Evolution in Payment Reform: Migrating to Bundled Payments
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1 November 15, 2015 Evolution in Payment Reform: Migrating to Bundled Payments Kimberly Hartsfield, MPA Vice President, GEHC Camden Group 1
2 3 Value-Based Reimbursement Goals % 50% 85% 90% Source: The Center for Medicare & Medicaid Innovation ( CMMI ), Bundled Payment Summit, June
3 A Bundled Payment is the process of making a single payment for all the care and services for a specific procedure or Episode of Care David, an Environmental Services Worker at the hospital has been suffering from severe BACK PAIN 3
4 Source: Stryker Performance Solutions 1990 s 2000 s 2010 s CMS Heart CMS Cardiac CMS ACE Bypass and Orthopedic Demonstration Centers of Oncology Care Cataract Excellence Model Demonstration BPCI and CCJR Centers of Excellence Geisinger UHC Oncology Demonstration Prometheus IHA Horizon BCBS *CMS - Centers for Medicare & Medicaid Services, **ACE - Acute Care Episode 4
5 Estimated Cumulative Percentage Changes in National Healthcare Expenditures, 2010 through % NP* PA* Scope of Practice -0.3% 0.0% Medical Homes 0.4% 1.0% HIT * 0.8% 0.0% Bundled Payment -0.1% -0.3% Benefit Design -0.5% -0.6% Retail Clinics -1.2% -1.3% Disease Management -1.5% -2.0% Hospital- Rate Regulation -5.4% NP* - Nurse Practitioner, PA* - Physician Assistant, HIT* - Health Information Technology Source: Hussey P., et al. New England Journal of Medicine 2009;361: Episode Cost Variation $168,344 $15,978 Source: BPCI claims, The Camden Group analysis, and Milliman 5
6 MEDICARE MEDICAID COMMERCIAL CARRIERS EMPLOYERS 11 3 Days Pre Acute Hospital Inpatient Stay Inpatient MD Services Post Acute Facility Services Post Acute MD Services Related Readmission Model 1 Model 2 Model 3 Model 4 6
7 Reduced Readmissions IMPACT Reduced ALOS of BPCI Reduced Discharge to SNF Increased Home Health Use Episode Cardiac Valve $438 Average Savings Per Episode Coronary Artery Bypass Graft ( CABG ) $2,812 Major Joint $506 Average Savings Per Episode $1,252 7
8 Estimated Savings of Approximately $2.1 million 75 Mandated Metropolitan Statistical Areas Source: CMS 8
9 TEXAS Austin-Round Rock Beaumont-Port Arthur Corpus Christi Killeen-Temple Lubbock Tyler TENNESSEE MISSISSIPPI ARKANSAS Memphis ARKANSAS Hot Springs Source: CMS LOUISIANA Monroe New Orleans-Metairie OKLAHOMA Oklahoma City Inpatient Stay (Facility and Professional Fees) Skilled Nursing Facility Inpatient Rehab Facility Home Health Long-Term Acute Care ( LTAC ) 90 Days Post-Discharge (Including Readmissions) Source: CMS 9
10 Total Hip & Knee Replacements January 1, 2016 Mandatory 5-year program No downside risk in Year 1 90-day retrospective episode of care Source: CMS $15,000 $14,000 $13,000 Hospital owes CMS $5,000 $12,000 $11,000 $10,000 $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 Target Price CMS owes Hospital $2,000 Hospital 1 Hospital 2 (Cost $ 8,000) (Cost $ 15,000) $0 10
11 2 Sources of Savings: Reconciliation Payments Internal Cost Savings Source: CMS Episode Cost Variation $168,344 $15,978 Source: BPCI claims, The Camden Group analysis, and Milliman 11
12 Moving to Regional Pricing Blend of Hospital & Regional 2/3 hospital specific + 1/3 regional 1/3 hospital specific + 2/3 regional Entirely regional Downside Risk None Limited (10% stop-loss)** Full (20% stop-loss) Upside Opportunity 20% gain sharing cap *CY - Calendar Year, **If hospital owes CMS, the limited downside risk is based on a either 0.7 or 1.0 percent discount (based on voluntary reporting) Source: CMS Complication Rates Readmission Rates Patient Satisfaction Source: CMS 12
13 Risk Bearer Voluntary/Mandatory Episode Length Baseline Period Target Price Discount Reconciliation Source: CMS Average Daily Medicare FFS Rates $190 $432 $1314 $1450 $1819 Home Health SNF IRF LTAC Hospital Acute Hospital Source: MedPAC 2013 Based on Fiscal Year 2011 Data 13
14 Information Technology and Data Sharing Patient Satisfaction Facility and Services Quality and Outcomes Medical Directorship and Staffing Delivery Network and Care Continuum Transparency is like a disinfectant for business. It will purify things and help start the healing, but It s going to sting like hell. Patient Satisfaction Quality and Outcomes Delivery Network and Care Continuum THE CAMDEN GROUP 11/15/
15 Cost Variation For Normal Cesarean Section Delivery Hospital City State Cost Estimate $14,334 Flushing Hospital Medical Center Flushing NY $ Holy Name Medical Center Teaneck NJ $ 15,005 Mount Sinai St Luke's Roosevelt New York NY $ 16,505 St Joseph Hospital and Medical Center Paterson NJ $ 16,592 Huntington Hospital Huntington NY $ 17,217 LI Jewish Medical Center New Hyde Park NY $ 17,551 North Shore University Hospital Manhasset NY $ 17,678 Winthrop University Hospital Mineola NY $ 18,174 Westchester Medical Center Valhalla NY $ 18,379 Forest Hills Hospital Forest Hills NY $ 18,491 Englewood Hospital and Medical Center Englewood NJ $ 18,533 St John's Riverside Hospital Yonkers NY $ 18,956 Lenox Hill Hospital New York NY $ 19,105 Putnam Hospital Center Carmel NY $ 19,698 $29,823 The Stamford Hospital Stamford CT $ 22,390 Hackensack University Medical Center Hackensack NJ $ 25,291 Greenwich Hospital Greenwich CT $ 25,989 Norwalk Hospital Norwalk CT $ 29,823 Source: Anthem Care Compare 15
16 2014 Medicare Spend Per Beneficiary Data Facility Name Hospital vs. State Hospital Spend Per Episode Cypress Pointe Surgical Hospital 1.48 $30,212 East Carroll Parish Hospital 0.46 $9,412 Source: data.medicare.gov Louisiana Average $20,458 National Average $20,025 ENHANCES TRANSPARENCY FACILITATES EFFICIENCY ENABLES EVIDENCE- BASED DECISIONS MEASURES OUTCOMES AND PROGRESS ENABLES ACTION 16
17 Source: Bundled Payments for Care Improvement Voices from the Field: Lessons Learned from Implementing BPCI Data and Dashboards for Physicians January 21, 2015 PEDIATRIC AND MATERNITY OUTPATIENT GROWTH OF COMMERCIAL AND EMPLOYER CONTRACTS PROSPECTIVE PAYMENT 17
18 Being FIRST matters more than being perfect: Failure tolerance Not all bundles are created equally-evaluate CAREFULLY Know your VALUE proposition PREDICTIVE risk tools are necessary and will become the norm Engage Physicians and Care Teams Standardize Clinical Care Protocols and Pathways Collect and Analyze Post- Acute Spend Data Determine Post-Acute Care Strategy Identify Cost Savings Opportunities Invest in Implementation Resources 18
19 Our goal is not simply to survive in a world of cost containment, but to leverage our core capacities in a way that actually gives us strategic advantage. How well we do that will be the story of the next 10 years. Dereesa Purtell Reid CEO, Hoag Orthopedic Institute 19
20 Questions? Kimberly Hartsfield Vice President GE Healthcare Camden Group GEHC CAMDEN GROUP 11/15/
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