Alternative Payment Models: Trends and Tactics for Success

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1 Alternative Payment Models: Trends and Tactics for Success James Michel Senior Director, Medicare Reimbursement & Policy American Health Care Association November 15, 2016

2 Discussion Review CMS priorities and goals related to shifting Medicare spending from FFS to value-based models Current evidence and trends alternative payment models (APMs) Accountable Care Organizations (ACOs) Bundled Payments Discuss strategies for success under new APMs Wrap up with a discussion of the outlook for APMs postelection and Q&A

3 CMS Targets to Shift Payments 2016 Goals 2018 Goals Alternative Payment Models 30% Alternative Payment Models 50% FFS Linked to Quality FFS Linked to Quality 85% 90% All Medicare FFS All Medicare FFS

4 MACRA s APM Incentives Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 Permanently repeals the sustainable growth rate (SGR) formula used to determine Medicare payments to clinicians Establishes a two-track system for physician payments Quality Payment Program Merit-based Incentive Payment System (MIPS) Advanced Alternative Payment Models (APMs)

5 What Are Advanced APMs? Advanced APMs must meet the following requirements: Be CMS Innovation Center models, Shared Savings Program tracks, or certain federal demonstration programs Require participants to use certified EHR technology Base payments for services on quality measures comparable to those in MIPS Be a Medical Home Model expanded under Innovation Center authority or require participants to bear more than nominal financial risk for losses.

6 What Are Advanced APMs?

7 What Are Advanced APMs? Qualified providers who receive 25% of Medicare payments or 20% of patients through an advanced APM in 2017 will earn a 5% bonus payment in 2019 The following APMs will qualify as advanced APMs beginning in 2017: Comprehensive ESRD Care Model (Large Dialysis Organization (LDO) arrangement) Comprehensive ESRD Care Model (non-ldo arrangement) CPC+ (reopening in 2018) Medicare Shared Savings Program ACOs - Track 2 Medicare Shared Savings Program ACOs - Track 3 Next Generation ACO Model (reopening in 2018) Oncology Care Model (two-sided risk arrangement)

8 What Are Advanced APMs? The following APMs will be added to qualify as advanced APMs in 2018: ACO Track 1+ New voluntary bundled payment model Comprehensive Care for Joint Replacement Payment Model (Certified Electronic Health Record Technology (CEHRT) track) Advancing Care Coordination through Episode Payment Models Track 1 (CEHRT track)

9 Accountable Care Organizations

10 MSSP ACO Program 434 MSSP ACOs by Risk Track No Downside Risk Downside Risk # of MSSP ACOs 6 16 Track 2 Track 3 Top 10 ACO Markets # ACOs % Benes Boston 37 20% New York 59 14% Philadelphia 59 15% Atlanta % Chicago 82 16% Dallas 54 11% Kansas City 30 18% Denver 12 9% San Francisco 45 7% Seattle 7 7% Sources: CMS Data Library, accessed at Leavitt Partners, Medicare ACOs Announced: What Happened and Why It Matters, January 20, 2016.

11 Pioneer ACO Program Pioneer ACO Program Distinctions Ongoing CMMI demonstration currently in 5 th (final) year Higher levels of shared savings/risk possible than in MSSP May experiment with alternative payment arrangements, such as reduced fee arrangements with SNFs May access certain payment waivers, such as telehealth and SNF 3-day requirement waivers Where Pioneer ACOs Are As of January 2016, 9 of the original 32 Pioneer ACOs remain in the program Source: Center for Medicare and Medicaid Innovation:

12 Next Generation ACO Model Next Generation ACO Distinctions Builds upon Pioneer and MSSP models Allows ACOs to assume higher levels of risk and reward Offers additional tools to support patient engagement and care management Offers certain payment policy waivers such as the SNF 3-day waiver May negotiate rates directly with providers Where NGACOs Are Source: Center for Medicare and Medicaid Innovation:

13 Bundled Payment

14 Bundled Payments for Care Improvement (BPCI) Initiative Three-year demonstration program administered by CMMI, currently in Year 2 Tests 4 models of acute and postacute care bundled payment Model 1: Acute care only Model 2: Acute + post-acute Model 3: Post-acute only Model 4: Acute care only (prospective payment) 48 defined clinical episodes available for testing Officially ended Phase 1 trial period in October 2015 all BPCI providers are now in risk-bearing Phase 2 BPCI Participants

15 BPCI Results Year 2 Model 2: Hospital + PAC Orthopedic Surgery * SNF, IRF, LTCH $864 Average decline in Medicare payments for hospitalization + 90 days 1.3 Days Decline in SNF ALOS 7% Reduction in the share of beneficiaries utilizing institutional PAC* $7,465 Average SNF payment 90 days post-discharge for BPCI patients Source: BPCI Evaluation Report, Year 2. The Lewin Group, October 2016.

16 BPCI Results Year 2 Model 2: Hospital + PAC Cardiovascular Surgery 1.5 Increase in the number of home health visits 11% Reduction in the share of beneficiaries utilizing institutional PAC* 0.3% Increase in mortality rates Source: BPCI Evaluation Report, Year 2. The Lewin Group, October * SNF, IRF, LTCH

17 Comprehensive Joint Replacement (CJR) Initiative Five-year, mandatory bundled payment program for providers who operate in one of 67 MSAs Runs April 1, 2016 December 31, day episode spending targets for lower-extremity joint replacement (LEJR) procedures, primarily total hips and knees MS-DRG 469 MS-DRG 470 The hospital is the at-risk entity under CJR; no downside risk until Year 2 Hospitals may share up to 50% of financial risk with CJR collaborators, which include SNFs Program waivers and alternative financing options begin in Year 2 (January 1, 2017)

18 CJR Design Comprehensive Joint Replacement (CJR) Initiative Target prices based on 3-year historical spending of the hospital at first, transitioning to regional trend by year 4 Built-in limits to savings and loss potential BPCI takes precedence Rule encourages hospitals to gain-share with collaborators, including SNFs CJR waives: SNF 3-day rule starting in Year 2 for SNFs with 3 or more stars on Nursing Home Compare (Five-Star) Limits on physician home visits Geographic site requirement and originating site requirement for telehealth reimbursement 18

19 CJR Program Overview SNF Medicare Revenue Exposure to CJR (based on analysis of 2013 claims data) Source: AHCA internal analysis.

20 Cardiac Bundles Overview CMS issues proposed rule for three new EPMs Acute myocardial infarction (AMI) Coronary artery bypass graft (CABG) Surgical hip/femur fracture treatment excluding lower extremity joint replacement (SHFFT) Cardiac (AMI & CABG) EPMs will be mandatory in 98 randomly selected metropolitan statistical areas (MSAs) MSAs to be announced later SHFFT EPM will be an expansion of CJR and added in the same 67 MSAs Proposed start July 1, 2017 Five-year model ending December 31, 2021

21 Sharing in Risk and Reward EPM hospitals may share reconciliation payments and repayment risk with collaborators Gainsharing Eligibility Must meet the criteria set by participating hospital Physicians, NPPs, and PGPs must furnish a billable service in an episode EPM Collaborators: SNF HHA IRF LTCH PGP Physician/NPP Outpatient therapy providers ACOs Hospitals CAHs

22 Limits on Gainsharing and Risk Sharing Gainsharing Payments Participant hospitals may share reconciliation payments and internal cost savings Individual physicians/practitioners gainsharing payments are capped at 50% of their PFS for episode services PGPs may receive gainsharing payments up to 50% of their PFS payments for episode services Alignment Payments Participant hospitals may share repayment responsibilities Hospital must retain responsibility for retaining 50% of the repayment amount A single collaborator that is not an ACO may not pay more than 25% of their repayment amount ACO collaborators may pay up to 50% of the repayment amount

23 Payment Policy Waivers Home Visits Telehealth SNF 3-Day Stay Waives supervision requirement so clinical staff may provide home visits under general supervision AMI up to 13 home visits in the 90 days CABG up to 9 home visits in the 90 days SHFFT up to 9 home visits in the 90 days Waive global period restrictions to allow for home visits CJR: April 1, 2016 EPM: July 1, 2017 Waives the geographic and originating site requirements for telehealth services Telehealth services may be provided in an EPM beneficiary s home or residence CJR: April 1, 2016 EPM: July 1, 2017 CJR and AMI only Not applicable for CABG or SHFFT Allows coverage of a SNF stay following discharge from an anchor EPM hospital stay of fewer than 3 days SNF must have at least 3 star rating for 7/12 preceding months CJR: January 1, 2017 EPM: April 1, 2018

24 SNF Utilization in EPMs Eligible Inpatient Stays Eligible SNF Stays Number Percent Number Percent Proportion of Episodes Leading to SNF Stay Overall 797, % 345, % 43.3% Cardiac Episodes Only 347, % 155, % 44.6% All Acute Mycardial Infarction Episodes 167, % 38, % 22.8% AMI with Medical Management Only 91, % 29, % 31.8% AMI with Percutaneous Coronary Intervention Only 75, % 8, % 11.8% Coronary Artery Bypass Graft 47, % 11, % 24.2% Surgical Hip/Femur Fracture Treatment 132, % 105, % 79.5% Comprehensive Care for Joint Replacement 449, % 190, % 42.3% Source: The Moran Company, analysis of claims data from 2013 and 2014.

25 CJR/EPM Impact on Providers If you receive a CJR, SHFFT, AMI or CABG case from a hospital in one of these markets, you are in the policy. Even if you re not in one of the markets yourself Means the hospital sees you in this new light anyway Many markets in one or both programs Many SNFs outside the markets receive patients from hospitals in the markets 20% of SNFs likely have revenue exposed to the policy Bigger factor is: Hospital (& physician) behavior is converging to controlling costs of post-discharge episodic payments

26 Total episode cost progression as complexity increases Not Transfer Case Transfer Case w/o CC/MCC w/cc w/mcc w/o CC/MCC w/cc w/mcc AMI/PCI episodes AMI, discharged alive $ 16,489 $ 22,701 $ 33,439 $ 42,346 $ 45,717 $ 63,720 PCI w/ drug-eluting stent $ 22,477 n/a $ 37,368 $ 35,595 n/a $ 63,066 PCI w/ non-drug-eluting stent $ 23,688 n/a $ 39,116 $ 41,927 n/a $ 68,779 PCI w/o stent $ 25,260 n/a $ 39,360 * n/a * AMI transferring to CABG w/ PTCA n/a n/a n/a * n/a * AMI transferring to CABG w/ cardiac catheter n/a n/a n/a * n/a * AMI transferring to CABG w/o cardiac catheter n/a n/a n/a * n/a * CABG Episodes CABG w/ PTCA $ 56,141 n/a $ 81,222 n/a n/a n/a CABG w/ cardiac catheter $ 47,253 n/a $ 73,243 n/a n/a n/a CABG w/o cardiac catheter $ 39,410 n/a $ 62,849 n/a n/a n/a CJR Episodes LEJR w/ hip fracture $ 61,427 n/a $ 46,814 n/a n/a n/a LEJR w/o hip fracture $ 43,562 n/a $ 26,187 n/a n/a n/a SHFFT Episodes Hip/Femur fracture w/o replacement $ 41,049 $ 49,184 $ 62,244 n/a n/a n/a

27 SNF cost behavior as complexity increases Not Transfer Case Transfer Case w/o CC/MCC w/cc w/mcc w/o CC/MCC w/cc w/mcc AMI/PCI episodes AMI, discharged alive $ 1,737 $ 3,634 $ 6,170 $ 2,853 $ 4,853 $ 6,853 PCI w/ drug-eluting stent $ 560 n/a $ 2,300 $ 1,890 n/a $ 4,550 PCI w/ non-drug-eluting stent $ 1,102 n/a $ 3,554 $ 3,645 n/a $ 5,031 PCI w/o stent $ 1,113 n/a $ 2,933 $ 2,448 n/a $ 5,847 AMI transferring to CABG w/ PTCA n/a n/a n/a $ 4,438 n/a $ 5,675 AMI transferring to CABG w/ cardiac catheter n/a n/a n/a $ 2,641 n/a $ 8,053 AMI transferring to CABG w/o cardiac catheter n/a n/a n/a $ 3,165 n/a $ 6,038 CABG Episodes CABG w/ PTCA $ 1,947 n/a $ 3,978 n/a n/a n/a CABG w/ cardiac catheter $ 2,059 n/a $ 4,323 n/a n/a n/a CABG w/o cardiac catheter $ 1,546 n/a $ 3,636 n/a n/a n/a CJR Episodes LEJR w/ hip fracture $ 8,063 n/a $ 20,726 n/a n/a n/a LEJR w/o hip fracture $ 3,672 n/a $ 16,517 n/a n/a n/a SHFFT Episodes Hip/Femur fracture w/o replacement $ 15,966 $ 20,520 $ 23,569 n/a n/a n/a

28 What will hospitals read into the data? You need to know and understand your data o Measure and perform Some hospitals will analyze your data and make anything of it o Some hospitals will be informed and have good intelligence about the dynamics and reasoning behind SNFs higher cost o Some will look at aggregate patterns of cost and misperceive: A highly complicated referral that contributed to very high cost overall Rather than a deliberate choice of hospitals sending patients to SNFs for complex care Your job is to become familiar with your data so you can articulate to the hospitals how you bring value to the post acute partnership

29 SNF % of total episode costs with episode complexity Not Transfer Case Transfer Case w/o CC/MCC w/cc w/mcc w/o CC/MCC w/cc w/mcc AMI/PCI episodes AMI, discharged alive 11% 16% 18% 7% 11% 11% PCI w/ drug-eluting stent 2% n/a 6% 5% n/a 7% PCI w/ non-drug-eluting stent 5% n/a 9% 9% n/a 7% PCI w/o stent 4% n/a 7% * n/a * AMI transferring to CABG w/ PTCA n/a n/a n/a * n/a * AMI transferring to CABG w/ cardiac catheter n/a n/a n/a * n/a * AMI transferring to CABG w/o cardiac catheter n/a n/a n/a * n/a * CABG Episodes CABG w/ PTCA 3% n/a 5% n/a n/a n/a CABG w/ cardiac catheter 4% n/a 6% n/a n/a n/a CABG w/o cardiac catheter 4% n/a 6% n/a n/a n/a CJR Episodes LEJR w/ hip fracture 13% n/a 44% n/a n/a n/a LEJR w/o hip fracture 8% n/a 63% n/a n/a n/a SHFFT Episodes Hip/Femur fracture w/o replacement 39% 42% 38% n/a n/a n/a

30 Percent of episodes first referred to SNFs And how did hospitals historically refer to SNFs for different complexities of case? Not Transfer Case Transfer Case w/o CC/MCC w/cc w/mcc w/o CC/MCC w/cc w/mcc AMI/PCI episodes AMI, discharged alive 8% 15% 28% 14% 19% 27% PCI w/ drug-eluting stent 3% n/a 12% 8% n/a 18% PCI w/ non-drug-eluting stent 6% n/a 19% 13% n/a 18% PCI w/o stent 5% n/a 15% 12% n/a 21% AMI transferring to CABG w/ PTCA n/a n/a n/a * n/a * AMI transferring to CABG w/ cardiac catheter n/a n/a n/a 24% n/a 46% AMI transferring to CABG w/o cardiac catheter n/a n/a n/a 24% n/a 35% CABG Episodes CABG w/ PTCA 15% n/a 26% n/a n/a n/a CABG w/ cardiac catheter 17% n/a 27% n/a n/a n/a CABG w/o cardiac catheter 14% n/a 23% n/a n/a n/a CJR Episodes LEJR w/ hip fracture 66% n/a 70% n/a n/a n/a LEJR w/o hip fracture 33% n/a 49% n/a n/a n/a SHFFT Episodes Hip/Femur fracture w/o replacement 60% 69% 72% n/a n/a n/a

31 Episodes referred to home health Not Transfer Case Transfer Case w/o CC/MCC w/cc w/mcc w/o CC/MCC w/cc w/mcc AMI/PCI episodes AMI, discharged alive 13% 17% 23% 23% 28% 34% PCI w/ drug-eluting stent 8% n/a 18% 16% n/a 32% PCI w/ non-drug-eluting stent 11% n/a 20% 23% n/a 38% PCI w/o stent 9% n/a 20% 23% n/a 38% AMI transferring to CABG w/ PTCA n/a n/a n/a * n/a * AMI transferring to CABG w/ cardiac catheter n/a n/a n/a 52% n/a 37% AMI transferring to CABG w/o cardiac catheter n/a n/a n/a 45% n/a 42% CABG Episodes CABG w/ PTCA 44% n/a 30% n/a n/a n/a CABG w/ cardiac catheter 41% n/a 34% n/a n/a n/a CABG w/o cardiac catheter 40% n/a 35% n/a n/a n/a CJR Episodes LEJR w/ hip fracture 7% n/a 4% n/a n/a n/a LEJR w/o hip fracture 44% n/a 25% n/a n/a n/a SHFFT Episodes Hip/Femur fracture w/o replacement 12% 6% 4% n/a n/a n/a

32 Drawing a Conclusion: SNF Specialization For episodes except heart attack and PCI patients without transfers or later bypass surgery As complexity increases, SNFs take over and HHAs step back. This is specialization of SNFs for more complex medical needs, and HHAs for straight forward cases.

33 APM Success Strategies

34 How to Succeed: Portfolio of Strategies Six key elements in the portfolio: SNF length of stay SNF rehospitalization rate Keep your Five Star rating 3 stars for 7 of last 12 months Manage the hospital s CJR/EPM quality measures Be the competent care coordinator Leverage participation in Model 3 BPCI

35 Element #1 Manage hospital requirements for shorter LOS Educate Hospital to stop telling patients SNF will get patient back to baseline level of functioning as this should be the task of the HHA SNF gets patients to a functional status which permits safe discharge. HHA can get patients back to prior level of functioning

36 Element #2 Minimize Your Rehospitalization Rates Rehospitalizations is seen as the main measure of cost paired with quality PointRight Pro 30 :

37 Element #3 Manage Your Five Star Rating Use the strategy of practicing the survey process continually through the year, before you are surveyed E.g., Abaqis, etc. Work towards RN and overall direct care staffing rating 4 stars Work towards quality rating at 5 stars Comprehensive QA/PI

38 Element #4 Manage Hospital Quality Measures Model Quality Measure Weight in Composite Quality Score MORT-30-AMI (NQF #0230) 50% Quality Domain/Weight CABG Model AMI Model CJR & SHFFT Model AMI Excess Days 20% Hybrid AMI Mortality (NQF #2473) Voluntary Data 10% HCAHPS Survey (NQF #0166) 20% MORT-30-CABG (NQF #2558) 75% HCAHPS Survey (NQF #0166) 25% THA/TKA Complications (NQF #1550) 50% THA/TKA Voluntary PRO and Limited Risk Variable Submission 10% HCAHPS Survey (NQF 0166) 40% Outcome/80% Patient Experience/20% Outcome/75% Patient Experience/25% Outcome/50% Patient Experience/50%

39 Element #4 Manage Hospital Quality Measures Quality Composite Score Range Quality Category Eligible for Reconciliation Payment Effective Discount % for Reconciliation Payment Effective Discount % for Repayment Amount >13.2 Excellent Yes 1.5% PY1: N/A* PY2-3: 0.5% PY4-5: 1.5% >6 and <13.2 Good Yes 2% PY1: N/A PY2-3: 1% PY4-5: 2% >4 and <6 Acceptable Yes 3% PY1: N/A PY2-3: 2% PY4-5: 3% <4 Below Acceptable No 3% PY1: N/A PY2-3: 2% PY4-5: 3%

40 Element #4 Manage the Hospital s Quality Measures Hospital target prices are higher for better quality and almost all of them can be affected by a SNF stay Program and Quality Measure Reference Period SNF Opportunity CJR Complications following elective hip/knee replacement: 1) Mechanical complications - 90 days 90 days post-hospitalization Yes 2) Wound infection/periprosthetic joint infection (PJI) - 90 days 90 days post-hospitalization Yes 3) Surgical site bleeding - 30 days 30 days post-hospitalization Yes 4) Pulmonary embolism - 30 days 30 days post-hospitalization Yes 5) Death - 30 days 30 days post-hospitalization Yes 6) AMI - 7 days 7 days post-hospitalization Yes 7) Pneumonia - 7 days 7 days post-hospitalization Yes 8) Sepsis/septicemia/shock - 7days 7 days post-hospitalization Yes Customer satisfaction about hospital stay (all discharges) Hospitalization No SHFFT Same as CJR plus Hip/knee replacement patient reported outcomes 9-12 months post-hospitalization Yes AMI Mortality rate (AMI only) 30 days post-hospitalization Yes Excess days in ED, readmissions, and observations (AMI only) 30 days post-hospitalization Yes Customer satisfaction about hospital stay (all discharges) Hospitalization No CABG Mortality rate (CABG only) 30 days post-hospitalization Yes Customer satisfaction about hospital stay (all discharges) Hospitalization No

41 Element #5 Be the Competent Care Coordinator Manage the patient within the SNF stay (traditional model of care), and post SNF discharge (new model of care) Insert NARA presentation bullets on care coordination here

42 Element #6 Leverage participation in Model 3 BPCI BPCI Models 2 and 3 take precedence over CJR and EPMs Creating a strategic opportunity for SNF providers participating in BPCI o When hospital refer a CJR/EPM patient to SNFs participating in BPCI, the SNF becomes the risk bearing entity for that patient, relieving the hospitals from the burden of assuming risk in a mandatory program This is true through the December , when the awardees conclude their participation BPCI will reopen to new applicants in Entering phase 1 could mean immediate access to CMSprovided historical claims data Precedence rules may change

43 APM Future Outlook

44 Election Outcome Raises More Questions than Answers Most health policy experts anticipated a Clinton administration that would be an extension of the work started by the current administration Trump administration has new focus areas in health care, but could shift over next few months ACA repeal and replacement Medicaid reform

45 CMS Innovation Center s Future is Uncertain Republican criticism of CMMI increased in months and weeks leading up to the election With Republican wins in White House and Congress, likelihood of action is increased Unlikely CMMI will disappear, but may look very different Required stakeholder input into demo design Reduced authority New name? CBO attributes significant cost savings to CMMI demonstrations, so legislative action to limit or eliminate CMMI would require offsets Makes it much more difficult to achieve

46 Future Outlook for ACOs ACOs will continue to offer providers an easy way to dip a toe into bearing financial risk CMS will continue to ensure additional opportunities for physicians to qualify for advanced APM designation under MACRA Next Generation ACOs will lead by employing innovative payment arrangements between providers, the likes of which have not yet been seen ACOs have benefitted from bipartisan support and direction of the program (which has remained voluntary) is likely to remain unchanged May have future opportunities to insert additional provider protections

47 Future Outlook for Bundling BPCI and CJR will likely continue forward EPM/Cardiac program may move forward Maybe no more mandatory bundling programs? BPCI CMS will reopen the demonstration with new models in 2018

48 James Michel Q&A

49

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