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1 Episode Payment Models: Cardiac Bundle Initiative HFMA Florida Chapter (North Florida) October 25, 2016 Robert Howey MBA, MHA, CPA Revenue Cycle Manager 2016 MFMER slide-1

2 Objective After the session, you will be able to: Understand the key components of the Cardiac Episode Payment Models (EPMs) Understand actions that hospitals can take to prepare for EPMs 2016 MFMER slide-2

3 Agenda I. Changing Payment Landscape II. EPM Bundling Methodology & Reconciliation III. Preparation for EPMs 2016 MFMER slide-3

4 Overview Proposed Rule on 8/2/16 Proposed Changes: Three new episode payment models (EPMs) A cardiac rehabilitation (CR) incentive payment model Refinements to the CJR model 2016 MFMER slide-4

5 Changing Payment Landscape 2016 MFMER slide-5

6 CMS Movement Toward Greater Risk P4P Bundled Payments Shared Savings Shared Risk Full Risk Hospital VBP Program Hospital Readmissions Reduction Program HAC Reduction Program Merit-Based Incentive Payment System BPCI Comprehensive Care for Joint Replacement (CCJR) Model EPMs for SHFFT, AMI and CABG MSSP Track 1 (50% sharing) MSSP Track 2 (60% sharing) MSSP Track 3 (up to 75% sharing) Next Generation ACO Model (80-85% shared savings option) Next Generation ACO Model (full risk option) Medicare Advantage (providersponsored) 2016 MFMER slide-6

7 CMS Shifting Payments from Volume to Value FFS Tied to Value Target % of Medicare Payments Tied to Quality or Value 80% 85% 90% Alternative Payment Models Target % of Medicare Payments Tied to APMs 20% 30% 50% Hospital VBP Program Hospital Readmission Reduction HAC Reduction Program Merit-Based Incentive Payment System (MIPS) Medicare Shared Savings Program Bundled Payments for Care Improvement Initiative (BPCI) Patient-centered medical home models 2016 MFMER slide-7

8 EPM Bundling Methodology & Reconciliation 2016 MFMER slide-8

9 What is an Episode Payment Model? 2016 MFMER slide-9

10 EPM Episode Definition: Services Included Initiated by a hospital admission All care during index hospitalization through 90 days post discharge 90-day post discharge services include: Physician services Hospital readmissions and outpatient Clinical laboratory Outpatient therapy DME and Part B drugs Post-acute care IPF, LTCH, IRF, SNF, HHA, Hospice 2016 MFMER slide-10

11 EPM Episode Definition: Beneficiaries Enrolled in Medicare Part A and Part B throughout duration of episode Excludes those: Eligible on basis of ESRD Enrolled in Medicare Advantage Covered under United Mine Workers of America health plan Aligned to an ACO Under care of a BPCI Model Deaths during anchor admission/chain 2016 MFMER slide-11

12 EPM Episode Definition: Services Excluded Acute diseases unrelated to a condition resulting from or likely to have been affected care during the EPM episode Certain chronic diseases, depending on whether the condition was likely to have been affected by care during the EPM episode or whether substantial services were likely to be provided for the chronic condition during the EPM episode 2016 MFMER slide-12

13 What is an Episode Payment Model? What types of providers are impacted? 2016 MFMER slide-13

14 Providers Impacted IPPS Hospitals 98 randomly selected metropolitan statistical areas (MSAs), with limited exceptions 2016 MFMER slide-14

15 What is an Episode Payment Model? What types of providers are impacted? Why is CMS targeting this area? 2016 MFMER slide-15

16 Goals of EPMs Better care for patients through more coordinated, higher quality care during and after select episodes or care periods 2016 MFMER slide-16

17 Goals of EPMs Smarter spending of health care dollars by holding hospitals accountable for total episode spending, not just inpatient costs, and incentivizing use of high value services during care periods 2016 MFMER slide-17

18 Goals of EPMs Healthier People and Communities by improving coordination in health care and by connecting care across hospitals, physicians, and other health care providers 2016 MFMER slide-18

19 Performance Period July 1, 2017 December 31, 2021 $170M Estimated Net Savings 2016 MFMER slide-19

20 DRGs Impacted DRG Range DRG Description Trim Coronary Artery Bypass Graft (CABG) Percutaneous Coronary Intervention (PCI) Without AMI With AMI Without CABG Readmit With CABG Readmit Acute Myocardial Infarction (AMI) Without CABG Readmit With CABG Readmit 2016 MFMER slide-20

21 Payment Reconciliation Price DRG Avg Spend (Hospital) Avg Spend (Region) Difference Cases Recon Amount 233 w/o AMI $52,000 $59,000 $7, $280, w/ AMI $43,000 $42,000 $(1,000) 30 $(30,000) 246 w/o CABG readmission 247 w/ CABG readmission 280 w/o CABG readmission $29,000 $32,000 $3, $75,000 $58,000 $53,000 $(5,000) 50 $(250,000) $22,000 $26,000 $4, $40,000 Total $115, MFMER slide-21

22 Price DRG Scenarios: Hospital Transfer #1 Start of Episode Anchor DRG (Hospital A) DRG 281 AMI (RW = ) Included in Episode Price DRG (Hospital B) DRG 246 PCI (RW = ) End of Episode Post Discharge Period Perf Period Attributed to: Hospital A is an EPM Participant Perf Period DRG For Reconciliation: Baseline DRG For Regional Avg 90 Days Hospital A MS-DRG 246 MS-DRG 246 Rule: Priced at highest weighted eligible DRG 2016 MFMER slide-22

23 Price DRG Scenarios: Hospital Transfer #2 Start of Episode Anchor DRG (Hospital A) DRG 304 Hypertension (RW = ) Included in Episode Price DRG (Hospital B) DRG 246 PCI (RW = ) End of Episode Post Discharge Period Perf Period Attributed to: Hospital A does NOT perform a qualifying MS-DRG Perf Period DRG For Reconciliation: Baseline DRG For Regional Avg 90 Days Hospital A MS-DRG 246 MS-DRG 246 Rule: Attributed to hospital where the inpatient episode began 2016 MFMER slide-23

24 Price DRG Scenarios: Hospital Transfer #3 (Hospital A) DRG 281 AMI (RW = ) Included in Episode Start of Episode Anchor Price DRG (Hospital B) DRG 246 PCI (RW = ) End of Episode Post Discharge Period Perf Period Hospital Attribution Hospital A is NOT but Hospital B is an EPM Participant Perf Period Episode Assignment for Reconciliation Baseline Period Episode Assignment for Reg Avg 90 Days Hospital B MS-DRG 246 MS-DRG 246 Rule: Attributed to first Hospital that is an EPM Participant 2016 MFMER slide-24

25 Average Spend Year Performance Year Hospital Specific Regional Average Data Period /3 1/ /3 1/ /3 2/ /3 3/ /3 3/ Regional Average normalized using hospital-specific wage index at 70% labor rate Average spend excludes add-ons for IME, DSH, VBP, rural, etc. Outliers are included Episodes capped at 2 standard deviation above the regional mean (ceiling) 2016 MFMER slide-25

26 Regional Variation CMS Region MS-DRG 247 Perc Cardiovascular w/ Drug Eluting Stent States Avg Anchor Spend % of Episodes w/ Transfers Mountain AZ, CO, ID, MT, NV, NM, UT, WY $12,049 2% West South Central AR, LA, OK, TX $10,987 3% East South Central AL, KY, MS, TN $10,622 4% West North Central IA, KS, MN, MO, NE, ND, SD $11,242 5% East North Central IL, IN, MI, OH, WI $12,005 5% Pacific AK, CA, HI, OR, WA $14,911 6% South Atlantic DE, DC, FL, GA, MD, NC, SC, VA, WV $11,698 6% Middle Atlantic PA, NJ, NY $14,057 11% New England CT, ME, MA, NH, RI, VT $15,282 11% 2016 MFMER slide-26

27 Stop-Loss and Stop-Gain Limits Year Performance Year Stop-Loss Stop-Gain No Risk 5% Q1 No Risk 5% Q2-Q4 5% 5% % 10% % 20% % 20% Additional protection for Rural, SCH, MDH, RRC hospitals with stop-loss at 3% for Year 2 (Q2-Q4) and 5% for Years 3-5 Initial reconciliation occurs 3 months after end of performance year Final reconciliation occurs 12 months later 2016 MFMER slide-27

28 Pay-for-Performance Quality Category AMI Comp Quality Score CABG Comp Quality Score Eligible for Recon? Eligible for QIP? Discount for Recon (All Years) Discount for Repayment (Years 2 and 3) Discount for Repayment (Years 4 and 5) Below Acceptable < 3.6 < 2.8 No No 3.0% 2.0% 3.0% Acceptable >= 3.6 and < 6.9 >= 2.8 and < 4.8 Yes No 3.0% 2.0% 3.0% Good >= 6.9 and <= 14.8 >= 4.8 and <= 17.5 Yes Yes 2.0% 1.0% 2.0% Excellent > 14.8 > 17.5 Yes Yes 1.5% 0.5% 1.0% Discount rate applied to the regional average Composite score methodology: Each hospital s performance compared to the nation 18 pt scale for AMI; 20 pt scale for CABG Measure scores are weighted 2016 MFMER slide-28

29 Quality Measures AMI Quality Measures Weighting MORT-30-AMI (NQF #0230) 50% AMI Excess Days in Acute Hospitalization 20% Hybrid AMI Mortality (NQF #2473) 10% HCAHPS Survey (NQF #0166) 20% CABG Quality Measures Weighting MORT-30-CABG (NQF #2558) 75% HCAHPS Survey (NQF #0166) 20% 2016 MFMER slide-29

30 Preparation for EPMs 2016 MFMER slide-30

31 Items for Hospitals to Review Report from state hospital association Average spend (anchor stay and post-discharge) to the regional average % of chained episodes (transfers) Quality scores Items under hospital control Percentage of readmissions Percentage of high outlier cases Post-discharge care Post-acute care Physician Other outpatient 2016 MFMER slide-31

32 Percentage of Total Costs for 90-day Episode 75% 60% 34% 26% 4% 8% 11% 2% 8% 17% 9% 6% 11% 17% 1% CABG PCI AMI Source: Advisory Board analysis of 2014 Medicare data 2016 MFMER slide-32

33 Other Items to Review Possible collaboration to improve quality, reduce Medicare spending, and share in gains Physicians and non-physician practitioners Home health agencies Skilled nursing facilities Long term care hospitals Inpatient rehabilitation facilities Outpatient therapy services Other hospitals ACOs that participate in the Medicare Shared Savings Program Payments must be substantially based on quality of care and provision of EPM activities Possible collaboration to share in downside risk 2016 MFMER slide-33

34 Takeaways Still a proposed rule Hospitals own the bundles Expect more bundles in the future 2016 MFMER slide-34

35 2016 MFMER slide-35

36 Let s Stay in Touch! Robert Howey (904) MFMER slide-36

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