State of MN – SEGIP An Employer View on ACOs

Presented by : Nathan Moracco September 17, 2014

2

State Employee Group Insurance Program (SEGIP)

§  50,000 Employees §  1120,000 lives covering Judicial, Executive & Legislative Branches §   $1.5 billion biennial budget

§   Largest employer group in the state §   1,200 clinics

§   55 care systems

§   90% Union

3

MN Advantage 90’s - 2002 Ø  Until 2002 the State Employee Group Insurance Program (SEGIP)

had been employing a “Managed Competition model” –   Successful for many years

Ø  The State of Minnesota health plans had been experiencing significant healthcare cost increases.

Ø  Member cost share was primarily based on differences in plan premiums. –   As healthier members switched to low cost plans, the premium differentials

increased, causing more members to switch plans. –   Low cost plans may not have been the most efficient, causing increases in

overall costs when more members moved into these plans.

Ø  Reduction in competition and affordable access to all providers

4

MN Advantage Current Ø  Network

–   Health care providers grouped into provider groups •   Provider groups consist of primary care physician clinics and ancillary

services

•   Each clinic has own referral, prescribing, and hospital admission characteristics

•   Grouped by recognized care systems »   Broken into sub-groups where needed »   Independent clinics grouped regionally to develop credible risk-score

–   Provider groups are assigned to one of four levels based on analysis of historical risk adjusted cost

–   Employer, with the support of the Unions, has control (working with plan administrator) over level and network composition

5

MN Advantage – How it Works? Ø  Plan Design

–   Cost sharing (copays, deductibles, etc.) is greater for less efficient provider groups

–   Employees and dependents each choose their own provider group.

Ø  Members select primary care clinic (guarantee level 2 access)

6

Cost and Quality Vary Provider Group

PMPM Cost

Provider Group

PMPM Cost

Provider Group

PMPM Cost

Provider Group

PMPM Cost

A $332.27 N $377.92 BB $417.18 OO $456.87B $346.70 O $386.02 CC $418.23 PP $457.16C $347.74 P $386.23 DD $428.78 QQ $462.86D $349.75 Q $386.66 EE $429.48 RR $472.02E $350.07 R $389.44 FF $432.37 SS $481.37F $358.75 S $393.03 GG $438.77 TT $482.52G $360.19 T $393.81 HH $440.27 UU $483.27H $361.70 U $394.77 II $443.05 VV $513.06I $362.85 V $396.22 JJ $443.29 WW $516.58J $368.40 X $402.05 KK $443.74 XX $530.94K $371.09 Y $403.15 LL $446.47 YY $552.48L $372.33 Z $405.66 MM $447.26 ZZ $562.98M $374.33 AA $410.97 NN $449.16 AAA $575.40

Level 2 Level 4

Level 3

Level 1

7

Advantage Plan Design

8

Why Provider ACO? Ø  Advantage plan had already capitalized on many of the key

incentives of ACO arrangements: Ø  Encouraged performance accountability at the PCP level Ø  Reduced costs and enhanced members’ health care “consumerism”

Ø  Plan structure encompasses many of the key elements of the ACO contracting framework: Ø  Program incorporates a systematic means for measuring performance on a

TCOC basis, creating accountability for performance, and providing performance feedback to providers

Ø  However, beyond the risk of losing members provider performance does not impact payment

9

Why Provider ACO? Existing structure has it’s limitations

Ø   Focus on fee schedule

Ø   Retrospective rather than prospective

Ø   Difficult to make large tier jumps

Ø   Assumes past performance dictates future outcomes

Ø   Doesn’t allow direct sharing of efficiency savings

10

Why Fairview? Need strong partnership with provider

Ø   Fairview had historically been average (tier 2) to above average

Ø   Tier 2 status does not necessarily mean market share in competitive TC

Ø   Fairview was willing to take “leap of faith” with the State

Ø   Fairview was willing to structure agreement that fit into existing model

Ø   Fairview is second largest provider for State

11

What Did the State Implement Ø   Provider Organization:

Ø   SEGIP has an agreement with provider organization to maintain a specific level of performance efficiency

Ø   In exchange for the provider organization’s efficiency guarantee, SEGIP placed the organization in the most preferential cost level (Level 1)

Ø   Population:

Ø   Members are attributed to the provider group based on their choice of PCP and plan administrator:

Ø   Agreement administered through one specific plan administrator.

Ø   Continuum of Care:

Ø   Provider organization is responsible for all medical services covered under the eligible medical benefit:

Ø   Claims above a certain threshold are removed from the performance assessment process

12

Contract Structure Ø  Accountability:  

Ø  The  observed  TCOC  expenses  for  the  a5ributed  members  are  adjusted  for  rela;ve  risk  using  Johns  Hopkins  ACG  risk  adjustment      

Ø  Risk-­‐adjusted  costs  are  compared  to  the  plan  average  costs  to  determine  the  rela;ve  efficiency  of  the  provider  group  

Ø  If  efficiency  performance  is  be5er  than  the  threshold,  a  por;on  of  the  lower  than  expected  costs  are  returned  to  the  provider  

Ø  If  worse  than  expected,  a  por;on  of  the  excess  costs  are  returned  to  the  State  

Ø  Other  relevant  details:  

Ø  All  provider  groups  receive  informa;on  on  their  rela;ve  performance  in  aggregate  and  by  service  category  

Ø  In  addi;on,  provider  groups  receive  summary  informa;on  on  their  member  expenses  by  provider,  both  inside  and  outside  their  network      

13

What are the Results A risk based contract that created incentives and rewards for employer and provider

Ø   Increased the number of available providers in favorable cost levels Ø   Rewarded innovation and accountability and allowed the provider group

to capitalize on their ACO initiatives and identified cost savings opportunities

Ø   Contract involves both shared savings and risk

Ø   An additional 10% of SEGIP members were able to access Level 1 benefits without changing their PCP

Ø   The plan administrator that brokered the deal increased their enrollment by nearly 40%

Ø   The provider organization increased their enrollment by 10%

14

Lessons Learned

Ø  You  need  a  strong  provider  partner  Ø  The  plan  administrator  may  be  an  important  liaison  to  nego;ated  contract  

Ø  Reward/Risk  may  not  match  those  of  exis;ng  plan/provider  arrangements  

Ø  Risk  of  incoming  popula;on  difficult  to  predict  Ø  Repor;ng  requirements  are  increased  for  employer  Ø  Transparency  and  discre;on  is  important  –  trust  is  key  Ø  Providers  and  employers  are  new  to  the  ACO  game.    It  takes  ;me  learn  

15

Q&A

n  Contact information:

Nathan Moracco, Assistant Commissioner nathan.a.moracco@state.mn.us (651) 431-5929