The Changing LTC Delivery and Payment Landscape: Managed Care. Jay Gormley Chief Strategy & Planning Officer
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1 The Changing LTC Delivery and Payment Landscape: Managed Care Jay Gormley Chief Strategy & Planning Officer
2 MJHS Today An integrated not-for-profit health system. Comprised of 15 corporations in 4 business: Home & Community Based Services Hospice & Palliative Care Facility Based Care Managed Care $1.1B in annual revenues Serves over 45,000 New Yorkers each year. Serves all 5 boroughs of New York City, Westchester, Nassau and Suffolk counties. Certified in 42 upstate counties for Health Palns Main corporate office in Brooklyn with satellite locations in: Manhattan, Bronx, Staten Island, Yonkers & Nassau
3 Five Take Home Predictions 1. Fee For Service Reimbursement in the next five to ten years will become less than ¼ of your payor mix 2. Rehospitaliztion rate, not case mix or rehab minutes, will become your most important data element from a reimbursement standpoint 3. The most important clinical initiative you can engage in is increasing the ability of your home to provide complex care to your long term residents 4. The power relationship between you and the hospitals will change drastically, but not right away and they hospital may not realize it. It s goanna get bumpy. 5. Integrated networks of providers and payors will win the day, shared risk is going to become the new way to optimize reimbursement. Integration does not necessarily mean ownership
4 The Word of the Moment (or 2009) in Health Care is Unsustainable The size of the federal budget deficit is unsustainable The annual increase in the Medicare budget is unsustainable The percentage of health care spending to GDP is unsustainable State Medicaid programs are unsustainable The continued transfer of costs to employers and consumers is unsustainable
5 Health Care Spending per Capita, 2011 Adjusted for Differences in Cost of Living
6 International Comparison of Spending on Health, Average spending on health per capita ($US PPP) Total expenditures on health as percent of GDP Source: OECD Health Data 2010 (Oct. 2010)
7 Three Microsystems Suggest Themselves Immediately 1. The general patient population 2. The general Medicare population 3. The Medicare population with multiple chronic conditions Medicare Spending for Medicare Fee for Service Beneficiaries by Age and Number of Chronic Conditions 2008 Source: Centers for Medicare & Medicaid Services: Chronic Conditions among Medicare Beneficiaries,Chart Book. Baltimore, MD, December 2011.
8 Cost by Age Categories Source: Fischbeck, Paul. US-Europe Comparisons of Health Risk for Specific Gender-Age Groups. Carnegie Mellon University; September, 2009.
9 Federal Government Outlays and Revenues (% of GDP) Source: Fischbeck, Paul. US-Europe Comparisons of Health Risk for Specific Gender-Age Groups. Carnegie Mellon University; September, 2009.
10 Domains of Excess Costs
11 Thematic and Contextual Changes 1. A change in the classes of providers 2. Dramatic change to the competitive landscape 3. The job shop to manufacturing shop challenge 4. Facing up to the variability of quality and cost
12 1. The New Business Model Creates Three Classes of Providers Class I Contracted Providers Smaller niche providers, some of which may be in rural communities that will serve as necessary access points; important, but not critical components. Class II Major Participants Community hospitals and systems that will work within a network managed by a larger Population Health Manager (PHM) to efficiently provide a broad portfolio of services. These organizations will be critical components of PHM networks. Class III Population Health Managers Large, regional health systems that will be able to provide (either directly or through managed relationships) a full continuum of services, across all service lines and levels of acuity. These organizations will have significant alignment with their medical staff and will be in a position to accept and manage risk.
13 2. Dramatic Changes to the Competitive Landscape The blurring of lines between not-for-profit and for-profit health care creates new and more pragmatic competitors The blurring of lines between health care s traditional participants insurers, hospitals, and physicians resulting in new market entrants Join Venture to Form New System Join Venture to Acquire Catholic Hospitals acquires acquires
14 3. The Challenge of Transitioning from a Job Shop to a Manufacturing Shop Health care is currently a job shop, which is a series of one-off patient encounters with individual physicians and individual hospitals. This results in significant variability in cost and quality and in unpredictable revenue. Given the new value proposition, we are moving to a manufacturing or production problem, which asks an entirely different question. How does a health care system produce a certain amount of health care at a stated and consistent quality and provide that care to a population at a predetermined price?
15 4. Facing Up to the Variability of Quality and Cost Source: Internal data from client in southeast United States
16 The Four Underlying Concepts of Cost Containment Through Payment Reform
17 Bending the Cost Curve
18 Bending the Cost Curve U.S. Health Spending as % of GDP % of GDP
19 Bending the Cost Curve
20 Bending the Cost Curve
21 Bending the Cost Curve
22 Types of Managed Care Coming soon FIDA 22
23 The New York State Picture: Care Management for All Managed Long Term Care expansion Mandatory enrollment downstate Voluntary enrollment upstate until sufficient capacity to move to mandatory Mainstream Medicaid Managed Care expansion Make it statewide Expand the benefit package (pharmacy, personal care, SNF) Expand the populations served (AIDS, homeless, SNF residents) Medical Homes, Health Homes CMS Dual Integration Demo Managed FFS model 2013 Capitated model 2014
24 Why? Data Driven Per Recipient Spending Trends by LTC Service Nursing Homes # recipients $ per recipient # recipients $ per recipient % change in recipients % change in $ per recipient 139,080 $42, ,878 $50, % 18.5% ADHC 16,365 16,269 17,303 18, % 13.1% LTHHCP 26,804 19,036 26,934 26, % 39.8% Personal Care Managed LTC Assisted Living 84,823 21,512 72,031 29, % 38.9% 12,293 36,146 37,843 37, % 2.4% 3,538 14,270 5,217 17, % 25.1% Home Care 92,553 8,215 87,366 17, % 116.2% TOTAL 318,617 $30, ,590 $39,498.62% 28.4%
25 Why? Chronic is Costly 1,029,621 or 20% of NYS Medicaid enrollees with mental disability, mental health, chemical dependence, HIV and/or chronic conditions account for 75% of Medicaid spending. oaverage per capita annual cost = $30,195. othese enrollees are the most likely to be in fee-forservice programs.
26 Why? Chronic is costly 865,000 beneficiaries with multiple chronic illnesses: 50,000 with developmental disabilities cost $6.4B ($10,500 PMPM) 200,000 with LTC needs cost $10.5B ($4,500 PMPM) 300,000 with behavioral health problems cost $5B ($1,400 PMPM) 300,000 with chronic medical problems cost $2.4B ($695 PMPM)
27 Mandatory Medicaid Long Term Managed Care Approved in writing by CMS August 31, 2012 State had verbal approval to start announcing the change in July. As of Sept. 17, 12,800 announcement letters will have been sent to eligible residents of Manhattan, the Bronx and Brooklyn Additional 3,500 announcement letters to be sent to eligible residents of Queens and Staten Island on or about Oct. 11. Eligible individuals given information and helped to choose a plan to enroll in First group of eligibles who fail to choose a notified they were being auto-enrolled as of Nov RHFC Delayed till Feb 1, 2014
28 MLTC Enrollment MLTCP Enrollment Mandatory - required to enroll in MLTC: Dual eligible Age 21 and over Require 120+ Days of Community Based Long Term Care Services (i.e. Personal Care, Nursing, ADHC, Therapy) Require permanent placement in a nursing home for custodial care on or after 2/1/2015 NH patients prior to 2/1/2015 can stay FFS Populations and Counties based on DOH Phase-In Schedule 28
29 MLTC Populations MLTCP Popultation Medicaid long term care populations being moved into Managed Care TRANSITION COMPLETE PC LTHHCP CHHA ADHC AIDS ADHC PDN CDPAP TO BE COMPLETED Nursing Home NHTD TBI ALP Hospice OPWDD OMH OASAS
30 MLTC Update MLTCP Update New Date for NH inpatient February 2015 Special Terms and Conditions (STC s) Conflict Free LTSS Evaluation process Conflict Free Evaluation and Enrollment Center (CFEEC) run by Maximus Independent determination of services needed Nurses can not be related to any Plan Ombudsman Independent Consumer Support Program (ICSP) Beneficiary education 30
31 Risk Based Reimbursement Transition
32 Reimbursement During Transition: Benchmark rate guaranteed for three years Includes all aspects of NH FFS rate, including but not limited to Operating, Capital, Per Diems, Cash Assessment, Case Mix and Quality Will include Universal Settlement if it passes Can negotiate a rate acceptable to all parties and approved by DOH (risk sharing arrangement) Contracted rate must be increased by the Plan if it falls below the current market Benchmark rate at any time Bedhold: Policy remains the same (number of days, rate) Pharmacy Current NH pharmacy arrangements must be honored during transition period unless another arrangement is negotiated 32
33 Reimbursement: Capital Calculated by DOH Passed through from Plans to Providers Guaranteed after transition (for now) What does that really mean? NH Capital Workgroup will identify changes needed Capital Pool 33
34 MLTCP Nursing Home Roll-Out DATE Phase 1- February 1, 2015 Phase 2- April 1, 2015 Phase 3- July 1, 2015 October 1, 2015 AFFECTED GEOGRAPHY New York City Bronx, Kings, New York, Queens, and Richmond counties Nassau, Suffolk and Westchester counties Albany, Allegany, Broome, Cattaraugus, Cayuga, Chautauqua, Chemung, Chenango, Clinton, Columbia, Cortland, Delaware, Dutchess, Erie, Essex, Franklin, Fulton, Genesee, Greene, Hamilton, Herkimer, Jefferson, Lewis, Livingston, Madison, Monroe, Montgomery, Niagara, Oneida, Onondaga, Ontario, Orange, Orleans, Oswego, Otsego, Putnam, Rensselaer, Rockland, St. Lawrence, Saratoga, Schenectady, Schoharie, Schuyler, Seneca, Steuben, Sullivan, Tioga, Tompkins, Ulster, Warren, Wayne, Washington, Wyoming, and Yates counties All counties - voluntary enrollment in Managed Long Term Care, Fully Integrated Duals Advantage (FIDA) and Mainstream Medicaid Managed Care becomes available to individuals residing in nursing homes who are in fee-for-service Medicaid
35 Dual Integration Demonstration- Two National Models Capitated Model Three way contract between States, Plans & CMS Savings inure to the states for reinvestment Must allow for Medicare FFS opt out Does not preserve current reimbursement Managed FFS Model Use Health Homes Includes all settings Preserves current reimbursement but States pursuring this model want to engage in some kind of bundle/shared savings
36 Dual Integration Demonstration- New York States Approach Create a Fully Integrated Dual Advantage (FIDA) program that builds out from MLTC. FIDA plans will receive both Medicare and Medicaid capitation to cover all physical health care, behavioral health care and all long term care services. The demonstration will involve duals in an 8-county service area: The 5 NYC counties/boroughs plus Nassau, Suffolk and Westchester counties. Expected to serve 123,880 duals plus 50,000 nursing home residents
37 Dual Integration Demonstration- FIDA Schedule January 1 st Community Based Voluntary Enrollment April 1 st Mandatory Enrollment for MLTCP membership Community Based Members on a rolling basis Facility Based member on revalidation date October 1 st Facility Based FFS Voluntary Rollout
38 DSRIP What s it stand for? The Medicaid Redesign Team Waiver Amendment Delivery System Reform Incentive Payment (DSRIP) Plan What is it? It s NYS s attempt to reinvest a portion ($6.4 billion over five years) of the federal savings already produced by MRT initiatives to change the health care system. What is the goal? The DSRIP Plan is primarily focused on reducing avoidable hospital use by 25% in five years with an additional focus on stabilizing health care safety net providers How do you participate? By joining a PPS
39 Why Should You Care about DSRIP? 39
40 Types of Medicare Advantage SNPs Authorized By Medicare Modernization Act (MMA) of 2003 Created to limit enrollment to beneficiaries with specialized care needs Wide array of plans, varying degrees of success Most recent data and policy suggests ongoing commitment to dual-eligible and institutional SNP models
41 I-SNP Cheat Sheet 1. Designed for long term residents only 2. Covers all services (Part A, B and D) 3. Monthly Capitation to the Plan 4. Requires Voluntary enrollment by each individual resident 5. Must Comply with the published model of care 6. Two main reimbursement models 1. Capitated Model 2. Budget Based Model with shared risk 7. Usually involves the use of Nurse Practitioners 8. Key to success is reducing hospitalizations
42 Other Health Reform Initiatives That Could/Will Effect the Homes you Serve Health Homes Patient Centered Medical Homes Accountable Care Organizations Pioneer ACOs Commercial ACOs Medicare Shared Savings ACOs Rehospitalization Penalties in FFS Medicare SNF payments Value Based Purchasing/Quality Bonus Payments Narrow Networks Bundled Payments for Care Improvement (BPCI) Initiative Model 2 (Acute Care plus Post acute) Model 3 (Post Acute only)
43 What is Bundling? Payment Bundling is the use of one payment to pay for a variety of services for one type of condition Example: Current market for a hip replacement: $ to Surgeon MD $ to Transportation $ to Hospital for Facilty based Services $ to SNF $ to outpatient therapy $ to DME $ to CHHA Under a Bundel $ to convener (usualy a Hospital or an MD Group)
44 Types of Managed Care Coming soon FIDA 44
45 Disruptive Innovation Employers Patients Medicare Medicaid MCOs Healthcare Company Specialty Providers Shared Risk MDs Hospitals H&CB Ambulatory Care SNFs
46 Disruptive Innovation Employers Patients Medicare Medicaid MCOs Large Hospital System? Specialty Providers Shared Risk MDs Hospitals H&CB Ambulatory Care SNFs
47 Disruptive Innovation Employers Patients Medicare Medicaid MCOs Large IPA? Specialty Providers Shared Risk MDs Hospitals H&CB Ambulatory Care SNFs
48 Disruptive Innovation Employers Patients Medicare Medicaid MCOs Integrated Delivery System? Specialty Providers Shared Risk MDs Hospitals H&CB Ambulatory Care SNFs
49 Disruptive Innovation Employers Patients Medicare Medicaid MCOs SNF Network? Specialty Providers Shared Risk MDs Hospitals H&CB Ambulatory Care SNFs
50 Disruptive Innovation Employers Patients Medicare Medicaid MCOs SNF Network? Specialty Providers Shared Risk MDs Hospitals H&CB Ambulatory Care SNFs
51 Disruptive Innovation Employers Patients Medicare Medicaid MCOs Health Care Company 1 Specialty Providers SNF Network MDs Hospitals H&CB Ambulatory Care SNFs
52 Disruptive Innovation Employers Patients Medicare Medicaid MCOs Health Care Company 1 Specialty Providers LTC Network owns Specialty MCO MDs Hospitals H&CB Ambulatory Care SNFs
53 Disruptive Innovation Employers Patients Medicare Medicaid MCOs Health Care Company 1 Specialty Providers LTC Network owns Specailty MCO MDs Hospitals H&CB Ambulatory Care SNFs
54 How Might We Get There? Change the Culture Practice based on evidence Reduce unexplained clinical variation Reduce slavish adherence to professional autonomy Continuously measure and close feedback loop Engage with patients across the continuum of care
55 A Predictive Point of View 1. Provider revenues will be under severe pressure as payment mechanisms migrate toward value-based approaches 2. Inpatient and outpatient use rates will decline 3. Providers will consolidate at an accelerated pace horizontally and vertically 4. The competitive landscape will be reshaped 5. Technology will become a major disruptive change agent in health care
56 Thank You! Questions? Feel free to reach out Jay Gormley Chief Strategy & Planning Officer MJHS Phone: (347)
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