Get Ready for the Comprehensive Joint Replacement Program The Time is Now Friday, September 9, 2016 2016 Foley & Lardner LLP Attorney Advertising Prior results do not guarantee a similar outcome Models used are not clients but may be representative of clients 321 N. Clark Street, Suite 2800, Chicago, IL 60654 312.832.4500 Presenters Frederick Geilfuss II Partner Foley & Lardner LLP fgeilfuss@foley.com Christopher Donovan Partner Foley & Lardner LLP cdonovan@foley.com Dave Terry CEO & Founder Archway Health dterry@archwayha.com 2016 Foley & Lardner LLP 1 1
General Overview Comprehensive Care for Joint Replacement ( CCJR ) Model Acute care hospitals in certain selected geographic areas will be responsible for the costs of episodes of care for lower extremity joint replacement or reattachment of a lower extremity (and, as proposed, surgical hip/femur fracture) Episode covers all Medicare Part A and Part B payments from hospitalization through 90 days post-discharge Mandatory participation of roughly 800 hospitals in 67 MSAs Program began April 1, 2016 Downside risk starts January 1, 2017 5 year program 2016 Foley & Lardner LLP 2 Reconciliation Payment Model Retrospective, two-sided risk model with hospitals bearing financial responsibility Providers and suppliers continue to be paid via Medicare FFS At the end of the performance year, actual episode spending will be compared to the episode target price Generally, anchor hospital receives benefit if costs below target or bears risk if costs exceed target If costs below target, reconciliation payments will be phased in and capped (stop-gain): Years 1 and 2: Capped at 5% Year 3: Capped at 10% Years 4-5: Capped at 20% If costs above target, hospital responsibility to repay CMS will be phased in and capped (stop-loss): Year 1 (2016): No responsibility to repay Medicare Year 2: Capped at 5% of target prices Year 3: Capped at 10% of target prices Years 4 and 5: Capped at 20% of target prices 2016 Foley & Lardner LLP 3 2
Establishing Target Prices Each participant hospital will have its own episode target prices set by CMS based on 3 years of historical data Target based on a blend of hospital-specific and regional costs: Years 1 and 2: 2/3 hospital-specific costs and 1/3 regional Year 3: 1/3 hospital-specific costs and 2/3 regional Years 4 and 5: 100% regional costs 3% discount to serve as Medicare s savings; quality impact 2016 Foley & Lardner LLP 4 Overview Hospital at core Hospital may share upside and downside, but requires a detailed contract with collaborators (providers furnishing services as part of the episode) Contract requirements are detailed Hospital must keep 50% of downside; no one but collaborator can be responsible for more than 25% Physician upside limited to 50% of the total Medicare-approved amounts under the physician fee schedule 2016 Foley & Lardner LLP 5 3
Overview (cont d.) Program Waivers Waives requirement for 3-day inpatient stay before SNF admission (if SNF has 3-star rating) For post-discharge home visits, waives incident to direct supervision for physician services Maximum of nine visits during episode Telehealth -- waives geographic site requirement Preferred providers in discharge planning Easing of requirements? 2016 Foley & Lardner LLP 6 Sharing Agreements Hospitals may negotiate agreements for sharing gain and loss that they bear Opportunities lie in aligning other providers for furnishing efficient services Analyze cost of care furnished and by whom in an episode DRG for hospital; opportunity for physician gainsharing Post-acute care services Reduce hospital readmissions More home care 2016 Foley & Lardner LLP 7 4
Requirements for Sharing Agreements Detailed written agreement Hospital must develop a written set of policies for selecting providers/suppliers, which include quality criteria Criteria for sharing must be based on quality, not volume or value For PGPs, PGP must contribute to care redesign and be clinically involved in CJR beneficiaries care (e.g., care coordination, design of care) Agreement must tie provider compliance plan to CJR 2016 Foley & Lardner LLP 8 CJR: Fraud and Abuse Waivers Three Fraud and Abuse Waivers: 1. Waiver for Distribution of Gainsharing Payments and Payment for Alignment Payments Under Sharing Arrangement ( Gainsharing and Alignment Payment Waiver ) 2. Waiver for Distribution Payments from a Physician Group Practice to a Practice Collaboration Agent ( PGP to Collaboration Agent Waiver ) 3. Waiver for Patient Engagement Incentives Provided by Participant Hospitals to Medicare Beneficiaries in Episodes ( Patient Engagement Waivers ) 2016 Foley & Lardner LLP 9 5
CJR Program Management Preparation, Design & Implementation September 9, 2016 10 Contents About Archway Health Bundled Payment Market Update CJR Program Management Phase I: CJR Diagnostics & Opportunity Assessment Phase II: Program Design Phase III: Implementation Getting Started 11 6
About Archway Health Mission To fix healthcare through payment reform Focus To partner with providers & payors to execute bundle payment programs 100% Focused on Bundled Payment it s all we do Active in all of the CMS bundled payment programs BPCI, CJR, OCM, EPM Also developing commercial bundle Have built a comprehensive, one stop shop bundled payment platform Working with dozens of customers & hundreds of providers across the country Real results all of our partner hospitals & physicians are earning significant savings The Archway team has been working in these programs since their inception in 2011 12 About Archway Health - Results to Date Archway s comprehensive, straightforward approach has helped provider organizations achieve significant savings in their BPCI orthopedic bundles. Archway s Bundled Payment Performance Increased patient satisfaction 85%+ provider compliance with INACT process Reduced readmissions Reduced post-acute facility costs 9-17% reconciliation savings $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $- $31,000 Baseline Performance Prices $26,300 Performance Period Cost $2,000 $4,700 savings/ bundled patient 13 7
About Archway Program Design We ve learned that there are four elements to the most effective bundled payment programs. Bundled Payment Pyramid Innovation New & better ways to care for acute & chronic patients Optimal provider, patient, payor alignment Driven by hospital specialist alignment Biggest driver of improvement Care Management Leverage existing protocols & guidelines Case manager engagement Driven by nurses & hospitalists Data Analytics Identify opportunities & risks Prioritize areas for improvement Bundled Payment Contract Basic requirement Creates new incentives for accountability & improvement 14 Bundled Payment Market Bundle payment is shifting from a niche payment model to an emerging strategic priority. Bundled Payment Market Size Bundle Payment Initiatives Participants Estimated Market Size* BPCI - Bundled Payment for Care Improvement CJR - Comprehensive Care for Joint Replacement 1,457 providers $10 Billion 767 Hospitals $4 Billion OCM - Oncology Care Model 196 Oncology Groups 17 Health Plans Episode Payment Model - EPM 1,200 hospitals 2 cardiac & 1 new ortho bundle BPCI 2.0 Voluntary Focus on physician driven bundles $2 Billion $6 Billion Starts 7/1/17 Size TBD Starts early 2018 Commercial @ 40 active programs Lots of activity in the last 6 months Total 3,620 $25+ Billion * Estimated based on publicly available information 15 8
Archway CJR Approach Archway has developed a comprehensive process for helping hospitals succeed within the CJR program. CJR Program Preparation, Design & Implementation Process Phase I: Program Preparation Phase II: Program Design Phase III: Program Implementation Pricing analysis by bundle type Opportunity benchmarking Detailed Surgeon analysis Post-acute provider analysis Quality performance analysis Main Objective: Identify priority areas of focus Designate & train CJR Oversight Team Develop work plan & timeline for focus areas Execute surgeon gainsharing strategy Formalize preferred provider network Quality improvement plan Main Objective: Finalize CJR strategy and operational plan Identify & track CJR patients Implement care management approach Collect & track quality metrics Track quality & financial performance Monitor preferred providers CMS program compliance Ongoing learning & improvement Main Objective: Improve quality & reduce costs 16 Archway CJR Approach: Phase I Phase I: Program Preparation The first step is to episodic spending by type of service - outpatient, home health, SNF, etc. Demo Data 17 9
Archway CJR Approach: Phase I Phase I: Program Preparation Best practice benchmarking is an important step that helps CJR hospitals understand their opportunities and risks within their organization and market. Opportunity Assessment Controllable Cost Benchmarking Illustrative Elective DRG 470 18 Archway CJR Approach: Phase I Phase I: Program Preparation Understanding historical episodic costs by surgeon is essential to developing a CJR strategy and defining short term priorities. Major Joint Surgeon Cost Performance Profile Illustrative Elective DRG 470 Physician (volume) (19) D $45,461 (17) E $44,008 (129) F (40) G (37) H (21) I (31) J $29,003 $26,699 $26,133 $25,590 $24,301 (90) K (43) L (259) M (121) N (345) O (120) P $23,767 $23,716 $23,632 $22,897 $22,658 $21,601 Estimated Elective 470 Price $- $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 Anchor Stay SNF HHA Readmits IRF Other 19 10
Archway CJR Approach: Phase I Phase I: Program Preparation There is also significant variation in the episodic cost of care by Skilled Nursing provider. Episodic Cost of Care by Skilled Nursing Facility 20 Archway CJR Approach: Phase I Phase I: Program Preparation It is also important to work with high quality post-acute providers. SNF Medicare Compare Ratings Illustrative Quality Staffing Survey Overall SNF A SNF B SNF C SNF D SNF E SNF F SNF G 21 11
Archway CJR Approach: Phase I Phase I: Program Preparation CJR pricing is adjusted based on each hospital s performance within a Composite Quality Score that includes complication rates, HCHAPS scores, and patient reported outcomes (PRO) submission. Illustrative RSCR Score (4/1/11-3/31/14) CJR Quality Metrics Calculations HCAHPS Star Rating (7/1/14-6/30/15) Percentile Rank of HLMR* Patient Reported Outcome Reporting Composite Quality Score Effective Discount Percentage for Year 1 Hospital Percentile Points Points Campus Rank Assigned Assigned Brookline 2.4 94 10 3 57 5.6 2.0 17.6 1.5% Cole Valley 3.2 48 6.25 4 64 6.2 0.0 12.5 2.0% *HCAHPS Linear Mean Roll-up score (HLMR) was derived from publicly available Hospital Compare data using CJR final rule formula. 22 Archway CJR Approach: Phase II Phase II: Program Design Archway has developed a comprehensive process for helping hospitals succeed within the CJR program. CJR Program Preparation, Design & Implementation Process Phase I: Program Preparation Phase II: Program Design Phase III: Program Implementation Pricing analysis by bundle type Opportunity benchmarking Detailed Surgeon analysis Post-acute provider analysis Quality performance analysis Main Objective: Identify priority areas of focus Designate & train CJR Oversight Team Develop work plan & timeline for focus areas Execute surgeon gainsharing strategy Formalize preferred provider network Quality improvement plan Main Objective: Finalize CJR strategy and operational plan Identify & track CJR patients Implement care management approach Collect & track quality metrics Track quality & financial performance Monitor preferred providers CMS program compliance Ongoing learning & improvement Main Objective: Improve quality & reduce costs 23 12
Archway CJR Approach: Phase II Phase II: Program Design Designating a single, focused and manageable CJR implementation team is key to effective program design and success. Recommended Team Principles CJR Focused Team One team is better than many Designate an empowered Project Leader with Oomph The Care Management Team can make a huge difference Physician gainsharing helps too Keep it simple Crawl, walk, run Track program performance frequently Care management Financial Build continuum partnerships, but don t get locked in Trust but verify Switch when necessary Key Team Members Joint Class leaders Care Management leader Discharge planning Surgeon champion Finance C-Suite representation 24 Archway CJR Approach: Phase II Phase II: Program Design Gainsharing is important tool for aligning incentives and improving performance. Gainsharing Rules & Principles Strive to keep the structure simple & objective Focus on high volume, high influence providers Use gainsharing to align incentives & drive performance Gainsharing with SNFs creates unique risk protection within CJR Physician gainsharers limited to 50% of Part B collections in CJR CJR Hospitals should only distribute gains if there are net gains for the overall program Gainsharing Agreements 25 13
Archway CJR Approach: Phase II We have developed a simple, data-driven process to develop a preferred provider network. Phase II: Program Design Preferred Provider Network Development Sample Skilled Nursing Facility Analysis Preferred Provider Expectations Episode Episode Overall Facility LOS Score Volume Cost Score Star Rating Collaboration Total Score OAK STREET REHABILITATION & NURSING CENTER 140 3.00 4.00 5 5 5 MAIN STREET REHABILITATION & NURSING CENTER 112 1.00 2.00 5 5 5 MOUNTAIN VIEW REHABILITATION & NURSING CENTER 135 2.00 4.00 3 3 3 FOREST VIEW REHABILITATION & NURSING CENTER ELM STREET REHABILITATION & NURSING CENTER CITY VIEW REHABILITATION & NURSING CENTER LAKE VIEW REHABILITATION & NURSING CENTER OCEAN VIEW REHABILITATION & NURSING CENTER 90 Day Hospital-Initiated Bundles from 1/1/14-12/31/14 147 1.00 2.00 4 3 3 150 5.00 1.00 3 2 3 137 1.00 1.00 4 2 2 120 1.00 1.00 2 2 1 123 1.00 1.00 3 1 1 Daily health status updates BPCI participation strongly preferred Focus on quality improvement Commitment to reduce LOS & Readmits Designated CJR point person Data sharing Continuous learning & improvement Regular care management meetings 26 Archway CJR Approach: Phase II Phase II: Program Design At the end of Phase II we generally develop a detailed workplan designed to accomplish the goals outlined in the Design Phase. Detailed CJR Program Workplan 27 14
Archway CJR Approach Phase III: Program Implementation Archway has developed a comprehensive process for helping hospitals succeed within the CJR program. CJR Program Preparation, Design & Implementation Process Phase I: Program Preparation Phase II: Program Design Phase III: Program Implementation Pricing analysis by bundle type Opportunity benchmarking Detailed Surgeon analysis Post-acute provider analysis Quality performance analysis Main Objective: Identify priority areas of focus Designate & train CJR Oversight Team Develop work plan & timeline for focus areas Execute surgeon gainsharing strategy Formalize preferred provider network Quality improvement plan Main Objective: Finalize CJR strategy and operational plan Identify & track CJR patients Implement care management approach Collect & track quality metrics Track quality & financial performance Monitor preferred providers CMS program compliance Ongoing learning & improvement Main Objective: Improve quality & reduce costs 28 Archway CJR Approach: Phase III CJR Care Model Design INACT Process Phase III: Program Implementation Archway has collaborated with participating providers to develop a simple bundled payment care management model that is working well in the market. Steps 1. Identify 2. Notify 3. Assess 4. Care Plan 5. Track Description Identify patients in bundled payment programs Notify patients they are enrolled in a bundled payment program Assess patients to determine if they are Low, Medium or High risk for complications Develop a 90 day care plan that maps out key transition steps across the episode Track patient progress as they transition from hospital to home 29 15
Real Time Patient Tracking Archway Carelink Dashboard 30 Archway CJR Approach: Phase III Archway Analytics Web-Enabled Dashboard Costs by DRG & Type 31 16
Archway CJR Approach: Phase III Archway Analytics Web-Enabled Dashboard Physician Reporting 32 Getting Started To get started we recommend initiating the Phase I program preparation analytics. CJR Program Priorities Identify your hospital s current phase Prep, Design Implementation Designate CJR Team Identify 2-3 initial CJR priorities Surgeon Gainsharing Preferred Provider Network Development Patient Tracking Performance Tracking 33 17
Questions & Answers 2016 Foley & Lardner LLP Attorney Advertising Prior results do not guarantee a similar outcome Models used are not clients but may be representative of clients 321 N. Clark Street, Suite 2800, Chicago, IL 60654 312.832.4500 34 18