COORDINATE DELIVER ANALYZE BALANCE. Bundled Payments. The A-B-C-Ds of Success

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1 Bundled Payments The A-B-C-Ds of Success ANALYZE BALANCE COORDINATE DELIVER Coordinate changes to operational processes for success under CMS s Comprehensive Care for Joint Replacement (CJR) model

2 Coordinate Operational Changes in a World of Bundled Payments To manage costs and meet other challenges under a bundled payment arrangement, hospitals and health systems will need to coordinate and master 4 operational capabilities: The ability to manage financial risk A willingness to redesign clinical processes A flexibility to redesign administrative processes Infrastructure for developing and tracking performance management In coordination, these capabilities cut across all phases of the patient journey, from preadmission planning through the acute care and post-acute care phases. Decision to Seek Care Preadmission ~ 4-6 WEEKS ~ 3 DAYS 90 DAYS 1. Manage Financial Risk! Think like a payer A health system or integrated delivery network that operates or affiliates with outpatient clinics, physician practices, or other ambulatory service providers may think of these sites of care as revenue centers. But under a bundled payment system, individual facilities and providers become cost centers requiring a new way of thinking about patient and cost management across settings. 1 Under CJR, your hospital becomes responsible for managing and mitigating risk. This means that you have to think like a payer. Like a payer, you will need strong actuarial and financial analysis capabilities to estimate internal expenditures and anticipate post-acute care (PAC ) costs (see example on page 3). 2 Whether this expertise is in-house or contracted out, it is a prerequisite for managing a payment bundle. DePuy Synthes Companies of Johnson & Johnson offers resources that can help: Episode of Care Coordination: Offers alignment strategies and orthopedic service line establishment Words in italics are defined in the Glossary and Resources brochure. 2

3 Part A cost categories Part B cost categories Sample actuarial analysis, post-acute care, MS-DRG 470 *3 % of admissions with utilization in category Average per-capita claims cost in category over 90 days Acute readmission 10% $2000 Skilled nursing facility 40% $8000 Inpatient rehabilitation 20% $3000 Inpatient professional charges 45% $1200 Outpatient professional charges 75% $1400 Outpatient rehabilitation 45% $850 Durable medical equipment 65% $650 Other Part B, including drugs, lab, etc 70% $600 *Fictitious example, simplified and for illustrative purposes only. Total average PAC costs per episode $17,700 Index admission $12,300 TOTAL EPISODE COST $30,000 Target price $27,500 Difference $2500 Use your analysis to anticipate utilization and costs within your patient mix and plan accordingly. Decision to Seek Care Preadmission Beyond operating within a fixed budget Required risk-management competencies also include the ability to 1 Negotiate collaborator contracts Coordinate billing, collection, and gainsharing arrangements Pay all participating collaborators accurately and quickly Tip: Dedicated administrative staff can be liaisons to clinical and office personnel in your hospital and within your network. For instance, a hospital-based member of the CJR implementation team can work with collaborators to help them understand which services fall within the bundle, which can be a point of confusion. 4 3

4 2. Redesign Clinical Processes Bundled payments provide incentives to improve quality, eliminate unnecessary care, and use resources efficiently. Clinical redesign is central to these goals. In the Bundled Payments for Care Improvement (BPCI) initiative, participants took evidence-based steps to redesign care in 5 broad areas 5 : Redesign care pathways System changes to support care 5 Areas to Redesign Care Enhancements in care delivery Care coordination! Patient engagement and risk management Preadmission Many of the clinical-process changes that BPCI participants implemented are documented in the literature and can be replicated. One hospital developed a discharge-planning tool to standardize the discharge-planning process. Another hired a case manager to meet with patients before surgery to discuss options for post-discharge care and to track the patient s progress throughout the episode. 5 Clinical redesign takes on added importance, considering that the Centers for Medicare and Medicaid Services (CMS) risk adjusts only for patients with hip fracture in its CJR formula. 6 DePuy Synthes Companies offers resources that can help: Hip Fracture Pathway (HFP): The Geriatric Fracture Program (GFP)* provides inspired solutions by providing a standard team-based approach to treating these patients from the time they arrive in the emergency department through discharge. This approach has been shown to improve outcomes and to get patients back to their pre-injury status faster 4 *Costs associated.

5 Goals for redesigning clinical processes Improve quality. To earn a reconciliation payment, CJR hospitals must meet minimum thresholds on 2 quality-of-care measures: complication rates following THA/TKA and HCAHPS. 6 In this regard, it helps to know your collaborators. In BPCI, participants discussed PAC with providers who were likely to receive their patients. Several identified higher-quality providers that they would include on a preferred list for their patients. 5 Eliminate unnecessary care. This includes variations in care. The Health Care Incentives Improvement Institute, a leading advisor on bundled payments, says forward-thinking hospitals map the expected arc of patient progress across the episode time frame. They create a baseline, standardize care processes, and maintain frequent patient contact throughout the episode to identify variations in care. 7 Use resources efficiently. Changes can be internal (eg, decisions related to purchasing or anesthesiology protocols in the operating room). 8 Others may be externally focused, such as directing discharged patients to the level required for optimal patient care. 1 Any clinical redesign should be carried out with input from clinical leaders. Process redesign should be structured to avoid negative effects on quality and safety. 9 Case Study: A Coordinated Effort to Adapt to Bundled Payments 10 A large Midwest acute care hospital took on the challenge of bundled payments for joint replacements during phase 1 of the BPCI. Participating in Model 2, the hospital was able to reduce inpatient length of stay by 12%, decrease discharges to skilled nursing facilities by 23%, and reduce readmissions by 68%. What were its secrets? 1. Administrative investments. To support bundled payments, the hospital made key hires: a project manager to work with CMS and coordinate physicians and the hospital s financial team; a dedicated financial analyst; and a consultant to launch the program. These team members helped the hospital to set up accounts, rethink claims processing, and develop gainsharing arrangements with network providers. 2. Clinical re-engineering. Engaging orthopedic surgeons and other clinicians inside and outside the hospital were critical for earning their buy-in to the concept. Without physician buy-in, success may be elusive. To engage patients, navigators were hired to track patient progress and mitigate risk. With the navigators holding patients hands, the hospital cut down on infections and readmissions. 3. Data analysis. Participation in BPCI gave the hospital access to an unprecedented amount of CMS claims data for potential network partners. The hospital used those data to evaluate skilled nursing facilities for costs and outcomes. The analysis allowed the hospital to develop a narrow network of post-acute providers, excluding skilled nursing facilities whose priorities were not aligned with those of the hospital. HCAHPS=Hospital Consumer Assessment of Healthcare Providers and Systems; THA=total hip arthroplasty; TKA=total knee arthroplasty. 5

6 3. Redesign Administrative Processes Leadership and Physician Collaboration Hospital administrators must create a culture for bundled payments, rather than treat it as a side venture. Recruiting physician champions and empowering them is critical to the success of clinical redesign. 11 Together, administration and physicians should be able to articulate a unified vision of patient care. 7 Engage Responsible Parties Administrative processes support clinical redesign and take several forms Hire Key Staff Physician leaders may be far more effective than administrators in challenging PAC providers to be creative in developing care protocols and strategies for achieving their shared vision. 7 Patients, too, have a hand in your success. Ensure that they understand their care plan and know whom to contact when something isn t right. Standardize Supplies and Purchasing Case managers are the glue that holds the enterprise together. A case manager tracks a patient s progress throughout the episode, monitoring care at disparate sites and acting as a sentinel for the care team. Patient navigators supplement care managers by acting as a resource for the patient. 12 Having dedicated administrative staff, such as a CMS liaison or a financial analyst to monitor data, may also be useful. 10 Standardizing and optimizing supplies and equipment may streamline purchasing protocols. Evaluating source contracting may also generate savings DePuy Synthes Companies offers resources that can help: Partnership With Ethicon: Offers a portfolio of wound care, biosurgery, and energy solutions that can provide value to surgeons while helping to drive better healthcare outcomes Supply Chain Efficiencies: Provides tools and analytics to help evaluate and enhance important measures within the hospital: productivity and performance during the perioperative process, workflow efficiency, supply standardization, inventory cost reduction, and overhead savings Tray and Instrument Optimization: Helping you achieve efficiencies through standardization, digital templating, and unique product-efficiency trays

7 4. Develop an IT Infrastructure Data and the ability to manage data are cornerstones of success under CJR. Historical and real-time claims and utilization data can help you develop a performance management program. CMS provides historical data. Real-time data generally come from 2 sources 7 : Provider-generated data, which allow for comparisons to expected norms Payer-provided data, which can help you analyze out-of-network utilization Being able to track and monitor costs, utilization, and performance in real time allows for course correction during the performance year. This is important because in a retrospective model, bonus payments or penalties are not paid or incurred until many months after care is given, diminishing the psychological impact of the action. 13 Patient engagement Information technology also can help patients understand their care and more fully participate in it. A growing body of evidence shows that patients who are actively involved in their health care experience better health outcomes and incur lower costs. 14 Under payment reform, it can be expected that motivated patients will be increasingly important and hospitals will seek new ways to engage them. Case Study: Online Patient Journey 15 A Pennsylvania community health system found that face-to-face education for patients undergoing total joint recovery improved patient readiness and satisfaction. The hospital decided to widen its outreach by developing an online patient journey that helped patients prepare for surgery and know what to do and expect for up to 4 months after surgery. The online program included action checklists for patients and physical therapy (PT) exercise videos. Other videos featuring staff members engaged patients by helping them with facial recognition once the patient entered the hospital. The system also collected functional outcomes surveys at 3 months and 1 year after surgery. Within a year of implementation, outcomes were encouraging. The educational aspect helped patients to ask more focused questions, while PT exercise videos shortened the first PT encounter and helped to reduce length of stay. Surveys in 2013 revealed that 81% of patients felt very prepared for their surgery as a result of the program. Decision to Seek Care Preadmission 7

8 The DEPUY SYNTHES ADVANTAGE CMS developed CJR to encourage providers to meet the goals of the Triple Aim: increase patient satisfaction, reduce costs, and improve clinical outcomes. DePuy Synthes Companies recognizes the importance of CJR to our customers and is positioned to help you meet the challenges of bundled payments. The DEPUY SYNTHES ADVANTAGE is a suite of customized, measurable, patient-focused programs, products, and services that can help hospitals and health systems optimize one or more Triple Aim segments for total joint replacement patients. Visit for more information. References 1. Dobson A, DaVanzo J, Heath S, et al. Medicare payment bundling: insights from claims data and policy implications. Analyses of episode-based payment. Dobson DaVanzo and Associates. Report to the American Hospital Association and American Association of Medical Colleges. October 26, Walton G, Beckett D. Success in bundled payments for care improvement. success-in-bundled-payments-for-care-improvement. Accessed October 27, Bates D. Bundled payment claims analytics. Milliman Healthcare Analytics blog. March 20, bundled-payment. Accessed November 6, American Medical Association. Evaluating and negotiating emerging payment options Dummit L, Marrufo G, Marshall J, et al. CMS Bundled Payments for Care Improvement (BPCI) initiative models 2 4: year 1 evaluation & monitoring annual report. The Lewin Group. February Centers for Medicare and Medicaid Services. Comprehensive Care for Joint Replacement (CJR) model. November 19, Accessed November 30, Bailit M, Houy, M. Key payer and provider operational steps to successfully implement bundled payments May 28, Health Care Incentives Improvement Institute issue brief. Accessed October 27, Fleisher L, Lee T. Anesthesiology and anesthesiologists in the era of value-driven health care. Healthcare. 2015;3: Gamble M. 9 best practices for bundled payment success. Beckers Hosp. Review. March 6, hospital-physician-relationships/9-best-practices-for-bundled-payment-success.html. Accessed October 27, Cheyney C. The secret sauce for orthopedics bundled payment success. HealthLeaders Media. September 21, Accessed October 27, Caramenico A. Doc leadership, engagement key to bundled payment success. FierceHealthcare website. April 30, Accessed October 27, Bailit M, Burns M, Houy M. Bundled payments one year later: an update on the status of implementations and operational findings May 30, Health Care Incentives Improvement Institute issue brief. bundled-payments-one-year-later. Accessed October 27, Greene J. Bundled payments: value in bite sizes. Manag Care. 2015;24(8): James J. Patient engagement. Health Affairs health policy brief. February 14, brief.php?brief_ id=86. Accessed August 13, WellBe. Butler Health System leverages online engagement solution to deliver better prepared patients. attachment/5832/f-0050/1/-/-/-/-/butler%20health%20case%20study.pdf. Accessed November 9, For more information, contact your DePuy Synthes Companies representative or visit BundledPayments@its.jnj.com The third party trademarks used herein are the trademarks of their respective owners. DePuy Synthes All rights reserved. DSUS/JRC/1215/1189c 01/16

Bundled Payments KEY CAPABILITIES. for working with the Comprehensive Care for Joint Replacement (CJR) model

Bundled Payments KEY CAPABILITIES for working with the Comprehensive Care for Joint Replacement (CJR) model CJR Takes Aim at Variations in Care Cost and Quality Hip and knee replacements are among the