling and
Dissemination
Evaluation and
Monitoring
Synthesis,
Learning, and
Re-design
Navigating the roadmap along these key components requires:
1. Sustained leadership across components of health system
2. Analytics to identify opportunities, prioritize, and measure
performance
3. Definition of near-term  long-term value capture
•
•
•
Near-term: generic vs. branded prescribing, PAC routing
Mid-term: Post-acute care refinement, readmissions
Long-term: comprehensive care management
4. Systematic processes for workflow development
• Rapid Improvement Events (RIEs) for inter-disciplinary bottlenecks and
cost drivers
• E.g., SCAMP (Standardized Clinical Assessment and Management
Plan) development for key areas of need (post-op infections,
prosthesis/implant infections, etc.)
• Care Management function development
Page 42
7. LESSONS LEARNED
Page 43
7. LESSONS LEARNED FROM VALUE-BASED PAYMENT
AND CLINICAL PROCESS CHANGE INITIATIVES
» When you change your core payment model and provide incentives to modify practice
behavior to focus on optimal care with the lowest cost mix of services… you must also
address how prepared your organization is prepared to manage clinical,
operational, financial and competitive risks. For example:
› Are our analytics capabilities aligned to track/report/manage risk?
› Do we have the right configurations in our “Network” to navigate patients “innetwork” and draw “shared savings” from other providers in the market beyond our
own organization?
› Are our Finance/Accounting/Billing/IT operations prepared to manage value-based
payments and associated performance metrics?
› How will we risk stratify patients and what clinical process changes will we need to
make to manage high and moderate risk patients?
› How do we need to structure our organization to achieve results? Who will lead the
change?
› How are we doing relative to our competitors and to systems in similar markets on
contracting? On quality? On staffing and productivity?
Page 44
7. PREPARING FOR THE FUTURE: INTEGRATED CLINICAL
AND PAYMENT TRANSFORMATION
"The best way to predict the future
is to invent it." – Alan Kay
"The future belongs to those who
see possibilities before they become
obvious." – John Sculley
“All organizations are perfectly
designed to get the results they are
now getting. If we want different
results, we must change the way
we do things.” – Tom Northrup
What clinical and
operational changes
does your
organization need to
address to serve
patients, retain the
best staff and remain
a financially
sustainable
organization in the
post 2014 ACA
business
environment?
Page 45
Page 45
TODAY’S PRESENTERS
Amol Navathe, M.D., Ph.D.
Managing Director, Clinical Transformation, Navigant Consulting, Inc.
101 Federal Street | Suite 2700 | Boston, MA 02110
617.748.8304 Office | 267.975.8833 Cell
amol.navathe@navigant.com | www.navigant.com
Christopher Kalkhof, FACHE
Director, Payment Transformation, Navigant Consulting, Inc.
30 S. Wacker Drive | Suite 3100 | Chicago, IL 60606
312.583.2143 Office | 716.912.0309 Cell
christopher.kalkhof@navigant.com | www.navigant.com
As a Managing Director in Navigant’s Healthcare practice, Dr. Amol Navathe serves as
a practicing physician, health economist and engineer with expertise in the utilization of
advanced health data analytics and technology to improve healthcare delivery. He
serves a diverse client base of payer, provider, and government clients on
transformational payment and care delivery issues. His pioneering work on utilizing
claims and clinical data to re-engineer the fundamental processes of care offers clients
exceptional business, operational and patient management efficiency expertise.
Chris is a senior healthcare executive with over twenty-eight years of operations,
finance, managed care/contracting, M&A, strategic alliance and new business
development experience across hospital, physician organization, post-acute care and
health plan industry verticals. More recently, Mr. Kalkhof has worked on varied planning,
development and implementation initiatives associated with post-reform care delivery
and financing models designed for business model sustainability.
Dr. Navathe has applied his skills to delivery transformation and innovations, federal
policy for health data infrastructure development, and the study of physician and
hospital economic behavior. Through his extensive thought leadership, he is the
founding co-editor-in-chief of “Health Care: The Journal of Delivery Science and
Innovation.” He is also the founding director of the Foundation for Healthcare
Innovation.
Having served as Medical Officer and Senior Program Manager for the Office of the
Secretary Department of Health and Human Services, Dr. Navathe led the $1.1 billion
Comparative Effectiveness Research (CER) program. He is regarded as one of the
chief architects of the nation’s CER and research data infrastructure strategy.
Dr. Navathe led a $19M data infrastructure to create a multi-payer multi-claims
database (MPCD), which promotes CER. He has led delivery systems to improve
management of high-risk and high-cost patients through predictive analytics and brings
his CER knowledge to driving evidence-based care.
Since joining Navigant, Chris has worked with some of the leading academic medical
centers, health systems, health plans and medical groups around the country on the
following strategic initiatives:
» Operational readiness for population health management and risk based contracting
and strategy alignment
» Comprehensive managed care reimbursement benchmarking to support/revise
pricing strategy and service line care continuums
» Commercial global case rate and episodic pricing model development and shared
savings payment models for payer contract strategy development and negotiations,
along with concurrent clinical transformation initiatives
» Best practices contract and rate amendment language for national health systems
and payers
» Strategic alliance and joint venture development between health plans and provider
organizations which cover product, value-based reimbursement, network
composition, distribution channels and partnership zones
» M&A due diligence support of provider and health plan acquisitions
Page 46