BUNDLED PAYMENT PROGRAM

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1 BUNDLED PAYMENT PROGRAM TRANSITIONING TO A VALUE BASED MODEL Marcia A. Friesen RN, BS, FAIHQ, FACHE President Marcia Friesen & Associates, LLC

BUNDLED PAYMENT MODEL DEFINITION A Bundled Payment is: A single, fixed payment amount designed to pay all providers involved in a single episode of care This includes the facility, surgeon,

2 BUNDLED PAYMENT MODEL DEFINITION A Bundled Payment is: A single, fixed payment amount designed to pay all providers involved in a single episode of care This includes the facility, surgeon, anesthesia provider, physical therapy, nursing and overhead. Can include prescripjons and nonmedical services such as transportajon. Episode of Care commonly defined as day of surgery through 90 days post-op Can include 30 days prior to surgery All include pabent criteria for parbcipabng in the bundle Quality and Efficiency are key to success 2

BENEFITS BUNDLED PAYMENTS Bundle Facility, Equipment & Professional Service Fees into one Package Opportunity to transibon procedures to

INSURER BENEFITS: 1) Allow reasonable payment 2) Insurers only cut one check HOSPITAL BENEFITS: Insurer will name them a preferred

transparency ü Receive one up front price for all services in an episode of care ü Pay less in out-of-pockets expenses vs.

3 BENEFITS BUNDLED PAYMENTS Bundle Facility, Equipment & Professional Service Fees into one Package Opportunity to transibon procedures to ASC s primarily performed in a hospital semng. INSURER BENEFITS: 1) Allow reasonable payment 2) Insurers only cut one check HOSPITAL BENEFITS: Insurer will name them a preferred provider resuljng in more business PATIENT BENEFITS: ü Consumers can shop around for services based on quality, experience and price transparency ü Receive one up front price for all services in an episode of care ü Pay less in out-of-pockets expenses vs. a costlier facility ü ElecJve Surgeries have one invoice for payment Copyright ASC COMMUNICATIONS Interested in LINKING to or REPRINTING this content? View our policies by clicking here. ConfidenJal & Proprietary, Marcia Friesen and Associates,

BUNDLED PAYMENT PROGRAM Value Based Model

Providers o o o o o o Pre-surgical 30 days

RehabilitaJon Rheumatologists 90 Days Post

RehabilitaJon FaciliJes o Long Term Care o

Therapy o Pharmacy o DME Post Acute Care

4 BUNDLED PAYMENT PROGRAM Value Based Model for Musculoskeletal Care o Employers o Wellness Programs/ YMCA o Insurers o Disease Management Programs o PrevenJon Programs Community Partnerships & CollaboraJon Beber Health Triple Aim Providers o o o o o o Pre-surgical 30 days Primary Care / Internal Medicine Orthopaedic Surgeons Spine Surgeons Anesthesia Providers Physical Medicine & RehabilitaJon Rheumatologists 90 Days Post o Skilled Nursing FaciliJes o RehabilitaJon FaciliJes o Long Term Care o Home Health o Physical & OccupaJonal Therapy o Pharmacy o DME Post Acute Care Beber Care Lower Costs InpaJent & OutpaJent Services Surgical Event o InpaJent & OutpaJent IntervenJons o Imaging & Lab Services o IntegraJve ModaliJes o Standardized efficient care o IntegraJve Nurse Navigator 4 ConfidenJal & Proprietary, Marcia Friesen and Associates, 2015

5 TIME DRIVEN ACTIVITY BASED COSTING (TDABC) Segment PaJent Episode of Care (Pre-OP, OR, Post OP) Hospital Sub- Segment of Care Process Map Development Shadow PaJent Episode of Care ConJnuum Engage Clinical, Department, Financial & HR Leadership Process Map for each subsegment of pajents episode of care Standardize PaJent Episode of Care ConJnuum QuanJtaJve & QualitaJve Data Results Industry Best Care PracJces Calculate Cost Consumable Cost Personnel Cost Space & Equipment Cost Implant Cost TDABC is effecjve at idenjfying the major cost drivers, capacity ujlizajon, areas of opportunity for improving efficiencies, and experiences for this pajent populajon, and all of the informajon required to parjcipate successfully in bundling and RBP programs for THR and TKR. DiGioia AM, et al, Determining the True Cost to Deliver Total Hip and Knee Arthroplasty Over the Full Cycle of Care: Pre- paring for Bundling and Refer..., J Arthroplasty (2015), hbp://dx.doi.org/ / j.arth ConfidenJal & Proprietary, Marcia Friesen and Associates,

6 VARIANCE OF CARE & COST IN PAC ENVIRONMENT Reducing Post Acute Care (PAC) variance is cribcal to successfully implemenbng CJR Bundled Payments. ü PAC consjtutes over 40% of total LEJR episode costs and approximately 70% of episode cost variance 2. Hospitals can manage Post-Acute Care Costs by 1 : o SelecJng PAC networks with High Value Competencies: ü High PaJent Physical Outcomes ü High PaJent SaJsfacJon Scores ü Low Readmission Rates ü Low Length of Stay (LOS) ü High Nursing Home Comparison RaJngs ü Scalability and size to accommodate hospitals LEJR Referrals o IntegraJng and aligning with PAC providers to decrease LOS o Discharge PaJents straight to Home o OpJng to partner with Home Health Agencies instead of SNF s 6 1.Matheson, Shawn. Why the CJR Joint Replacement Bundle Will Dras8cally Change the PAC Landscape. 24, November Web Access. 10 February hbp://leavibpartners.com/2015/11/why-the-cjr-joint-replacement-bundle-will-drasjcally-changethe-pac-landscape/ 2. The Transi8on to Value-Based Care. NaviHealth. Web Access. 10 February hbp://

MANAGE THE ENTIRE EPISODE OF CARE Hospital Leadership needs to manage the EnBre Episode of Care by 3 : ü Engage PAC providers in designing and monitoring the episode of care ü Be proacjve with

7 MANAGE THE ENTIRE EPISODE OF CARE Hospital Leadership needs to manage the EnBre Episode of Care by 3 : ü Engage PAC providers in designing and monitoring the episode of care ü Be proacjve with complicajons before they become readmissions or revisions ü Engage and enhance the pajent experience by offering the convenience of interacjng with their abending physician from home via Telehealth. ü Monitor the pajent s episode of care by through ValidCare s Surgical Episode Management Technology by engaging pajents and physicians 7 3. Torres, Ben. Why You Should Leverage Tele-rehabilita8on for The Mandatory CMS Joint Replacement Bundle. 14 December Web Access 11 February hbp://reflexionhealth.com/tag/cjr/

Establish PaBent SelecBon Criteria Define Episode of Care Timeline Consensus Protocols to OpBmize Efficiency & Quality Establish a System

8 KEY PROJECT COMPONENTS Understand the Current State Data Analysis to Understand Both Costs & Reimbursement EvaluaJon of Work flow to IdenJfy PotenJally Avoidable Costs (PACs) Compliance with Established Standardized Order Sets Define Included and Excluded Services Establish PaBent SelecBon Criteria Define Episode of Care Timeline Consensus Protocols to OpBmize Efficiency & Quality Establish a System to Deal with ComplicaBons Evaluate Current Contracts Establish Billing & Fee DistribuBon Processes Establish Performance Metrics Data Transparency 8

9 ASC BUNDLED PAYMENT CASE STUDY "When you look at the data for bundled payments at hospitals or physician-owned ASCs, the care is provided for about 35 percent to 47 percent less at ASCs than at hospitals for the same procedures. These bundles include 60 days to 90 days which defines the enbre episode of care 1. Dr. Bert Monterey County, California ü Providers: BSC, United Healthcare, A large self-insured group (10,000 covered lives) ü 60% of 225 cases were orthopaedic ü Reimbursement Rate for 225 cases: $23,103 ü Average Bundled Fee Rate (ASC, Surgeon, Anesthesiologist) $13,708 ü Total savings to payers (pajents, employers & insurance companies: $2,113,875 ü Average savings per case was $9,395 or 41 percent, which is at the high range of average savings generated through the G1 bundle payment network in California. PaBent sabsfacbon rates for surgeries in the ASC semng were high. Nearly one-half of all pabents completed a sabsfacbon form, and 98 percent of respondents indicated they would recommend the ASC to family members or friends requiring a similar surgery Dyrda, Laura. The future of orthopedics: ACO s bundled payments, gain-sharing & the advantage in change. Becker s Spine Review. 21 July Web Access 8 October htp:// 2. Angel, Jeffrey. Beyond the Hospital: Outpa8ent and Physician-owned Bundled Payments. AAOS Now. October 2015 Issue. Web Access 8 October hbp:// 9 ConfidenJal & Proprietary, Marcia Friesen & Associates, 2015

10 CAMPBELL CLINIC CASE STUDY Results: ASI THA performed in an ASC resulted in a significantly shorter length of postoperabve stay Post OperaBve Stay VAS Scores (3 months post operabvely) There were no significant differences between groups regarding operajve Jme, blood loss, or complicajons. Conclusions: The ASC group had a shorter length of stay and less postoperabve pain, than the HS cohort with no difference in complicabons. Cost savings were significant, with the ASC group saving an average of $12,437. Further invesbgabon is needed to evaluate longer-term outcomes and cost effecbveness of ASI THA performed on an outpabent basis. Cost ASC 13.4 Hours 0.4 $29,421 Hospital 38 Hours 0.8 $41,858 P < P = 0.03 P< Used with permission from Dr. Patrick Toy. Campbell Clinic ConfidenJal & Proprietary, Marcia Friesen & Associates, 2015

11 MARCIA FRIESEN & ASSOCIATES, LLC VISION: Redefining Orthopaedics and Healthcare BUSINESS SOLUTIONS: Ø ASC Program Ø Bundled Payment Ø Clinical Care Delivery Redesign Ø Healthy Bone tm Program Ø Integrative Advantage tm BIOGRAPHY: Marcia A. Friesen RN, BS, FAIHQ, FACHE Marcia Friesen is an innovative leader in healthcare who is nationally and internationally recognized as an expert in the design and implementation of high performing orthopaedic and spine services. In addition to her clinical and business background, her experience includes serving as a senior officer at Biomet, a hospital executive at a large integrated delivery system, an executive director of government managed care programs for a large payer system, and over 12 years owning and operating Orthopaedic Advantage a successful global orthopaedic consulting company where she has worked with hundreds of surgeons and administrators to develop top performing, efficient, patient-centered, cost effective healthcare delivery systems. Marcia is a Registered Nurse, holds a degree in business administration and is a Fellow of the American Institute for Healthcare Quality as well as the American College of Healthcare Executives. She has served as a Malcolm Baldrige Quality Award Examiner at both the National and State levels and a judge at the State level. She is currently preparing for her board certification as an International Integrative Health Nurse Coach. Marcia is the founder of Marcia Friesen & Associates, a global health care consulting firm that specializes in designing exceptional patient experiences, outpatient total joint replacement programs and orthopaedic service line strategic planning, business development, and performance improvement. 11

12 Thank You! Marcia A. Friesen RN, BS, FAIHQ, FACHE President Marcia Friesen & Associates, LLC 225 N. Columbus Drive Suite 7105 Chicago, IL

OUTPATIENT TOTAL JOINT

OUTPATIENT TOTAL JOINT REPLACEMENTS How to Prepare, Transition and Deliver High Quality of Care Becker s ASC 22 nd Annual Meeting October 22-24, 2015 Chicago, IL Marcia A. Friesen, RN, BS, FAIHQ, FACHE