PREPARING YOUR ORGANIZATION FOR CMS MANDATORY COMPREHENSIVE CARE FOR JOINT REPLACEMENT (CCJR) PAYMENT MODEL: WHERE TO START
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1 BDO CENTER FOR HEALTHCARE EXCELLENCE & INNOVATION PREPARING YOUR ORGANIZATION FOR CMS MANDATORY COMPREHENSIVE CARE FOR JOINT REPLACEMENT (CCJR) PAYMENT MODEL: WHERE TO START Steven Shill CPA Paul T Gallese PT, MBA William Bithoney MD, FAAP January 21, 2016
2 Agenda and Acknowledgements Page 2
3 Agenda 1. Program Architecture and Program Element Descriptions (The Where, What, and Why) 2. Care Model Redesign (The Now) 3. Pathway for Positive Reaction (The How) Page 3
4 The CJR Program An Immediate Future State Page 4
5 Complexity: Golf Swing Considerations Page 5
6 Program Architecture Program Architecture DRG 469 and 470 are included Frame of reference: 90 day DRG payment for which the hospital is entirely responsible - Providers bill Medicare directly at current fee-for-service rates - Claims aggregated based on an index admission - Cost reconciled post discharge - Savings distributed to providers; losses paid back to CMS This is a mandatory program with an April start date Although this program resembles CMS s BPCI program, there are material differences that need to be understood and considered Page 6
7 Program Structure 42 CFR Part 510, Subparts A K* Market and Timing Pricing and Payment Performance Years Geography and Coverage Program Episodes and Inclusion Criteria Episode Target Price Calculation Reconciliation Process Other CMS Program Payments Quality Measures Gain Sharing Arrangements Waivers Required Quality Measures Required Reporting, ABN Requirements and Beneficiary Choice Impact of Quality Measures on Reconciliation Payments Allowed Financial Arrangements Gain sharing distributions Home health SNF 3-day rule Telemedicine Post-operative billing Page 7 *
8 Market and Timing Mandatory program all hospitals in the total joint business in these MSAs are included 794 Hospitals in 67 MSAs (107,037 episodes in our data cohort) Five performance years start 1 April 2016 Page 8
9 Inclusions and Exclusions Included 90 day episode Physician Services Inpatient Services (includes readmissions) IPF, LTACH, IRF, SNF, HHA services Hospital OPD (including rehab services) Clinical Lab Services DME Drugs and biologics Hospice Services Excluded MA program participants Live BPCI program participation Items and services unrelated to the anchor hospitalization Certain unrelated chronic conditions Oncology Medical Trauma Chronic surgical diseases Acute surgical diseases Clotting factors Pass through payments for medical devices New technology add-ons Page 9 Items services and costs included in the episode attributed to the HOSPITAL that is responsible for the Anchor Admission
10 Regional Spend DRG 469 Southern California: $52, d Page 10
11 Regional Spend DRG 470 Southern California: $40, d Page 11
12 Pricing and Payment Performance Year* Hospital Price Weight Regional Price Weight Risk Exposure Quality Score Impact Loss and Gain Caps PY 1 PY 2 PY 3 PY 4 PY % 66.6% 33.3% 0% 0% 33.3% 33.3% 66.6% 100% 100% Upside Upside only, limited Downside Upside, limited Downside Full upside and downside Full upside and downside None.5% 2%.5% 2% 1.5% 3% 1.5% 3% 0 Loss Gain cap 5% 5% loss 5% gain 10% loss 10% gain 20% loss 20% gain 20% loss 20% gain Cost Index Years Page 12 *PY 1 starts 1 April 2016
13 Pricing and Payment: Illustrate Potential Impact Hospitals nationally could collectively lose over $115 million if they choose to maintain the status quo Use Pacific Region Target Prices No credit for historical performance Representative sample 95 hospitals in the So Cal CJR cohort MS-DRG Total Spend Target Price (Pacific Region) NPRA/case Expected Volume (n) Total NPRA 469 $52,841 $48,874 ($3,967) 563 ($2,233,421) 470 $40,678 $23,424 ($17,254) 6,567 ($113,307,018) TOTAL ($115,540,439) Average estimated exposure for So Cal CJR hospitals: $1.2 million per facility Page 13
14 Pricing and Payment: Payment Mechanics What is at stake for my hospital?...arriving at the NPRA 1. CMS aggregates all of the payments for the care episode 2. Multiply the episode target price by the number of episodes during the performance year 3. Subtract results of Step 1 from Step 2 4. If NPRA is positive, hospital is ENTITLED TO A PAYMENT from CMS (subject to Hospital achieving adequate quality criteria scores), repayment subject to stop gain percentages in applicable PY. 5. If NPRA is negative, hospital REPAYS CMS equal to the negative NPRA amount (no repayment in PY 1, repayment subject to stop loss percentages in applicable PY) Page 14
15 Cost Variance: Co-Morbid Conditions (So Cal) The Impact of Fracture as a Co-Morbid Diagnosis Fractures comprise about 14% of major joint episodes for all Medicare patients Fracture patients are more complicated cases 2x readmission rate 2x PAC utilization Higher mortality Page 15
16 Cost Variance: Post Acute Care Spend (So Cal) Use Rates National DRG 469 % So Cal DRG 469 % National DRG 470 % So Cal DRG 470 % SNF 66.0% 64.7% 42.4% 35.5% HH 36.7% 41.2% 48.4% 65.3% IRF 19.0% 17.6% 13.5% 3.6% LTCH 3.2% 0.0% 0.4% 0.0% Readmission Rate 30.8% 20.6% 12.2% 9.0% Page 16
17 Cost Variance: Readmission Volume (So Cal) Page 17
18 Cost Variance: Readmission Cost (So Cal) Readmission exposure in this data cohort invites attention to post discharge wound care and respiratory disease management By spend, AMI is the most prevalent but not the most costly readmission Page 18
19 Cost Drivers: PAC Utilization (So Cal) Home Health v SNF? Home Health v OP PT? Page 19
20 Cost Variance Drivers: ED Utilization (SoCal) LEJR patients go to the ED because they fall Page 20
21 Quality Measures Detail program quality measures that must be in place to participate in the program Program rules define quality measures required NQF 0166 NQF 1550 Consider adding NQF 1551 for quality control (not mandated) Page 21
22 Beneficiary Notification Requirements Hospitals in the CJR program are required to provide written notification to Medicare beneficiaries: Notice that the hospital is participating in the CJR program Description of the hospital s program List of collaborators, providers with whom the hospital has established relationships for patient care under the program Acknowledgement that Medicare beneficiaries are entitled to receive care from any Medicare provider Hospitals can label certain providers as preferred Individual CJR program beneficiaries may NOT opt out of data sharing Page 22
23 Financial Arrangements The Final Rule describes allowed gain sharing arrangements between and among providers: Written agreements among collaborators Hospitals must update compliance programs to include oversight of the CJR program and must create and approve written policies No inducements to limit care, no restrictions on patient choice or selection of equipment Hospitals may pay collaborators Must receive payment from the reconciliation payment Can include internal cost savings attributable to hospital care model redesign Collaborators must contribute to program design and care model redesign Payments made to group practices can only be shared with those physicians or other providers that deliver care to CJR program beneficiaries ( practice collaboration agents ) Lots of detail in the gain sharing rules.we advise having competent counsel involved in the preparation and execution of gain sharing arrangements Page 23
24 Regulatory Waivers CJR provides relief for certain, long standing, rules and regulations SNF 3-day rule Post operative billing restrictions Deductible and co-insurance applicable to reconciliation payments Beneficiary protection retained Choice maintained without restrictions Beneficiary notification requirements There is a 20 page OIG waiver document that counsel should review and integrate into your CJR program plan Page 24
25 Reacting Positively: Care Model Redesign Data, Planning, Understanding Page 25
26 Payment and Care Model: Current State Hospital Physicians Home Health Skilled Nursing Rehab Services Hospice Pharma DRG Medicare Part B HHPPS 60 Day Episode RUGS IRF PPS RHC and SIA Part D Silos today: separate functions, separate payment systems Page 26
27 Payment and Care Model: Bundle State Bundles align services and payments bundles cross all the traditional lines Post-Acute Care Index Admission Hospital and readmit SNF, IRF Home Health, Rehab Enabling Services Physician Services Diagnostic Services Risk Stratification, Care Transition, Care Coordination, Enabling Services Page 27
28 The How-To. Curate the Care Process 1 Data Receive, process, analyze data build cost models Curate From the Latin root CURARE one responsible for the care of souls 2 Care Model Identify required process change, care model redesign 3 Clinical System Secure collaborators, manage outside the walls 4 Operations Operating systems, dashboards, feedback, reconciliation process BDO Center for Healthcare Excellence & Innovation Page 28 28
29 BDO Center for Healthcare Excellence & Innovation Page 29 29
30 Data: Know and React to Clinical and Fiscal Opportunities Represents a single episode of care for illustrative purposes only BDO Center for Healthcare Excellence & Innovation Page 30 30
31 Care Model: End-to-End Systems; Manage Inside and Outside the Hospital Walls Develop an end-to-end clinical system Internal (hospital processes) Understand, quantify, and manage inbound risk Standardize supply chain External (person-centric care system) Understand, quantify, and manage outbound risk Develop and operate a post-acute care system Proactively manage care transitions Monitor post acute care workflow Create non-institutional contact points BDO Center for Healthcare Excellence & Innovation Page 31 31
32 Care Model: Reduce Potentially Avoidable Complications (PACS) Issues Pre- surgical Patient History Education Perioperative Blood Loss Autologous transfusion Deep Vein Thrombosis and PE Infection: Prophylaxis Start/Stop Develop Skill building Teams to Train MDs Especially Outliers Rehabilitation/Physiotherapy Discharge Planning Begins pre-admission Page 32
33 Care Model: Develop Pre Admission Packages Elements of Pre -Admission Packages Pre-surgical screening: Prehab MAR Physiotherapist Assessment Standard Nursing Assessment Including Complication Index, CPT And DRG Therapy Referral Form Lower Extremity Functional Assessment Initiate Standardized Evidence Based CPG FOR ALL CO MORBITIES BDO Center for Healthcare Excellence & Innovation Page 33 33
34 Clinical Systems: Identifying PAC Use and Referral Patterns BDO Center for Healthcare Excellence & Innovation Page 34 34
35 Clinical Systems: High Quality SNFs are a Must 1 Star 2 Star 3 Star 4 Star 5 Star National 14.9% 19.8% 18.9% 23.5% 22.8% N= LA 10.3% 20% 19.1% 23.7% 26.8% N= OC 6.5% 25% 19.7% 28.9% 23.6% N = MSA 10% 20.5% 19.2% 24.4% 26.4% N= * Note the spread between Star ratings about 30% of SNFs in LA and OC MSA are below quality score minimums to qualify for waivers under CJR. About 40% are 3-Star rated or lower.the quality scores impact the ability of your organization to collaborate with every SNF in the market. You need to be highly selective about your partners in this program. Page 35 *Source: BDO analysis of CMS data
36 Clinical Systems: Plot Recovery Path BDO Center for Healthcare Excellence & Innovation Page 36 36
37 Preferred Networks: Invite Strong PAC Partners BDO Center for Healthcare Excellence & Innovation Page 37 37
38 Clinical Systems: Develop Acute Stage Guidelines Develop Standardized Order Set Evidence based clinical algorithms across the episode (by CPT, HCPCS, ICD-10) Use Only Pre-approved Implants one source Caregiver to Sign Each Order As Completed: Pre, Post-Op Checklists Document Each Variance From Standard Set With Reason For Variation Mobilization Beginning Post-Op Day 1 Functional Assessments Connect with Home Care Avoid Rehab or SNF referral whenever possible (if necessary INCREASE LOS?) Page 38
39 Operations: High Level Operating Schematic Total Joint Case Elective Emergent Pre-op assessment & Pre-Hab In-house visit Program enrollment Risk Stratification High Risk Low Risk Program Discharge at 90-day mark Work Flow Platform Resource delivery Telephonic case following Appointment scheduling Medication reconciliation Transportation Enabling services High Risk Track Assigned Care Management In-house dc planning Close post-op following Low Risk Track Care pathway deployed Telephonic post-op following Page 39
40 Page 40
41 Operations: Track Program Performance Thoughtful modeling, consistent reporting, and effective use of the ongoing program data streams will contribute significantly to program success Create and maintain reasonable expectations about the program Measure and follow trends, intervene quickly Measure the performance of the PAC network Measure compliance with care models, care processes and established program guidelines Note and measure internal cost savings. The program data delivered to your hospital allows you to assess, report, and control your CJR program investment Page 41
42 Operations: Model Gain Sharing and Communicate Collaborators need to be actively engaged Communicate early and often Provide simple, meaningful metrics Consider distributing gainsharing on a rolling average Calculate and consider completion factors (IBNR) Page 42
43 Summary How to Win in the Bundle Payment Environment Page 43
44 Critical Success Factors 1. The CJR program is an exercise in regression to the mean CMS intends to lower both the overall cost and the cost variation for this procedure 2. As the Episode Initiator, the hospital becomes responsible for the sum total of the claims cost for LEJR for 90 days...this constitutes an opportunity to redesign the care model for this case type to optimize clinical outcome and financial result 3. Hospitals have a great deal of control over the care process and can, within the program rules, deliver those resources that can assure positive clinical and financial outocmes. BDO Center for Healthcare Excellence & Innovation Page 44 44
45 Critical Success Factors 4. This is a new space for most hospitals nationally... hospitals are learning how to manage outside their walls 5. Data is the key to success in this program... you will need to develop or acquire the ability to process, analyze and distill the program data into useful information that can track program progress. 6. Care management resources that hospitals typically support may not be adequate, as currently configured, to manage the scope and geography of this program BDO Center for Healthcare Excellence & Innovation Page 45 45
46 The Way Forward How we Can Help Page 46
47 How We Can Help Initial analyses Data: Analyze and use program data to model performance. Performance: Where are you leaking volume? How do you compare to national and regional benchmarks? Network: What are your current referral patterns? With whom should you partner more closely? Volume/Referrals: What is your share of wallet? where is it leaking? Drivers of leakage? Program development and implementation Care planning: (including optimal PAC plan) at the pre-procedure stage Discharge planning: Facilitate optimal site of care, length of stay and most capable provider for each patient and effect an e-referral for PAC BDO Center for Healthcare Excellence & Innovation Page 47 47
48 How We Can Help Gain Sharing Design model and administer programs to align collaborators Program Operations Financial projections Financial reconciliation Abstract results/capabilities to support commercial bundle expansion Extend bundled payment operations expertise to other clinical processes and conditions BDO Center for Healthcare Excellence & Innovation Page 48 48
49 Program Development Process (Example) Reacting effectively to the CJR program involves a deliberate, well coordinated effort that requires a blend of data, analytics, care model redesign, modeling, and consensus building within and outside the hospital walls. 1. Gather data CMS will provide program data; develop other data sources that can be analyzed in advance of and parallel to the CMS data set The CMS data set requires competent assembly, it is not shipped in ready to use format CMS data delivery has been delayed in the past, access to bundle data prior to receiving your organization s data can provide a quick start for program analysis 2. Model program exposure Use the program and comparative data to model CJR program financial exposure Model post acute care cost exposure Identify potential collaborators Describe an optimal collaboration network BDO Center for Healthcare Excellence & Innovation Page 49 49
50 Program Development Process (Example) 3. Assess internal care processes Develop a clear understanding of internal processes Develop a current state care model Include the post acute assets in the care model 4. Identify transition and care management assets and needs Assess current transition processes from the institution Critically review current care management practices and processes Traditionally constructed hospital case management assets will likely fall short of meeting program needs 5. Develop a care model redesign process Having assessed care processes, conduct a gap analysis and develop a care model redesign pathway Model potential gains against initial program model BDO Center for Healthcare Excellence & Innovation Page 50 50
51 Program Development Process (Example) 6. Develop the post acute care collaboration network Secure a range of collaborators that have been identified through the data analysis as potentially effective Invest collaborators in the care model design Develop and execute collaboration and gain sharing agreements with selected partners Harmonize program elements with institutional governance requirements ABN notification modification Compliance program and governance oversight 7. Develop operating infrastructure for program support Assemble operating infrastructure components including care management workflow platform, performance dashboards Develop a rolling reconciliation process based on quarterly data feeds from CMS BDO Center for Healthcare Excellence & Innovation Page 51 51
52 When science finally locates the center of the universe, some people will be surprised to learn that they are not in it. Yogic Wisdom BDO Center for Healthcare Excellence & Innovation Page 52 52
53 Bios BDO Professionals Page 53
54 William Bithoney, MD, FAAP BDO Center for Healthcare Excellence & Innovation Chief Physician Executive Dr. Bithoney has more than 25 years of experience serving as a physician executive in diverse academic and hospital systems, specializing in the development of ACOs, Medicare Advantage clinical programs, physician alignment strategies, managed care strategies, academic and research program development, as well as performance and quality improvement programs. He worked for 17 years at Boston Children s Hospital/Harvard University School of Medicine. In that span, he was named Senior Associate in Medicine, Associate Professor of Pediatrics and Chief of General Pediatrics Primary Care. Senior Associate in Medicine is the highest clinical appointment available at Harvard Medical School. Dr. Bithoney has served as Professor at SUNY Health Sciences Center, Brooklyn as well as both Professor and Vice Dean of NY Medical College. He has also served as CMO of a number of multihospital health systems with revenue between $1 billion and $2.5 billion/annum. bbithoney@bdo.com Direct: Mobile: Park Avenue New York, NY Dr. Bithoney has advised on ACO and physician alignment strategy for Signature Health System and UMass Memorial Health Care. While serving as CEO of the Sisters of Providence Health System in Massachusetts he managed a Medicare Advantage (MA) program which was independently rated as following best practices for physician engagement and alignment strategies. While at Sisters of Providence Health System (SPHS), he also served not only as Interim President & Chief Executive Officer (CEO) but also as Chief Operating Officer (COO) & Chief Medical Officer (CMO). Following the successful development of an ACO and Medicare Advantage program at SPHS, he and his team turned SPHS into the most profitable community hospital in the state, despite being in the most impoverished City in Massachusetts. In 2010, Dr. Bithoney and his team won the Innovation Award from the American College of Healthcare Executives for their ACO work managing a healthcare system and an award winning full-risk full-capitation MA program. That same year, SPHS was named one of the Top 100 Hospitals in the United States for quality and value by Cleverly and Associates. Subsequently SPHS was named a 100 Top Hospital in the US for 3 consecutive years. EDUCATION M.D., School of Medicine, Yale University A.B., Molecular Biology, Harvard College, magna cum laude BDO Center for Healthcare Excellence & Innovation Page 54 54
55 Paul Gallese, PT, MBA BDO Center for Healthcare Excellence & Innovation Senior Clinical Fellow Mr. Gallese has more than 35 years of healthcare experience, serving as an operating executive, restructuring specialist, value creation advisor, and consultant working with hospitals, health systems, academic medical centers, health insurers, private equity sources, and bundled payment infrastructure providers. focusing on program development, asset development, asset repurposing, program design,revenue growth, physician engagement, and clinical excellence. Prior to joining BDO, Mr, Gallese served as the Chief Operating Officer of Liberty Health Partners, a national awardee convener in the CMS BPCI program. Mr. Gallese is also the Managing Principal of Inner Circle Health Advisors, a value creation advisory firm that focuses on new and early stage healthcare technology companies. He is also serves as a Senior Clinical Fellow in the BDO Center for Healthcare Excellence and Innovation. Mr. Gallese started his career as a Physical Therapist and Pathokinesiologist working primarily with elite Olympic and professional athletes. pgallese@bdo.com Direct: Park Avenue New York, NY Mr. Gallese has served in several executive leadership roles both permanent and interim for healthcare organizations nationally. He has completed several development, restructuring, new asset development and program development efforts, some of which are listed below. Senior Director at Alvarez & Marsal CEO, Community Health Plan of Washington Senior Consultant for The Lewin Group Executive Director, Einstein Practice Plans SVP, Network Operations for Salick Cancer Centers Associate Administrator for USC University Hospital EDUCATION PT, Marquette University, Milwaukee, Wisconsin (emphasis on Neurosicences and Pathokinesiology MBA, Pepperdine University, Malibu, CA (emphasis on finance and business systems) BDO Center for Healthcare Excellence & Innovation Page 55 55
56 Steven Shill BDO Center for Healthcare Excellence & Innovation U.S. National Healthcare Industry Lead Partner Office: Bristol St Costa Mesa, Ca Steven has more than 22 years of public accounting and consulting experience with two global accounting/consulting firms serving a variety of publicly and privately held companies (including nonprofits and NGOs) in the healthcare, finance, and insurance, sectors. During this period he also spent a number of years working in private industry as a senior manager of an actuarial/risk management consulting subsidiary of a multi-national publicly traded company. Steven extensive experience in in public accounting and consulting has seen him serve hospitals, nursing homes, medical insurance plans, physician groups, dental organizations and other healthcare related industries, such as drug testing, pharmaceuticals, urgent care services, surgery centers, and behavioral health providers. Steven s services to healthcare organizations include audits (inclusive of SEC and SOX compliance), risk assessment consulting, financial feasibility and debt capacity studies, internal control reviews and various other consulting services such as litigation support. Steven s role in litigation support has included serving as an expert on the Medicare Advantage Program including participation in depositions. Steven also has restructuring experience and has provided audit services to healthcare organizations in bankruptcy Steven is head of BDO USA s West Region healthcare team and also serves as its National Healthcare Industry Lead Partner and a leader at BDO s Center for Healthcare Excellence &Innovation. He routinely presents on healthcare topics at various forums nationally in the US including a series on Audit and Accounting Risks for the Healthcare Industry as well as a series on Healthcare Reform. He is an active member of the Healthcare Financial Management Association and most recently he was a guest speaker at their US national meeting. EDUCATION Post Graduate Honors Degree in Accounting Science University of South Africa B.S. in Commerce University of the Witwatersrand Chartered Accountant-South Africa Certified Public Accountant -California BDO Center for Healthcare Excellence & Innovation Page 56 56
57 Data Collaborator Owned Outcomes Page 57
58 BDO Center for Healthcare Excellence & Innovation Page 58 58
59 The BDO Center for Healthcare Excellence & Innovation DRIVING THE FUTURE OF HEALTHCARE The BDO Center for Healthcare Excellence & Innovation is devoted to helping healthcare organizations thrive, clinically and financially. We help clients redefine their strategies, operations, and processes based on both patient-centric demands and rigorous best business practices responding to the industry s new market disrupters, cost pressures, and outcome-based reimbursement models. The Center is built to meet the current and future needs of providers, payers, and investors. We are accomplished, senior-level specialists, who approach every challenge from multiple perspectives, collaboratively, in spirit and in practice. Drawing on the full extent of the BDO network, we are uniquely able to meet the specific needs of each client, no matter how large or complex. Healthcare Executives Clinical Practitioners Valuation Professionals Turnaround / Restructuring Advisors Investment Bankers Economists & Statisticians Auditors IT Specialists / Data Analysts Forensic Technologists Regulatory Specialists Tax Accountants Real Estate Planners & Advisors BDO Center for Healthcare Excellence & Innovation Page 59 59
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