HEALTH Volume 9 • No. 5
Kavita Patel, MD Entering the Great Paradox, p.10 Encouraging Incentives for Alternative Payment Models in MA, p.12 Unlocking the Value in Risk-based Contracts, p.14
Fall 2015
Confidence The feeling you have when you are affiliated with Hill Physicians. Claudell Stephens M.D.
Hill Physicians provider since 1993. Uses Ascender preventive care reminders and Hill EHR for a comprehensive solution to patient care, practice management and ePrescribing.
At Hill Physicians, we continue to improve upon coordinated care, with remarkable results. We provide the tools and support that practices need to be financially successful and improve the coordinated care experience for their patients. Our advantages include: • Fast, accurate claims payments • Free eReferrals and online doctor-patient communications • Experienced RN case management for complex, time-intensive cases • Deep discounts on EPM and EHR solutions to help you meet the federal mandate • Easy preventive care and disease management reminders for patients • Extensive health resources that boost patient engagement • High consumer awareness that builds practice volume That’s why 3,800 independent primary care physicians, specialists and healthcare professionals have joined Hill. Feel confident in the future of your practice and your patients by affiliating with Hill Physicians Medical Group.
For more about the advantages of affiliating, visit HillPhysicians.com/JoinUs.
Hill Physicians’ 3,800 healthcare providers accept HMOs and many PPOs from Aetna, Anthem Blue Cross, Blue Shield, CIGNA, Easy Choice, Health Net, Humana, SCAN, San Francisco Health Plan, United Healthcare WEST and Western Health Advantage. Medicare Advantage plans in all regions. Medi-Cal in some regions for physicians who opt-in.
Hospice: Another Medicare Advantage Since 1982, hospice has been a Medicare benefit, bringing team-based palliative care to terminally ill patients and their families. • Improving quality of life for beneficiaries • Saving money for Medicare • Reducing preventable readmissions for hospitals • Increasing patient and family satisfaction • Managing the medical cost ratio for insurers Partner with VITAS® Healthcare to provide your most fragile patients with comfort, dignity and time enough to address spiritual, financial, practical and relational issues as well as their physical needs near the end of life.
866.536.7655 • VITAS.com/nationalaccounts
TABLE OF CONTENTS
ON THE COVER
10
Kavita Patel, MD: Entering the Great Paradox
HEALTH Publisher
Valerie Okunami
DEPARTMENTS
FEATURES
5
14
Notes from the President
Editor-in-Chief
Don Crane
Editorial Advisory Board
Lura Hawkins, MBA Amy Nguyen Howell, MD, MBA Mary Kay Payne, Arch Health Partners Managing Editor
Daryn Kobata
Editorial Assistant
Nelson Maldonado
6
Contracts
Names in the News
22
8
Healthcare Hot Spotting Points to Higher Quality in Managed Care
Upcoming Events
Contributing Writers
Bill Barcellona Andrew Cohen Don Crane Amy Nguyen Howell, MD, MBA Rani Khetarpal, MBA Anand Krishnaswamy Stephen J. Linesch, MBA Elliott Main, MD Mara McDermott Kavita Patel, MD John Poziemski Michael Worsman
12 Federal Legislative Update: Encouraging Incentives for Alternative Payment Methods
16 Policy Briefing: Dealing with Increasing
CAPG Health Magazine is published by
Specialty Drug Costs
capghealth.com
20
Valerie Okunami Media PO Box 674, Sloughhouse, CA 95683 Phone 916.761.1853
Please send press releases and editorial inquiries to capghealth@capg.org or c/o CAPG Health, 915 Wilshire Blvd., Suite 1620, Los Angeles, CA 90017 For advertising, please send email to vokunami@netscape.com Subscription rates: $32 per year; $58 two years; $3 single copy. Advertising rates on request. Bulk third class mail paid in Jefferson City, MO Every precaution is taken to ensure the accuracy of the articles published in CAPG Health Magazine. Opinions expressed or facts supplied by its authors are not the responsibility of CAPG Health Magazine. Š 2015, CAPG Health Magazine. All rights reserved. Reproduction in whole or in part without written permission is strictly prohibited.
4 l CAPG HEALTH
Unlocking the Value in Your Risk-based
Fall 2015
CAPG Member List
24 CMQCC Leads a Statewide MultiStakeholder Project to Reduce Cesarean Births
26 The Impact of Transitional Care
28 New Partner MMA Presents 2015 CAPG Survey
From the President A M ES S AG E F R O M D O N A L D C R A N E , P R ES I D E N T A N D C EO , C A P G
CAPG Members and Friends: Education, in its broadest sense, has been the centerpiece of our mission throughout CAPG history. It plays an even larger role today as the nation moves from fee-forservice to alternative payment models. We are educating members with an everincreasing national schedule of meetings, classes, conferences, and publications. At the same time, we’re also educating our legislators and Accountable Care Act administrators, the healthcare community, and the general public.
Donald Crane, CAPG President and CEO
We believe this multifaceted effort will help create a high-quality, patient-centered system and promote greater understanding of the value of risk-based coordinated care. We also know that CAPG members who take advantage of our educational offerings are among America’s most successful healthcare providers. The 2015 CAPG Colloquium, now in its second year, is an important part of our focus on education. Let me point out just a few of the ways the conference can benefit you, whether you’re attending in person or online, or even reading some of the articles in this issue related to risk-based care. Because of the Colloquium’s location in our nation’s capital, you have the opportunity to meet and hear the views of legislators, policymakers, and top administrators. The event speakers also include executives representing physician groups, healthcare plans, consulting firms, think tanks, and prominent universities. One highlight will be our own Republican-Democratic Policy Debate, with four experts who promise a lively conversation. I look forward to moderating this debate, and to seeing you there—if not this year, then in the near future. Even more on education: An unprecedented 98 physician groups participated this year in our annual Standards of Excellence™ (SOE™) survey, and 38 of those were first-time participants. These numbers clearly show how eager CAPG members are to learn and to make good use of that knowledge. Our fourth edition of Case Studies in Excellence, based on the work of SOE™ participants, will be published around the time you’re reading this. It is an outstanding example of how closely education and excellence are linked. o
MARK YOUR CALENDAR
and join us next year!
13th Annual CAPG Healthcare Conference June 16-19, 2016 Grand Hyatt, San Diego Fall 2015
CAPG HEALTH l 5
Names in the News DR. VITO IMBASCIANI NAMED SECRETARY OF CALIFORNIA VETERANS AFFAIRS Vito Imbasciani, MD, director of government relations at the Southern California Kaiser Permanente Medical Group and a CAPG board member, has been appointed by Gov. Jerry Brown as secretary of the California Department of Veterans Affairs. Dr. Imbasciani previously served as state surgeon for the California Army National Guard from 2006 to 2014 and as a surgeon in the U.S. Army Medical Corps from 1986 to 2014. President-elect of the Los Angeles County Medical Association and a member of the California Medical Association Board of Trustees, he earned his medical degree from the University of Vermont.
CAPG MEMBERS AMONG SCAN HEALTH PLAN BEST-PERFORMING MEDICAL GROUPS Eight CAPG members are among the 10 top-performing medical groups in SCAN Health Plan’s California provider network for 2015. The 10 groups each achieved an average of four stars or higher on SCAN’s internal quality metrics, which are similar to the Centers for Medicare & Medicaid Services’ (CMS) Star Rating System and include a focus on preventive screenings, treatment of chronic conditions, and appropriate documentation to ensure that members get the care they need. CAPG members Greater Newport Physicians, HealthCare Partners, Riverside Medical Clinic, and St. Joseph Heritage Healthcare made the list for the second year in a row, along with Scripps Health Plan Services Inc. Joining the list are CAPG members Affinity Medical Group, Brown & Toland Medical Group, Mercy Physicians Medical Group, and UCLA Medical Group, together with Axminster Medical Group. The medical groups honored jointly serve approximately 21 percent of SCAN’s total membership, comprising 170,000 members in California and Arizona. The health plan is one of the nation’s largest not-for-profit Medicare Advantage plans.
MEMORIALCARE MEDICAL GROUP-SAN JUAN CAPISTRANO MOVES TO NEW LOCATION The San Juan Capistrano branch of MemorialCare Medical Group, an affiliate of MemorialCare Health System with locations in Orange County and Long
6 l CAPG HEALTH
Fall 2015
Beach, California, has moved to a new building at 31001 Rancho Viejo Road. The 25,000-square-foot health center serves as a “one-stop-shop” for patients. Lab, digital imaging services, and a Coumadin Clinic are available onsite. Patients have access to care including health promotion, disease prevention, health maintenance, counseling, patient education, and diagnosis and treatment of acute and chronic illnesses. The new facility’s 11 healthcare providers include family medicine physicians, pediatricians, an internist, and a podiatrist. Appointments can be scheduled at (949) 661-9600. For more information, please visit http:// www.memorialcare.org/memorialcaremedical-group.
CAPG CMO GIVES KEYNOTE ON PRACTICE TRANSFORMATION CAPG Chief Medical Officer Amy Nguyen Howell, MD, MBA, delivered the keynote talk at Practice Transformation: Prepare, Transform, Excel, a summit hosted by ConnectiCare, Inc., September 9 in Connecticut. Dr. Nguyen’s talk addressed ConnectiCare physician groups who are working toward total population health management and moving to alternative value-based reimbursement agreements. ConnectiCare, Inc. was ranked #5 on the 2007 U.S. News and World Report/National Committee for Quality Assurance list of America’s Best Health Plans. o
YOU PROBABLY BECAME A DOCTOR BECAUSE... you care deeply about people, their happiness and their health. WellMed shares your healthcare vision. If you’re interested in working with the Medicare population, working in an environment that empowers you and rewards you for your dedication and effort, join WellMed. Call our recruitment partner Provenir today (210) 479-3444. We can help you strengthen your medical practice future. From our WellMed doctors, nurses and physician assistants to our medical assistants and technicians, we have the same focus; to provide the best, most attentive healthcare for our senior patients. WellMed wants to create partnerships that offer physicians who share our vision with the freedom, support, and opportunity for professional growth. We’d like to welcome you to our family.
WellMedHealthcare.com DR_AD TJ101413
E V E N T S
SECOND CAPG COLLOQUIUM Monday through Wednesday, October 5-7 Marriott Wardman Park, Washington, DC*
U P C O M I N G
Tuesday, October 27 WebEx*
PHARMACEUTICAL CARE COMMITTEE NORTHWEST REGIONAL MEETINGS Thursday, September 24 Doubletree by Hilton Seattle Airport, Seattle*
Wednesday, November 4 TBD*
STATE GOVERNMENT PROGRAMS COMMITTEE
STATE GOVERNMENT PROGRAMS COMMITTEE
Tuesday, November 10 Los Angeles, CAPG Office*
Tuesday, September 29 Sheraton Grand Sacramento Hotel, Sacramento*
PUBLIC POLICY COMMITTEE
INLAND EMPIRE REGIONAL MEETINGS Wednesday, September 30 Riverside, Mission Inn*
CAPG NATIONAL
8 l CAPG HEALTH
APM COMMITTEE
Monday, October 5 Marriott Wardman Park, Washington, DC*
PUBLIC POLICY COMMITTEE
Thursday, November 12 Conference Call*
GENERAL MEMBERSHIP - SOUTHERN CALIFORNIA Tuesday, November 17 Los Angeles, CAPG Office*
PRIMARY CARE PRACTICE TRANSFORMATION COLLABORATIVE
Thursday, October 8 Conference Call*
Wednesday, November 18 Los Angeles, CAPG Office*
PUBLIC RELATIONS AND MARKETING COMMITTEE
GENERAL MEMBERSHIP - NORTHERN CALIFORNIA
Tuesday, October 13 Conference Call*
Thursday, November 19 Hilton Oakland Airport Hotel, Oakland*
ARIZONA REGIONAL NATIONAL MEETINGS
PUBLIC POLICY COMMITTEE
Thursday, October 15 Phoenix, TBD*
Thursday, December 10 Conference Call*
SAN DIEGO REGIONAL MEETINGS Wednesday, October 21 Sharp Spectrum Auditorium, San Diego*
CONTRACTS COMMITTEE Thursday, October 22 Los Angeles, CAPG Office*
*For more information contact CAPG at (213) 624-CAPG.
If you have an event to list in this column, please submit it at capghealth@capg.org. Include the name of the event, date, location, and where to get additional information. Fall 2015
November/December Winter2014 2015 CAPG CAPGHEALTH HEALTHl l25 9
ON THE COVER
Entering the Great Paradox BY KAVITA PATEL, MD , M S , M A N AG I N G D I R ECTO R F O R C L I N I C A L T R A N S F O R M AT I O N , T H E B R O O K I N G S I N S T I T U TION
As we come closer and closer to 2016, we are faced with a great paradox in healthcare. There has never before been both great certainty and great uncertainty about the future. On one hand, the Affordable Care Act (ACA) and its emphasis on expanded access and improved quality of care, having been upheld by the Supreme Court on two significant issues, is the law of the land. Yet on the other hand, we are more uncertain about whether we are ready to take on risk; whether costs can be contained in Medicare, Medicaid and commercial settings; and if we will ever have true healthcare transparency with knowledge around cost and quality of care at the point of service. Therein is the great paradox. As healthcare leaders, we must blaze ahead while dealing with the fact that at times, it feels as if we are on our hands and knees, looking for our keys in the dark. Riskbased financial arrangements are not new, but the ability to take on both clinical and financial risk can be daunting, as we have seen from recently released results from the Medicare Pioneer and Shared Savings Programs. Approximately one in four programs achieved savings beyond the required threshold, indicating that sustained savings are possible as the program expands across the country—but difficult to achieve. Perhaps more revealing are the dwindling numbers of accountable care organizations (ACOs) interested in taking downside risk when Medicare providers will be required to enter risk-based arrangements as part of the Medicare Access and CHIP Reauthorization Act (MACRA)—the recently passed sustainable growth rate (SGR) “doc fix” legislation. Below are five key areas that can help ease the transition and hopefully simplify the paradox:
1. DATA THAT CAN BE LIBERATED OUT OF SILOS Many people perceive that the era of “big data” will usher us out of chaos and into high value healthcare, but the ability to run analytics on existing datasets is not novel or unique. Rather, the ability to flexibly interdigitate streams of data from clinical origins, patient reported data, claims, and external sources (such as webscraping) will be a critical measure of success in risk-based arrangements. Recently released standards such as FHIR (Fast Healthcare Interoperability Resources) will help to drive new efficiency streams of data and open more unique applications for clinicians and patients.
2. A FOCUS ON THE TEAM OUTSIDE THE HOSPITAL/CLINIC Much of our attention has been focused on the four walls—be they the walls of the hospital, clinic, ambulatory surgical center, nursing home, etc. But the ability to successfully take on risk will be correlated with the ability to develop teams that live in the transitional spaces in between traditional care episodes. These teams can help navigate social determinants of health, as well as simply provide guidance on how to best engage with physicians and hospitals.
10 l CAPG HEALTH
Fall 2015
3. CONCENTRATION ON EFFICIENCIES IN WORKFLOWS Risk-based care might be considered a “better mousetrap,” but even building a better mousetrap can be difficult in healthcare when we are so dependent on legacy systems. Organizations that can identify and prioritize workflow efficiency will be able to survive no matter what the financial model—and that means learning from outside sectors such as industrial engineering and manufacturing. Smaller, iterative projects to improve scheduling, patient movement through a clinic, and worker satisfaction will yield great dividends.
4. BEHAVIORAL HEALTH INTEGRATION A significant degree of healthcare resource utilization can be tied to a behavioral health comorbidity, yet most providers lack experience in how to recognize, treat and improve these conditions. Integration of services, be they physical or virtual, can be an important step in patientcentered care, as well as mitigate potential downstream use of resources
5. EMPHASIS ON CONSUMER EXPERIENCE The rise of the concierge movement is present in all aspects of our society—rides on demand, instant help for tasks in the house, and so on. However, rather than trying to create the “Uber” of healthcare, risk-taking organizations will be smart to think about how to enhance the consumer’s experience at every touchpoint in the care system: from enrollment to choosing a provider, all the way through interpreting a bill. At each step, providers should try to identify pain points and sensible solutions.
And finally, a nod to the political season. It’s important to highlight that while the ACA is the law of the land, it is hard to tune out the rhetoric from Republican presidential candidates interested in potentially repealing and replacing Obamacare, though it seems highly unlikely given the votes required to make that happen. It is far more likely that the GOP majority Congress will take legislative action between now and Election Day by repealing the ACA’s medical device excise tax and Cadillac Tax (a 40 percent excise tax on highcost employer-sponsored coverage); the Independent Payment Advisory Board; and passage of the 21st Century Cures Act, which has a number of provisions that affect not just the bio/pharmaceutical sectors but the entire health industry. If the White House becomes occupied by a Republican in 2016 and the GOP can hold both chambers of Congress, then real action on the ACA is possible, including changes in many provisions around access. But both Democratic and Republican candidates realize that as more time passes, the more difficult it will be to unwind any major aspect of the law. Phrases such as “accountable care,” “insurance marketplaces” and “subsidies” are now part of the public dialogue, and as history has shown, it is very difficult to reverse the momentum on broad-scale social programs. o Dr. Kavita Patel is a Managing Director of Delivery System Reform at the Brookings Institution in Washington, DC. She is also a practicing primary care physician and a cofounder of Tuple Health, a physician-led company dedicated to bringing care back to health. In her spare time she enjoys trying to find even more spare time.
Fall 2015
CAPG HEALTH l 11
Federal Legislative Update Encouraging Incentives for Alternative Payment Models in Medicare Advantage BY MARA MCDERMOTT, VP OF FEDERAL AFFAIRS, CAPG
Enactment of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) and Department of Health & Human Services Secretary Sylvia Burwell’s Value Goals announcement have created an intense focus on how physicians are paid in Traditional Medicare. CAPG is working with Congress and the Administration to apply the same attention to alternative payment models in Medicare Advantage. Earlier this year, Congress passed and the President signed MACRA into law. Primarily, the act eliminates the sustainable growth rate (SGR) formula for Medicare Part B physician payments. Application of this formula in recent years had resulted in repeated significant proposed cuts to physician payments. Each time, Congress would act to prevent the cuts from going into effect. But to pay the bill for preventing physician payment reductions, Congress then would cut payments to other healthcare industry sectors, including Medicare Advantage. The enactment of MACRA creates a greater level of certainty around physician payments in Traditional Medicare and, for the rest of the industry, eliminates the constant threat of SGR-related cuts. MACRA was significant for CAPG members and like-minded physician organizations for another reason—it charts a course for the future of physician payment with incentives for financial and clinical risk. The law includes a five percent bonus payment for physicians and physician groups that take financial risk through qualifying “alternative payment models” in Traditional Medicare beginning in 2019. While we await regulations that will define and implement this statutory construct, we are encouraged by the official push to riskbearing models in Traditional Medicare. It’s a bold step forward. At the same time, we believe that same push forward is needed in Medicare Advantage. CAPG is encouraging Congress and the Administration to focus on the parallel issue of alternative payment models in Medicare Advantage—transforming the model of payment from health plan to physician or physician group. While it is well-known that the Centers for Medicare & Medicaid Services (CMS) makes a capitated payment to a health plan in Medicare Advantage, less is known about how MA plans are continued on page 30 12 l CAPG HEALTH
Fall 2015
“Properly implemented, capitated and risk-based models will lead to higher quality and a better overall care experience for Medicare’s seniors.”
2016 EDITORIAL CALENDAR
SPRING 2016 Theme: Clinical Quality Editorial & Advertising Due Friday, December 11, 2015
SUMMER 2016 / CONFERENCE ISSUE Theme: Commercial ACOs Editorial & Advertising Due Friday, April 22
FALL 2016 / COLLOQUIUM ISSUE Theme: Healthcare Policy And Alternative Payment Models Editorial & Advertising Due Friday, August 5
For editorial guidelines contact Daryn Kobata capghealth@capg.org Editorial Departments:
Upcoming Events Names in the News Member Spotlight
For Advertising Information : capghealth@gmail.com
Winter 2015
CAPG HEALTH l 13
Unlocking the Value in Your Risk-Based Contracts BY A N D R E W C O H E N , J O H N P O Z I E M S K I , A N D A N A N D K R I S H N A S WA M Y, K A U F M A N , H A L L & A S S O C I AT ES L LC
It’s taken a year or more of negotiating. Now you can celebrate the signing of a contract and establishment of an incentive model that allows key stakeholders to rally around improved quality and outcomes performance. Certainly, you have cause for celebration. Just be careful not to mistake the contract signing as the culmination of your efforts. Implementation work is just beginning. With the growth of revenue and members assigned to risk-based contracts, it will be critical for your organization to continually assess and adjust care delivery and health outcome optimization efforts, while simultaneously ensuring proper alignment between financing and care delivery models. The healthcare marketplace is becoming more competitive as commercial payers further consolidate, organizations continue to see pressure on rates and pricing, markets transition toward population health management (PHM), and tiered and narrow networks take hold. Your organization’s market essentiality will be challenged, requiring it to compete on network price and performance at a rate that far exceeds historical averages as it contends for a shrinking number of contracts against persistently more sophisticated competitors. Each risk-based contract offers opportunities to develop and refine the capabilities needed to gain and/or maintain a strong market position. FOUNDATIONAL COMPETENCIES Healthcare organizations that currently operate under capitated and other risk-based contracts likely have focused efforts on these foundational capabilities or “building blocks” for value-based PHM:
• Effective physician leadership and governance structures • Engaged and aligned primary care network 14 l CAPG HEALTH
Fall 2015
• Business intelligence and data governance, including data collection, analytics, and reporting • Enhanced care management and coordination functions, such as managing care across the continuum, keeping patients healthy versus treating sickness • Care management and payer contract alignment (e.g., effective member attribution, aligned and achievable incentives, quality metrics measurement and performance, etc.) ADVANCED CAPABILITIES Once your organization has the PHM building blocks in place, you can concentrate on more advanced capabilities to further optimize clinical and financial performance—and help distinguish your organization as a high performer in the marketplace. While there are many advanced capabilities providers should invest in, these four are among the most critical: Medical management prioritization. For clinicians to effectively prioritize PHM care models and interventions, including appropriate resource utilization, they need to tailor interventions to specific patient cohorts. This requires identifying key population segments associated with contracts, for example Medicare Advantage, commercially insured, and Managed Medicaid. Benefit design often varies across payer categories and each will require a unique approach. Patient segments should be stratified into manageable cohorts based on health risk status (e.g., disease burdens, chronic illness, mental health)—ranging from complex, high-risk patients to healthy, stable patients. Many advanced organizations enlist data analysts or specialty analytics vendors to build predictive models that assign patients individual scores based on certain risk variables (e.g., emergency department visits in last year, income, prior specialty visits, disease burden). This risk score informs the level and type of medical management and intervention needed. For these scores to be accurate and useful, you need rich utilization/cost and clinical data— epidemiological and patient-level data—from across care sites and ancillary services. Claims and medical record data are two possible sources. Socioeconomic data, including family state and housing status, also are essential to understanding how best to treat the population.
Analysts should engage clinicians and staff to identify the right risk variables and data sources. Allina Health tested hundreds of variables that might influence a patient’s readmission risk before settling on 30 highly predictive variables, including lab values and nursing assessment data.1 This approach allows organizations to prioritize PHM care interventions using the Pareto principle or “80/20 rule”—targeting early interventions to the 20 percent of the stratified population that consumes 80 percent of health resources. Advancing care models and population-specific programs. Sometimes clinicians find that the care model they thought would work for a population segment doesn’t keep unnecessary utilization in check. Or the care model needs to adapt as the population profile changes over time. One California provider, for example, needed to address rising per-member, per-month (PMPM) costs related to end-of-life care, despite decades of successful performance under a Medicare Advantage contract. Clinicians sought to pilot a palliative care program to provide patients the comfort and care they needed in the most appropriate care setting. They worked with the Medicare Advantage payer to incorporate financial incentives into the contract that made the palliative program a win-win for the providers, payer, and patients. This example illustrates the need to routinely reevaluate how a contract is performing against clinical realities and, if necessary, renegotiate terms and conditions. It is in the payer’s best interest to periodically fine-tune risk-based contracts to ensure their long-term sustainability. Contracts must evolve with care delivery models and the populations served. Specialist network design. After building a strong primary care base, your organization needs an equally high-performing specialty network. Many networks take an “all-comers” approach, but you will need to limit referrals to higher quality, lower-cost specialists as financial risk and performance management requirements increase. It can be difficult for physicians to tell colleagues that they need to improve performance before patients can be referred to them. Developing a clear and comprehensive set of performance criteria for your preferred network can make the process more objective. In California, the Integrated Healthcare Association’s pay-for-performance program is a good source of basic quality and cost information. More specific criteria will be needed for each specialty. Your organization might consider other yardsticks for both primary and specialty care, such as potential referral base, IT connectivity, patient satisfaction, mobile access, and cultural fit. Putting the preferred network together won’t work if you don’t also have effective, standardized referral management.
Organizations need to have a stop-gap for tracking and reviewing referrals—investigating why inappropriate out-ofnetwork referrals occur and whether referrals are made to the most appropriate, lowest-cost setting. Making it easier to identify network physicians might also help. Banner Health Network physicians, for example, soon will have an app that allows them to tell when a referral is in or out of network.2 Risk contracting and funds flows. Proper downstream risk sharing and performance incentives also are key to managing network providers. Organizations must thoroughly plan the timing and sharing of risk with affiliated or owned providers, especially if they plan to take global risk (institutional and professional risk). Lead entities that assume global risk under a capitated contract should be cautious and ensure that they don’t push risk downstream too quickly or too slowly or in a way that doesn’t promote optimal care delivery. Subcapitation and incentive arrangements should optimize efficiencies across the entire network, rather than at specific care sites. For instance, capitating primary care fees but reimbursing specialists on a fee-for-service basis might result in higher specialist utilization—along with higher overall profession spend and total care costs. As an example, a large children’s hospital performed detailed scenario modeling for various subcapitation and risk distribution models prior to entering into a risk-based contract with a major employer. This provided hospital leaders a clear understanding of the best structure and methodology for distributing funds and aligning incentives across their provider network. A FUTURE POSITION By focusing on the foundational building blocks of PHM—while working toward more advanced capabilities— organizations can position themselves to succeed in a more competitive provider marketplace and contracting environment. Organizations must act early and engage all stakeholders to maximize their likelihood of success with risk-based contracts. o Andrew S. Cohen is senior vice president, John Poziemski is vice president, and Anand Krishnaswamy is assistant vice president, Kaufman, Hall & Associates, LLC. Contact information: acohen@kaufmanhall.com, jpoziemski@ kaufmanhall.com, akrishnaswamy@kaufmanhall.com References 1. Van Dyke, M.: “Predictive Analytics: Pinpointing How to Best Allocate Patient Resources.” Leadership, March 1, 2013. http://www.hfma.org/ Leadership/Archives/2013/Spring _2013/Predictive_Analytics__ Pinpointing _How_To_Best_Allocate_Patient_Resources/) 2. Healthcare Financial Management Association: Strategies for Reconfiguring Cost Structure. June 2015. https://www.hfma.org/ valuereconfiguration/ Fall 2015
CAPG HEALTH l 15
Policy Briefing Dealing with Increasing Specialty Drug Costs BY BILL BARCELLONA, SENIOR VP, GOVERNMENT AFFAIRS, CAPG
The cost of so-called specialty drugs is a growing issue for payers, providers and patients. Specialty drugs are generally understood to be structurally complex, often requiring special handling or delivery mechanisms, and typically priced much higher than traditional medications. Some of these drugs are breaking ground in treating cancer, respiratory conditions, central nervous system disorders, and inflammatory conditions such as rheumatoid arthritis and psoriasis. But the cost of treating a patient can be tens of thousands of dollars a year–even up to $750,000 per year for the most expensive specialty drugs. The changing demographics of patient populations compound the potential for increased application of such drugs. Only 4 percent of patients use specialty drugs, but they account for 25 percent of total U.S. drug spending. Historically, these drugs have targeted diseases affecting very small populations, sometimes as few as a thousand individuals. But over time, breakthroughs lead to new clinical pathways to treat chronic conditions affecting tens of millions of patients. Specialty drugs are expected to increase drug spending growth in 2015 and beyond. Many of the highest-cost specialty drugs are a unique subset known as biologics. Unlike traditional medications made from chemical compounds, biologics are complex molecules derived from living or biological sources. Biologic medications can include vaccines, gene therapies, recombinant protein products, antibodies, and hormones. Advances in the understanding of how these medications work and their potential to help treat and cure disease have led to dramatic market growth—eight of the 10 top-selling drugs are forecast to be biologics by 2016, while only one was in the top 10 a decade ago. These drugs come to market with a significant price tag, up to 22 times more expensive than traditional medications. U.S. prescription drug spending rose by 13 percent in 2014, driven largely by increased spending on new breakthrough medications, according to a report by the IMS Institute for Healthcare Informatics. Medicaid patient spending on drugs rose much faster in states that expanded Medicaid under the Affordable Care Act compared with those that did not, the report found. The IMS’ annual analysis on prescription drug use found medication spending in 2014 reached its highest level since 2001, totaling more than $373 billion, with more than 4 billion prescriptions filled. A large contributor to the rise was an increase in specialty medication spending, which rose by $54 billion over the previous five years and accounted for one-third of medication spending in 2014, compared with 23 percent in 2009. Much of the increase came from drugs for hepatitis C, cancer, diabetes and multiple sclerosis. The study also found that new drugs accounted for more than $20 billion in drug spending growth in 2014, with over half coming from four new hepatitis C therapies. The number of patients treated for hepatitis C increased tenfold over 2013, to more than 161,000 in 2014. The new hepatitis C drugs, including Gilead Sciences’ Sovaldi and Harvoni, accounted for more than $11 billion of the 2014 spending. Sovaldi, which costs $84,000 for a normal course of treatment, represented a majority of those sales. According to one study author, “That’s enough to push health spending all by itself almost three-tenths of a percentage point.” The new hepatitis C drugs have a higher cure rate—90 percent or higher—than 16 l CAPG HEALTH
Fall 2015
previous treatments, as well as fewer harmful side effects. Some studies have shown that the drugs justify their cost based on the better quality of life they provide and the future health expenses that patients avoid. But insurers and pharmacy benefit managers, like CVS, reacted strongly and negatively to the initial pricing. Anthem initially restricted coverage for the treatment in certain patients that did not demonstrate advanced liver disease. One California patient, who alleged that she was denied coverage because she merely showed symptoms of darkened urine without evidence of liver scarring, fought back and sued the insurer. Public payers, including many state Medicaid programs, took a more restrictive approach toward the drugs, often requiring that patients have advanced liver disease to be eligible for the treatment. By November 2014, Harvard’s Center for Health Law and Policy Innovation found, 27 state Medicaid plans had restricted access to Sovaldi to patients with severe liver ailments, while some states also instituted limits on access for people with recent substance abuse problems. Ryan Clary, executive director of the National Viral Hepatitis Roundtable in San Francisco, said that some restrictions are unreasonable, particularly those imposed by state Medicare and Medicaid programs. “The restrictions placed by private and public payers on hepatitis C treatment can be severe,” he said. “They are blanket restrictions, like you must be sober for six months or you must have advanced liver disease. We believe that somebody with a chronic life-threatening illness like hepatitis C who wants to be cured, should be cured, and insurance should cover it.” If cost is the impetus for restricting access to medication, employers and insurers must realize that they will have to pay eventually, Clary said. “You have to weigh that cost against the cost of end-stage liver disease, of a liver transplant and hospitalizations,” he said. “Then, expanding access is not only humane but cost effective.”
known as Part D, which went into effect in 2006. All 54 million people on Medicare, including those 65 and older and those under 65 with permanent disabilities, have access to the Medicare drug benefit through private plans approved by the federal government. Beneficiaries with low incomes and modest assets are eligible for assistance with Part D plan (PDP) premiums and cost sharing. The Affordable Care Act of 2010 (ACA) made some important changes to Part D—in particular, phasing out the coverage gap by 2020. Around 11 million beneficiaries are currently receiving the Low-Income Subsidy (LIS), according to the Medicare Trustees. CMS has estimated that many other low-income beneficiaries are eligible for but not receiving these subsidies. Beneficiaries who are dually eligible automatically qualify for the additional assistance, and Medicare automatically enrolls them into PDPs with premiums at or below the regional average (the LIS benchmark) if they do not choose a plan on their own. Other beneficiaries are subject to both an income and asset test and need to apply for the Low-Income Subsidy through either the Social Security Administration or Medicaid. Even with Medicare Part D coverage, patients receiving the treatment are likely to incur high out-of-pocket costs—with some estimates of as much as $7,000 in cost sharing over a 12-week period for Sovaldi, taking into account the deductible, coinsurance, coverage gap, and 5 percent coinsurance above the catastrophic limit. Total out-of-pocket costs would be even higher for Part D enrollees who take Sovaldi in combination with other drugs. Previously undisclosed federal data show that Medicare spent $4.5 billion last year on new, pricey medications that cure hepatitis C—more than 15 times what it spent the year before on older treatments for the disease.
Some analysts expect that the dramatic cost increase in 2014 and 2015 will level out in 2016. In February, Gilead shocked investors by announcing expected discounts of 46 percent on Sovaldi and Harvoni for 2015. The introduction of AbbVie’s Viekira Pak was a game-changer, according to Seth Friedman, vice president of client management at Solid Benefits Guidance, a pharmacy and employee benefit consulting firm. “Viekira Pak changed the dynamic because it introduced competition,” he said. “Sovaldi spurred a lot of noise because it had no competition, but the landscape is changing.”
About 350,000 Medicare beneficiaries have hepatitis C, although less than half are aware of it. Because hepatitis C is most prevalent among baby boomers, the number of patients seeking treatment under Part D could rise unless they are cured before reaching the age of Medicare eligibility. HHS is currently encouraging at-risk individuals to get hepatitis C screening, which could boost the number, including Medicare beneficiaries, seeking a cure. Medicare may soon begin to cover the cost of screening for those at risk, which could further increase the number of beneficiaries seeking Medicare-covered treatments. As noted above, Medicare does not receive the discounts obtained by the VA or Medicaid; in fact, the program is explicitly prohibited by law from negotiating drug prices directly with pharmaceutical manufacturers.
What does all of this mean for Medicare? The Medicare Modernization Act of 2003 established a voluntary outpatient prescription drug benefit for Medicare patients
The picture is somewhat different in Medicaid programs. In the first full year of Affordable Care Act enrollment, Medicaid beneficiaries in states that expanded the Fall 2015
CAPG HEALTH l 17
program for all adults earning up to 138 percent of the federal poverty level filled 25 percent more prescriptions in 2014, compared with a 3 percent increase in nonexpansion states. Medicaid was the largest driver of retail prescription spending growth in 2014. The number of prescriptions filled through the program rose by 17 percent in 2014, accounting for 70 percent of the overall growth in demand for medications. But beyond Medicaid programs, states have been considering how to respond to the problems posed to consumers by increasing drug costs. Instead of charging a fixed copayment for specialty drugs, many PBMs require consumers to pay a percentage of the overall medication cost. With some commercial private plans, patients have to cover 20 percent to 50 percent of a drug’s cost; those with Medicare Part D can end up handling 25 percent to 33 percent. At least six states have adopted legislation that in one way or another caps how much consumers can be required to pay—leaving insurers, employers and PBMs to figure out how to integrate these sharply rising costs into affordable premium structures. One employer—the Southeastern Pennsylvania Transportation Authority in Philadelphia—filed a lawsuit in December 2014 against Gilead for alleged price gouging. The state agency said that it paid more than $2.4 million for Sovaldi prescriptions for its employees that year. Some employers are requiring employees to participate in disease management programs to help them stick to the treatment; using step therapy, which requires patients to try a less expensive medication before moving up to a more expensive one; and imposing restrictions on who gets treatment. They are also working with their benefits advisers, PBMs and health plans to establish usage criteria, something that the National Business Group on Health (NBGH) is advising all of its members to do. According to a November 2014 survey of 42 NBGH members, nearly 80 percent of employers that offer hepatitis C medications use prior authorization criteria that include having a specific genotype of the virus, covering only patients who have the active virus and who have liver damage. Health plans have begun developing benefit designs recognizing the unique nature of specialty drugs. These approaches encourage use of the most efficient site of care, including home or physician offices if appropriate, and collaboration between treating providers and specialty pharmacists with expertise in medication management for specific conditions. More tightly integrating and coordinating the pharmacy and medical benefits also allows plans to better track the usage of specialty drugs across enrollees and identify additional areas for alignment. 18 l CAPG HEALTH
Fall 2015
Many health plans now contract with specialty pharmacies that supply enrollees with the drugs needed and coordinate their often complex delivery and treatment processes. These pharmacies have specialized capabilities to monitor and track specialty drug use and have the necessary expertise to handle distribution. Specialty pharmacies also employ dedicated teams of healthcare specialists that can help enrollees understand how to manage their medication, and ensure that these drugs are administered at the most appropriate care site. According to industry group America’s Health Insurance Plans (AHIP), payers are exploring policy options that include: Encouraging alternative payment and incentive structures—such as coverage with evidence development—for new drugs and technologies. Such payment strategies can ensure access to new drugs while generating additional evidence on their value to patients. As part of a broader value-based purchasing strategy, alternative arrangements—such as outcomes-based contracting or reimbursing providers a flat fee for obtaining drugs, rather than a percentage of the drug’s total cost— provide enhanced financial incentives for manufacturers of new drugs and medical technologies that are contingent on agreed-upon standards for quality care, performance, and health outcomes. Greater use and availability of comparative effectiveness data is a key element in the future growth of these innovative payment arrangements. Shortening the exclusivity period for biologics to promote greater price competition and earlier access to lower-cost specialty drugs or biosimilars. AHIP argues that Congress could shorten the exclusivity period for biologics to allow for more competition from followon or generic biologics—similar to the patent protections afforded to traditional, small-molecule prescription drugs. By facilitating the entry of lower-cost, generic biologic drugs, this proposal would reduce costs throughout the healthcare system. While specialty and other breakthrough drugs can offer high-quality, lifesaving treatments for serious medical conditions, there are opportunities to help reduce costs and improve efficiency in their delivery. By shortening the exclusivity period, policymakers can ensure greater price competition in the specialty drug area and help alleviate cost pressures for payers and consumers. The National Coalition on Healthcare—made up of more than 80 medical societies, healthcare providers, insurers and other groups—has launched the Campaign for Sustainable Rx Pricing to spotlight what it brands as “unsustainable and abusive” prices for some specialty drugs. Providers are finding new ways to deal with the sharply rising costs of specialty drugs. When physicians and
administrators at Christiana Care Health System in Wilmington, Delaware, saw how many newly approved specialty and orphan drugs had price tags in the tens of thousands of dollars, they decided in 2011 to form a committee that uses a 20-point scoring system to evaluate if a drug should be listed on the system’s formulary. All drugs that cost more than $10,000 for a course of treatment— about 5 percent of the medications dispensed through the system’s inpatient and outpatient settings—are now assessed by the medication value subcommittee, which includes 12 physicians, administrators, nurses, pharmacists and finance executives. The subcommittee looks at a wide range of factors, including the drug’s efficacy, risk, and financial impact on the patient and healthcare system. A group of five community leaders, including a high school teacher, a pastor and a community activist, also evaluate factors such as a drug’s tolerability, cost, and safety to provide input on quality-of-life issues. Of 27 drugs assessed by the subcommittee, 17 ended up on the system’s formulary list. The panel’s scoring system assesses both inpatient drugs that are reimbursed as part of a diagnosis-related group and outpatient drugs. About one-tenth of Christiana Care’s supply costs are generated by drug costs, which are going up about 7 percent each year, said Teresa Corbo, Christiana Care’s vice president of pharmacy services. Dr. Mitchell Saltzberg, a cardiologist who chairs the formulary committee, noted, “It sends a message to drug developers that you have to prove that your drug is really valuable to patients. We just don’t approve everything.” The increased alignment between hospitals and physicians, as well as the broader consolidation among hospitals and health systems, has given hospital systems more leverage in seeking to continued on page 30 Fall 2015
CAPG HEALTH l 19
ORGANIZATIONAL MEMBERS Accountable Health Care IPA George M. Jayatilaka, MD, CEO Druvi Jayatilaka, Vice President
M E M B E R S
Advanced Medical Management, Inc. Kathy Hegstrom, President • Access Medical Group/Access Santa Monica • Community Care IPA • MediChoice IPA • Premier Care IPA • Seoul Medical Group •
Cigna Medical Group Edward Kim, President and General Manager Kevin Ellis, DO, Chief Medical Officer Citrus Valley Independent Physicians Gurjeet Kalkat, MD, Executive Medical Director Martin Kleinbart, DPM, Chief Strategy Officer
Adventist Health Physicians Network IPA Arby Nahapetian, MD, CMO Jim Agronick, VP – IPA Operations
Colorado Permanente Medical Group, P.C. William G. Wright, MD, Executive Medical Director Dan A. Oberg, CFO and VP, Corporate Development
Affinity Medical Group Richard Sankary, MD, President Scott Ptacnik, COO
Community Health Innovations Anthony Chavis, MD, VP Enterprise and CMO Liz Lorenzi, VP and COO
Alameda Health Partners William Peruzzi, MD, Chairman David Cox, Treasurer/CFO
Conifer Health Solutions Megan North, CEO
AllCare IPA* Matt Coury, CEO Randy Winter, MD, President Allied Physicians of California Thomas Lam, MD, CEO Kenneth Sim, MD, CFO AltaMed Health Services Corporation* Castulo de la Rocha, JD, President and CEO Martin Serota, MD, Chief Medical Officer
• AKM Medical Group • Amvi Medical Group • Exceptional Care Medical Group • Family Choice Medical Group • Family Health Alliance • Huntington Park Mission Medical Group • Medicina Familiar Medical Group • New Horizon Medical Group • Noble Community Medical Associates • OmniCare Medical Group • Premier Physician Network • United Care Medical Group • Continucare Corporation Alfredo Ginory, MD, Chief Medical Officer Gemma Rosello, Vice President
Physician Network • California Desert IPA • Desert Oasis Healthcare • Greater Covina Medical Group • HealthCare Partners, IPA, AZ & NY • Heritage Physician Network • Heritage Victor Valley Medical Group • High Desert Medical Group • Priority Care Plus, AZ • Regal Medical Group • Sierra Medical Group • High Desert Medical Group Charles Lim, MD, FACP, Medical Director Anthony Dulgeroff, MD, Assistant Medical Director Hill Physicians Medical Group, Inc.* David Joyner, CEO Tom Long, MD, Chief Medical Officer John Muir Physician Network Lee Huskins, Interim CEO/SVP/COO Ravi Hundal, MD, Medical Director Lakeside Community Healthcare Kerry Weiner, MD, Chief Medical Officer Jonathan Gluck, Counsel Lakeside Medical Group, Inc. Lakewood IPA Varsha Desai, Chief Operating Officer • Alamitos IPA • St. Mary IPA • Brookshire IPA • Leon Medical Centers, Inc. Rafael Mas, MD, SVP and CMO Julio G. Rebull, Jr., SVP
AppleCare Medical Group, Inc.* Vinod Jivrajka, MD, President and CEO Surendra Jain, MD, Chief Medical Officer
DCHS Medical Foundation Ernest Wallerstein, CEO Dean M. Didech, MD Chief Medical Officer
Loma Linda University Health Care J. Todd Martell, MD, Medical Director Maverick Medical Group Warren Hosseinion, MD, Chairman Mark C. Marten, CEO
Austin Regional Clinic Norman Chenven, MD, CEO and Founder Kerry Rosker, Executive Administrative Coordinator
Desert Oasis Healthcare Marc Hoffing, MD, Medical Director Dan Frank, Chief Operating Officer
MED3000 Lynn Stratton Haas, CEO Gary Proffett, MD, Medical Director
Bakersfield Family Medical Center Carol L. Sorrell, RN, COO Ju Hwan Lee, MD, Medical Director
Dignity Health Bruce Swartz, SVP, Physician Integration
• SeaView IPA • Valley Care IPA •
Bayhealth Physician Alliance, LLC Evan W. Polansky, JD, Executive Director Joseph M. Parise, DO, Medical Director
C A P G
Choice Medical Group IPA Manmohan Nayyar, MD, President Marie Langley, IPA Administrator
Beaver Medical Group* John Goodman, President and CEO Charles Payton, MD, VP Medical Administration and CMO Brown & Toland Physicians* Richard Fish, CEO California Pacific Physicians Medical Group, Inc. Dien V. Pham, MD, Chief Executive Officer Carol Houchins, Administrator CareMore Medical Group Tom Tancredi, Director of Practice Operations Catholic Health Initiatives* Don Lovasz, President, Clinically Integrated Network Chris Stanley, MD, VP of Care Management Cedars-Sinai Medical Group* Thomas D. Gordon, CEO Stephen C. Deutsch, MD, Chief Medical Director Central Ohio Primary Care Physicians, Inc. J. William Wulf, MD, CEO Michael Ashanin, COO Children’s Physicians Medical Group Leonard Kornreich, MD, President and CEO Chinese Community Health Care Association John M. Williams, PharmD., CEO Polly Chen, Director of Operations * Indicates 2015-2016 Board Members
20 l CAPG HEALTH
Fall 2015
Edinger Medical Group Matthew C. Boone, MD, Executive Medical Director Denise McCourt, Chief Operating Officer Empire Physicians Medical Group* Steven Dorfman, MD, President Yvonne Sonnenberg, Executive Director Everett Clinic, P.S., The* Adrianne Wagner, Quality Improvement Consultant Manager Shashank Kalokhe, Associate Administrator of Value-Based Contracting and Coordinated Care Facey Medical Foundation* James M. Slaggert, CEO Erik Davydov, MD, Medical Director Golden Empire Managed Care, Inc.* Michael Myers, President and CEO Steve Bass, MD, CMO Good Samaritan Medical Practice Association Nupar Kumar, MD, Medical Director Greater Newport Physicians Medical Group, Inc.* Diane Laird, CEO Adam Solomon, MD, CMO HealthCare Partners* Kent Thiry, Chairman and CEO, DaVita Don Rebhun, MD, Corporate Medical Director Heritage Provider Network* Richard Merkin, MD, President Richard Lipeles, Chief Operations Officer • Affiliated Doctors of Orange County • Bakersfield Family Medical Group • California Coastal
MedPoint Management Kimberly Carey, President Rick Powell, MD, Chief Medical Officer • Accountable Healthcare IPA • Bella Vista Medical Group IPA • Centinela Valley IPA • El Proyecto Del Barrio, Inc. • Global Care Medical Group • HealthCare LA IPA • Jewish Home for the Aging IPA • Pioneer Provider Network, A Medical Group, Inc. • Premier Physicians Network • Prospect Medical Group, Inc. • Redwood Community Health Network • Watts Healthcare Corporation • MemorialCare Medical Group* Mark Schafer, MD, CEO Jennifer Jackman, Chief Operating Officer Meritage Medical Network Joel Criste, CEO J. David Andrew, MD, Medical Director Mid-Atlantic Permanente Medical Group, PC Bernadette Loftus, MD, Associate Executive Director for MAS Jessica Locke, Special Assistant Molina Medical Centers* Keith Wilson, MD, Vice President of Clinical Services Gloria Calderon, Vice President of Clinic Operations Monarch HealthCare* Bart Asner, MD, CEO Ray Chicoine, President and COO MSO of Puerto Rico Richard Shinto, MD, CEO Raul Montalvo, MD, President Muir Medical Group, IPA Ute Burness, RN, CEO Steve Kaplan, MD, President
NAMM California* Leigh Hutchins, President and COO T. K. Desai, MD, SVP and CMO
River City Medical Group, Inc. Loren Douglas, CEO Jose Abad, MD, President and Medical Director
Tenet Healthcare Jacob Furgatch, CEO, Coast Health Plan Services Ronald Kaufman, CMO
• Coachella Valley Physicians of PrimeCare, Inc., • Mercy Physicians Medical Group • Primary Care Associated Medical Group, Inc. • PrimeCare Medical Group of Chino • PrimeCare of Citrus Valley • PrimeCare of Corona • PrimeCare of Hemet Valley Inc • PrimeCare of Inland Valley • PrimeCare of Moreno Valley • PrimeCare of Redlands • PrimeCare of Riverside • PrimeCare of San Bernardino • PrimeCare of Sun City • PrimeCare of Temecula • Redlands Family Practice Medical Group, Inc. •
Riverside Medical Clinic Steven Larson, MD, Chairman Judy Carpenter, President and COO
Torrance Hospital IPA Norman Panitch, MD, President Triad HealthCare Network, LLC Thomas C. Wall, MD, Executive Medical Director Steve Neorr, VP, Executive Director
New West Physicians, PC Ruth Benton, CEO Thomas M. Jeffers, MD, President and Chair Northwest Permanente, P.C. Jeffrey Weisz, MD, Executive Medical Director Harry Stathos, VP and CFO Omnicare Medical Group Toni Chavis, MD, President Ashok Raheja, MD, Medical Director The Permanente Medical Group, Inc. Oakland (North)* Michelle Caughey, MD, Associate Executive Director Suketu Sanghvi, MD, Associate Executive Director
Riverside Physician Network Howard Saner, CEO Paul Snowden, COO St. Joseph Heritage Healthcare* C.R. Burke, CEO Khaliq Siddiq, MD, Chief Medical Officer • Hoag Medical Group • Mission Heritage Medical Group • St. Mary High Desert Medical Group •
USC Care Medical Group, Inc. Keith Gran, CEO Donald Larsen, MD, Chief Medical Officer
San Bernardino Medical Group James Malin, CEO Thomas Hellwig, MD, President
WellMed Medical Group, P.A. George M. Rapier III, MD, Chairman and CEO Carlos O. Hernandez, MD, President
San Diego Physicians Medical Group Joyce Cook, CEO James Cordell, MD, President
CORPORATE PARTNERS
• Greater Tri-Cities IPA • Noble AMA IPA • St. Vincent IPA •
Sansum Clinic* Kurt Ransohoff, MD, CEO, CMO and President Vince Jensen, COO Santa Clara County IPA (SCCIPA)* J. Kersten Kraft, MD, President of the Board Lori Vatcher, CEO
Physicians Choice Medical Group of San Luis Obispo John Okerblom, MD, President Barbara Cheever, Executive Director
Santé Health System, Inc Scott B. Wells, CEO Daniel Bluestone, MD, Medical Director
Physicians Medical Group of Santa Cruz County* Marvin Labrie, CEO Nancy Greenstreet, MD, Medical Director
Scripps Coastal Medical Center Louis Hogrefe, MD, APC, Chief Medical Officer Tracy Chu, Assistant Vice President of Operations
Physicians Choice Medical Group of Santa Maria John Okerblom, MD, President Barbara Cheever, Executive Director
Sharp Community Medical Group* John Jenrette, MD, CEO Christopher McGlone, Chief Operating Officer
Physicians of Southwest Washington, LLC Mariella Cummings, CEO Gary R. Goin, MD, President
• Graybill Medical Group • Arch Health Partners • Sharp Rees-Stealy Medical Group* Stacey Hrountas, CEO Alan Bier, MD, President
Physicians DataTrust Anthony Ausband, President Lisa Serratore, Chief Operations Officer
PIH Health Physicians Ramona Pratt, RN, COO, Group Operations Pioneer Medical Group, Inc.* John Kirk, CEO Jerry Floro, MD, President Preferred IPA of California Mark Amico, MD, Medical Director Zahra Movaghar, Administrator ProHEALTH Care Associates, LLC David Cooper, MD Walter LeStrange, Senior EVP and COO Prospect Medical Group* Jason Barker, CEO Jeffrey Hay, MD, CMO • AMVI/Prospect Health Network • Gateway Medical Group • Genesis Healthcare • Nuestra Familia Medical Group • Pacific Healthcare IPA • Prospect Corona • Prospect HealthSource • Prospect Huntington Beach • Prospect Northwest Orange County • Prospect Orange County • Prospect Professional Care • Prospect Van Nuys • Providence Health & Services James M. Slaggert, CEO Providence Medical Management Services Phil Jackson, Chief Integration and Transformation Officer • Korean American Medical Group • Providence Care Network •
UCLA Medical Group* Sam Skootsky, MD, CMO Kit Song, MD, Medical Director of Surgical Services
Southeast Permanente Medical Group, Inc., The Michael Doherty, MD, Executive Medical Director and Chief of Staff Southern California Permanente Medical Group* Vito Imbasciani, MD, Director of Government Relations James Malone, Medical Group Administrator Sutter Health Foundations & Affiliated Groups* Jeffrey Burnich, MD, SVP and Executive Officer, Sutter Medical Network Brian Roach, President, Mills Peninsula Division of PAMF • Central Valley Medical Group • East Bay Physicians Medical Group • Gould Medical Group • Marin Headlands Medical Group • Mills-Peninsula Medical Group • Palo Alto Foundation Medical Group • Palo Alto Medical Foundation • Peninsula Medical Clinic • Physician Foundation Medical Associates • Sutter East Bay Medical Foundation • Sutter Gould Medical Foundation • Sutter Independent Physicians • Sutter Medical Foundation • Sutter Medical Group • Sutter Medical Group of the Redwoods • Sutter North Medical Group • Sutter Pacific Medical Foundation • SynerMed* James Mason, President and CEO George Ma, MD, Medical Director • Alpha Care Medical Group • Angeles IPA • Crown City Medical Group • EHS Inland Valleys IPA • EHS Medical Group – Central Valley • EHS Medical Group – Los Angeles • EHS Medical Group – Sacramento • Employee Health Systems • MultiCultural IPA • Pacific Alliance Medical Center • Southern California Children’s Network •
Anthem Blue Cross of California Athenahealth Boehringer Ingelheim Pharmaceuticals, Inc. Humana, Inc. Merck & Co. Novartis Pharmaceuticals Novo Nordisk Patient-Centered Primary Care Collaborative SCAN Health Plan ASSOCIATE PARTNERS abbvie Arkray ArroHealth Astellas Pharma US, Inc. AstraZeneca Pharmaceuticals Bayer HealthCare Pharmaceuticals Bio-Reference Laboratories, Inc. CVS Caremark, Corp. Daiichi Sankyo Easy Choice Health Plan, Inc. Eisai, Inc. Genomic Health Gilead Sciences Incyte Corporation Johnson & Johnson Family of Companies Kaufman, Hall & Associates Kindred Healthcare, Inc. Lumara Health Pfizer, Inc. Ralphs Grocery Company Sanofi Sunovion Pharmaceuticals Inc. Takeda Oncology The Doctors Company Vitas Healthcare Corporation of California AFFILIATE PARTNERS Alignment Healthcare Altura CalINDEX Children’s Hospital Los Angeles Medical Group Global Transitional Care Mills Peninsula Medical Group Nifty After Fifty Monarch LLC Partners in Care Foundation Pharmacyclics, Inc. PsycheAnalytics, Inc. Redlands Community Hospital Saint Agnes Medical Group SullivanLuallin Group Ventegra, LLC
Fall 2015
CAPG HEALTH l 21
Healthcare Hot Spotting Points to Higher Quality in Managed Care BY AMY NGUYEN HOWELL, MD, MBA, CHIEF MEDICAL OFFICER, CAPG
In May, the Integrated Healthcare Association (IHA) released a new online tool, HEDIS by Geography. The tool allows stakeholders to view and compare measures of quality of care and use of health care resources for 11 health plans across California, offering a clearer view of the state’s population health. HEDIS by Geography shows 2013 HEDIS (Healthcare Effectiveness Data and Information Set) claims data results by geographic region and zip code for 19 million lives, approximately half of California’s population. Users can examine the information by health plan product line, including commercial health maintenance organizations (HMOs), preferred provider organizations (PPOs), Medicare Advantage (MA) and managed Medi-Cal.
the “Overall, analysis showed that integrated care products outperformed PPO on a majority of clinical quality measures.”
In IHA’s analyses of the data, two main themes emerged: 1) Health plan products that mainly rely on integrated care delivery networks, such as HMOs and MA, generally have higher quality scores without using more resources; and 2) Healthcare quality and resource use vary widely throughout the state, sometimes showing substantial variation within single measures across geographic areas. The tool allows users to examine performance in two categories: Clinical quality measures: Breast cancer screening, colorectal cancer screening, blood sugar control for people with diabetes, blood sugar screening for people with diabetes, kidney disease monitoring for people with diabetes, and medication management for people with asthma. Resource use measures: All-cause readmissions; emergency department visits; and inpatient bed days. Demographic data are also provided for education, language, median income, and population distribution by race/ethnicity. In one of the study’s major findings, commercial HMOs outperform commercial PPOs in five of the six clinical quality measures. For example, about 85 percent of commercial HMO patients met clinical guidelines for breast cancer screening and received mammograms, compared to about 70 percent of similar commercial PPO patients. If PPOs had performed at the same level as HMOs, an estimated 55,356 more California women would have received mammograms in 2013. A comparable large gap also exists in colorectal cancer screening rates between commercial HMOs and PPOs, with a 71 percent screening rate versus 48 percent, respectively. An estimated 197,385 more PPO enrollees would have received colorectal cancer screening in 2013 if the PPO rate had matched the HMO. Similarly, Medicare Advantage (MA)—a managed care alternative to traditional fee-for-service (FFS) Medicare—had the highest average quality scores compared with other product lines for all six reported clinical quality measures. While utilization rates for commercial HMOs and PPOs were generally comparable, the analysis showed a marked difference in rates for MA compared with traditional Medicare. MA utilization rates were only 55 to 65 percent of Medicare FFS—a remarkably efficient rate that indicates “there is likely a true performance difference” between managed and unmanaged Medicare.
22 l CAPG HEALTH
Fall 2015
Additionally, the study noted, while “selection bias may also contribute to the difference” (i.e., older, more complex patients might opt to stay in traditional Medicare), the lower MA utilization might also indicate more effective population health management. In another finding, managed MediCal (California’s Medicaid program) had mixed results, but scored higher than commercial PPO for diabetes care in both blood sugar control and kidney disease monitoring measures. This outcome is notable given that Medi-Cal patients are generally lower income and more likely to have complex conditions than are commercial PPO enrollees.
physician group members have experienced over many years of practicing integrated, coordinated care. o More information on the HEDIS by Geography tool and findings are available on IHA’s website at https://hbg.iha.org.
SAVE THE DATE!
Third CAPG Colloquium September 28-30, 2016
Hyatt Regency on Capitol Hill Washington, DC
Overall, the analysis showed that integrated care products outperformed PPO on a majority of clinical quality measures. These results add to the strong evidence that patients in managed care receive higher-quality care compared with those in PPO plans—and confirm what CAPG’s
Fall 2015
CAPG HEALTH l 23
CMQCC Leads a Statewide Multi-Stakeholder Project to Reduce Cesarean Births BY E L L I OT T K . M A I N , M D , M E D I C A L D I R ECTO R , C A L I F O R N I A M AT E R N A L Q UA L I T Y C A R E C O L L A B O R AT I V E ( C M Q C C ) , S TA N F O R D U N I V E R S I T Y
Today, fully one-third of births in California, and in the United States, are delivered by cesarean section (CS). To put this in context, when most of today’s practicing physicians were in training, the national CS rate was 16 to 20 percent; for those of us now gone gray, it was even lower—in the range of 12 to 15 percent. However, since its rise to 20 percent (and beyond), we’ve seen no evidence of improvements in neonatal outcomes associated with the higher rates. In fact, among women with prior cesareans, we are now experiencing an epidemic of placenta accreta—when the placenta embeds too deeply within the uterine wall (often as a result of uterine scarring) and which typically leads to a hysterectomy. Similarly, we have witnessed a doubling in the rates of hemorrhage among maternity cases.
of “One-third U.S. births are delivered by cesarean section. When most of today’s practicing physicians were in training, the national rate was 16 to 20 percent.”
For many years, professional societies shied away from addressing the rising CS rate, given the difficulty of identifying a target rate of CS utilization. However, with new measurement methods and data feedback tools, we can move beyond simply tracking an overall statewide CS rate average, and focus on reducing the striking variation in practices across hospitals for their low-risk patients. Among California hospitals, the overall cesarean rate varies significantly—from 15 to 71 percent. Some have suggested the variation may be due to case mix. However, the California Maternal Quality Care Collaborative (CMQCC) has evaluated the CS rate among a population of low-risk mothers—those that are nulliparous (first births), term, singleton (one child), and vertex (head first). The result: the variation in rates is even greater, from 10 percent to 75 percent among California hospitals (see figure). 80% 70% 60% 50%
Variation in NTSV CS Rate Among 251 California Hospitals: 2013 Range: 10.0—75.8% Median: 27.0% Mean: 27.7%
40% 30%
National Target =23.9%
20%
0%
Large Variation = Improvement Opportunity 1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81 86 91 96 101 106 111 116 121 126 131 136 141 146 151 156 161 166 171 176 181 186 191 196 201 206 211 216 221 226 231 236 241 246
10%
Hospitals 24 l CAPG HEALTH
Fall 2015
in early 2016. This initiative aligns with CMQCC’s long track record of helping hospitals to improve maternity safety, including projects to reduce early elective deliveries and to decrease maternal mortality and morbidity for hemorrhage and severe hypertension. Each project started with a statewide task force developing a quality toolkit—a set of best practices, educational materials, sample policies, and other useful tools for implementing change. Employing the toolkit within the supportive framework of a quality collaborative, while simultaneously providing a data tool that enables hospitals to easily track their progress, has proven a successful recipe for improving maternity care in California. CMQCC’s Supporting Vaginal Birth/Reducing First Birth CS Task Force will follow this path, with a toolkit to be published in January 2016 and a Quality Improvement Collaborative geared toward Southern California hospitals that will launch in February 2016. Bolstering the work slated for 2016 are the results of a pilot project recently completed with three Southern California hospitals. All three started with Low-Risk First Birth CS rates in the 30 to 32 percent range. With encouragement from the payer community and CMQCC’s quality improvement tools, all three pilot hospitals’ Low-Risk First Birth CS rates dropped by 20 percent—to 24 percent or lower within a one-year period—a drop that has since been sustained by all three hospitals. This measure, labeled the Low-Risk First-Birth CS Rate, is used by The Joint Commission, the Centers for Medicare & Medicaid Services, and the Leapfrog Group, as well as endorsed by the American Congress of Obstetricians and Gynecologists and the National Quality Forum. It focuses attention on preventing the first cesarean—which is of critical importance. If a woman has a CS in her first birth, 90 percent of all her future births will be via CS; conversely, if she has a vaginal birth for her first delivery, over 90 percent of all her future births will be vaginal. Another reason to direct attention to rising CS rates is their substantially higher cost. Payer reimbursements (actual payments averaged across both Medi-Cal and commercial plans) are $5,000 more for cesarean births as compared to vaginal births. In this environment, a number of large employers and health plans have stepped forward to express concerns over high CS rates at hospitals serving their members. CMQCC sees the extreme variation as a quality improvement opportunity, and has begun working with a broad coalition of state agencies, professional societies, payers, and purchasers to launch a CS reduction program
Key to achieving this reduction was the hospitals’ use of the CMQCC Maternal Data Center (MDC), a confidential online tool for participating hospitals that generates rapid-cycle performance reports in the form of both hospital and provider-level metrics. With a few button clicks, MDC hospitals are able to create monthly statistics to share with their providers, enabling consistent tracking and motivation for improvement. The MDC also provides automated measure analysis, helping clinical leaders to understand the drivers behind their hospital’s CS rates and identifying priority areas for improvements. The medical centers at which your obstetricians practice may be among the 130 hospitals already participating in the MDC! CMQCC welcomes the opportunity to partner with any interested physician groups around the upcoming CS project. For more information about CMQCC, the Maternal Data Center, or the Supporting Vaginal/Reducing FirstBirth CS Task Force, please contact us at (650) 7256108 or allana@stanford.edu. The California HealthCare Foundation has provided generous support for both the CS Toolkit and the MDC. o
Fall 2015
CAPG HEALTH l 25
The Impact of Transitional Care BY R A N I K H E TA R PA L , M B A , C EO , G LO B A L T R A N S I T I O N A L C A R E
Hospitals across the nation were fined a combined $420 million in readmission penalties for five diagnosis-related groups (DRGs): chronic obstructive pulmonary disease (COPD), myocardial infarction (MI), congestive heart failure (CHF), hip and knee replacements, and pneumonia, according to Kaiser Health News, which published the latest numbers of the Hospital Readmissions Prevention Program (HRPP) in its Aug. 3, 2015 issue. The result: 2,592 hospitals will see an average reduction in reimbursement of .61 percent for an inpatient stay. What is hidden in the details, however, is that the latest data have shown that readmission rates have been declining since 2011. Table 1 lists the latest readmission rates for all-cause and the impacted five DRGs over the last four years.
Table 1: National Readmission Rates Measure Date 7/1/2011 – 6/30-2014
“When looking
at the triangular benefit to patient, provider, and payer, transitional care makes a lot of sense. So why doesn’t everyone do it?”
Hospital Wide
COPD
Pneumonia
MI
CHF
Hip/Knee
15.2%
20.2%
16.9%
17%
22%
4.8%
What is impacting this trend? For many, the answer is transitional care, which existed as a concept long before the Affordable Care Act came about in 2010. In fact, various evidence-based models of transitional care have been developed and studied since the mid-1990s, with overall positive short- and long-term outcomes. However, it wasn’t until just recently, with the unveiling of the ACA and the subsequent HRPP, that the idea of transitional care has been given due attention. The Centers for Medicare & Medicaid Services (CMS) defines transitional care as ...services provided to a patient whose medical and/or psychosocial problems require moderate or high-complexity medical decision making during transitions in care from an inpatient setting, partial hospital, observation status in a hospital, or skilled nursing facility/nursing facility, to the patient’s community setting. The key phrase is “…a patient whose medical and/or psychosocial problems require moderate or high-complexity medical decision making.” DECLINE IN READMISSIONS Looking at patients most at risk for readmissions, those with this defined level of complexity are usually the ones we term “frequent flyers.” Whether a transitional care program is telemedicine based or a brick-and-mortar clinic—and regardless of whether it’s executed exactly as CMS envisioned—there is obvious benefit going from zero transitional care activity to even the most miniscule intervention. The evidence comes in the decline in readmission rates, which ultimately benefits the payer. Beyond preventable readmission reduction, a much wider impact can be realized by providing comprehensive transitional care that is a trifecta for the payer, provider, and patient. So much so that in 2014 Medicare created Current Procedural Terminology (CPT) codes to start reimbursing for transitional care. However, no one will disagree that the CPT codes put forth by CMS are complex. Further, more often than not, many providers cannot afford to expend the resources required to provide transitional care services according to the codes. Let’s put that aside for a moment. The intent of CPT codes is good, with a requirement
26 l CAPG HEALTH
Fall 2015
that a face-to-face visit be conducted by a nurse practitioner or licensed physician within a designated time frame based on the complexity of the patient. Other requirements include timely follow up, interactive contact, and medication reconciliation/management. IMPROVED PATIENT OUTCOMES The benefit to the patient is clear. A licensed practitioner provides clinical oversight, medical management, and continuity of care without a gap in care, while the patient is at home. This translates into overall better patient outcomes, a greatly improved patient care experience, and less time needed by the physician to track the patient and ensure proper post-discharge care. All of this ultimately benefits both the provider and the patient. It allows for significant cost efficiencies as well— for FY2013, CMS spent an average of $9,670.99 per inpatient stay; the average reimbursement for Medicare for transitional care is $230 per patient. That is a savings for Medicare of over 97 percent per beneficiary if transitional care works the way it is supposed to and prevents a readmission. This has tremendous impact beyond just Medicare. Commercial payers have also jumped on the bandwagon. The amount of savings per member for commercial patients can be just as significant, or even greater in some cases. When looking at the triangular benefit to patient, provider, and payer, transitional care, as defined by CMS, makes a lot of sense. So why doesn’t everyone do it? This goes back to the issues of the complexity of the codes and the resources required to provide this level of care. The average reimbursement of $230 covers all services rendered in the 30-day period of transitional care—Day One being first day post discharge. When you think about the actual cost to the provider for one patient, plus the code limitations associated with transitional care, it is simply not cost effective for the individual provider to offer this care as CMS defines it. Fortunately, various models have been successful with reducing readmissions, including the recently launched dedicated transitional care provider organization. Based on the Naylor Model of Transitional Care, developed at the University of Pennsylvania, Global Transitional Care (GTC) is the first organization approved by
Medicare to exclusively provide transitional care services. As a specialty group provider, GTC assumes full risk for the patient and bills Medicare directly. There is no cost to the hospital or other provider to have a patient receive comprehensive transitional care. Patients incur a 20 percent copay on such services in accordance with their Medicare plan. IMPACT ACROSS THERAPEUTIC AREAS The potential impact of this type of provider organization is considerable. In essence, individual providers no longer need to have the resources and investment required to build and execute a transitional care program, yet can still realize the benefits. Transitional care isn’t limited to the five DRGs related to the HRPP—as such, dedicated provider organizations also are not limited to five DRGs. The ability to impact the inpatient-to-outpatient care gap across therapeutic areas is now a real possibility, opening the door to cost efficiencies and better outcomes not seen before. In addition, the payer organizations stand to benefit tremendously from a model that merges both live in-home human interaction and technology. The ability to interface with patients in their home environment provides a patient experience that not only will ultimately save the payer thousands of dollars in hospitalizations, but also will provide valuable data and insight into what drives patient behavior after discharge. From a patient experience perspective, a highly interactive transitional care model has a greater chance of resulting in increased patient satisfaction and improved outcomes—a combination linked to a higher rate of member retention. The story of transitional care is just beginning. The true impact of such services across the healthcare continuum remains to be seen. It is certain we will continue to see organizations innovate and create models that improve efficiencies and outcomes in healthcare, ultimately benefiting those that we all aim to serve— patients.
Rani Khetarpal, MBA, is cofounder and chief executive officer of Global Transitional Care, a third-party specialty group provider offering comprehensive transitional care. GTC’s mission is to enhance the care continuum and provide personalized clinical oversight for each individual patient. o Fall 2015
CAPG HEALTH l 27
New Partner MMA Presents 2015 CAPG Survey BY S T E P H E N J . L I N ES C H , S E N I O R V P F O R A D M I N I S T R AT I O N A N D D E V E LO P M E N T, C A P G , A N D M I C H A E L W O R S M A N , D I R ECTO R , S T R AT EGY A N D B U S I N ES S D E V E LO P M E N T, M A R S H M C L E N N A N AG E N CY
This year marks the 27th annual CAPG Compensation and Benefits Survey—and the first time since the survey’s inception that CAPG has engaged a new vendor, Marsh McLennan Agency (MMA). MMA—selected from among a number of capable finalists—has a track record in the survey space, performing some of the largest, most comprehensive benefits and compensation surveys nationally. The agency has specific expertise in working with integrated health systems and physician groups, and alignment with the CAPG mission and vision. These qualities will all contribute to continuous improvement and national expansion of the CAPG Survey. Our 2015 Compensation and Benefits Survey was notable for having 39 participants, up from 36 in 2014. This represents the first increase in participation in over five years, which is significant considering recent consolidations among physician organizations and with health systems. STRATEGIC ALIGNMENT AND GROWTH In other ways, even with the vendor change, this year marked a continuation of previous years. CAPG and MMA worked hard to make the process seamless for year-over-year participants, including keeping a similar input template, data metrics, and reporting formats (though now offering these electronically). One of our collective goals is to grow both CAPG membership and survey participation. To this end, we plan to utilize the MMA network of clients and
28 l CAPG HEALTH
Fall 2015
practices, along with our growing reach, to offer a more expansive data set.
Cedars-Sinai Health Associates is
SEEKING A MEDICAL DIRECTOR
We also want to continuously improve our survey to maintain it as an essential tool for organizations practicing capitated, coordinated care. Historically the survey has been a robust data set that has collected additional data points over the 26-year history. As we move into the future, our goals are to: • Focus our survey on metrics and questions that align with the CAPG mission and our members, including examining year-over-year industry trends • Implement design changes to increase participation • Include additional benefit and compensation metrics in the survey • Expand our reach to show more extensive regional data as CAPG grows nationally
As we refine and continuously improve the CAPG Compensation and Benefits Survey, we will look to you, our CAPG members, for feedback and input. Survey team members Jeremy Anderson and Michael Worsman presented the 2015 survey results and an overview of national trends at the Southern California General Membership meeting September 16 and the Northern California General Membership meeting September 17. o
to join its team in Beverly Hills, California
At Cedars-Sinai Health Associates (CSHA), an IPA within the Cedars-Sinai Medical Network, our medical professionals bring everything they have in order to provide the highest caliber of care to our patients. It’s because of their compassion, their expertise, and their dedication that Cedars-Sinai Medical Network is consistently recognized for its quality and service. We’re currently seeking a talented Medical Director who shares our same outlook to join the CSHA team. As an invaluable part of the Cedars-Sinai Medical Network, our CSHA Medical Director is responsible for providing senior leadership to a large network of individual physicians with independent offices throughout Los Angeles. These physicians have come together to form an independent physician association (IPA) to serve the community’s managed care medical needs. This position works collaboratively with the CSHA Board of Directors and administrative leadership of Quality, Clinical Efficiency, Care Transitions and Medical Group Operations to achieve mutual goals for the organization. Requirements • Current California medical licensure and Board certification in one of the following specialties: Internal Medicine (preferable), Family Practice, Pediatrics, or with an Internal Medicine Sub-specialty (e.g. Pulmonary, Endocrinology, Cardiology) • Demonstrated experience leading and managing a physician network that accepts financial risk for care • Thorough understanding of trends shaping the health care delivery system • Exceptional leadership skills and ability to manage within a large, multifaceted health care delivery system • Strong knowledge of industry and regulatory standards for clinical quality, as well as the ability to implement them • Extensive experience in medical/utilization management To learn more or apply, please contact: Sherrie Rodriguez, Senior Human Resources Consultant sherrie.rodriguez@cshs.org o: 310.385.3523 c: 619.787.3337
Cedars-Sinai Medical Center welcomes and encourages diversity and is committed to maintaining a drug- and alcohol-free workplace. AA/EOE.
Fall 2015
CAPG HEALTH l 29
Federal Update...continued from page 12
Policy Briefing...continued from page 19
paying providers. Some plans are already capitating their downstream providers, and CAPG believes this type of arrangement should be encouraged and spread across the entire country.
curb cost growth for drugs. For one, it has changed the way pharmaceutical companies market to healthcare providers.
To create true transformation of the delivery system, CAPG is urging Congress and the Administration to take a consistent approach across Traditional Medicare and Medicare Advantage in moving from fee-for-service to risk-based payment models. In line with this goal, CAPG is recommending adoption of an incentive structure for alternative payment models in Medicare Advantage identical to the one MACRA creates in Traditional Medicare. CAPG is encouraging the availability of a five percent bonus for physician groups that participate in alternative payment model contracts with MA plans. Medicare Advantage plays a critical role in achieving true delivery system reform. While Traditional Medicare is on an “on ramp to risk”—moving from fee-for-service to bundled payments to shared savings arrangements and eventually capitation—Medicare Advantage already articulates the destination of that ramp: capitated payments to physician organizations and clinical accountability for a defined patient population. Not only are capitated arrangements available in Medicare Advantage today, they are producing superior quality results for seniors when compared to Traditional Medicare and there is no doubt they could be proliferated more broadly across the entire nation. We believe that properly implemented, capitated and risk-based models will lead to higher quality and a better overall care experience for Medicare’s seniors. Today, Medicare Advantage constitutes more than 30 percent of Medicare enrollment and it is anticipated that the program will continue to grow in the years to come. MA’s role in the delivery system reform landscape simply cannot be ignored. That is why we are calling on Congress and the Administration to work to provide the same incentives for payment reform across the entire Medicare program. CAPG is committed to the advancement of capitated and risk-based payment models across all of Medicare. In support of our commitment, earlier this year CAPG announced ambitious value goals of driving 90 percent of our members’ Medicare payments into capitated models by 2018. We look forward to working with our members to continue to achieve this goal. o 30 l CAPG HEALTH
Fall 2015
There are also calls for transparency from drug makers. AHIP says that drug makers should have to make public what they spend on R&D and marketing, just as insurers must disclose what they spend on medical care and administrative costs. AARP, the leading voice for seniors, agrees. “There’s no transparency in the cost of producing these drugs,” agrees Leigh Purvis, Director, Health Services Research at AARP’s Public Policy Institute. “At what point is it profiteering? Right now, there’s just no way to know.” Still, a recent bill brought in the California Legislature by freshman Assembly Member David Chiu stalled in committee. The mechanics of determining the right data points for such a transparency program remain undetermined. WHAT HAPPENS NEXT? Prescription drugs accounted for 9 percent of total U.S. healthcare spending in 2013, according to CMS data. An increase of 16 percent each year is forecast for the 2015–18 period, with the total reaching more than 50 percent ($235 billion) of total drug spending by 2018. “We can afford new medicines for Alzheimer’s, hepatitis C and other conditions,” says Jenny Bryant, senior vice president of policy and research at PhRMA (the drug industry’s trade association), who points to a 20 percent decline in the cancer death rate over two decades. “Prescription drug spending is expected to grow in line with overall healthcare costs through 2023.” But payers, governments, and health insurers are not as sanguine. CAPG member physician organizations that are financially at risk for pharmacy bear the brunt of steep increases in specialty drug costs. One member experienced a 400 percent increase in such costs during 2014. Our members have serious concerns that state-based legislation to cap copays for specialty drugs, and to set tiering standards requiring inclusion of new drugs that solely occupy a single class, will give drug manufacturers free reign to charge whatever they like for the first year after introduction, reaping windfall profits. When a single new drug like Sovaldi can generate over $10 billion in revenue in a single year, manufacturers will have little incentive to negotiate lower prices until the next competitor drug enters the marketplace. o
More than 1 million prescriptions to date1*
Covered
for more than 80% of commercially insured patients
without prior authorization1
®
Savings Card
Learn more and register for updates at INVOKANAhcp.com
*Data on file. Based on TRx data sourced from IMS NPA Database, weekly data through 6/6/14. † The Savings Card is not available to patients enrolled in federally subsidized healthcare programs that cover prescription drugs, including Medicare, Medicaid, TRICARE, or other federal or state programs.
>> Subject to a $3,900 maximum annual benefit, 12 months after activation or 12 uses, whichever comes first >> Continuing support may also be available for eligible patients who have exhausted their 12 months in the program >> For eligibility requirements and restrictions, visit INVOKANACarePath.com or call 1-877-INVOKANA (1-877-468-6526) Reference: 1. Data on file. Janssen Pharmaceuticals Inc., Titusville, NJ.
Janssen Pharmaceuticals, Inc. Canagliflozin is licensed from Mitsubishi Tanabe Pharma Corporation. © Janssen Pharmaceuticals, Inc. 2014
September 2014
019651-140807
Medicare Advantage Brings Value, Improves Outcomes Brown & Toland Physicians and its doctors are uniquely positioned to impact the overall health of seniors enrolled in Medicare Advantage (MA) products. In a traditional fee-for-service model, physicians and the medical group are compensated after delivering care, with little emphasis on cost-effective processes, disease prevention programs or health education. In the Medicare Advantage model, however, physicians are compensated for managing and coordinating the total healthcare needs of their patients, therefore aligning the goals of an integrated delivery system with delivering cost-effective, quality care. Brown & Toland’s team of professionals, including nurses, care managers, social workers and pharmacists work collaboratively with our network to deliver quality, compassionate healthcare to their patients, and positively impact outcomes and costs. MA patients benefit through a coordinated care experience, which may mean fewer trips to the doctor or shorter stays at the hospital, and an overall better quality of life. Long-term costs can be lowered even further when seniors complete their annual wellness visits, resulting in reducing, or even totally eliminating, unnecessary visits to the emergency room. To learn more about Brown & Toland Physicians and our programs that benefit our MA patients, visit brownandtoland.com.
Keeping the San Francisco Bay Area healthy for more than 20 years
brownandtoland.com