RISK CAPABILITY AND THE HARD WORK OF
HEALTHCARE TRANSFORMATION:
“CONNECTING THE DOTS WITH GOVERNANCE”
SCHA TAP CONFERENCE
Hilton Head, South Carolina
September 18, 2014
Our Transformational Perspective
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Industry Transformation
•
PROVIDER NET REVENUE
•
•
•
How do local market conditions impact timing
considerations?
Can market-changing events create an urgent
paradigm shift?
What is my step-change business model risk?
Do I have the financial tools to adequately
analyze relevant states?
TIME
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Payer Movement to Value-Based Payment Models
Survey
the
Commercial
Payer
Community
AA
Survey
ofof
the
Commercial
Payer
Community
Source: Availity Research, April 2013
Which Service Lines Will You Focus On
Over Next 12-18 Months
Percentage of Payer Community
Percentage of Payer Community
Increasing
Portion
of Business
Increasing
Portion
of Business
Supported
By Value-Based
Models
Supported
By Value-Based
Models
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Source: Availity Research, April, 2013
5
Risk Capable…ACO Adoption
http://ehrintelligence.com/2013/08/23/acos-doubled-during-past-year-medicare-outpaced-commercial/
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The Risk Capable Healthcare Organization
Populations,
Utilization,
Costs,
Budgets,
Monitoring
Risk
Capable
“Overmanaged,”
Portfolio,
Multiple
Models,
Funds
Distribution
Structure, Governance, Alignment, Value
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Case Study Thumbnails
Markets are changing…..
•
•
•
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Alabama Medicaid reform – a market-changing event
Large orthopedics group – challenges around the corner
National not-for-profit – revenue portfolio transformation
National for-profit – preparing for changing markets
BPCI pilots exploding
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LEGAL EXPOSURE ASSOCIATED WITH
RISK-BASED CONTRACTING
• Financial Impact and Consequences
– Hospital executives, Board and physician leaders need to understand
the scope of what is at risk and potential implications of assuming this
risk.
– Need to develop and implement into payor strategy for all payors:
• Governmental
• Commercial –Blue Cross, etc.
• Employers –Direct Contract
LEGAL EXPOSURE ASSOCIATED WITH
RISK- BASED CONTRACTING
• Leadership must have proper resources and skill set to
evaluate and implement risk based strategies. Boards must
know how to evaluate these new types of strategies:
– Does hospital have the IT system to manage the risk-based
strategies?
– Does hospital have clinical integration in place to assume risk?
LEGAL EXPOSURE ASSOCIATED WITH
RISK- BASED CONTRACTING
• Implications of Development of Clinically Integrated Network
• Expectations Have Changed:
– Payors will be expecting hospitals to behave in a different way.
– Hospitals will be expecting physicians to behave in a different way.
– Physicians and patients will be expected to be more engaged and
informed and to work together more closely.
– Population health management
LEGAL EXPOSURE ASSOCIATED WITH
RISK-BASED CONTRACTING
• Physician/Hospital Alignment
– Hospitals who have financial relationship with physicians will be
changed as the reimbursement methodologies change.
– Volume-based methodologies will transition to more specific clinical
and cost metrics
• Value based purchasing
• Reducing re-admissions
• Reducing hospital acquired infections
– These new methodologies will need to be documented in new
contracts with hospitals and physicians
• There will be growing pains
Physician Value Based Purchasing
Medicare as Passive Payer
Medicare as Active Purchaser
Who and When?
2013
Physician
groups 100 or
more measured
2014
Physician
groups of 10 or
more measured
2015
Payment
adjusted for
physician
groups of 100 or
more and all
physicians
measured
60% of
Physicians
2016
Payment
adjusted for
physician
groups of 10 or
more
2017
Payment
adjusted for all
physicians
What Are the Standards?
Physician Risk – Medicare Payment
Physician Practice Expense
Number of Patients
Malpractice
Stark/Anti-kickback/CMP
Coding Compliance and Accuracy
Quality Metrics
Costs to Medicare
Quality Metrics
Costs to Medicare
Standards for Payment Adjustment
Quality
Cost
•
•
•
•
PQRS
– Patient Safety
– Patient Experience
– Care Coordination
– Clinical Care
– Population Health
– Efficiency
Outcome measures
– Avoidable admissions for heart failure,
COPD, diabetes
– Avoidable admissions for UTI,
dehydration, and pneumonia
– All-cause hospital readmissions
Gets to Post-Acute Care Spending
Total Overall Costs (Medicare Parts A and B)
Total Costs for patients with specific conditions
– COPD
– Heart Failure
– Coronary Artery Disease
– Diabetes
Medicare Spending
Per Beneficiary
LEGAL EXPOSURE ASSOCIATED WITH
RISK-BASED CONTRACTING
• Regulatory Requirements/Risk
– Although the reimbursement/compensation methodologies may be
changing, the regulatory framework for hospital/physician relationships
are still in place.
– Must still comply with:
•
•
•
•
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Stark Law
Anti-kickback Statute
Antitrust Laws
Civil Monetary Penalty Rules
False Claims Act Laws
– ACOs provide some potential limited waiver-protection regarding
compliance with these laws but this is not enough.
– Ultimately, may need changes in the regulatory framework to give
providers the room they need to make transition to these new models.
LEGAL EXPOSURE ASSOCIATED WITH
RISK-BASED CONTRACTING
• Other Potential Legal Implications
– Development of exclusive high performing or narrow networks.
• Could a system be carved out of a certain service line within a market by a
payor?
– Return of Economic Credentialing?
• What happens to physicians who do not perform well under these new
risk-based methodologies?
• Employment status
• Medical staff membership status
• Participating provider status in payor network
LEGAL EXPOSURE ASSOCIATED WITH
RISK-BASED CONTRACTING
• Other Potential Legal Implications
• Executive Qualifications/Compensation
– As these new reimbursement/compensation methodologies evolve,
will a different type of executive leader be needed?
– What will necessary skill sets be?
– What will executive compensation look like?
– Role of physician leaders will be critical
Key Considerations
Achieving sustainable risk capability must consider:
•
•
•
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Complexities in creating reliable
forecasts and capital plans
•
Federal and state uncertainties –
“stroke of the pen” risk
•
Operationalizing risk capability
across multiple domains
Articulating and demonstrating ROI
on major current investments
•
•
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Compliance requirements across
multiple providers
Alignment around measurable
participation criteria: quality,
certifications, clinical protocols,
payment incentives
Accelerating transformation
across the industry landscape
Identifying and deploying the
“right” tools to monitor progress
and changes
Continuous evaluation:
measuring, reporting and
adjusting
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Barriers – Forbes insights
50%
Difficulty in fully engaging physicians
46%
Complexity and unpredictable impact of VBP contracts
Decrease in profitability during transition
32%
Lack of information management infrastructure
32%
Lack of sufficient economic predictability
31%
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A View on the Change Response
High
Paralyzed by
Confusion
Embracing the
Opportunities
Existing in
Denial
Resigned to
Acceptance
RESILIENCY
Low
Low
UNDERSTANDING
High
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The Risk Capable Healthcare Organization
Risk management in
an efficient and
profitable organization
Maximize portfolio
reimbursement to
foster financial
success
Educated patients
with accountability
who utilize services
appropriately
Integrated provider
network that
enhances the
continuum of care
and creates value
Incentivized providers
that manage quality
and costs
Provider criteria with
defined metrics to
ensure compliance
Best practices for patientcentered care
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With You Today
Bill Hannah
Market Leader - CFO Advisory Services
DHG Healthcare
[email protected]
404.575.8921
Matthew B. Roberts
Member
Nexsen Pruet, LLC
[email protected]
803.253.8286
Scott E. Hultstrand
Special Counsel
Nexsen Pruet, LLC
[email protected]
803.540.2148
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