Accountable Care Organizations
2014 Carolinas Rehab Summit
November 6, 2014
Steve Neorr
Executive Director, Triad HealthCare Network
Cone Health
www.TriadHealthCareNetwork.com
Health Care Reform Jeopardy
You guess the bill…
• Major Provisions
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Require Individuals To Purchase Health Insurance
Requires Employers To Offer Health Insurance To Employees
Bans Denying Medical Coverage For Pre-existing Conditions
Establish State-based Exchanges/Purchasing Groups
Offers Subsidies For Low-Income People To Buy Insurance
Makes Efforts To Create More Efficient Health Care System
Reduces Growth In Medicare Spending
Prohibits Insurance Company From Cancelling Coverage
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Health Care Reform Jeopardy
You guess the bill…
• The Health Equity and Access Reform
Today Act of 1993
• Sponsored by Republican Sen. John Chafee, R-R.I., during
the Clinton presidency as Republican alternative to
“HilaryCare”
• Primary differences
– No Medicaid expansion
– Attempted to tackle malpractice reform
– Did not extend coverage to dependents
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Triad HealthCare Network
Why are we here?
• US spends almost double per capita on total health
expenditures than average of other industrialized countries
• Estimated 2011 US healthcare expenditures ~ $2.6 trillion highest worldwide at 17.2 % of GDP
• US healthcare outcomes are inconsistent with high cost of
care:
– Life Expectancy - 27th out of the 34 industrialized countries
– Highest or near-highest prevalence of infant mortality, heart and lung disease,
injuries, homicides, disability…1
• Widespread clinical variation; more care not equated with
better care
• Growing acknowledgement that current US health care
payment and delivery systems are unsustainable
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4"U.S. Health in International Perspective: Shorter Lives, Poorer Health" (2013) National Institutes of Health Committee on Population, Board on Population Health and Public Health Practice
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Triad HealthCare Network
Understanding the Impact of System Design
“Every system is perfectly designed to get the
results it gets.”
- Paul Batalden, M.D.
Dartmouth Medical School
“If we keep doing what we have been doing, we'll
keep getting what we've always gotten"—an
expensive, high-tech, inefficient health-care system.
"The health-care system needs to be redesigned.”
Dartmouth Medicine, Spring 2006
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Triad HealthCare Network
Two Roads….
Cuts
Realign Incentives
through Reform
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Triad HealthCare Network
Important Trends
Health care transformation is not going to happen… it is happening
• Unsustainable spending growth driving unprecedented
changes:
– Medicare Payment Innovation
• New risk-based payment models – Value-Based Modifier, MSSP, Bundling
• Growth of Medicare Advantage – ‘privatization’ of public dollars
– Market-Based Medicaid Reform
• Potential expansion to 30 million individuals
• Growth of Medicaid Managed Care
• Commercialization through “Private Option”
– Increased Commercial Market Competition
• New dynamic individual market through exchanges
• New channels for competition in group market – entrenched payers being
supplanted
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Source: The Advisory Board Company: The Coming Retail Revolution
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Triad HealthCare Network
Important Trends
“Our price is now given by the market. Our
business is changing from cost-based pricing
to price-based costing.”
Health Plan Executive
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Source: The Advisory Board Company: The Coming Retail Revolution
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Triad HealthCare Network
Important Trends
Impact of Price-Based Pricing…. Bundling
“OrthoCarolina of Charlotte to bundle
knee, hip replacement costs”
By Karen Garloch
Monday, Sep. 29, 2014
“Patients undergoing knee and hip
replacements can get a single bill with a
“bundled payment” that covers
preoperative care, surgery, followup
appointments, 90 days of physical
therapy and the services of a “patient
navigator” who serves as a guide
through the process.”
“OrthoCarolina also has a contract with
Duke Energy that requires all
employees (and dependents covered by
Duke’s health insurance plan) to use
OrthoCarolina and the Lake Norman
hospital if they are having joint
replacements or spinal surgery.”
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Triad HealthCare Network
Important Trends
Networks Narrowing on the Public Exchanges as Plans respond to premium sensitivity
Recent study showed
40% reduction in cost for
Massachusetts state
employees using a
‘limited network plan’
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Triad HealthCare Network
Important Trends
There is currently a ‘transparency revolution’ which will transform healthcare
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Triad HealthCare Network
Important Trends
Transparency is creating a retail revolution
Castlight Health
presents provider
cost and quality
data to employees
real time – directs
to preferred
providers
There’s an
app for that!
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MediBid is a Priceline for medical services
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Triad HealthCare Network
Important Trends
Care is and will be steered to the most efficient Specialists
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Triad HealthCare Network
What is an Accountable Care Organization (ACO)?
• Accountable Care Organizations (ACOs) are groups of doctors,
hospitals, and other health care providers, who come
together voluntarily to give coordinated high quality care to
their patients.
• The goal of coordinated care is to ensure that patients,
especially the chronically ill, get the right care at the right
time, while avoiding unnecessary duplication of services and
preventing medical errors.
• ACOs’ success can be measured by reporting quality metrics
for defined populations of patients and spending health care
dollars more wisely leading to lower costs.
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Triad HealthCare Network
History and Overview
• Began as a 20-member physician-led steering committee in
fall 2010
• Developed over eight months as collaboration between
independent and employed community physicians and
Cone Health
• Formed officially in 2011 as a Clinically Integrated Network
serving the Piedmont Triad area; Approved as a Medicare
Shared Savings Program ACO in June 2012 (40,000+
beneficiaries)
• Is an affiliate of the Cone Health System, but governance
and operations is led and driven by physicians
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Triad HealthCare Network
Goals
• Allow physicians to lead and drive the necessary changes in
healthcare
• Engage physicians to develop new models of care and true
“transformation” of the local healthcare delivery system
• Provide resources to physicians to meet the growing
demands of accountability and transparency
• Create greater collaboration and trust among physicians,
hospitals, patients and payers
• Be renowned as a clinically integrated system of care
delivering superior value measured by high quality outcomes,
affordability and exceptional customer experience
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Triad HealthCare Network
Structure and Membership (as of September 2014)
• 875 Affiliated physicians representing 63 entities across four
counties
– 360 employed by Cone/ARMC
– 60% independent community physicians
• 277 Primary Care Physicians
– 213 Adult Medicine
– 64 Pediatricians
• Facilities
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6 Hospitals - 1,342 Acute Care Beds
2 Ambulatory Surgery Centers
1 Nursing Home – 92 Beds
2 Freestanding Ambulatory Care Campuses, Inc a Freestanding ED
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Triad HealthCare Network
Current Contracts
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Medicare Shared Savings Program
40,000
Cone Health employees/dependents 16,000
Humana Medicare Advantage
4,000
United Medicare Advantage
10,000
70,000 Patients
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Triad HealthCare Network
Medicare Shared Savings Program - Results
• THN began participation in the Medicare Shared Savings
Program (MSSP) in July 2012
• During its first 18 month measurement period, THN saved just
over 4.6% compared to its historic benchmark generating
$21,505,622 in savings for the Medicare program.
– $463,194,583 Benchmark versus $441,688,961 Actual
• THN’s total performance payment for its first 18 months of
performance in the MSSP is $10,537,755
• Of the 53 ACOs who generated savings, THN was one of the top
five in the country in terms of total dollars saved!
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Triad HealthCare Network
Lessons Learned
• Physician engagement is key. Provide many opportunities
for involvement.
• Take the time to develop understanding, unity and buy-in
from your core physician leaders – Build champions
• Make barriers to entry low and do not focus on ‘high bar
performance’ early on
• Be cognizant of and transparent about hot button topics –
money, employed vs. independent, PCP vs specialists; MEC
• Develop a model to distribute “maybe money” earlier
versus later
• Don’t forget importance of engaging staff
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Triad HealthCare Network
Lessons Learned
• Primary Care Physician alignment/attribution is difficult
• Aggregating clinical and claims data and reporting is
extremely difficult and takes longer than anyone will admit
• Have a plan to manage your population assuming you do
not have much data initially
• Limit your initiatives and focus on key areas
• Lowering cost/saving money is more difficult than it would
seem
• Community Care Management home assessments and
interventions have been most effective
• Most surprising: the impact of ‘non-medical’ drivers on cost
– transportation, meals, HVAC, housing, literacy, finances
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Triad HealthCare Network
Evolution Towards Risk
• Began journey by entering into ‘shared savings’ agreements
under which THN would earn revenue if it achieved savings
from past spending benchmarks or a percentage of the
premium spent on medical care.
• Realized shared savings is not ideal as the more savings are
generated, the harder it is to generate them in the future.
• But did start to understand the financing of healthcare and
the need to have physicians incented to understand and be
more in control of medical spending.
• Started planning to transition to risk in 2013
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Triad HealthCare Network
Evolution Towards Risk
• Effective 9/1/14, transitioned existing Humana Medicare
Advantage shared savings agreement to full global capitated
agreement through our strategic partner North Texas
Specialty Physicians (“NTSP”)
• THN has become payer to THN providers
– Primary goal to move away from straight FFS to value-based
compensation
– PCPs paid at FFS through 2016; transition performance based PCP
capitation –% of premium based on quality metrics and RAF scores
– Specialists paid on contact-capitation with 100% Medicare floor in
first year
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Questions?
For further information, please visit
www.TriadHealthCareNetwork.com
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