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Making it Safe to Grow Old

A Financial Simulation Model for Launching MediCaring Communities for Frail Elderly Medicare Beneficiaries

Joanne Lynn Director, Center for Elder Care and Advanced Illness Altarum Institute Joanne.Lynn@Altarum.org

Single Classic “Terminal” Disease

• Function

Time

• Function

Time

• Prolonged dwindling
• !

"#$!

Sad Tale #2 – NY Times Sept 28, 2014

The MediCaring Community Components

J Lynn, MediCaring Communities: Getting what We Want and Need in Frail Old Age at an Affordable Cost. Altarum Institute,

• 2016. Available on Amazon.com

Frail Elderly People Need Some New Spending…

$Housing $Nutrition $Personal Care $Caregiver training, respite, income $New drugs and other treatments

Where will it come from?

$$$

$$$

$$$

$$$

$$$ $$$

My Mother’s Broken Back

“The Cost of a Collapsed Vertebra in Medicare”

[Better Care & Lower Cost] for Advanced Illness

• PACE – 75% lower hospitalizations; 14% lower nursing home
• Aetna Compassionate Care – 22% lower net costs
• GRACE – net savings 23%
• Independence at Home – saving $3070 per person per year
• Sutter’s AIM – Medicare saved $760 per person per month
• Veteran’s HBPC – VA + Medicare costs reduced 11.7%

Summary in J Lynn, MediCaring Communities: Getting What We Want and Need in Frail Old Age at an Affordable Cost. Altarum Institute, 2016, pp 57-66.

Estimating Potential Savings in Medical Care

• Working with health care leaders in 4 actual communities
• Estimate frail as 10% of >64 population in a geographic area
• Estimate PMPM total costs (except for unpaid caregiving)
• Use CMS HRR and county data for aggregate costs, population,

utilization

• Use sources in literature for LTC costs and small ancillary costs
• Estimate realistic goals of reducing medical care, delaying Medicaid,

reducing use of nursing homes - generally, about half of the maximal effect reported in the literature (e.g., 25% reduction in hospital, 5% in LTC)

Summary Table of Effects

• 10% to
• 20%

• 25%
• 8% to -33%

• 10%

• 17%

• 18%

• 36%

• 61%

• 10% to
• 30%
• 10%

• 25%
• 35% to -59%

• 1%

• 20%

• 15%
• 53%

• 20% to -30%
• 15%

• 20%

• 25%

• 85%
• 28%

• 5%
• 71%

• 72%

MediCaring Communities Financial Simulation: Utilization Estimates (Akron, OH)

Service Category Without MediCaring With MediCaring Percent Change Absolute Change Inpatient Hospital $966 $725

• 25%
• $242

Outpatient Hospital $331 $364 10% $33 Professional Primary Care $270 $351 30% $81 Skilled Nursing Facility $315 $252

• 20%
• $63

Medicaid-covered Long-Term Care $2,307 $2,191

• 5%
• $115

MediCaring Communities Financial Simulation

$153 $136 $250 $125 $285 $253 $467 $234 $328 $291 $537 $269 $- $100 $200 $300 $400 $500 $600 Akron Milwaukie Queens Williamsburg PBPM Savings ($)

Per Beneficiary Per Month Savings ($) by Site, Over Time

Year 1 Year 2 Year 3

MediCaring Communities Financial Simulation

289% 148% 97% 279%

• 100%
• 50%

0% 50% 100% 150% 200% 250% 300% 350% Year 1 Year 2 Year 3 Return on Investment (%)

Return on Investment, Years 1- 3

Akron Milwaukie Queens Williamsburg

A Winning Possibility: MediCaring Communities

• Four geographic communities - 15,000 frail elders as

steady caseload

• Conservative estimates of potential savings from

published literature on better care models for frail elders and on implementation

• Yields $23 million ROI in first 3 years

Net Savings for CMS Beneficiaries Yr 1 Yr 2 Yr 3 3-Yr Before Deducting In-Kind Costs

• $2,449,889

$10,245,353 $19,567,328 $27,362,791 After Deducting In-Kind Costs

• $3,478,025

$8,463,101 $17,629,209 $22,614,284

For more on financial estimates, see http://www.milbank.org/uploads/documents/Making_It_Safe_to_Grow_Old.pdf and http://medicaring.org/2013/08/20/medicaring4life/

Published online by The Milbank Quarterly, July 2016

Original Investigation

Making It Safe to Grow Old: A Financial Simulation Model for Launching MediCaring Communities for Frail Elderly Medicare Beneficiaries

ANTONIA K. BERNHARDT, JOANNE LYNN, GREGORY BERGER, JAMES A. LEE, KEVIN REUTER, JOAN DAVANZO, ANNE MONTGOMERY, and ALLEN DOBSON

http://www.milbank.org/the-milbank-quarterly/early-view-articles

Piloting the MediCaring Community

• Use a flexible “Accountable Care Community”
• Serve all eligible and willing frail elders
• Define geographically
• Account for co-existing shared savings models and demos
• Many communities with leadership organizations interested
• Raising start-up funds appears feasible
• Best practices emerge from testing in diverse settings
• Can build revenue model from MCO, ACO, SNP, or PACE, with waivers
• Successful piloting requires
• Rapid cycle improvement with technical assistance
• Sustaining the endeavor through shared savings

The MediCaring Community Components

J Lynn, MediCaring Communities: Getting what We Want and Need in Frail Old Age at an Affordable Cost. Altarum Institute,

• 2016. Available on Amazon.com

Interested in Research in this Area, Or in Reform in Your Community? Contact us! Joanne.Lynn@Altarum.org