HOSPITALS & HEALTH SYSTEMS: DATA-DRIVEN STRATEGY FOR BUNDLED PAYMENT SUCCESS 4/19/2016. April 20, 2016

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1 HOSPITALS & HEALTH SYSTEMS: DATA-DRIVEN STRATEGY FOR BUNDLED PAYMENT SUCCESS April 20, 2016 Eddie Marmouget National Industry Partner Eric Rogers Managing Consultant Jeremy Clopton Director 1

2 TO RECEIVE CPE CREDIT Participate in entire webinar Answer polls when they are provided If you are viewing this webinar in a group Complete group attendance form with Title & date of live webinar Your company name Your printed name, signature & address All group attendance sheets must be submitted to within 24 hours of live webinar Answer polls when they are provided If all eligibility requirements are met, each participant will be ed their CPE certificates within 15 business days of live webinar PREPARING FOR RISK Payment reform & shift from volume to value Common issues Timing the transition Diminished future revenues Adaptability Physician alignment Defining value proposition 2

3 PROJECTED CAPABILITY NEEDS Interoperability Real-time data access Business intelligence Post-discharge follow-up Care standardization Assessing ROI Flexible physician compensation models KEYS TO CREATING VALUE People & culture Business intelligence Performance improvement Contract & risk management 3

4 STRONG BUSINESS ACUMEN Governance & oversight Physician alignment Payment methodology experimentation Self-funded & fully insured employers Reevaluate cost accounting systems CMS AHEAD OF TARGET For the hospital CEO or CFO out there who says, I m doing really well in feefor-service so I m just going to stick with it and it s going to be OK, eventually it will not be OK, and I actually predict it will not be OK in a much shorter time frame than they might imagine. Patrick Conway, MD, Deputy Administrator and Leader of CMMI at CMS 4

5 CMMI INNOVATION MODELS Accountable Care BPCI Primary Care Transition Medicaid and CHIP Acceleration Models Speed Adoption of Best Practices ACOs Model 1 Advanced Primary Care Initiative Reduce Avoidable Hospitalizations State Innovation Models Beneficiary Engagement Model Advanced Payment ACOs Model 2 Comprehensive Primary Care Initiative Financial Alignment Incentive for Medicare & Medicaid Frontier Community Health Integration Community Based Care Transitions ACO Investment Model Model 3 FQHC Advanced Primary Care Practice Strong Start for Mothers & Newborns Health Care Innovation Rounds Health Care Action & Learning Network Next Generation ACO Model 4 Graduate Nurse Education Medicaid Prevention of Chronic Diseases Health Plan Innovation Initiative Innovative Advisors Program Pioneer ACO CJR Transforming Clinical Practice Medicaid Emergency Psychiatric Demonstration Million Hearts PARTICIPANTS IN CMMI PAYMENT MODELS

6 CJR SELECTION 67 MSAs BUNDLED PAYMENT EXPANSION From hips & knees to COPD CHF AMI Pneumonia Oncology 6

7 42 CFR PART day public commenting period on proposal ended Sept 8 th Numerous comments Effective April 1, 2016 Key Changes 2% to 3% discount New targets for fractures 67 MSAs 3 month delay Stop loss reduced Quality measures EPISODE DEFINITION Episodes are triggered by hospitalizations of eligible Medicare FFS beneficiaries discharged with diagnoses MS-DRG 469: Major joint replacement or reattachment of lower extremity with major complications or comorbidities MS-DRG 470: Major joint replacement or reattachment of lower extremity without major complications or comorbidities Episodes include Hospitalization & 90 days post-discharge All Part A & Part B services, with exception of certain excluded services that are clinically unrelated to episode 7

8 EPISODE DEFINITION Included Physician services IP hospitalization (including readmissions) IP Psych Facility LTCH IRF SNF Home Health Hospital OP services Independent OP therapy Clinical lab DME Part B drugs Hospice Excluded Acute clinical conditions not arising from existing episode-related chronic clinical conditions or complications of the LEJR surgery Chronic conditions that are generally not affected by the LEJR procedure or postsurgical care PAYMENT AND PRICING: RISK STRUCTURE Retrospective, two-sided risk model with hospitals bearing financial responsibility Providers & suppliers continue to be paid via Medicare FFS In year two, actual episode spending will be compared to episode target prices If in aggregate target prices are greater than spending, hospital may receive reconciliation payment If in aggregate target prices are less than spending, hospitals would be responsible for making a payment to Medicare 8

9 TARGET PRICING CMS intends to establish target prices for each participant hospital prior to start of each performance period Includes 3% discount to serve as Medicare s savings Based on blend of hospital-specific and regional episode data, transitioning to regional pricing. Essentially competing against yourself in the beginning Year Year 1 & 2 1/3 hospital 2/3 hospital 1/3 regional Year 3 4 & 5 100% 2/3 regional regional $26,000 W.I. DSH IME $25,000 $24,000 $23,000 $25,989 $22,456 +/- $ Target $22,000 $21,000 $20,000 1/3 2/3 Regional Average Sample Hospital Target Year 1 & 2 9

10 FINANCIAL MODELING 0-20% Stop Loss $7,344,781 $9,330,051 Example Reconciliation Target 5-20% Stop Gain 359 Total Episodes Episode # 324 of 359 $63,460 $53,516 (2X SD) $25,989 THA/TKA Complications 90 th th and < 90 th th and < 80 th th and < 70 th th and < 60 th th and < 50 th th and < 40 th <30 th Decile Improvement HCAHPS Survey THA/TKA Voluntary PRO and Limited Risk Variable Data Yes 2.00 No 0.00 Total Points 14.1 Poor: < 6.0 3% discount Good: % discount Excellent: > % discount 10

11 FINANCIAL ARRANGEMENTS: GAINSHARING Consistent with applicable law, participating hospitals might have certain financial arrangements with Collaborators to support their efforts to improve quality and reduce costs. Collaborators may include Physician & non-physician practitioners Home health agencies SNF LTCH Physician group practices IRF Inpatient & Outpatient PTs & OTs PROGRAM WAIVERS Skilled Nursing Facility CJR would waive the SNF 3-day rule for coverage of a SNF stay following the anchor hospitalization beginning in year two Patients must be transferred to SNFs rated 3-stars or higher Beneficiaries must not be discharged prematurely to SNFs Home Visits CJR would waive the incident to rule for physician services Allows licensed clinical staff of a physician to furnish a home visit in patient s home Permitted only for patients who do not qualify for Medicare coverage of home health services Maximum of nine visits using a new HCPCS code Telehealth Waives geographic site requirement & originating site requirement to permit visits originating in patient s home or place of residence Cannot be a substitute for in-person home health services Must be furnished in accordance with all other Medicare coverage & payment criteria 11

12 DATA SHARING Data will be shared to evaluate practice patterns, redesign care delivery pathways & improve care coordination Hospitals can request to obtain beneficiary-level Part A & B claims for duration of episode in summary format, raw claims line feeds or both Data would be available for hospital s baseline period and on a quarterly basis during the performance period Importance of Data Analytics in Payment Reform 12

13 WHAT IS DATA ANALYTICS processes and activities designed to obtain and evaluate data to extract useful information and answer strategic questions... OPPORTUNITIES FOR APPLICATION Analysis of historical claims data Analysis of quarterly claims data provided by CMS Integration of cost components from internal claims data 13

14 14

15 CASE STUDY 15

16 Patients Physicians Post-Acute Providers Risk Stratification 1 2 CASE STUDY 16

17 CASE STUDY CASE STUDY 17

18 CASE STUDY CASE STUDY 18

19 CASE STUDY Home Health 71% DRG 470 Post Acute Utilization Skilled Nursing 17% $15,226 $9,213 Other 10% Hospice 2% $2,787 19

20 CASE STUDY CASE STUDY 20

21 CONTINUING PROFESSIONAL EDUCATION (CPE) CREDITS BKD, LLP is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: The information in BKD webinars is presented by BKD professionals, but applying specific information to your situation requires careful consideration of facts & circumstances. Consult your BKD advisor before acting on any matters covered in these webinars. 21

22 CPE CREDIT CPE credit may be awarded upon verification of participant attendance For questions, concerns or comments regarding CPE credit, please the BKD Learning & Development Department at Eddie Marmouget Eric Rogers Jeremy Clopton 22

23 23

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