Senior Living, Accountable Care Organizations, and the New Medicare May 8, 2013
The Problem: Costs 17.3% of US GDP spent on health care in 2009 1.1% increase over 2008’s 16.2% -‐-‐ the largest one-‐year increase since 1960 17.9% of US GDP in 2010 The country closest to the U.S. in health care expenditures is Germany, where health care costs are 11.1% of GDP
Medicare Costs Total Medicare spending is projected to increase from $523 billion in 2010 to $932 billion by 2020. From 2010 to 2030, Medicare enrollment is projected to increase from 47 million to 79 million.
2010 CMS Actuarial Report on the Financial Outlook for Medicaid Expenditures are projected to increase at an average annual rate of 8.3% and to reach $840.4 billion by FY 2019. Average enrollment is projected to increase at an average annual rate of 4.5% over the next 10 years and to reach 78 million in FY 2019.
Cost Drivers Poor health of Americans Unnecessary procedures Fee for service structure Inefficient treatment of chronic disease Payment systems don’t reward quality and efficiency Programs don’t keep high uXlizers in beZer health Programs don’t deal with end of life costs Pharma costs Technology costs
The Problems: Quality The United States ranks dead last of Britain, Canada, Germany, Netherlands, Australia and New Zealand — 2012 Commonwealth Fund The United States is, at best, average in comparison to European health care systems — Urban Ins7tute 2012 The United States is no beZer, and in some cases, worse than its largest trading partners — Business Roundtable 2010
World Rankings
What to do? COMPLETELY CHANGE THE INCENTIVES IN THE AMERICAN HEALTHCARE SYSTEM THIS IS THE NEW MEDICARE
That is… Improve health of Americans Eliminate unnecessary procedures Move away from fee for service structure Efficient treatment of chronic disease Payment systems rewards quality and efficiency Programs keep high uXlizers in beZer health Programs deal with end of life costs Pharma costs kept under control Technology costs kept under control
This isn’t “Obamacare” “The steps that I think are most promising are really about changing payment methods to reward providers for better health outcomes”. January 21, 2013, Mark B. McClellan, Financial Times
Institute for Healthcare Improvement THE TRIPLE AIM Improving the U.S. health care system requires simultaneous pursuit of three aims: improving the experience of care, improving the health of populations, and reducing per capita costs of health care
Example: The Medicare Shared Savings Program (“MSSP�) Authorized by the Affordable Care Act The Centers for Medicare & Medicaid Services (CMS) is responsible for implementation Rules finalized October 20, 2011 Eligible providers, hospitals, and suppliers may participate in the MSSP by creating or participating in an Accountable Care Organization (ACO). Designed to implement the Triple Aim
ACOs 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 Medicare 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. When an ACO succeeds both in both delivering highquality care and spending health care dollars more wisely, it will share in the savings it achieves for the Medicare program.
Organization-Form and Function An ACO is a legal entity that is recognized and authorized under applicable State, Federal or Tribal law, is identified by a Taxpayer Identification Number, and is formed by one or more ACO participants Receives and Distributes Shared Savings Repays Shared Losses Establishes, reports and ensures provider compliance with health care quality criteria Fulfills other ACO functions
Organization- Governance An ACO must maintain an identifiable governing body with the authority to execute the functions of the ACO Governing body members have a fiduciary duty to the ACO Must be unique to the ACO if comprised of different ACO participants Must include a Medicare beneficiary 75% control of the governing body must be held by ACO participants
Organization- Participants ACO Participants are individuals or groups of ACO providers/suppliers that are identified by a Medicare enrolled TIN and that are in the approved list of providers Clinical management and oversight must be managed by a senior level medical director who is a physician Each ACO participant must demonstrate a meaningful commitment to the ACO mission (either financial or human investment)
Applicationand Agreement To participate in the Shared Savings Program, an ACO must apply to CMS Application must inform CMS how the ACO plans to deliver high quality care and lower costs If accepted, the ACO must enter into an agreement with CMS to participate for at least 3 years ACOs must accept responsibility for at least 5,000 Medicare beneficiaries
Beneficiary Assignment CMS assigns based on “plurality of primary care services�: Plurality: a greater proportion of primary care services, measured in terms of allowed charges, but can be less than a majority of services Step 1: Assigned if the beneficiary receives the plurality of her primary care services from primary care physicians within the ACO. Primary care physicians designations: internal medicine, general practice, family practice, and geriatric medicine. Step 2: If a beneficiary has not had a primary care service furnished by any primary care physician. Then assignment is made based on receipt of a plurality of her primary care services from physicians and certain non-physician practitioners (nurse practitioners, clinical nurse specialists, and physician assistants) within the ACO.
Beneficiary Assignment Assignment, Reconciliation, and Data Sharing At the beginning of the performance year, beneficiaries are preliminarily assigned to ACOs (prospectively) based on the most recent available data. However, final assignment, for the purposes of determining an ACO’s quality and financial performance, is made at the end of the performance year (retrospectively). At the start of each agreement period, the performance year and quarterly thereafter, CMS will provide the ACO with a list of preliminarily assigned beneficiaries and aggregate beneficiary level data regarding this population. Preliminary prospective assignment allows ACOs to develop care plans and quality initiatives with some knowledge regarding the beneficiaries for whom they will ultimately be held accountable. The final retrospective reconciliation allows CMS to assess an ACO’s performance based on where beneficiaries have chosen to receive services during the performance year.
Shared Savings Calculation Track 1: “One Sided” risk model; that is, ACO shares program savings, but is not at risk for program losses Track 2: “Two Sided” risk model; ACO shares (more) program savings, but is also at risk for program losses Eventually: ALL ACOS WILL BE TRACK 2
Shared Savings Calculation Step 1: Establish Benchmarks for each Performance Year of Agreement Period The benchmark is most recent 3 years of per-beneficiary expenditures for Medicare Fee For Services Part A and B, adjusted for risk Benchmark is a surrogate measure of what Medicare Fee for Service would have paid in the absence of the ACO
Shared Savings Calculation Step 1 (cont.) Benchmarks are risk adjusted for the Medicare population served based on CMS’ experience with Medicare Managed Care Benchmark will also account for the national growth rate for Medicare FFS expenditures
Shared Savings Calculation Step 2: Compare Performance to the Benchmark to Determine Shared Savings To account for normal variation, CMS will establish a Minimum Savings Rate (“MSR”) that must be achieved in order for an ACO to share savings Similarly, for Track 2 ACOs, a Minimum Loss Rate (“MLR”) is established
Shared Savings Calculation Step 2 (cont.) Track 1 ACOs: The MSR varies with the size of the ACO population (the smaller the size, the larger the MSR) The range is from 2% to 3.9% Track 2 ACOs: The MSR and MLR are set at a flat 2%
Shared Savings Calculation Step 2 (cont.) For each Performance Year, if actual expenditures are less than the ACO benchmark and exceed MSR, the ACO is eligible for shared savings For Track 2; if actual expenditures are greater than the ACO benchmark and exceed MLR, a loss is incurred
Shared Savings Calculation Step 3: Determining Sharing Rate and Shared Savings If an ACO achieves savings AND meets quality standards (next): Track 1: Sharing rate up to 50%, quality dependent (payment limit=10% of benchmark) Track 2: Up to 60%, quality dependent (payment limit= 15% of benchmark)
Shared Savings Calculation Step 3 (cont.) Track 2 Shared Losses ACOs are liable for up to 60% of losses Actual amount varies based on quality SO, ACOs that provide high quality share less loss Loss sharing limited to 5% of benchmark (Y1), 7.5% (Y2) and 10% (Y3)
Quality Measures Before an ACO can share savings, it must demonstrate quality performance 33 measures for quality performance Span 4 quality domains: 1. Patient Experience of Care 2. Care Coordination/Patient Safety 3. Preventative Health 4. At-Risk Population
Quality Measures Measured by: Web interface Patient experience (care surveys) CMS’ Claims and Administrative Data Minimum attainment level: 30th percentile of the national performance benchmark Maximum points: 90th percentile Corrective Action Required for failure to hit minimum attainment on 70% of measures
It’s real Since passage of the Affordable Care Act, more than 250 Accountable Care Organizations have been established 106 new ACOs were announced in January In total, Medicare ACOs will serve more than 4 million beneficiaries nationwide
Senior Care’s Role Evolving Partner as opposed to Participant Hospital costs are a key driver of overall beneficiary costs Inroads are being made by senior care providers to provide post hospital care and rehabilitation services Is there potentially a greater role in enhancing the consumer experience? In promoting overall health?
Assisted Living’s role Advantages - Consumer focused - Promotes wellness - Routine screening - Less costly than other care settings
Challenges - State regulations - Dealing with partners - Investment - Technology - Training
- Touching Medicare
ACOs: tip of the iceberg Value based payment for physicians in 2015 Hospital acquired condiXons payment adjustments in 2015 Value based purchasing for hospitals 2013 Readmits reducXons in 2012 AND WE HAVEN’T EVEN TALKED ABOUT PRIVATE INSURANCE
Questions? Thank you! Michael R. Crowe Brown McCarroll, LLP 111 Congress, Suite 1400 Austin, Texas 78701 512-702-5737 mcrowe@brownmccarroll.com