ECG Management Consultants, Inc.
The Shift From Volume to Value:
Emerging Reimbursement and Alignment Models
August 22, 2014
Ms. Purvi B. Bhatt, Senior Manager
Mr. Sean T. Hartzell, Senior Manager
Agenda
I.
II.
III.
IV.
V.
Market Trends
Alignment Models
Innovative Payment Models
Case Studies
Key Takeaways
Appendix A – Alignment Model Examples
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I. Market Trends
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I. Market Trends
Key Issues
The burning platform is here.
•
Evidenced by significant federal, state, and commercial payor initiatives, strategic direction, and financial urgency
(governmental).
•
Health systems focused on eliminating waste.
•
Strong physician partnerships critical to driving change and protecting market share.
•
Systems focused on efficiencies must restructure contracts to be rewarded for improved value.
The pacing of the movement to value-based care is critical.
•
Providers largely dependent on a productivity-based system and cannot simply “flip a switch.”
•
As utilization is taken out of the system (through focused medical/chronic disease/population management
initiatives), hospital and specialist financial performance at risk if contracts not restructured.
Not all organizations can or should strive for the end-state model (in its totality).
•
Critical (no matter what provider type) to focus on efficiencies, measurement, and quality.
•
Essential to execute strategy that closely aligns organization with preferred care partners.
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I. Market Trends
End-State Model
The end-state model is a clinically integrated network (CIN) of providers who follow common clinical
protocols, have aligned measures and incentives based on improved value, and obtain joint payor contracts.
Independent Providers
Independent
Providers
•
•
•
•
Fragmented
Delivery
System
Home Health
SNF
Pharmacy
Other
Employed
Physicians
Outcomes
• Provider Organization
• Management/Governance
• Clinical Protocols
• Disease Management
• Wellness
• Integrated EHR
• Performance Measurement
• Reporting
• Disease Registry
• Joint Payor Contracting
• Employee Health Plan
(EHP)
• Funds Flow Design
• Aligned Incentives
•
•
•
•
CIN
Home Health
SNF
Pharmacy
Other
Employed
Physicians
Hospital
Hospital
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I. Market Trends
A Time for New Alliances
“The goals of population health management may be encouraging rampant
consolidation across the healthcare industry, but some systems are pushing back
and seeing whether they can achieve the same results with looser arrangements.”
– Modern Healthcare, July 2013
Philadelphia
Indianapolis
georgia
Three Leading Health
Systems Form New Initiative
Three Health Systems Create
Accountable Care Consortium
23 Hospitals Form Care
Alliance
Three Philadelphia-area health systems form
an alliance to work collaboratively to
improve care and meet demands of health
reform. The initial focus is to jointly manage
the healthcare benefit plans of the systems'
employees and their families.
This new alliance will bring together more
than 30 facilities, including 6 of the 10 that
make up Indiana's Suburban Health
Organization.
“Healthcare reform has required healthcare
systems to think differently than in the past,”
– Vincent Caponi, CEO.
In Central and Southern Georgia, 23 hospitals
form a not-for-profit LLC called Stratus
Healthcare.
This new network is a partnership allowing
the member hospitals to collaborate while
remaining independent.
.
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I. Market Trends
The Spectrum of Integration
Independent/
Competitive
Segmented
Integration
Clinical
Integration
Provider
Network/ACO
• Traditional medical
• Organizational models
• Systems and processes in
• All characteristics of
staff/hospital relationship.
• Physicians are
“customers” of the
hospital.
• Competition over
outpatient services and
revenue streams.
• FFS mechanisms
predominate.
created to achieve
physician/hospital
integration (e.g., joint
ventures [JVs],
employment).
• Physician-only models
may include entering into
managed care risk (e.g.,
independent practice
association [IPA]).
• Focus is on creating
structures that align
strategic and financial
goals – typically of one
aspect of the healthcare
delivery system (e.g., a
service line, an outpatient
service, physician
recruitment, payor type).
place to measure quality
and cost across a
continuum (e.g., hospital,
physicians, pharmacy,
outpatient services).
• Selective participation of
physicians who are
willing to comply with set
protocols and outcome
measures.
• Pursuit of new models of
clinical care delivery to
enhance the management
of chronic disease and
coordination of care
overall.
clinical integration with a
greater degree of financial
integration and
interdependence.
• Ability to approach the
market and payors with an
integrated system (i.e.,
hospitals, physicians, and
other providers of care).
• Culture is totally focused
on the success of the
system versus individual
components (e.g., hospital
versus physician group).
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II. Alignment Models
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II. Alignment Models
How Physicians Are Organizing
Physicians are choosing to organize themselves in response to changing payor dynamics.
SingleSpecialty
Group
Management
Services
Organization(
MSO)
Multispecialty
Group
• Loose; little
• Shared services,
interrelationship.
• Difficult to realize
IPA/
PHO1
lower cost.
• Little negotiating
economies of scale.
power.
Service Line
Management
Equity
JV
• More risk sharing.
• Rewards for
improved
performance.
Professional
Services
Agreement
(PSA)
Hospital
Employment
• More integrated
relationship.
• Possible hospital
financial support.
Ultimately, group dynamics will play into the preferred relationship/tactic.
1
PHO = Physician Hospital Organization.
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II. Alignment Models
Alignment Approaches and Their Characteristics
There are a variety of approaches for pursuing alignment, yet the requirements
for infrastructure and capabilities related to population management will vary.
Alignment
Approach
Ability to
Maintain
Financial
Autonomy/
Independence
Ability to
Leverage
Infrastructure
Development
Costs
Ability to
Facilitate
Clinical
Collaboration
Ability to
Manage Care
Across
Continuum
Ability to
Pursue Joint
Contracting
With Payors
Single-Specialty Group
High
Low
Medium/High
Low
High
Multispecialty Group
High
Low
Medium/High
Medium
High
MSO
High
Medium
Low
Low
Low
PHO
Medium/High
Medium/High
High
Medium/High
Medium
IPA
Medium/High
Medium/High
High
Medium/High
Medium
Service Line
Management
Medium/High
Low
High
Medium/High
Medium
Equity JV
Medium
Low
Low
Low
Medium
PSA
Medium
Medium
High
Medium
Medium/High
Low
High
High
High
High
Hospital Employment
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II. Alignment Models
Range of Provider/Payor Collaborations
Providers are contemplating a range of payor collaborative models, a thoughtful
network strategy, and models for building appropriate insurance capabilities.
Range of Payor and Provider Collaborative Models
Traditional
Contractual
Relationship
Incentive
Arrangement
Risk
Contract
JV
Clinical Programs
Infrastructure
Research
JV
Financial Integration
Clinical Integration
ACO
Merged
Organization
Single
Organization/O
wnership
Major Considerations
Network Strategy
Need for Premium Access
Need for Insurance Capabilities
Degree of Clinical/Financial Integration
Level of Commitment
Complexity and Financial Investment
Potential Upside
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II. Alignment Models
Network Participation Tiers
Network formation typically includes participation tiers, allowing organizations to choose the
most appropriate level of their commitment and exclusivity related to clinical integration efforts.
Typical Network Tiers
Network Contractors
• No governance or
decision-making
participation.
• FFS only.
• For example, radiology
group.
Network Participants
• No governance or decisionmaking participation.
• FFS with shared savings.
• For example, home health
agency.
Network Affiliates
• Participation in decision
making.
• Potential risk sharing.
• For example, aligned
independent medical group.
Network Core
• Ownership
(if necessary).
• Governance.
• Risk sharing.
• Surplus sharing.
Level of Commitment and Exclusivity
A provider organization’s strategy must consider how it fits into
the full continuum of care and its vision for future care delivery.
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II. Alignment Models
Alignment of Payment Models With Network Goals
The funds flow is an important tool for creating alignment among the participating
providers with both the immediate and longer-term goals of the network.
Possible Transition Over Time
Characteristic
Emphasis
First Generation
• Gain experience.
• Develop capabilities.
• Generate modest financial/
Second Generation
• Leverage experience.
• Expand capabilities.
• Participate in associated
cost improvement.
Scope
EHP only.
Ultimate Goal
• Market/promote experience.
• Capitalize on capabilities.
• Engage in population health
savings.
• EHP.
• Medicare Advantage (MA)
•
and/or commercial plans.
Medicaid HMO contracts.
management.
•
•
•
•
EHP.
MA and/or commercial plans.
Self-funded employer plans.
Medicaid HMO contracts.
Level of Risk
Moderate upside opportunity.
Shared savings.
Shared risk.
Business
Requirements/
Capabilities
Evolving.
More advanced.
Advanced.
Level of Risk
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III. Innovative Payment Models
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III. Innovative Payment Models
Clinically Integrated Models
Less
Integrated
Independent Contracting Decisions
“Messenger” Model
Third-Party
Messenger
More
Integrated
Range of Clinical Integration
P4P
Physician/Hospital
Alignment
Potential Models of Integration
Risk Sharing
“United Front”
Clinical Integration
Coordinated
Care
Financial Integration
Merger/
Acquisition
• This model involves
• Care is provided in
• Providers share
• Patient-centered care
• System-wide efficiencies
separate, independent, and
unilateral contracting
decisions.
• Offers and counteroffers
between individual
providers and payors are
conveyed by PHO
messenger.
• Objective information is
communicated to providers
regarding proposed
contract terms.
accordance with quality
targets.
• The quality of care is
reviewed and monitored.
• There are provisions for
adequate peer review if
quality targets are not
achieved.
• Payments are based on
historical activity to avoid
referral incentives.
responsibility for cost or
utilization and have a
significant positive gain for
achieving targets.
• Members or owners share
financial risk directly or
through membership in
another organization.
• Members may not account
for more than 30% of
physicians in local market.
focused on common
understanding of desired
outcomes.
• Broad network of
providers.
• Integrated IT and efficient
information exchange.
• Compliance with
utilization review and
performance standards.
across providers.
• Centralized ownership.
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III. Innovative Payment Models
Range of Value-Based Payment Models
As more risk is introduced into payment methodologies, providers are moving toward
greater integration and scale to efficiently develop capabilities for value-based models.
Risk Continuum Associated With Various Reimbursement Structures
Medical
Home1
FFS
Bundled
Payment
P4P
Payment for
Episodes of Care
Global Payment
With Performance Risk
and P4P
Total Cost
of Care/
Shared Savings
Global Payment
With Financial Risk
Clinical and Financial Integration
Complexity/Broader Capabilities Required
Greater Risk/Potential Upside
1
Medical homes that receive extra dollars for patient management.
Source: Healthcare Financial Management Association, “Accountable Care:
The Journey Begins,” August 2010.
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III. Innovative Payment Models
Contracting Vehicles
The economic reality of reform has caused enormous changes in the insurance industry;
plans are differentiating themselves through the creation of innovative products.
Payor initiatives
are putting
downward
pressure on
provider
reimbursement.
Health
Exchanges
Commercial
MA
Narrow
Networks
P4P
Bundled
Payments
PatientCentered
Medical
Home
(PCMH)
Shared
Savings
Disease
Management
Shared/ Full
Risk
Those providers
positioned for a
value-based
system will emerge
as market leaders.
Managed
Medicaid
EHPs
Dual
Eligibles
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III. Innovative Payment Models
Range of Potential Risk Arrangements
Global payment arrangements (total cost of care models) range from shared savings
(e.g., gain sharing, “one sided” track) within an FFS environment to shared-risk and
ultimately to global-risk (e.g., capitation) arrangements with quality bonuses.
Gain Sharing/One-Sided/
Asymmetric Model
•
•
•
“Two Sided”/
Symmetric/SharedRisk Model
Global Risk/Partial
Capitation Model
Ideally, as a provider network matures, it will adopt payment models with increasingly
more risk.
With the increased risk should come the opportunity to earn a greater percentage of
shared savings, because the network/entity will be more accountable for cost and quality.
As organizations become more adept at managing risk and enhance their clinical
integration through care process redesign and better health IT, they can transition from
risk-free or one-sided risk models to two-sided risk models in which organizations suffer
a loss if they spend more than their projected global medical spending amount.
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III. Innovative Payment Models
Critical Success Factors in Full-Risk Contracting
Overall, there are major clinical, financial, operational, and strategic
requirements that will drive successful population health management.
Provider Composition/Practice
• Sufficient primary care size for population
•
•
•
•
•
•
•
•
Governance and Management
• Meeting of financial strength requirements to accept
management.
risk.
Clinical consideration for specialty management
• Legal structure in place to receive and distribute
and/or involvement for patients with chronic
payments.
conditions.
• Broad base of clinical and administrative leadership.
Hospital partnership.
• Clear lines of authority and accountability among
Support of the transformation of the care process to
related entities.
a team approach.
• Alignment of compensation/funds flow programs.
Use of physician extenders.
• Adequate incentives for population.
Group visits, e-visits, or other forms of patient
• Alignment of incentives.
encounters.
Communication tools to facilitate integration of
practice teams.
Patient satisfaction monitoring.
Patient attribution method in place.
Source: Adapted from the AMGA Accountable Care Organization Readiness Assessment, 2010.
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III. Innovative Payment Models
Critical Success Factors in Full-Risk Contracting (continued)
Care Management/Coordination
•
•
•
•
•
•
•
•
•
•
•
Chronic care management processes.
PCMH practices.
Predictive analytical tools to identify high-risk patients.
Case managers assigned to high-risk patients.
Systems in place to manage transitions of patient care
settings.
Medication reconciliation.
Behavioral health programs integrated into care
management plans.
Home health and other extended care programs
integrated into care management plans.
Patient communication established as standard practice.
Patient follow-up and reminder systems.
Follow-up visits and referrals scheduled at time of
initial encounter.
Source:
Accountability/Reporting
• Systems to manage population costs.
• System-wide measures and performance tracking of
•
•
•
•
•
•
•
•
•
•
quality and efficiency.
Episode-based resource-use metrics linked to quality
metrics.
Public reporting on outcomes/costs.
Common EHR across providers.
Practice guidelines/clinical protocols embedded in
EHR.
Appropriate alerts for clinical decision support.
Processes to improve coding.
Registries for chronic disease patients.
E-prescribing used by PCPs.
Formularies for generics.
Electronic patient communication.
Adapted from the AMGA Accountable Care Organization Readiness Assessment, 2010.
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IV. Case Studies
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IV. Case Studies
Example #1 – Nonurban Hospital With Local Providers
Background
• 250-bed hospital, 40 miles outside of major metropolitan
•
•
•
•
•
•
•
•
•
city.
Inpatient market share in the core market is high.
Payor market is consolidated, and the local Blue Cross
plan is dominant.
The medical community is predominantly composed of
small, independent, single-specialty physician practices.
A significant proportion of the primary care base, while
generally loyal to the hospital, is economically aligned
with a regional network of primary care practices.
The hospital is preferred by affiliated physicians and
patients.
Multiple clinical affiliations augment local expertise.
Quality, excellence, and continuous improvement are
areas of ongoing emphasis for the organization.
Costs and utilization are lower compared to other area
hospitals.
Limited experience with pilots for care management of
specific patient populations.
Considerations for the Future
• Most of the covered lives cared for by the hospital and
•
•
•
•
•
•
•
the medical community are “owned” by the regional
primary care network.
Market share of covered lives will be a key measure of
indispensability in the future, replacing today’s emphasis
on market share of beds, discharges, and/or specialists.
Local PCPs have growing expertise to support the
management of care for specific populations.
Most nearby competitors have achieved greater economic
alignment with physicians and have a larger base of
employed PCPs.
Hospital-centric mind-set means health system model is
underdeveloped.
Despite pilot initiatives around care coordination, the care
model remains fragmented, with generally uncoordinated
care transitions.
Success in new care delivery models and under new
payments models will require more than improved
performance on traditional metrics.
Financial capacity to fund growth is limited.
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IV. Case Studies
Example #1 – Nonurban Hospital With Local Providers (continued)
The key to being relevant in the future is to strengthen existing relationships and establish new ones that
add value, capture new markets, and accelerate the development of new competencies and capabilities.
Secure an economically aligned referral base in order to be indispensable in
the primary market.
Build the competencies required to be successful as healthcare reform drives
delivery and payment system changes.
Enhance financial strength and market position to continue to operate as an
independent hospital/health system.
Develop a system of community care that is no longer hospital-centric, reaches
out proactively, and engages all providers and the patient.
Shift focus from managing episodes of hospital-based care to managing the
health of a population, thereby requiring clinical integration.
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IV. Case Studies
Example #1 – Nonurban Hospital With Local Providers (continued)
Transforming Care Delivery System
• Bundled payment
initiatives.
• Economic alignment between
Financial incentives for high-quality, lowcost care to a large patient cohort.
PCPs and specialists.
• Improved geographic access to
primary care.
• Continuous quality
improvement initiatives.
• Pilots with EHP.
• Platform for exchanging
electronic health data.
• PHO.
• Strong physician/hospital
relationships and shared
decision making.
Population health management tools and delivery
of targeted, cost-effective care.
• Health system model with
stronger linkages across system
of care.
• Evidence-based protocols and
Infrastructure that encourages and
facilitates collaboration.
care guidelines.
• Coordinated care transitions
using decision support tools
and reporting capabilities.
Culture that supports physicians in delivering
the best care.
• Cost discipline maintenance.
• Capitalizing on existing
expertise.
The previous investments and commitment by the physicians and the hospital in cultivating a strong partnership, implementing
technology, and engaging in continuous improvement provide a strong foundation for the medical community to build upon.
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IV. Case Studies
Example #2 – Nonurban CIN
More than a dozen inpatient facilities and over 1,000 employed physicians formed a CIN focused on improving
the quality and efficiency of care Vision
being delivered. The CIN members will collaborate and innovate to:
Improve
Outcomes
Gain
Efficiencies
Deliver Value to
the Populations
the CIN Serves
Guiding Principles
Support Local
Autonomy and
Independence
Collaborate With
Independent
Providers Who
Choose to Work
Together
Provide Options
for Degree of
Involvement
Engage
Physicians
Focus on
Innovating to
Create Value for
Purchasers and
Patients
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IV. Case Studies
Example #2 – Nonurban CIN (continued)
Two main functional areas have been identified to provide benefit to
members of the CIN: (1) payor contracting and (2) shared services.
Shared Services
Payor Contracting
•
•
•
•
Integrated IT.
– Health information exchange.
– Population health/utilization data warehousing.
– Disease registries.
Utilization, medical management, and care design.
– Utilization review.
– Standard protocol development and compliance.
– PCMH.
– Standardized care transitions.
– Care management and infrastructure.
Contracting.
– Collective negotiations.
– Risk-based contracting/shared risk.
– Network formation and contract execution.
– Funds flow design and planning.
Managed care administration
– Risk management support.
– Data analytics and reporting.
– Surplus and deficit accounting and distribution.
•
•
•
•
•
Vendor contracts and pricing.
– Supply chain.
– Insurance.
– Consulting.
Provider credentialing.
Best practices and education.
– Evidence-based practice guidelines.
– Quality improvement.
– Staff “in-services.”
– Industry trends.
– Regulatory compliance.
Medical delivery support.
– Telemedicine.
– Physician staffing/rotations.
– Medical transport.
Centralized corporate/other functions.
– Human resources (HR)/benefits.
– Revenue cycle.
– IT.
– Pharmacy.
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IV. Case Studies
Example #2 – Nonurban CIN (continued)
The ultimate goal is to evolve the CIN through the management of a series of phased-in populations.
•
•
•
The CIN will begin with consistent
measurements and the
development/refinement of programs
for major chronic conditions, using
the EHP as a starting point.
The CIN will evaluate payor
contracting opportunities to expand
population management capabilities
to additional patient populations.
As a first step in this process, it will
evaluate MA.
Second
Generation
First
Generation
•
EHP.
•
MA.
Ultimate
Goal
•
Commercial
contracts.
•
New Medicare or
Medicaid programs.
•
State health
exchange.
•
Direct-to-employer
contracting.
•
CIN.
A single EHP network will be developed by year-end 2014 aimed at improving the
health of employees through clinical integration and reducing the total cost of care.
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V. Key Takeaways
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V. Key Takeaways
So What Does It All Mean?
Practice Responses
New Demands
for Care
New demands from patients and payors are forcing care delivery changes in hospitals and physician practices.
Access
•
Schedules with same-day
open access and/or
extended hours.
•
Dedicated care managers
or disease management
PCMHs.
•
New delivery model
(PCMH).
•
Coordination with dentists,
pharmacists, and
nutritionists for preventive
care.
•
New patient encounter
types (e-visits, e-mail).
•
Stratification of patient
panel at start of visit to
off-load physician
schedule.
Coordinated
Care
Comprehensive Care
•
•
Provision of services at
schools, employers, etc.
Evidence-based practices.
•
•
•
PCP collaboration with
specialists to set
expectations for referral
coordination.
Standards for information
sharing (e.g., patient
discharge notes,
medication reconciliation).
Organization-wide
standard protocols for
patient follow-up.
Patient Engagement and
Communication
•
Patient portals, chat
rooms, e-visits.
•
Group visits.
•
Education champions in
each practice.
•
Online scheduling.
•
In-office resource centers.
•
Telephone calls for patient
follow-up.
Organizations can leverage the new care model and position themselves in
the competitive healthcare market as a high-quality, high-value provider.
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Presenter Biographies
Ms. Purvi B. Bhatt, Senior Manager, ECG Management Consultants, Inc.
•
Ms. Bhatt works with providers and health systems as they transition from volume- to value-based
delivery systems, analyzing quality and financial data; facilitating stakeholder discussions regarding a
culture of collaboration, creativity, and accountability; and developing ACO/delivery-based strategies.
•
She has master’s degrees in business administration and health services administration from the
University of Houston and a bachelor of arts degree in psychology from the University of Texas at
Austin.
•
Ms. Bhatt can be reached at 703-522-8450 or pbhatt@ecgmc.com.
Mr. Sean T. Hartzell, Senior Manager, ECG Management Consultants, Inc.
•
Mr. Hartzell is the co-leader of the firm’s transaction advisory service line, which focuses on developing
and disseminating the firm’s thought leadership in the areas of transaction planning, facilitation, and
implementation, and he has published thought leadership pieces and spoken nationally on these topics.
•
He received a master of business administration degree from the Darden Graduate School of Business at
the University of Virginia and a bachelor of science degree in operations research and industrial
engineering from Cornell University.
•
Mr. Hartzell can be reached at 703-522-8450 or shartzell@ecgmc.com.
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Appendix A
Alignment Model Examples
0100.015\313186(pptx)-E2
Appendix A
Alignment Model Examples1
Collaborators
Horizon BCBS,
PCPs, and New
Jersey Academy of
Family Physicians
Location/
Date
New Jersey,
2011
Details
• Pilot PCMH program included eight practices and 24,000
Horizon members.
• Horizon paid practices a care coordination fee ($2 to $3 per
member per month [PMPM]) to support practice
transformation and for the provision of additional services
under the PCMH model, in addition to existing FFS
reimbursement.
• Practices are also eligible for additional payments for
meeting quality and utilization outcomes.
• An expanded version of the program is now implemented in
48 practices serving 154,000 Horizon members.
California Public
Employees’
Retirement System
(CalPERS) and
Multiple HighQuality Hospitals
California,
2008
• CalPERS limited what it would pay for hip and knee
replacements to $30,000.
• Found several hospitals willing to stick to threshold amount.
• Some CalPERS members have 100% coverage, including
travel costs, when electing to receive these procedures at
participating facilities.
Outcomes
• 8% higher rate in improved diabetes control
(HbA1c).
• 6% higher rate in breast cancer screening.
• 6% higher rate in cervical cancer screening.
• 10% lower cost of care (PMPM).
• 26% lower rate in emergency room (ER) visits.
• 25% lower rate in hospital readmissions.
• 21% lower rate in hospital inpatient admissions.
• 5% higher rate in the use of generic prescriptions.
• In 2008, hip and knee replacement cost CalPERS
$55 million, and hospital bills ranged from $15,000
to $110,000 with no discernible difference in
quality.
• In 2011, the average price per surgery dropped
nearly 28% to $23,113.
• CalPERS has since applied thresholds to colonoscopies,
cataract surgeries, and arthroscopies.
• Members required to pay for charges above threshold when
using outpatient hospitals instead of ASCs.
1
Source: Oregon’s Office for Health Policy and Research, Alternative Payment Methodologies.
A-1
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Appendix A
Alignment Model Examples1 (continued)
Collaborators
1
2
Location/
Date
BCBS Illinois and
Advocate Health
Care
Illinois,
2011
Texas Medicaid,
MCOs, and Network
Physicians and
Hospitals2
Texas, 2012
New York Medicaid
Program and Health
Plans Contracting
With Medicaid
New York,
2002
Details
Outcomes
• Began shared savings program for fully and self-insured
• In the first 6 months of 2011, hospital admissions
commercial PPOs in Chicago area.
• Performance and cost standards were implemented for
physicians, who would be penalized for failure to meet them.
• ER visits fell 5.4%.
• Medicaid managed care contracts in Texas require MCOs to
• Potential savings related to readmissions is $120
conduct gain-sharing programs in which network physicians
and hospitals share a portion of an MCO’s savings resulting
from reduced utilization and inappropriate admissions.
• Contracts also include a Quality Challenge Award whereby
4% of an MCO’s capitation is withheld based on eight
quality measures.
• If an MCO does not achieve performance levels, future
monthly capitation payments will be adjusted by an
appropriate portion of the 4% at-risk amount. Unearned
funds are redirected to the Quality Challenge Award.
million in the first year.
• The state found that most preventable admissions
were related to mental health conditions.
• The program underwent substantial changes in 2014
to emphasize incremental improvement, rather than
quality challenge and at-risk measures.
• This is part of Texas’ broader effort to shift from
FFS to managed care for Medicaid populations.
• New York Medicaid offering quality-based bonuses and
• During first 4 years of program, New York paid
performance-based auto-assignment incentives to health
plans.
• Using HEDIS and CAHPS measures to develop quality and
patient satisfaction benchmarks.
• Created quality incentive score based on a scale of 150
points.
nearly $71.5 million in bonuses.
• The state saw an increase in enrollment plans that it
deems as high quality.
• A study by The Commonwealth Fund reported that
appropriate postpartum care rose from 49% to 68%.
per member decreased 10.6% compared with 2010.
Source: Oregon’s Office for Health Policy and Research, Alternative Payment Methodologies.
Source: Deloitte report on Texas Medicaid reform.
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Appendix A
Alignment Model Examples1 (continued)
Collaborators
Oregon Health Plan
(Medicaid) and
Healthcare
Providers – Care
Coordination
Organizations
(CCOs)
Location/
Date
Oregon,
2012
Details
• Initiative calls for the formation of a cross-functional
network of all healthcare providers working together to
provide medical services to persons covered under the
Oregon Health Plan.
• As of September 2013, 16 CCOs are in operation.
• CCOs participate in quality pool funding, which is a pool
totaling 2% of the aggregate CCO payments. The payments
are made completely outside of the capitation rates.
• Oregon plans to increase the incentive percentage on an
annual basis and has a waiver in place that allows the
supplemental pool to grow to 5%.
• Oregon publishes Quarterly Progress Reports, showing the
performance of the CCOs on 33 designated measures. Of
these measures, 17 are linked to incentive payments, and the
remaining measures are data the CCOs are required to
submit to the state to be reported publicly.
Outcomes
• Oregon believes one of the most successful aspects
of its program is the state’s strong relationships with
the CCOs. One of the reasons for these strong
relationships is that Oregon designates a single
point of contact who is made available to the CCOs
to address all questions regarding quality measures
and the reporting and analyzing of their results.
• Utilization and spending data in 2013 compared to
2011:
– ER visits down 9%.
– ER spending down 18%.
– Hospitalization for congestive heart failure
down 29%.
– Hospitalization for obstructive pulmonary
disease down 28%.
– Hospitalization for adult asthma down 14%.
– Primary care outpatient visits up 18%.
– Adoption of EHRs up 29%.
1
Source: Oregon’s Office for Health Policy and Research, Alternative Payment Methodologies.
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