PAYMENT INNOVATION: Real Examples of Client ImplementationCraig Tolbert & Michael Wolford

2

PINNACLE SPEAKER PROFILE

CRAIG TOLBERT

• Principal

• DHG Healthcare

• Birmingham, AL

PINNACLE SPEAKER PROFILE

MICHAEL WOLFORD

• Senior Manager

• DHG Healthcare

• Cleveland, OH

LEARNING OBJECTIVES

• Understand the universe of payment innovation programs and payment models out there in both the governmental and commercial domains.

• Focused comprehension of key provisions of a minority of the universe of payment innovation models where the bulk of the action is today.

• Discovering real DHG Healthcare client examples of implementing successful responses to payment innovation programs and models.

KEY TAKEAWAYS

• Payment innovation comes from all elements of the value chain

• Implementation of new payment model principles requires intimate understanding of success drivers

• DHG Healthcare has the experience and capability to help providers implement new payment model

Learning Objectives & Key Takeaways

5

LEARNING OBJECTIVES

• Understand the universe of payment innovation programs and payment models out there in both the governmental and commercial domains, and the likelihood of further innovation.

• Focused comprehension of key provisions of a minority of the universe of payment innovation models where the bulk of the action is today.

• Discovering real DHG Healthcare client examples of implementing successful responses to payment innovation programs and models.

KEY TAKEAWAYS

• Payment innovation comes from all elements of the value chain.

• Our approach to payment innovation fits hand-in-glove with our Risk Capability 2.0 perspective.

• Implementation of new payment model principles requires intimate understanding of success drivers.

• DHG Healthcare has the experience and capability to help providers implement new payment model.

Learning Objectives & Key Takeaways

6

Commonalities Between Toddler Toilet Training and Payment Models

7

0

20

40

60

80

100

120

140

160

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1947 1974 2003

Prol

ifera

tion

of D

ispo

sabl

e D

iape

rs

Age

of 6

0% C

hild

Toi

let T

rain

ing

Year

Toilet Training and Disposable Diapers in the United States

Age of 60% Population Trained Disposable Diaper Sales (est.)

Commonalities Between Toddler Toilet Training and Payment Models

8

0

20

40

60

80

100

120

140

160

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1947 1974 2003

Prol

ifera

tion

of D

ispo

sabl

e D

iape

rs

Age

of 6

0% C

hild

Toi

let T

rain

ing

Year

Toilet Training and Disposable Diapers in the United States

Age of 60% Population Trained Disposable Diaper Sales (est.)

Invention and mass-adoption of disposable diapers has resulted in later

toilet training among toddlers in the United States.

Drawing the Connection

9

Need:Cleanliness, Sanitation, Affordability

Fix: Disposable Diaper

Consequence:Delayed Toilet

Training, Others

DIA

PER

S

Drawing the Connection

10

Need:Cleanliness, Sanitation, Affordability

Fix: Disposable Diaper

Consequence:Delayed Toilet

Training, Others

Need:Trim Healthcare Spending while

Improving Quality

Fix: Alternative Payment Models that Reward

Both Needs

Consequence:

?

DIA

PER

SH

EALT

HC

AR

E

Different Model Variables

11

Voluntary / Mandatory

Demonstration / Codified

Geographies: Select / All

Financial Ramifications

Impacted Providers

…and dozens more

HCPLAN: Categories of Payment

12

Category 1:

Fee for Service –No Link to

Quality & Value

Category 2:

Fee for Service –Link to Quality

& Value

Category 3:

APMs Built on Fee-for-Service

Architecture

Category 4:

Population-Based Payment

Legend

HCPLAN: Categories of Payment, 2015-2016 Payments by Category

13

Category 1:Fee for Service –No Link to Quality

& Value

Category 2:Fee for Service –

Link to Quality & Value

Category 3:APMs Built on

Fee-for-Service Architecture

Category 4:Population-Based

Payment

62%43%

15%28% 23%

29%

2015 2016

HCPLAN: APM Principles

14

Provider financial incentives alone don’t generate meaningful

change; patients must also be empowered

Value-based incentives should ideally reach care teams who deliver care

Payment models that do not take quality into

account do not count as progress toward

payment reform

Incentives should be intense enough to motivate providers to invest in and adopt new approaches to

care delivery

Pulling It All Together

15

Actual Models

Variables

Categories

Principles

Pulling It All Together

16

Actual Models

Variables

Categories

Principles

Quality

Value

Payment Models of All Shapes and Sizes

17

• ACO Investment Model

• Advance Payment ACO Model

• Comprehensive ESRD Care Model

• Medicare Health Care Quality Demonstration

• Next Generation ACO Model

• Medicare Shared Savings Models

• Nursing Home Value-Based Purchasing Demonstration

• Physician Group Practice Transition Demonstration

• Pioneer ACO Model

• Private, For-Profit Demo Project for he Program of All-Inclusive Care for the Elderly (PACE)

• Vermont All-Payer ACO Model

• Acute Myocardial Infarction (AMI) Model

• BPCI Model 1: Retrospective Acute Care Hospital Stay Only

• BPCI Model 2: Retrospective Acute & Post-Acute Care Episode

• BPCI Model 3: Retrospective Post-Acute Care Only

• BPCI Model 4: Prospective Acute Care Hospital Stay Only

• Comprehensive Care for Joint Replacement Model

• Coronary Artery Bypass Graft (CABG) Model

• Medicare Acute Care Episode (ACE) Demonstration

• Medicare Hospital Gainsharing Demonstration

• Oncology Care Model

• Physician Hospital Collaboration Demonstration

• Surgical Hip and Femur Fracture Treatment (SHFFT) Model

• Advanced Primary Care Initiatives

• Comprehensive Primary Care Initiative

• Comprehensive Primary Care Plus (CPC+)

• FQHC Advanced Primary Care Practice Demonstration

• Frontier Extended Stay Clinic Demonstration

• Graduate Nurse Education Demonstration

• Independence at Home Demonstration

• Medicare Coordinated Care Demonstration

• Multi-Payer Advanced Primary Care Practice

• Transforming Clinical Practice Initiative

• Medicaid Emergency Psychiatric Demonstration

• Medicaid Incentives for the Prevention of Chronic Diseases Model

• Medicaid Innovation Accelerator Program

• Strong Start for Mothers and Newborns Initiative: Effort to Reduce Early Elective Deliveries

• Strong Start for Mothers and Newborns Initiative: Enhanced Prenatal Care Models

• Financial Alignment Initiative for Medicare-Medicaid Enrollees

• Initiative to Reduce Avoidable Hospitalizations Among Nursing Facility Residents, Phase

• Medicare-Medicaid Accountable Care Organization (ACO) Model

• Accountable Health Communities Model

• Cardiac Rehabilitation (CR) Incentive Payment Model

• Frontier Community Health Integration Project Demonstration

• Health Care Innovation Awards, Round Two

• Health Plan Innovation Initiatives

• Home Health Value-Based Purchasing Model

• Maryland All-Payer Model

• Medicare Advantage Value-Based Insurance Design Model

• Medicare Care Choices Model

• Merit-Based Incentive Payment System (MIPS)

• Quality Performance Program (QPP)

• Medicare Intravenous Immune Globulin (IVIG) Demonstration

• Part D Enhanced Medication Therapy Management Model

• Pennsylvania Rural Health Model

• Physician-Focused Payment Models (PFPMs)

• Regional Budget Payment Concept

• Rural Community Hospital Demonstration

• State Innovation Models Initiative: Model Design Awards Rounds One and Two

• State Innovation Models Initiative: Model Test Awards Rounds One and Two

• Beneficiary Engagement and Incentives: Direct Decision Support (DDS) Model

• Beneficiary Engagement and Incentives: Shared Decision Making (SDM) Model

• Community-Based Care Transitions Program

• Medicare Diabetes Prevention Program (MDPP) Expanded Model

• Medicare Imaging Demonstration

• Million Hearts

• Million Hearts: Cardiovascular Disease Risk Reduction Model

• Partnership for Patients

• Value-Based Purchasing (VBP) Program

• Hospital Acquired Condition (HAC) Penalties

• Readmission Reduction Program (RRP)

Payment Models of All Shapes and Sizes

18

• ACO Investment Model

• Advance Payment ACO Model

• Comprehensive ESRD Care Model

• Medicare Health Care Quality Demonstration

• Next Generation ACO Model

• Medicare Shared Savings Models

• Nursing Home Value-Based Purchasing Demonstration

• Physician Group Practice Transition Demonstration

• Pioneer ACO Model

• Private, For-Profit Demo Project for he Program of All-Inclusive Care for the Elderly (PACE)

• Vermont All-Payer ACO Model

• Acute Myocardial Infarction (AMI) Model

• BPCI Model 1: Retrospective Acute Care Hospital Stay Only

• BPCI Model 2: Retrospective Acute & Post-Acute Care Episode

• BPCI Model 3: Retrospective Post-Acute Care Only

• BPCI Model 4: Prospective Acute Care Hospital Stay Only

• Comprehensive Care for Joint Replacement Model

• Coronary Artery Bypass Graft (CABG) Model

• Medicare Acute Care Episode (ACE) Demonstration

• Medicare Hospital Gainsharing Demonstration

• Oncology Care Model

• Physician Hospital Collaboration Demonstration

• Surgical Hip and Femur Fracture Treatment (SHFFT) Model

• Advanced Primary Care Initiatives

• Comprehensive Primary Care Initiative

• Comprehensive Primary Care Plus (CPC+)

• FQHC Advanced Primary Care Practice Demonstration

• Frontier Extended Stay Clinic Demonstration

• Graduate Nurse Education Demonstration

• Independence at Home Demonstration

• Medicare Coordinated Care Demonstration

• Multi-Payer Advanced Primary Care Practice

• Transforming Clinical Practice Initiative

• Medicaid Emergency Psychiatric Demonstration

• Medicaid Incentives for the Prevention of Chronic Diseases Model

• Medicaid Innovation Accelerator Program

• Strong Start for Mothers and Newborns Initiative: Effort to Reduce Early Elective Deliveries

• Strong Start for Mothers and Newborns Initiative: Enhanced Prenatal Care Models

• Financial Alignment Initiative for Medicare-Medicaid Enrollees

• Initiative to Reduce Avoidable Hospitalizations Among Nursing Facility Residents, Phase 2

• Medicare-Medicaid Accountable Care Organization (ACO) Model

• Accountable Health Communities Model

• Cardiac Rehabilitation (CR) Incentive Payment Model

• Frontier Community Health Integration Project Demonstration

• Health Care Innovation Awards, Round Two

• Health Plan Innovation Initiatives

• Home Health Value-Based Purchasing Model

• Maryland All-Payer Model

• Medicare Advantage Value-Based Insurance Design Model

• Medicare Care Choices Model

• Merit-Based Incentive Payment System (MIPS)

• Quality Performance Program (QPP)

• Medicare Intravenous Immune Globulin (IVIG) Demonstration

• Part D Enhanced Medication Therapy Management Model

• Pennsylvania Rural Health Model

• Physician-Focused Payment Models (PFPMs)

• Regional Budget Payment Concept

• Rural Community Hospital Demonstration

• State Innovation Models Initiative: Model Design Awards Rounds One and Two

• State Innovation Models Initiative: Model Test Awards Rounds One and Two

• Beneficiary Engagement and Incentives: Direct Decision Support (DDS) Model

• Beneficiary Engagement and Incentives: Shared Decision Making (SDM) Model

• Community-Based Care Transitions Program

• Medicare Diabetes Prevention Program (MDPP) Expanded Model

• Medicare Imaging Demonstration

• Million Hearts

• Million Hearts: Cardiovascular Disease Risk Reduction Model

• Partnership for Patients

• Value-Based Purchasing (VBP) Program

• Hospital Acquired Condition (HAC) Penalties

• Readmission Reduction Program (RRP)

Payment Models of All Shapes and Sizes

19

• ACO Investment Model

• Advance Payment ACO Model

• Comprehensive ESRD Care Model

• Medicare Health Care Quality Demonstration

• Next Generation ACO Model

• Medicare Shared Savings Models• Nursing Home Value-Based Purchasing Demonstration

• Physician Group Practice Transition Demonstration

• Pioneer ACO Model

• Private, For-Profit Demo Project for he Program of All-Inclusive Care for the Elderly (PACE)

• Vermont All-Payer ACO Model

• Acute Myocardial Infarction (AMI) Model

• BPCI Model 1: Retrospective Acute Care Hospital Stay Only

• BPCI Model 2: Retrospective Acute & Post-Acute Care Episode

• BPCI Model 3: Retrospective Post-Acute Care Only• BPCI Model 4: Prospective Acute Care Hospital Stay Only

• Comprehensive Care for Joint Replacement Model• Coronary Artery Bypass Graft (CABG) Model

• Medicare Acute Care Episode (ACE) Demonstration

• Medicare Hospital Gainsharing Demonstration

• Oncology Care Model

• Physician Hospital Collaboration Demonstration

• Surgical Hip and Femur Fracture Treatment (SHFFT) Model

• Advanced Primary Care Initiatives

• Comprehensive Primary Care Initiative

• Comprehensive Primary Care Plus (CPC+)

• FQHC Advanced Primary Care Practice Demonstration

• Frontier Extended Stay Clinic Demonstration

• Graduate Nurse Education Demonstration

• Independence at Home Demonstration

• Medicare Coordinated Care Demonstration

• Multi-Payer Advanced Primary Care Practice

• Transforming Clinical Practice Initiative

• Medicaid Emergency Psychiatric Demonstration

• Medicaid Incentives for the Prevention of Chronic Diseases Model

• Medicaid Innovation Accelerator Program

• Strong Start for Mothers and Newborns Initiative: Effort to Reduce Early Elective Deliveries

• Strong Start for Mothers and Newborns Initiative: Enhanced Prenatal Care Models

• Financial Alignment Initiative for Medicare-Medicaid Enrollees

• Initiative to Reduce Avoidable Hospitalizations Among Nursing Facility Residents, Phase 2

• Medicare-Medicaid Accountable Care Organization (ACO) Model

• Accountable Health Communities Model

• Cardiac Rehabilitation (CR) Incentive Payment Model

• Frontier Community Health Integration Project Demonstration

• Health Care Innovation Awards, Round Two

• Health Plan Innovation Initiatives

• Home Health Value-Based Purchasing Model

• Maryland All-Payer Model

• Medicare Advantage Value-Based Insurance Design Model

• Medicare Care Choices Model

• Merit-Based Incentive Payment System (MIPS)• Quality Performance Program (QPP)

• Medicare Intravenous Immune Globulin (IVIG) Demonstration

• Part D Enhanced Medication Therapy Management Model

• Pennsylvania Rural Health Model

• Physician-Focused Payment Models (PFPMs)

• Regional Budget Payment Concept

• Rural Community Hospital Demonstration

• State Innovation Models Initiative: Model Design Awards Rounds One and Two

• State Innovation Models Initiative: Model Test Awards Rounds One and Two

• Beneficiary Engagement and Incentives: Direct Decision Support (DDS) Model

• Beneficiary Engagement and Incentives: Shared Decision Making (SDM) Model

• Community-Based Care Transitions Program

• Medicare Diabetes Prevention Program (MDPP) Expanded Model

• Medicare Imaging Demonstration

• Million Hearts

• Million Hearts: Cardiovascular Disease Risk Reduction Model

• Partnership for Patients

• Value-Based Purchasing (VBP) Program• Hospital Acquired Condition (HAC) Penalties

• Readmission Reduction Program (RRP)

Medicare Shared Savings Program (MSSP)

20

FAST FACTS

Introduced 2011, Started 2012

Participation Voluntary

Participants 432 ACOs (CY2016)

Provider Type(s) Physicians, Mostly PCPs

DHG Clients (approx.) ~10

End date (if appl.) N/A

Est. $ Impact / year High

Beyond The Facts:

• Significant Primary Care engagement and affinity strategy – not necessarily employment.

• Perfect program for providers to demonstrate ‘risk capability’ with no actual downside risk.

• Many providers hedge against downside risk; as a result, only 30% breakeven (CY2016) on the program.

• We expect participation to boom in the next few years as physicians seek alternatives to MIPS.

• Physicians can only be in one (1) MSSP, so there is both offensive and defensive ‘land grab’ in competitive markets

Bundled Payments for Care Improvement & Comprehensive Care for Joint Replacement Model

21

FAST FACTS

Introduced BPCI 2011 / CJR 2015

Participation BPCI: Voluntary;CJR: Mand. & Vol.

Participants BPCI: 1,000+CJR: 800

Provider Type(s) BPCI: All typesCJR: Acute hospitals

DHG Clients (approx.) ≈100

End date (if appl.) BPCI: Sept. 2018CJR: Dec. 2020

Est. $ Impact / year Low / Moderate

Beyond The Facts:

• Major strategies for success are mitigating unnecessary post-acute care utilization and avoiding readmissions.

• As a result of these bundling programs, significant savings has been generated from surgical episodes; medical episodes are flat nation-wide.

• Participation in both programs is limited; no new entrants expected.

• CJR Year 1 gains exceeded CMS initial expectations by 3.5x; shows that (a) there was legacy fat to trim and (b) incentives were material enough to manufacture change.

Merit-based Incentive Payment System (MIPS)

22

FAST FACTS

Introduced 2015

Participation Choose either MIPS or Advanced APMs

Participants >90% of physicians in Medicare Part B

Provider Type(s) Physicians

DHG Clients (approx.) ≈10

End date (if appl.) n/a

Est. $ Impact / year Moderate

Beyond The Facts:

• Nearly all physicians will seek the MIPS track instead of the Advanced APM track in the near future because the neutral zone is wide in which providers don’t earn gains or incur losses in MIPS.

• Physician Fee Schedule increases stop in 2020 when MIPS payment adjustment increases.

• By 2022, physicians’ Medicare Part B payments could adjust +/- 9% based on quality, efficiency, EHR use, and others.

• Clients with heavy Medicare FFS payer mix could see material compensation swing based on performance; others may choose to pursue Advanced APMs to avoid Part B fluctuation.

Value-Based Purchasing (VBP), Hospital Acquired Condition (HAC) Penalties, and Readmission Reduction Program (RRP)

23

FAST FACTS

Introduced 2010-2015

Participation Mandatory

Participants 3,000+ Hospitals

Provider Type(s) Acute Care Hospitals

DHG Clients (approx.) Hundreds

End date (if appl.) n/a

Est. $ Impact / year High

Beyond The Facts:

• Shockingly, many executives don’t fully understand (a) their own gain/loss history or (b) the performance metrics on which to improve.

• CMS saves nearly $1 billion annually from payment reductions derived from HAC and RRP; VBP is revenue-neutral.

• Similar type programs are being tested by commercial payers and by CMS for other provider types (Home Health, SNF)

• Every acute care hospital nationwide could perform better and improve Medicare reimbursement.

• Succeeding in these three programs is good for patients!

Client Example 1: Mary Washington Health Alliance

24

Situation

• Clinically Integrated Network (CIN) looking for ways to implement risk capability

• Strong DHG Healthcare relationships re: audit, legacy CFOA, strategy, and EI

Action

• PCP Strategy: Enrolled in MSSP

• Specialist Strategy: Enrolled in many voluntary bundles, ≈70% of Medicare FFS patients were bundled.

Result

• Revenues:• Bundles: +$9.6m• MSSP: $0 (2015-16)

• Expenses: ≈$3-4m

• Most savings derived from prevented readmissions:• 3Q15: 29%• 2Q17: 19%

Client Example 1: Mary Washington Health Alliance

25

Bundles only

Client Example 2: Conway Medical Center (SC)

26

Situation• Significant opportunities in

VBP, HAC, and RRP• Siloed organization• Outpaced by competitors• Clinical ops and quality

departments not working together

• Not using data to drive action

Action• 3-month engagement with

DHG• Focus on Triple-Aim

Performance Excellence• Overhauled nursing

protocols

Result• Protected $1.7 million of

future Medicare revenue• Dramatic statistical

improvements in:• CAUTI-SIR• CLABSI (became top

decile)• C. diff

• Clinical results improved VBP, HAC, and RRP scores; reduced Hospital LOS

Client Example 3: LifePoint Health

27

Situation• Strong legacy relationship

between DHG Healthcare and LifePoint SVP for Population Health

• 18+ months of mutual discovery meetings

• Three (3) LifePoint Clinically Integrated Networks (and more in the works) that are not in the Medicare Shared Savings program

• Nashville investor-owned chatter about CHS’ big offensive & defensive play in MSSP effective 2018

Action• Verbal commitment by LifePoint

to engage DHG Healthcare

• Engagement focuses on establishing MSSP in two (2) new markets and transitioning three (3) existing CINs to MSSP risk

• Data, strategy, implementation, and full-blown hand-holding to establish these 5 MSSP entities throughout 2018

Result

• To be continued…

28

Baloo

MICHAEL WOLFORDSENIOR MANAGERCLEVELAND // OH330-655-3323 // MICHAEL.WOLFORD@DHGLLP.COM

CRAIG TOLBERTPRINCIPALBIRMINGHAM // AL205-212-5355 // CRAIG.TOLBERT@DHGLLP.COM

29