The Future of Post-Acute Care Under Value-Based Payment

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1 The Future of Post-Acute Care Under Value-Based Payment Robert Mechanic, MBA Brandeis University Northeast Home Health Leadership Summit January 22, 2015

2 Medicare Margins for Freestanding Home Health Agencies 20.0% 15.0% 10.0% 5.0% 18.2% 19.4% 15.0% 14.4% 14.8% 12.6% 0.0% Proj Proj. Source: MedPAC Report to Congress, March

3 Growth in Medicare Home Health Episodes and Payments Change Medicare enrollees % HHA Users (millions) % Episodes (millions) % Payments (billions) $9.6 $ % vs. Source: MedPAC Report to Congress, March % All Medicare Spending

4 Post-Acute Care Services Are the Fastest Growing Category of Medicare Spending Why Should Hospitals and Physicians Care? 4 Brandeis University

5 Thinking About Post-Acute Care 5 Brandeis University

6 Change is Coming Medicare Beneficiaries in Risk-Based Programs in BPCI Applications 963 MD Groups 1,053 Hospitals 3,300 Post Acute Providers??? Bundled Payment Medicare ACOs Medicare Advantage 6

7 Lets Talk About Disruptive Innovation 7

8 8 Million People Signed up for Exchange Coverage in 2014 $164 Billion CBO: Cost of ACA Premium Subsidy Will Fall by 14% Due to Lower Health Insurance Costs Disruptive enough? 8 Brandeis University

9 Change in Coverage Under the ACA Insurance Exchanges Medicaid & CHIP Employer & Non-group (1) (5) (11) Uninsured (12) (19) (25) Source: Congressional Budget Office, April 2014 Baseline 9 Brandeis University

10 Narrow Network Health Plans Dominate Many Individual Exchanges 10

11 Narrow Networks Have Substantially Lower Premiums 11

12 Now Republicans Control The Congress Does Anyone Remember the Ryan Plan? 12 Brandeis University

13 But Lets Get Back to Value- Based Payment 13 Brandeis University

14 Bundled Payment Payer $$$ Single payment to cover costs of episode of care (30, 60, 90 days) Shared Accountability Hospital or Integrated Network $ $ $ $ $ Group is responsible for all care within the episode

15 What s in an Episode? Outpatient Professional Professional services Inpatient Professional Inpatient Stays Index Hospitalization SNF Readmission 90 day look-forward Brandeis University

16 CMMI Bundled Payment Pilot Model 1 Outpatient Professional Professional services Inpatient Professional Inpatient Stays Index Hospitalization SNF Readmission 90 day look-forward Brandeis University

17 CMMI Bundled Payment Pilot Model 2 Outpatient Professional Professional services Inpatient Professional Inpatient Stays Index Hospitalization SNF Readmission day look-forward Brandeis University

18 CMMI Bundled Payment Pilot Model 3 Outpatient Professional Professional services Inpatient Professional Inpatient Stays Index Hospitalization SNF Readmission 30 day look-forward Brandeis University

19 CMMI Bundled Payment Pilot Model 4: Prospective Payment Outpatient Professional Professional services Inpatient Professional Inpatient Stays Index Hospitalization SNF Readmission 30 day look-forward Brandeis University

20 Medicare Spends a Tremendous Amount in the Days After Patients Are Discharged from the Hospital 20

21 Medicare Post Acute Care Spending 2012 Medicare Spending by Type 21% 2008 Medicare Spending for Hospitalization plus 30 Days 34% Hospital IP Post-Acute Professional Hospital OP Hospital IP Professional Post-Acute Source: MedPAC, 2014 Data Book (Charts 1-1, 8-2). 21 Source: RTI Inc, Post-Acute Care Episodes: Expanded Analytic File, June 2011 p.216. Brandeis University

22 Medicare 2012 Post-Acute Spending by Setting HHA = $18.3b 31% Source: MedPAC, 2014 Data Book. Home Health SNF IRF LTAC 22 Brandeis University

23 Medicare Payment Methods SNF: Per-diem payment with therapies billed separately Patients covered for up to 100 days Home health: 60-day bundle Inpatient Rehab: Prospective per case payment (similar to DRG method) 60 percent of patients must have one of 13 conditions 23 Brandeis University

24 Avg Medicare Inpatient Payments for Select DRGs 20,000 15,000 10,000 5,000 0 $11,079 $5,347 $5,322 $6,437 $6, Maj. Joint Pne w/cc Heart Fail w/cc Index Admission Renal Failure w/cc COPD w/mcc Source: RTI Inc, Post-Acute Care Episodes: Expanded 24 Analytic File, June 2011

25 2008 Medicare Acute and Post-Acute Payments for Inpatient-Initiated 30-Day Episodes 20,000 $18,414 15,000 10,000 $9,732 $12,456 $10,636 $10,470 5, Maj. Joint Pne w/cc Heart Fail w/cc Index Admission Post Acute Renal Failure w/cc COPD w/mcc 25 Source: RTI Inc, Post-Acute Care Episodes: Expanded Analytic File, June Thirty day fixed episodes include the full amount of all claims incurred within 30 days of discharge even if they extend beyond the 30 days period.

26 2008 Medicare Acute and Post-Acute Payments for Inpatient-Initiated 90-Day Episodes 20,000 15,000 $19,745 $12,479 $16,589 $14,692 $14,910 10,000 5, Maj. Joint Pne w/cc Heart Fail w/cc Renal Failure w/cc Index Admission 30 day Post Acute 90 day Post Acute COPD w/mcc Source: RTI Inc, Post-Acute Care Episodes: Expanded Analytic File, June day amounts are estimated based on RTI, Analysis of Acute Care Episode Definitions Chart Book, November

27 There is Significant Variation in Post-Acute Care Spending Across Hospitals.. And Many Opportunities to Reduce Post-Acute Care Spending 27

28 Average 2009 Post-Acute Care Spending per Episode for Total Joint Replacement (90 day) $16,000 $14,000 $12,000 $12,000 $10,000 $8,000 $6,000 $6,000 $4,000 $2,000 $0 A B C D E F G H I J K L M N O P Q R St. Minimus Source: Brandeis University analysis of Medicare 28 Claims data. Figures adjusted for hospital wage index. St. Maximus

29 A Tale of Two Hospitals: Joint Replacement Episode 29 Source: Brandeis University analysis of Medicare Claims data. Unadjusted data.

30 A Tale of Two Hospitals: Joint Replacement Episode 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% St. Maximus St. Minimus 20.0% 10.0% 0.0% Readmission Rate Pct. SNF Pct. Home Health Source: Brandeis University analysis of Medicare Claims data. 30

31 Opportunities for St. Maximus Expand home health and reduce use of SNF services where appropriate Put a program in place to monitor patients following discharge Medication reconciliation Home assessment Primary care visit within 7 days Emergency plan for likely events Consider preferred relationships with collaborative & high value facilities. 31

32 Post Acute Strategy Components 1. Right setting 2. Right partners 3. Right relationships Patient & Family Primary Care Physician Post-Acute Providers 32 Brandeis University

33 2008 Medicare Post-Acute Care Payments Per User by Site of Service: DRG 470 (Total Joint) $25,000 Within 30 Days of Hospital Discharge $20,000 $15,000 $10,000 $23,017 $5,000 $0 Percent with Service: $11,079 $3,132 $8,562 $12,596 $9,496 Admission Home Health SNF Rehab LTAC Readmission 100% 60% 40% 7% 0.2% 9% 33 Source: RTI Inc, Post-Acute Care Episodes: Expanded Analytic File, June 2011

34 Variation in 2010 Medicare Average Length of Stay for Skilled Nursing Facilities Difference Between Top & Bottom Quartile 10 Days = $4, Quartile 1 Quartile 2 Quartile 3 Quartile 4 Source: Adapted form Office of HHS Inspector General 34 December 2010.

35 2012 Geographic Variation in Per Capita Medicare Payments to Home Health Agencies Data are Price, Race, Age & Sex Adjusted $2,000 $1,500 $1,000 $2,133 $1,891 $1,324 US Average $500 $1,122 $0 $906 $627 $553 $481 $410 $370 $250 Source: Dartmouth Atlas of Health Care 35

36 2013 Average SNF Spending Per Admission for Total Joint Replacement Patients $25,000 One Large Hospital s Top 6 SNFs by Number of Admissions $20,000 $15,000 $10,000 $5,000 $15,961 $20,717 $9,336 $9,299 $7,929 $12,835 $0 SNF A SNF B SNF C SNF D SNF E SNF F Source: Brandeis University analysis of Medicare claims data. All SNFs have 10+ cases. 36

37 Variation in 2009 Risk Adjusted Readmission Rates from Skilled Nursing Facilities 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 14.4% 18.1% 22.0% 0.0% 25th Percentile Median 75th Percentile Readmissions Source: MedPAC Report to Congress, March

38 40.0% 35.0% 30.0% 25.0% Distribution of Readmission Rates Across Home Health Agencies in % 15.0% 10.0% 25% 29% 39% 5.0% 0.0% 25th Percentile Median 75th Percentile Source: MedPAC Report to Congress, March

39 The Congress should direct the Secretary to reduce payments to home health agencies with high risk-adjusted rates of hospital readmission MedPAC

40 Expert Panel Ratings of Whether Hospital Admissions from Nursing Home Were Avoidable NH Resident Group Yes No Medicare (n=94) 69% 31% Medicaid/Other (n=106) 65% 35% High Readmit NHs (n=101) 75% 25% Low Readmit NHs (n=99) 59% 41% All Residents (n=200) 67% 33% Source: Ouslander et al. Potentially avoidable hospitalizations of nursing home residents: frequency, causes and costs. JAGS 58: ,

41 Causes of Potentially Avoidable Admissions Diagnoses for Potentially Avoidable Admissions n=100 Cardiovascular (mostly CHF, chest pain) 22% Respiratory (mainly pneumonia, bronchitis) 21% Mental status change 13% Urinary tract infection 11% Sepsis or fever 8% Skin (cellulitis, wound, pressure ulcer) 8% Dehydration 7% Gastrointestinal (bleeding, diarrhea) 7% Source: Ouslander et al. Potentially avoidable hospitalizations of nursing home residents: frequency, causes and costs. JAGS 41 58: , Brandeis University

42 Ratings of Factors Associated with Potentially Avoidable Admissions Factors that could have prevented hospitalization NH should have been able to do everything done by hospital Important Somewhat Important 50% 34% Better quality by NH physician or AP One MD visit could have prevented transfer Better quality by NH staff Better advance care planning Resident s condition limited ability to benefit from the transfer Source: Ouslander et al. Potentially avoidable hospitalizations of nursing 42 home residents: frequency, causes and costs. JAGS 58: , Brandeis University

43 Assessing Quality is Difficult 43

44 Developing a Preferred Post-Acute Network Right Geography Ability to Manage Complex Patients Criteria Willing to collaborate on QI Source: Atrius Health. On-Site MD Coverage Strong Performance Metrics Brandeis University

45 Performance in One Health System s Preferred SNF Network Average Length of Stay Days = $2, Days =$4, Medicare Advantage Pioneer ACO Market Avg. Source: Atrius Health, Brandeis University

46 Performance Expectations Appropriate staffing - low staff turnover Able to manage complex patients Able to treat acute exacerbations in place Close linkage with preferred MD/APC Committed to collaborative QI work Point person for clinical communication Regular performance reporting 46 Brandeis University

47 Innovations 47 Brandeis University

48 Innovations 48

49 Innovations 49 Brandeis University

50 Innovations 50

51 Observations about Home Health Home health will not be a viable fee-for-service business for much longer Unit cost superseded by total medical expense Home health can be an important lever for success in value-based payment Agencies will need size and adequate capital investment to play in the new world Partnerships are critical; but many will struggle with how to best use you 51 Brandeis University

52 Questions Robert Mechanic The Heller School for Social Policy & Management The Health Industry Forum Brandeis University 52