Advanced Alternative Payment Models for Advanced Chronic Illness The Need for Innovative Complex Chronic Condition Management APMs Ron Calhoun | Managing Director, Allēus Health Analytics | August 2017 The Current Reality - By all accounts the current U.S. healthcare spend (2017 projected to reach $3.53 trillion; 18.3% of U.S. GDP) and future actuarial projections under the existing model ($5.54 trillion by 2025; 19.9% of U.S. GDP) is unsustainable.1 Leading studies indicate that approximately 35% or more of this aggregate spend is attributed to waste, inefficiencies, fraud, duplication of services and excessive pricing strategies.2 The remaining 70% is significantly impacted by increases in chronic illness and disability from an aging population, behavioral health and substance use disorders, social determinants and economic disparities which impact the health of individuals, communities and populations. Chronic Illness in the United States – Approximately 133 million Americans are afflicted with one or more chronic diseases which represents approximately 40% of the U.S. population. Current studies project that by 2020 this number will grow to 157 million, with 81 million projected to have multiple chronic conditions.3 Year over year, roughly 10% of patients within the U.S. healthcare ecosystem will account for approximately 65% of the nation’s total annual healthcare expenditures.4 Most within this High-Need/High-Cost (HNHC) population will have unmet social needs that can exacerbate their medical conditions further increasing the 5 risk of unnecessary acute care utilization and increased medical spend. Unnecessary Health Care Utilization - A Truven Health Analytics study revealed that approximately 71% of all emergency room visits in the U.S. are unnecessary or could have been avoided.6 This phenomenon is compounded by the fact that those afflicted with chronic conditions receive only 56% of the recommended preventive health care services.7 Additionally, within this chronically ill population there is a direct correlation between an inability to take an active role in one’s own healthcare and unnecessary emergency room 8 utilization and related hospitalizations. Traditional Fee-For-Service Models – While efforts are underway to transition the U.S. healthcare ecosystem away from traditional fee-for-service (FFS) payment methodologies to more value-based models, FFS remains the dominant payment construct. These FFS methodologies have proven ineffective in managing appropriate levels of care within a variety of sub-populations, particularly within the complex chronic, HNHC population. The evidence is clear that traditional FFS payment methodologies have materially contributed to escalating 9 health care costs. The Emergence of Alternative Payment Models – After CMS’s 2010 adoption of the Institute for Healthcare Improvement’s Triple AIM (Improving Health Outcomes, Lowering Cost, and Ensuring High-Quality Patient Centered Care) several alternative payment models were developed, implemented and evaluated. Given the low to moderate success of many of these programs (i.e., the Pioneer ACO Model, MSSP, the Comprehensive Primary Care Initiative, etc.), many of the initial alternative payment models can be viewed as ‘proof of concept’ demonstrations as opposed to meaningful cost containment strategies.10 In 2015, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) bifurcated provider payments between two categories; the Merit-Based Incentive Payment System (MIPS) and the Advanced Alternative Payment Models (APMs). MACRA consolidated quality measurement programs and aggregated several alternative payment models under the APM track.11 525 North Tyron Street, Suite 1600 | Charlotte, North Carolina 28202 | Office 704-275-3800 | alleushealth.com While MACRA’s elimination of the immediate problems related to the Sustainable Growth Rate Formula resulted in $150.5 billion in additional costs for fiscal years 2015 through 2025, the expectation was that the savings generated through the adoption of MACRA’s APMs and Advanced APMs (i.e., the Comprehensive End- Stage Renal Disease Care Model, the Comprehensive Primary Care Plus Model, the Next Generation ACO Model, the Oncology Care Two-sided Risk Model, etc.) would be greater than the additional physician fees paid as a result of the legislation.12 The problem with this assumption is that, for the most part, these APMs and Advanced APMs are acute care focused, and are not comprehensive enough to effectively address the challenges posed by those that are consuming the largest per capita percentage of health care resources, i.e., the complex chronic population. Results for those APMs that are applicable to this unique population have been very positive, but a deeper analysis reveals systemic financial barriers that are impeding rapid adoption of these emerging models. Evidence around ‘High-Need/High-Cost’ Alternative Interventions - There is a growing body of evidence to substantiate that the most effective interventions targeting the high-need/high-cost patient population are those that integrate medical management and which concurrently address psychosocial and non-medical needs. Integrated models are proving to be far more effective than traditional medical models in curbing non- 13 urgent emergency department utilization and unnecessary costs. For example, the Medicare Independence at Home Demonstration was designed to provide a home-based primary care model that delivered interdisciplinary team-based health care with rapid respond capabilities which incorporated behavioral and supportive social services with palliative care and end-of-life planning. Unfortunately, while this model proved to be very successful in significantly reducing unnecessary hospital utilization and improving the quality of care and member satisfaction, it has not been widely adopted due to the reality that current payment models did not provide sufficient funds to sustain it.14 Integrating Palliative Care – The evidence indicates that palliative care is highly effective in significantly reducing hospitalizations and total health care spend without increasing mortality when compared with traditional care.15 While approximately 5% of the U.S. health care patient population accounts for roughly 50% of the total health care spend annually, 11% of this patient population incurs these costs in the last year of life.16 Additionally, although approximately 40% of the highest cost subset suffers from multiple morbidities, cognitive impairment, functional impairment and/or one or more serious illnesses that drive high utilization year after year, most are not yet eligible for hospice and/or do not receive appropriate or timely palliative care .17 The current reimbursement system is designed to curb utilization within any given care setting, rather than ensuring that patients receive the best care in the most appropriate setting at the right time to avoid preventable admissions, Since the majority of patients with advanced chronic illnesses live at home or in assisted living facilities or nursing homes, they may not be either eligible or considered for palliative care until the end of life.18 These patients are often bumped from care setting to care setting often resulting in unwanted or inappropriate care and significant patient dissatisfaction. Earlier home and community-based palliative intervention (within the last 3-5 years of life) can provide better quality of life in consideration of the patient’s wishes and goals for care and treatment, and reduce unwanted and unnecessary acute care utilization. Integrating Hospice Care – Hospice care supports patients and their families, both physically and emotionally, through the end-of-life. Several studies conclude that hospice care in the home effectively reduces unnecessary utilization, supports families to sustain patient care in the home and increases family and patient satisfaction.19 Hospice care has been a capitated service since 1983. However, despite the effectiveness of this service in providing humane treatment and curbing unnecessary utilization, hospice referrals and admissions are often not made timely for patients with complex chronic conditions. 525 North Tyron Street, Suite 1600 | Charlotte, North Carolina 28202 | Office 704-275-3800 | alleushealth.com Racial Disparities and Hospice – Studies suggest that black and Hispanic patients are much less likely to be admitted to hospice than whites.20 Further, once black and Hispanic patients are admitted into hospice, they are less likely than whites to receive recommended care.21 Progress needs to be made to improve quality and overall care experience in hospice operations that serve higher percentages of black and Hispanic populations.22 As alternative complex chronic condition management models emerge to address the needs of the dual-eligible populations special consideration will be required to address this disparity. The Path Forward Improving the performance of America’s health system will require improving care for the patients who use it most- those with multiple chronic conditions. This specialized care is often complicated by patients’ limited ability to care for themselves independently and by their complex social needs. Despite these challenges, improving our ability to deliver home and community-based palliative care is a worthy endeavor for humanitarian, demographic, and financial reasons. Cost containment must be balanced with the need to expand our ability to protect patients who have