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Perinatal Quality in the
world of value-based
care?
May 8, 2014

Alan D. Stiles, MD
Sr. Vice President
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Disclosures
I have no relevant financial relationships with the
manufacturer(s) of any commercial product(s) and/or
provider(s) of commercial services discussed in this
CME activity.
I do not intend to discuss an unapproved/investigative
use of a commercial product/device in our
presentation.
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Areas for discussion
The current state of transition in delivery of health
care
Value-based careACOs and quality
Children and NC Medicaid future ACOs??

How will children and particularly neonatal intensive
care fit into ACOs?
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Higher quality leads to lower costs

Value = Quality/Cost

Value (outcomes and cost) is
increasingly the measure for payment

Risk by providers is part of the new
competitive environment

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What is the big picture?
The Affordable Care Act (ObamaCare) is in motionMore
insured less self-pay in the future?
The current Market Share evolving to Population health
Consolidation of hospitals, practices, and health care systems
into larger integrated systems
Aim of health care is to be patient-centered using a primary
care medical home as the key stone of the care structure
Payment for care transitioning to value from fee for service

Wellness not care of illness is the new goal for health care
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W
e
l
l
n
e
s
s

Inpatient Rehab
Home Health &
Hospice
Outpatient Rehab
SNFs
Homecare
The New Health Care SystemPatient-Centered Full
Continuum of Care
Specialty Secondary
Tertiary/
Quaternary
Post-acute
System Integration of physicians and hospitals:
Clinical Integration
Primary
Service to Defined Populations for Medical Care
Primary
Care
Medical
Homes
Outpatient
Specialty
Care
Community
Hospital
Inpatient Care
Medical
Center/
Tertiary
Quaternary
Care
Medical Neighborhood
Greatest Costs
Accountable Care Organizations (ACOs)
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Steps in transitioning to value-based care
1. Redesign care focusing on quality and expense
management
2. Establish an integrated care system (Clinical
Integration) and identify the population for care
3. Transition reimbursement from fee for service only
to value-based care and risk
Value=Quality/Expense
Cutting costs cannot be the only focus
Clinical Integration: partnership of providers
(physicians, hospitals, others)
Data (clinical and financial) and analytics are critical for success
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NC has 7 well developed
ACOs (more than 20 others in
development)
Providers coordinate care for
a population of patients
Community Care of North
Carolina saved state $55M in
2010 with PCMH model
Expanded role of PCPs to
coordinate care for patients
across care settings
Health Care Structures
Definition Models
Examples
Accountable
Care
Organization
(ACO)
Primary Care
Medical
Homes
(PCMH)
Population
Health
~13M Medicare Advantage
members across the US (27%
of total Medicare beneficiaries)
Global payment for a defined
population
Narrow or
Tiered Network
(Capitation)

Traditional
Health Care
Structures
Independent
providers or
integrated
Health Care
System
Fee-for-Service or Fee-for-
Service with quality metrics
volume driven revenue
Majority of US Health Care
Systems with owned or
independent physician
practices
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What is an Accountable Care Organization (ACO)?
A provider-based organization:
Responsible for healthcare needs of a defined population;
Goals of improving health, improving efficiency, and
improving patient satisfaction;
Must include primary care physicians (for Medicare
ACOs)
Produces shared savings or other financial measures to
align incentives: Moves from Fee for Service to Fee for
Value assuming risk

Providers = Medical care professionals, hospitals and
others
.
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Revenue approaches for ACOs
1. Bundled Payments
Predetermined payment for an episode of care (hospital and physician or physician or
hospital only)
2. Shared Savings
Share reduced cost of care, assuming quality is maintained, between the payer and
provider by a predetermined formula
3. Pay for Performance/Value Based Purchasing/Risk Contracts
Quality metrics (with or without cost targets) predetermined as targets with payment
based on outcome
All are based on delivering value, not
volume alone
Performance is judged on the health outcomes of the
population the ACO manages
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The transition to value-based care aims to reduce
hospitalizations and ED visits, resulting in savings
25
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15
25
26
25
19
12
0
10
20
30
40
50
60
70
80
90
100
Future
100%
10
3
Current
100%
5
5
IP Spend*
OP Spend
Ancillary
Rx
Specialist*
PCP
Shared Savings
P
e
r
c
e
n
t

o
f

c
u
r
r
e
n
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s
p
e
n
d


10% savings to be used
for incentive payments
among providers and
payors


*Key question: How to balance the decrease in hospital
and specialist revenue?
Growth in population (volume) served by the value
based care hospital and specialist physicians
Source: Hypothetical percent of spending estimated in a static volume population from Cornerstone Healthcare internal study
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NC Medicaid Restructuring
State leaders have concluded NC Medicaid is
broken and in need of a major overhaul to
bring better care and efficiency
Primary goals are predictable Medicaid cost
and an overall reduction in cost
State leaders believe restructuring NC
Medicaid is necessary
Initially favored moving to Medicaid Managed
Care through groups with experience in other
states

NC Department of Health and
Human Services (DHHS) established
a Medicaid Advisory Group to review
Medicaid issues and develop
proposal to reduce costs and
improve care
Medicaid Advisory Group proposed
ACO shared savings model for NC
Medicaid focusing on medical care
(not behavioral health)
Proposal supported by DHHS and
the Governor but has not been
addressed by the NC Legislature
Workgroups formed in the NC
Hospital Association, NC Medical
Society, and other interested groups
to develop plans for possible
Medicaid ACO implementation in mid
2015
What is it? Status
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NC Medicaid
! ~1.8 million unduplicated eligibles covered
! ~926k children covered
! >45% of babies born are covered
! ~30% of recipients consume 75% resources

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53%
47%
&./011223
24%
76%
Children
Adults/Aged/
Disabled
45672.83
Distribution of NC Medicaid Enrollees and Payments
by Enrollment Group, FY2010
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Childrens care in ACOs: A flock of odd ducks
Children with
Chronic Illness
Well Children
NICU
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How will ACOs deal with Children? It is complicated!
Employer based health plans are providing insight into
childrens care in ACOs
Children present a large population with low risk
Most care is preventive and acute care for self-limited
illnesses (lower cost)
Quality Measures? (CHIPRA sets Child Core Measures)
Unpredictable or less predictable risk: accidents, catastrophic
illness, NICU care (all are low frequency)
Growing pool of children with chronic illness (regional care)


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Background
5% of Children < 17 yo (~50,000) incur 54% of the
cost for childrens care in Medicaid

Who are these children and what can be saved on
cost while maintaining or improving quality of care?
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Medicaid Hospital Claims for < 17 yo
Claims
NICU
Hematologic
Respiratory
Other
Other
11%
Respiratory
25%
Hematologic
NICU
47%
16%
Hospital Claims by
Diagnosis Group 2009-2011
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NICU patients and children with chronic illness
Children with
Chronic Illness
Other
Resp
Cardiac
NICU Patients
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Can ACOs manage NICU care? Maybe? No choice?
Cost containment with good outcomes cannot occur without application of
evidence based care and sustained quality measures
Rates of prematurity are predictable
Some significant opportunities for savings around preventable problems (e.g.
CLBSI), length of stay, and transitional care
Transitional care for NICU graduates, an opportunity
Prematurity prevention: the most effective cost reduction tool (and the hardest
to implement)
Only 1 proposed Core Child Quality Measures relates directly to NICU: (CLABSI)
with 6 others related to prenatal care



Impacting NICU costs is resource intense requiring partnership with
physicians and hospitals