Physician Compensation From Volume to Value

Transcription

1 Physician Compensation From Volume to Value Venson Wallin Managing Director BDO October 9, 2015

2 Venson Wallin - BDO Venson Wallin is a Managing Director in BDO Consulting, LLC and is the National Healthcare Compliance and Regulatory Leader for the BDO Healthcare Center of Excellence & Innovation. He has nearly 30 years of experience in the healthcare industry. He has assisted academic medical centers, hospitals and health systems, physician groups, continuing care retirement communities, and nursing homes by advising them on enhancements to their financial and operational systems as well as providing assurance on their financial statements and internal controls in accordance with regulatory requirements. E. VENSON WALLIN, JR., CPA, CGMA, HCISPP Managing Director BDO Consulting, LLC (804) vwallin@bdo.com Managing Director BDO Consulting, LLC (804) vwallin@bdo.com Mr. Wallin has performed several due diligence engagements analyzing the financial and operational aspects of providers, including historical and projected income statement and balance sheet performance as well as benchmarking against their peers. He has also led numerous financial and statutory audits of providers and payers, including analyses of their compliance with debt covenants included in their debt financing. Mr. Wallin has served as an expert witness on healthcare accounting and reporting matters. Mr. Wallin s additional experience in advising healthcare entities includes federal and state compliance, project management, Affordable Care Act impact modeling and education, ICD-10 implementation, debt capacity and feasibility studies, service line assessments, government reimbursement, and charge master pricing. Additionally, Mr. Wallin has managed teams through audits, bond financings, due diligence projects, and the adoption of new regulatory accounting pronouncements. PROFESSIONAL AFFILIATIONS American Institute of Certified Pubic Accountants Virginia Society of Certified Public Accountants Healthcare Financial Management Association Health Care Compliance Association EDUCATION B.B.A., Accounting, College of William and Mary 1

3 THE UNDERLYING FACTORS OF THE MOVE TO QUALITY- BASED REIMBURSEMENT 2

4 U.S. Healthcare Quality In 1999, The Institute of Medicine reported that as many 98,000 people per year die in hospitals from preventable errors. In 2013, Patient Safety America (in Houston) estimated that as many as 440,000 preventable adverse events occur annually in hospitals. To err is human. Institute of Medicine. November James J. A new evidence-based estimate Journal of Patient Safety: September (3).

5 U.S. Healthcare Quality Commonwealth Fund Surveys and Analyses indicate US is 11 th out of 11 Mahon M. Us health system ranks last... The Commonwealth Fund. June

6 U.S. Healthcare Quality These negative rankings have been challenged. CONCORD Cancer Survival in Five Continents: US first for breast, prostate, and colon cancers. American Enterprise Institute: Remove fatal injuries and US ranking goes to first. Researchers at U Penn: Low life expectancy in US not likely due to health care system. Perception remains that quality is too low and cost is too high. The myth of Americans poor life expectancy. Forbes. Nov Coleman MP et al. CONCORD Lancet. Aug 2008 Ohsfeldt R and Schneider J. The business of health American Enterprise institute Preston S and Ho J. Low life expectancy in the US PSC Working Papers. July 2009.

7 EVIDENCE OF SHIFT TO QUALITY-BASED REIMBURSEMENT 6

8 Hospital Inpatient Quality Reporting (Hospital IQR) Mandated by section 501b of the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 Initially, the MMA reduced by 0.4% the annual market basket update for hospitals that failed to report metrics. Deficit Reduction Act of 2005 increased the penalty to 2%. The quality of care data is available to consumers at

9 Hospital Outpatient Quality Reporting (OQR) Program Mandated by the Tax Relief and Health Care Act of 2006 Hospitals are subject to a 2 percentage point reduction in the annual payment update (APU) under the Outpatient Prospective Payment System (OPPS) if reporting requirements are not met. Approximately 30 quality metrics covering: Process of care Imaging efficiency patterns Care transitions ED throughput efficiency Use of Health Information Technology (HIT) care coordination Patient safety and volume

10 Physician Quality Reporting System (PQRS) Began in 2007 as PQRI with incentives that continued through 2014 to encourage quality metric reporting regarding Medicare FFS part B services. Now penalties of 1.5% in 2015 if metrics were not reported in 2013; going to 2% in 2016 if not reported in % participation in 2015 with 470,000 physicians receiving 1.5% penalty.

11 Medicare and Medicaid EHR Incentive Program Began in 2011 with incentive payments up to $43,720 for Medicare and $63,750 for Medicaid Stage 1: data capture and sharing Stage 2: advanced clinical processes Stage 3 coming 2017: improved outcomes; reduced complexity

12 Readmission Reduction Program Established by Section 3025 of the ACA Began with discharges in October 2012 Hospitals penalized with reduced payments for all DRGs if 30 day readmissions exceed risk-adjusted anticipated levels for Initially acute MI, heart failure, and pneumonia. In 2015, COPD and THA/TKA. Penalty has increased from 1% in 2013 to 3% in 2015.

13 Hospital Value Based Purchasing (VBP) Authorized by section 3001(a) of the ACA Uses data from Hospital Inpatient Quality Reporting Program. Began in 2013 with 12 clinical process measures and 8 patient experience measures from HCAPS In 2014, 30 day outcome mortality measures added (AMI, HF, PN) For 2015, PSI-90, CLABSI, MSBP For 2016, CAUTI and surgical site infection

14 Hospital Value Based Purchasing (VBP) Shifting emphasis from process measures to outcomes Clinical Process of Care 20% 10% 5% Patient Experience of Care 30% 25% 25% Efficiency 20% 25% 25% Outcomes 30% 40% 45%

15 Hospital Value Based Purchasing (VBP) Increasing redistribution of payments from lowest performers to highest performers Fiscal Year Percent Reduction

16 Hospital Value Based Purchasing (VBP) 2015 Payment Adjustment factors hospitals 1375 receive penalties up to -1.24% 1714 receive bonus up to 2.09%

17 Medicare Shared Savings Program (MSSP) and Pioneer Accountable Care Organizations Established by section 3022 of the ACA; began in 2012 Participation through Accountable Care Organizations (ACO) Providers coming together to serve fee-for-service Medicare beneficiaries MSSP shared savings/losses % share Cap Participants Track year 1-2 shared savings only 52.50% 7.5% year 3 savings and losses 60% 10% Track 2 3 all 3 years savings and losses 60% 10% Pioneer ACO year 1 savings and losses 60% 10% year 2 savings and losses 70% 15% year 3 savings and losses up to 100% 15%

18 Medicare Shared Savings Program: Results 7.3 M beneficiaries as of January 2015 Year 1 58 of the 243 initial MSSP s earned a bonus ($705 M in savings leading to $315 M in bonuses). One shared in losses ($10M loss with $4M penalty). 30 of 33 quality measures improved.

19 Pioneer ACO results 620,000 beneficiaries as of January 2015 Year 1 Saved Medicare $117 per participating beneficiary per year and a total of $118 million the first year. And savings was similar between ACOs that have dropped out versus those that have remained. Year 2 Saved Medicare $96 M and 11 earned bonuses totaling $68 M. 3 generated losses. 28 of 33 quality measures improved. McWilliams JM et al. Performance differences in year 1 of pioneer ACOs. JAMA. April 15,

20 Value Payment Modifier (VPM) Mandated by section 3007 of ACA Adjusts payments based on quality and cost metrics 2015: Physicians in groups of 100 or more Eligible Professionals (EPs) based on 2013 performance. 2016: Physicians in groups of 10 or more EPs based on 2014 performance. 2017: all Physicians including those participating in Shared Savings, ACOs, and Comprehensive Primary Care Initiative. 2018: extended to non-physician EPs.

21 Value Payment Modifier (VPM) 14 Process measures; examples: Follow-up after hospitalization for mental illness Spirometry testing to confirm COPD Lipid profile within 3 months of starting lipid lowering med 3 Outcome measures: Cost Composite of acute prevention: PN, UTI, dehydration Composite of chronic prevention: DM, COPD, HF All cause readmission Total per capita cost Per capita cost for each of COPD, HF, CAD, and DM

22 Value Payment Modifier (VPM) VPM adjustment for 2015 Physician groups could have elected Quality Tiering by Oct 15, groups elected tiering. No groups earned the 2x% upward adjustment based on high quality and low cost. 14 groups get an upward adjustment of 1x%. 11 groups get downward adjustment of %. For those who did not report got an automatic 1% penalty. The x adjustment factor above is based on the available funds from the groups that had a downward adjustment.

23 Value Payment Modifier (VPM) VPM adjustment for 2015 For 2015 the adjustment factor is 4.89, increasing payments by 4.89% to the 14 groups that earned 1x%. CMS: We also anticipate that we would propose to increase the amount of payment at risk for the Value Modifier as we gain additional experience with the methodologies used to assess the quality of care, and the cost of care, furnished by physicians and groups of physicians.

24 Value Payment Modifier (VPM) VPM adjustment for 2016 In 2016 (based on 2014) data the downward adjustment goes to 2%. It s too late to change your payment status for In 2017, all physicians impacted and quality tiering becomes mandatory!

25 Coming in 2017 Value Payment Modifier (VPM) To avoid the downward adjustment of 2% in 2017 (for groups up to 9) or 4% for groups of 10 or more: Option 1 Participate in Group Practice Reporting Option (GPRO): Qualified PQRS registry HER Web interface for those with 25+ EPs Consumer Assessment of Health Providers and Systems (CAHPS) for PQRS survey (mandatory for groups with 100+ EPs)

26 Value Payment Modifier (VPM) Coming in 2017 (cont d) To avoid the downward adjustment of 2% in 2017 (for groups up to 9) or 4% for groups of 10 or more: Option 2 At least 50% of group participates in PQRS as individuals Medicare Part B Claims Qualified PQRS registry EHR Qualified Clinical Data Registry

27 Penalties for Hospital Acquired Infections (HAI) Introduced by Section 3008 of the ACA 35% of score is composite safety measure with 8 indicators from AHRQ. 65% of score from 2 HAI measures from data reported to the National Healthcare Safety Network and the CDC s online infection reporting system. Beginning in 2015, 1% of payments subtracted from hospitals with the highest quartile rates of HAIs. 724 hospitals penalized in McKinney M. Hospital-acquired conditions mean Medicare penalties Modern Healthcare. Dec 18, 2014.

28 Medicare Shifting to a Focus on Value Goal to have 50% of all Medicare payments and 90% of fee-forservice Medicare tied to value by 2018 Develop and test new payment models. Encourage greater integration, coordination among providers, and attention to population health. Accelerate availability of EHR information and interoperability. ACA established Patient-Centered Outcomes Research Institute with goals of research findings being disseminated in part through EHRs. Medicare website allows consumers to compare data on costs and quality. Burwell S. Setting value-based payment goals NEJM. January 26, Japsen B. White House plans to shift Medicare Forbes. January 26, 2015.

29 Medicare Shifting to a Focus on Value The Sustainable Growth Rate (SGR) Doc-fix includes greater emphasis on payment for value Merit-based payment incentive system (MIPS) coming in 2020 Will consolidate current incentive programs including PQRS 4 categories of metrics: Quality Resource use / efficiency EHR use Clinical improvement activities Up to 9% of pay will be at risk Wynne B. Health Affairs Blog. April 14, 2015

30 Medicare Shifting to a Focus on Value Fiscal year 2016 IPPS Proposed Rule Hospitals that are meaningful users of EHRs and report quality through IQR data get a 1.1% increase in their operating rates 2.7% market basket update -0.8% multi-factor productivity and ACA adjustment -0.8% recoupment by American Taxpayer Relief Act of % Others will experience a decline in rates -(0.5x 2.7%) if not meaningful use compliant -(0.25x 2.7%) if not participating in IQR Overall, a 0.3% increase in IPPS payments is expected.

31 Commercial Payers also Shifting to Value United Health Initiated value-based contracting in Claims it has saved 1-6% by value based initiatives. Plans to increase valued based payments to doctors and hospitals by 20% in 2015 to $43 Billion and to $65 B by Aetna Claims 8-15% savings first year in transition to ACO model and $1,600 per member over 3 years. Predicts increased value-based spend to triple from Humana Claims full accountability (per member per month payment) reduces Medicare costs by 22% compared with no provider incentives. Japsen B. UnitedHealth s $43B exit Forbes. Jan 23, Funk M. Humana s approach to value-based reimbursement. Jan 24, Aetna Investor Conference. Dec 12, 2013.

32 The Paradigm Shift in U.S. Healthcare KEY HEALTH CARE MARKET TRENDS Rising Costs and Suboptimal Quality Regulatory Reform Aging Population & Chronic Disease Burden Reduced Number of Hospitals DATA & TECHNOLOGY Value-based reimbursement to providers Emphasis on chronic care management Shift to lower-cost care settings Increased M&A among providers and payers and Hartman M et al. National Health Spending in Health Affairs. 34 No. 1 (2015)

33 WHAT IS DRIVING CHANGES TO PHYSICIAN COMPENSATION?

34 Factors Impacting Physician Compensation MGMA 2014 Study (Current and Future) Years of Experience Degree of Productivity Influence Quality Measures Patient Panels EHR and Meaningful Use ACO/PCH Group Demographics Other Factors 33 Gpro CMS measures (usually seen in ACOs) HCAHPS scores

35 Factors Impacting Physician Compensation Other Factors HEDIS measures Readmission Rates Adherence to evidence-based care, clinical guidelines both inpatient and outpatient Patient Satisfaction Environmental Factors Health Insurance Exchanges Impending Physician Shortages

36 CURRENT COMPENSATION MODELS

37 Fee for Service Productivity Collections Work RVUs Current Compensation Models Salary Combination of Salary and Productivity

38 COMPENSATION MODELS OF THE FUTURE

39 Fee for Value Emerging Compensation Models Meaningful Quality Improvement Patient Outcomes Population Management Patient Panels Meaningful Use Payment Bonus Allocations ACO Shared Savings Payment Model

40 COMPENSATION MODEL EXAMPLES

41 Hospital Employed Physician Practices Patient satisfaction score used as a metric Physician loses 2.5% of compensation until his or her physician satisfaction score is 90 (out of 100) or higher Fear of no may lead to treatments that may have been avoided clinically Combining with objective measures of appropriate treatment may mitigate the negatives of this form of metric

42 Non Invasive Cardiology Patient satisfaction score Advanced practitioner supervision Clinical Outcomes/ Adherence to evidence based care Cost containment In-ACO referrals Hospital utilization