Association of Cancer Executives The Impact of Healthcare Reform: What It Means for Cancer Programs Today

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1 Association of Cancer Executives The Impact of Healthcare Reform: What It Means for Cancer Programs Today January 29, 2016

2 Agenda I. Introduction II. Changing Reimbursement Models 1

3 I. Introduction 2

4 I. Introduction Drivers of Change REGULATORS PAYORS These forces are pushing organizations to deliver high-quality care at a lower cost. COLLABORATIONS AND PARTNERSHIPS CONSUMERS 3

5 II. Changing Reimbursement Models Overview of Recent Developments For oncology services, healthcare reform in manifesting through payment reform as well as changes to key financial models. High- Deductible Plans MACRA Bundled Payments Bipartisan Budget Act of 2015 Oncology Medical Home (OMH) Oncology Care Model (OCM) New 340B Guidance 4

6 II. Changing Reimbursement Models Medicare Moving to Value-Based Models By the end of FY 2016, CMS intends to tie 30% of payments to alternative payment models (APMs) and 85% of all payments to some form of a value-based reimbursement mechanism. These figures are set to grow to 50% and 90%, respectively, by FY FY FY % 50% 85% 90% All Medicare FFS (Categories 1 4) FFS Linked to Quality/Efficiency (Categories 2 4) APMs (Categories 3 and 4) Source: CMS, Better Care. Smarter Spending. Healthier People: Improving Our Health Care Delivery System, January 26,

7 II. Changing Reimbursement Models MACRA Tracks 1 and 2 MACRA provides a new payment structure for physicians with quality metrics and two distinct tracks for providers to choose from. Track 1 MIPS: Modified FFS Track» The MIPS incorporates upside and downside risk through four performance measures: Clinical quality Resource utilization Practice improvement Meaningful use» Downside penalties will pay for upside bonuses, making the MIPS budget neutral.» There is an additional $500 million that will be distributed annually to top performers from 2019 through Track 2 APMs: Risk-Based Track» APMs refer to value-based, non-ffs payment mechanisms, such as ACOs.» To be eligible, providers must use an EHR, be paid for quality metrics similar to those under MIPS, and bear financial downside risk.» Providers must receive a large percentage of revenue through APMs to be eligible for this track.» The APM track frees physicians from participating in the MIPS performance metrics. 6

8 II. Changing Reimbursement Models Bipartisan Budget Act of 2015 The Bipartisan Budget Act of 2015, signed into law by President Obama on November 2, changes the financial and operational implications of facility-based Medicare reimbursement. DESCRIPTION» Excludes new off-campus hospital outpatient departments (HOPDs) from receiving reimbursement under Medicare s hospital outpatient prospective payment system (OPPS).» After January 1, 2017, new off-campus locations will be reimbursed under the Ambulatory Surgical Center Prospective Payment System or the Medicare Physician Fee Schedule. IMPORTANT DETAILS» On-campus departments are not affected.» On-campus outpatient department defined as an area within 250 yards of a main campus.» Only those sites billing as an HOPD by November 2, 2015, will continue to be reimbursed under OPPS.» Commercial reimbursement is not yet impacted. 7

9 II. Changing Reimbursement Models 340B Drug Pricing Program The proposed 340B guidance, if adopted as written, may limit access to the program, making a number of common industry practices no longer legal. The proposal includes a six-part test to determine whether individual patients are eligible to receive 340B drugs:» The individual receives a healthcare service at a facility or clinic site that is registered for the 340B program and listed on the public 340B database.» The individual receives a healthcare service provided by a covered entity provider who is either employed by the covered entity or who is an independent contractor for the covered entity, such that the covered entity may bill for services on behalf of the provider.» An individual receives a drug that is ordered or prescribed by the covered entity provider as a result of the service described above.» The individual s healthcare is consistent with scope of the federal grant, project, designation, or contract.» The individual s drug is ordered or prescribed pursuant to a healthcare service that is classified as outpatient.» The individual s patient records are accessible to the covered entity and demonstrate that the covered entity is responsible for care. 8

10 II. Changing Reimbursement Models Oncology Care Model Early last year Medicare announced the creation of the OCM, designed to improve care coordination, access, and appropriateness while lowering the total cost for Medicare beneficiaries receiving treatment.» The OCM will incorporate two new payment mechanisms: A $160 PMPM during the episode of care to support care coordination Retrospective performance-based payments for lower total cost of care and improved quality during» In order for a physician practice to participate in the episode-of-care model, the following requirements must be met: Provide access to patient navigation. Document care plans that contain all components in the proposed Institute of Medicine Care Management Plan. Offer 24/7 availability of a clinician who has real-time access to the practice s medical records. Treat patients based on nationally recognized clinical guidelines. Pursue continuous quality improvement projects. Utilize an ONC-certified EHR and attest to Stage 2 of meaningful use by the end of the model s third performance year. The OCM is designed to reduce the utilization of acute care services and high-cost pharmaceuticals. 9

11 II. Changing Reimbursement Models Oncology Medical Home The OMH model utilizes an oncology care team approach to ensure that clinical practices work collaboratively to best serve patients. Goals of OMH OMH Environment» Place the central focus on the patient.» Deliver clinically appropriate symptomatic and preventive care to reduce the utilization of resources, such as ED visits and hospitalizations.» Offer payment options under the OMH model: Shared savings between payors and providers for better disease management Up-front payment (e.g., care coordination fee) for comprehensive patient support Home Health Care Managers Social Workers Nurses PCP Patient Navigator Other (Residents) APCs Community/ Volunteers 10

12 II. Changing Reimbursement Models Bundled Payments The bundle supplies a single payment, encompassing services provided as part of a condition or episode of care. Bundled Payment Environment Single Payment for All Services Surgeons Other Physicians Post-Acute Services Payor Hospital Services Hospital Readmissions Post-Acute Physicians + Risk C O N S I D E R AT I O N S F O R O N C O L O G Y» What cases or conditions will the bundle be for?» How long will the bundle be valid, and what service period will it cover?» What types of services should be included or excluded from the bundle?» How should the bundle be adjusted for severity or stage of disease?» Are expensive drugs carved in or out of the episode?» How are oral oncology drugs reimbursed?» How is radiation treatment reimbursed?» How can the bundle be used to motivate coordination with palliative and hospice care? Because cancer encompasses many diagnoses and has a high degree of variation in costs and outcome, bundles must be carefully structured to avoid extremes of over- or underpayment. 11

13 II. Changing Reimbursement Models High-Deductible Plans The growth of high-deductible plans, both employer-sponsored and exchangebased, has led to a growing category of patients who shoulder more of their healthcare costs; patients are also demanding changes in the way care is delivered. 12

14 II. Changing Reimbursement Models Putting the Pieces Together The ongoing economic changes underscore a number of trends for healthcare providers Heightened attention on cost of care Tighter operating margins Fewer economic strategies to preserve margins Shifting of more financial risk to providers Mounting demands for demonstrable outcomes Greater patient expectations for consistency in clinical care Increased need to use EBM (lower-cost options) Growing need for clinical integration and coordination 13

15 II. Changing Reimbursement Models 14

16 15

17 Value-Based Enterprise To properly position themselves for the evolving healthcare environment, health systems and hospitals need to simultaneously evolve operationally, strategically, financially, and technologically. CARE DELIVERY TRANS- FORMATION VBE PAYMENT MODELS CLINICAL AND BUSINESS INFORMATICS PROVIDER NETWORK In each of these areas there are a number of strategies that organizations should adopt today. 16

18 Value-Based Enterprise: Care Delivery Transformation CARE DELIVERY TRANSFORMATION» Analyze clinical and claims data.» Develop protocols.» Outline and prioritize clinical care improvements.» Oversee clinical teams to address variation and create tools for improvement.» Evolve the framework for physician leadership, management, and accountability for protocol implementation. CARE DELIVERY TRANS- FORMATION CLINICAL AND BUSINESS INFORMATICS VBE PROVIDER NETWORK PAYMENT MODELS 17

19 Potential Tumor Site Committees Physician Leadership: Structure Developing a robust and high-performing physician leadership organization is critical to driving clinical and operational performance. Administrative Service Line Leader Physician Leadership Council Medical Director of Oncology Services Council Membership» Seven to nine members total» Medical director of oncology services» Four or five representatives from various specialties» Two hospital administrator members Breast Committee Lung Committee Ad Hoc and Other Tumor Site Committees (As Necessary) Membership of Potential Tumor Site Committees» Service line leader» Three to five physician representatives from surgery, medical oncology, radiation therapy, radiology, and pathology 18

20 Physician Leadership: Roles and Responsibilities While physician leadership councils can perform a variety of functions, they are particularly valuable in driving quality improvement, clinical integration, and care standardization efforts. E X A M P L E S C O P E O F P H Y S I C I A N S E R V I C E S» Develop clinical protocols.» Ensure compliance with best practices.» Monitor programs.» Improve clinical efficiency.» Monitor patient satisfaction.» Oversee program development.» Participate in provider recruitment.» Monitor inpatient and outpatient services.» Review financial, operational, and quality performance.» Develop policies and guidelines.» Provide input on budget.» Foster a culture of collaboration and accountability. 19

21 Value-Based Enterprise: Clinical and Business Informatics CLINICAL AND BUSINESS INFORMATICS» Develop reports of clinical and financial performance that reflect the priorities of value-based care.» Incorporate tools that provide clinical decision support.» Accomplish data exchanges across the care continuum. CARE DELIVERY TRANS- FORMATION CLINICAL AND BUSINESS INFORMATICS VBE PROVIDER NETWORK PAYMENT MODELS 20

22 Reporting Yesterday» Gross charges» Contractual adjustments» Net revenue» Payments» P&L for practice/network» Revenue from hospital operations» Volumes; new patients» No-show/cancellation rates» Payor mix» Days in A/R and A/R aging» Charge lag» Claims rejections» Bad-debt estimates Revenue Tomor row» Patients on pathway» Referrals out of network» Clinical outcome measures» Number of ED or inpatient admissions» Frequency of readmission» Use of off-formulary drugs» Percentage of patients receiving palliative care consults» Percentage of new cases reviewed in prospective tumor conference» Chemotherapy administered less than 14 days before death Cost and Outcomes 21

23 Value-Based Enterprise: Payment Models CARE DELIVERY TRANS- FORMATION CLINICAL AND BUSINESS INFORMATICS VBE PROVIDER NETWORK PAYMENT MODELS PAYMENT MODELS» Align value-based reimbursement philosophy with clinical goals.» Advance value payment models.» Mitigate reliance on FFS by diversifying portfolio and getting closer to the premium.» Collaborate with payors.» Update physician compensation structures to align with new methods of reimbursement. 22

24 TOTAL COMPENSATION CLINICAL COMPENSATION FIXED VARIABLE Physician Compensation: Design Elements The industry has responded to uncertainty by implementing comprehensive and flexible compensation frameworks. Academic/ Administrative/ Other Compensation Other Incentives (Quality/ Scorecard) Production- Based Incentive» What activities warrant additional compensation?» What are the mechanisms to compensate the activities?» How is performance in these activities monitored?» Who makes these decisions?» What are the metrics of performance, and what are the target levels for each metric?» What is the appropriate unit of measure (department, site, individual)?» How are incentives paid (all or nothing, tiered, etc.)?» Who makes these decisions?» What measure of production should be used, and what are reasonable productivity expectations?» How is production valued, and how is the incentive paid?» How are the staffing implications managed?» Who makes these decisions? Base (Fixed) Compensation» How is the ratio of base (fixed) to variable compensation established?» How is the amount for base compensation determined?» Who makes these decisions? 23

25 Physician Compensation: Transition Framework The diagram below represents the actions many organizations are currently pursuing to transition toward a more balanced compensation approach. 100% Production 100% Production Non- Productivity Performance Pool Nonproduction Incentives Non- Productivity Performance Pool Nonproduction Incentives Production Production Incentives Production Base (Fixed) Compensation Component Production Guaranteed Salary C U R R E N T P L A N T R A N S I T I O N / M O D E L I N G N O N P R O D U C T I O N I N C E N T I V E S F U L L I M P L E M E N T A T I O N» The plan is assumed at 100% production.» A major cultural shift is required for transition.» Data collection and reporting are inadequate.» The 100% production plan continues.» Performance measure data is collected and tested.» Shadow reports are created.» A work group is created to identify nonproductivity metrics and tie them to compensation pools.» Production compensation is reduced.» Funding is established for nonproduction pools.» Nonproduction incentives grow every year and are continuously evaluated and improved upon.» The transition is complete.» The new plan relies on the potential combination of production, nonproduction, and base (fixed) compensation components. 24

26 Value-Based Enterprise: Provider Network CARE DELIVERY TRANS- FORMATION CLINICAL AND BUSINESS INFORMATICS VBE PROVIDER NETWORK PAYMENT MODELS PROVIDER NETWORK» Provide and coordinate the clinical scope across the care continuum.» Align the network financially and clinically.» Ensure that the network follows protocols and facilitates in-network referrals. 25

27 Provider Network: Development Today, successful organizations are assessing their clinical capabilities and filling gaps with the appropriate programs and services. Identify Prioritize What services are necessary to round out the clinical portfolio and enable an organization to successfully compete in a value-based environment? What is the relative priority of these services (e.g., how does the service impact cost of care)? Subspecialists Specialists Strategize How quickly does an organization need to fill these gaps in its clinical portfolio? Primary Care 26

28 High AUTONOMY Low Provider Network: Evolution of Physician Alignment Industry forces are pushing healthcare providers to find innovative ways to form larger integrated networks or restructure their delivery models. Employment/ acquisition by a health system Clinically integrated networks involving multiple types of providers Private physician-owned group mergers Independent practice association medical groups or physician networks involving alliances Affiliations through professional services agreements and management services agreements Traditional Model Clinical Integration Complete independence Financial Integration Low INTEGRATION High 27

29 Provider Network: Physician Alignment Options There are a variety of strategies that may be used to clinically and economically align providers with the network. Typically however, network performance improves as integration increases. Medical Directorship Leadership Council Joint Venture Comanagement Arrangement PSA and MSA/ Comanagement PSA Employment Loosely Integrated Degree of Integration Tightly Integrated In recent years, organizations have also used managed care strategies such as medical homes, ACOs, and clinically integrated networks to achieve alignment. 28

30 Provider Network: Management An integrated delivery system will be advantaged in terms of its ability to attract and retain patients while ensuring the provision of high-value care. Ensures patients are seen by high-quality and efficient providers Increases patient volumes and revenue Improves the network s ability to coordinate care Patient Retention Referral Capture Prevents steerage of profitable volumes to other providers Cost Management Clinical management tools able to be developed to monitor and improve outcomes Outcome and efficiency reporting to attract and retain patients 29

31 Conclusions Develop and evolve the framework for physician leadership. Create reports of clinical and financial performance that reflect the priorities of value-based care. Update physician compensation structures to align with new methods of reimbursement. Develop a comprehensive integrated provider network. Align the provider network financially and clinically. Ensure that the network follows protocols and facilitates in-network referrals. 30

32 Questions & Answers Matt Sturm

33 Bonus: Executive Summary The Changing Landscape for Cancer Care Delivery Implications of Current Reform Efforts 1. Heightened attention on cost of care 2. Tighter operating margins 3. Fewer economic strategies to preserve margins 4. Shifting of more financial risk to providers 5. Mounting demands for demonstrable outcomes 6. Greater patient expectations for consistency in clinical care 7. Increased need to use EBM (lowercost options) 8. Growing need for clinical integration and coordination Strategies for Success 1. Develop and evolve the framework for physician leadership. 2. Create reports of clinical and financial performance that reflect the priorities of value-based care. 3. Update physician compensation structures to align with new methods of reimbursement. 4. Develop a comprehensive integrated provider network. 5. Align the provider network financially and clinically. 6. Ensure that the network follows protocols and facilitates in-network referrals. 32

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