Health Policy and Its Impact on Transitions of Care

Health Policy and Its Impact on Transitions of Care

Our mission is to bring joy, comfort, and grace to people as they age. We ve put together an amazing team, and raised $20 million, led by Andreessen Horowitz, toward accomplishing this mission.

Shrinking families 7 5.25 3.5 1.75 0 1950 1970 1990 2010 2030 2050 World More developed countries Less developed countries Least developed countries

Urban & rural population of the world, 1950-2030 9 6.75 4.5 2.25 0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 World, rural population World, urban population World, total population

Why PAC reform? One in five beneficiaries are hospitalized 43% 23% >8% at least once/year HHA: of 37.4% 38.2% use more SNF: of 41.1% 59% use additional services Percentage of Medicare patients utilizing PAC services Percentage of total medical spend that PAC represents Rate at which Medicare spending on PAC grew annually IRF: of 10.3% 87.7% use more following hospitalization from 2001-2012 Outpatient Therapy: of 9.1% 34.4% use more LTCH: of 2.0% 74.9% use more PAC 73% If regional variation in PAC spend did not exist, Medicare spending variation would fall by 73%. Acute 27% Diagnostic tests 14% Procedures 14% Drugs 9%

PAC Policy Reform Momentum Building 2017 Medicare FFS PAC Bundle? CMS FFS Shifts Focus to Managing Care Continued momentum and legislative initiatives to transform Medicare FFS reimbursement system, and incentivize 2010 ACA passed 2013 Bi-partisan bundling legislation introduced in White House 2013 CBO re-scores bundled payments; White house and MedPAC join conversation September 2014 IMPACT Act becomes law May 2014 Rep McKinley introduces bundling legislation in White House 2014 BPCI programs rollout 2015 CMS BPCI expansion 2015 President s budget includes PAC Bundling* 2015 IPPS NPRM Includes bundling expansion 2015 CCJR NPRM released 2009 CMS ACE Demonstration 2012 Hospital readmission penalties instituted; up to 3% by 2015 across 5 conditions** 2014 CMS releases 2 bundling RFI s *2016 President s budget included Implementing 2005 DRA establishes PAC PRD 2012 ACOs go live. Now over 350 Medicare ACOs 2014 Sen Wyden introduces Better Care, Lower Cost Act Bundled Payment for PAC Providers, beginning in 2020 accounting for $9.3 billion in proposed budget (2016-2025) ** 5 conditions for Readmission penalties include heart failure, heart attack, pneumonia, chronic lung problems and elective knee and hip replacements.

Hospital Readmission Penalties Strategies to help prevent readmissions Hospitals can lose as much as 3% of their Medicare payments due to the 30-day hospital readmission penalty across 5 baseline conditions: Heart Failure Chronic Lung Problems Heart Attack Elective Hip and Knee Replacements Pneumonia For penalized hospitals, CMS will reduce each payment for a patient stay from October 2014 through September 2015, which is the federal fiscal year. These penalties apply to patients admitted for any condition, not just the five conditions that were used to determine if a hospital had too many readmissions. Thus, if Medicare would normally pay a hospital $15,000 for a kidney failure patient, with a 1.5 percent penalty Medicare would deduct $225 and pay $14,775. Case management 66.0% Care transitions management 62.3% Phone monitoring post discharge 58.59% Improved discharge notes 52.8% Pre-admittance coaching 43.4% Self-management education 43.4% Post-hospitalization coaching 41.5% Medical reconciliation 39.6% Care transitions coaching 37.7% Plan of care/phr 32.1% Use of hospitalists 26.4% Inpatient coaching 26.4% Community partnerships 22.6% Other 9.4% Source: HIN Reducing Readmissions Survey, November 2009

HHS: Volume to Value 90% Value-based payment by 2018 HHS launches Payment and 55% 50% Learning Network on March 25, 2015 40% 30% 15% 10% Alternative payment Link to Quality No link to quality Alternative payment Link to Quality No link to quality 2016 2018 Source: CMS Press Release, January 26, 2015

CMS Payment Framework Category 1 Category 2 Category 3 Category 4 FFS No link to quality FFS Link to quality Alternative payment model Population-based payment built around FFS model Description Traditional FFS with no link At least a portion of payment Some payment linked to Payment not linked to service to quality or efficiency varies based upon quality or population delivery but delivery and responsible for a efficiency payment still triggered by longer period (e.g., greater than service delivery one year) Model FFS Hospital value-based purchasing Hospital readmission reduction program Hospital-acquired conditions program ACOs Medical Homes Bundles Comprehensive Primary Care Initiative Comprehensive ESRD Financial Alignment Demo FFS Model Pioneer ACO (Years 3-5) Next Generation ACO Source: http://www.cms.gov/newsroom/mediareleasedatabase/factsheets/2015-fact-sheets-items/2015-01-26-3.html

CMMI Activity: Covering the Nation with Innovation

CMMI Test: BPCI Basics Intended to: Support and encourage providers to achieve better health, better care, and lower costs through continuous improvement Create a positive cycle that leads to decreasing the cost of an acute episode of care and the associated post-acute care while fostering quality improvement Develop and test payment models that create accountability Shorten the cycle time for adoption of evidencebased care Model 1 Model 2 Model 3 Model 4 Episode All acute patients, all DRGs Selected DRGs, hospital plus postacute period Selected DRGs, post-acute period only Selected DRGs, hospital plus readmissions Services included in the bundle All Part A services paid as part of the MS- DRG payment All non-hospice Part A and B services during the initial inpatient stay, postacute period and readmissions All non-hospice Part A and B services during the post-acute period and readmissions All non-hospice Part A and B services (including the hospital and physician) during initial inpatient stay and readmissions Payment Retrospective Retrospective Retrospective Prospective Create environments that stimulate development of evidence-based knowledge Source: HIN Reducing Readmissions Survey, November 2009

Bundling Poised for Major Growth in 2015 Model 2 Model 3 2077 individual episode initiators 4558 individual episode initiators Precedence rules will determine market impact; ACOs and bundles can co-exist.

Selection of Episodes for Model 2 (out of 48) Diagnostic Families (Clinical episodes) Percentage of At-risk Model 2 Major joint replacement of the lower extremity 86% Congestive heart failure 34% Chronic obstructive pulmonary disease, bronchitis, asthma 25% Simple pneumonia and respiratory infections 21% These DRG families and percentages will likely change as more bundlers move to risk in 2015 Hip and femur procedures except major joint 18% Revision of the hip or knee 16% Coronary artery bypass graft 15% Acute myocardial infarction 15% Lower extremity and humerus procedure except hip, foot, femur 13% Double joint replacement of the lower extremity 12% Removal of orthopedic devices 12% Stroke 12% Sepsis 12%

Year One BPCI Evaluation Model 2-4 The three CMS evaluation and monitoring questions establish the framework for annual report: 1. What are the characteristics of the program and participants at baseline and how have they changed during the course of the initiative? 2. What is the impact of the BPCI initiative on the costs of episodes, the Medicare program and the quality of care for Medicare beneficiaries? 3. What program, provider, beneficiary, and environmental factors contributed to the various results of the BPCI initiative? Model 2 Model 3 Model 4 8 active awardees 9 hospital episode initiators Participating in 34 of the 48 episodes 6 active awardees 9 hospital episode initiators Participating in 6 of the 48 episodes 1 active awardees Participating in 1 of the 48 episodes Released February 27. Results as of Q4 2013.

Will CMMI release another Initiative? CMMI released an RFI in February 2014, with comments due in April 2014. CMS Signals Interest in Complex Chronic Care and Outpatient Bundled Payments

CMMI Released NPRM on Mandatory Joint Bundles Purpose Propose the creation and testing of a new model, Comprehensive Care for Joint Replacement (CCJR) Model under the CMMI Authority. Proposed model would REQUIRE the participation of hospitals in multiple geographic areas that might not otherwise participate in the testing of bundled payments for lower-extremity joint replacement (LEJR) procedures. Test Whether bundled payments to acute care hospitals for LEJR episodes of care will reduce Medicare expenditures while preserving or enhancing the quality of care for Medicare beneficiaries. Duration of Test 5 year performance period, beginning January 1, 2016 and ending December 31, 2020. MS-DRGs Included: 1. MS-DRG 469: Major joint replacement or reattachment of lower extremity with Major Complications or Comorbidities (MCC) 2. MS-DRG 470: Major joint replacement or reattachment of lower extremity without MCC Episode would be initiated with an admission to an acute care hospital for an LEJR procedure that is assigned to MS-DRG 469 or 470 and paid under IPPS. Scope of Episode Episode would end 90 days after date of discharge from the acute care hospital. Episode would include: LEJR Procedure, Inpatient stay, and all related care covered under Medicare Parts A and B within 90 days after discharge, including hospital care, post-acute care, and physician services. Participant hospitals in the selected 75 MSA markets would be episode initiators and bear financial risk. Participants Beneficiaries would be automatically included in the model. Retrospective reconciliation against a target price, with no downside risk for hospitals for performance year 1 that exceed their target price for year 1. Overlap with Ongoing CMS Models Overlap with Ongoing CMS Models Exclude certain hospitals participating in risk-bearing phase of BPCI Models 1, 2 and 4 for LEJR episodes. Beneficiaries will not be excluded in CCJR model episodes from being included in other CMMI initiatives- MSSP, etc.. There will be a method to account for overlap. Comprehensive care for joint replacement (CCJR) payment model for Acute Care hospitals furnishing lower extremity joint replacement services

Financial Options Discount % included in target price/reconciliation payment eligibility Meets thresholds for all 3 required quality measures Does NOT meet thresholds for one or more of 3 required quality measures Successfully submits THA/TKA voluntary data 1.7% and eligible 1.7% and ineligible Does not successfully submit THA/TKA voluntary data 2.0% and eligible 2.0% and ineligible

CMMI Released NPRM on Mandatory Joint Bundles (continued) Quality Measures and Reporting Requirements Proposing three hospital-level quality of care measures for CCJR model: 1. Complication Measure 2. Readmission Measure 3. Patient Experience Survey Measure Data Sharing Beneficiary Protections Hospitals would receive raw claims-level data and claims summary data by service line. CMS to provide hospitals with up to 3 years of retrospective claims data that will be used to develop their target price. Beneficiaries retain right to obtain care from any qualified Medicare Provider. Beneficiaries cannot opt out of the CCJR. Hospitals will be required to supply written information to beneficiaries. Financial Arrangements and Program Policy Waivers Participant hospitals will be financially responsible for CCJR LEJR episodes as participants. Several waivers related to SNFs and physicians will be available (3 day stay waiver, home visit waiver, telehealth waiver and gainshare waiver) Economic Effects Expect proposed model to result in savings to Medicare of $153 million over the duration of the model (5 yrs.): Year 1: Cost Medicare $23 million given no downside risk, Year 2: Medicare Savings of $29 million, Year 3: Medicare Savings of $43 million, and Year 4 and 5: Move from target pricing based on hospital s experience to regional experience, Medicare Savings of $50 million and $53 million, respectively. Along withnadditional savings, based on performance. Comments Due September 8, 2015

PAC Reform Legislation Bundling and Coordinating Post-Acute Care (BACPAC) Act Re-introduced March 19th in the 114th Congress by Representative McKinley (R-WV)- 2015 Hearing Held by Energy and Commerce Subcommittee on Health, Medicare Post Acute Care (PAC) Delivery and Options to Improve It on April 16 witnesses included: Mark Miller, Executive Director of the Medicare Payment Advisory Commission (MedPAC); Steven Landers, M.D., M.P.H., President and CEO, Visiting Nurse Association Health Group; Samuel Hammerman, M.D., M.M.M., F.C.C.P., Chief Medical Officer, LTACH Hospital Division, Select Medical Corporation; Melissa Morley, Ph.D., Program Manager, Health Care Financing and Payment, RTI International; and Leonard Russ, Principal Partner, Bayberry Health Care, Chairman of American Health Care Association (AHCA). Comprehensive Care Payment Innovation Representatives Introduced in the 113th Congress by Representative Black(R-TN) and Neal (D-MA)- 2014

The IMPACT Act Improving Medicare Post-Acute Care Transformation Act Signed into law on October 6, 2014

Today, Tools Utilized Depend on Setting Comparison of current instruments Acute Hospitals no standard tool, varies by hospital Long-Term Care Hospitals no standard tool, varies Inpatient Rehabilitation Facilities IRF-PAI Skilled Nursing Facilities MDS Similarities Medical complexity Motor Functional status Cognitive status Social support and environmental factors Home Health Agencies OASIS IRF- PAI-The Inpatient Rehabilitation Facility Patient Assessment Instrument MDS- Long Term Care Minimum Data Set OASIS- The Outcome and Assessment Information Set CARE- The Continuity Assessment Record and Evaluation Differences Individual items that measure each concept Rating scales used to measure items Look-back or assessment periods

Comparison of Tools: Functional Status Variation in Tool Utilization Driving the Need for Standardization Functional Items Rating Scale Levels Assessment Periods IRF PAI 18 7 Past 3 days MDS 3.0 11 2 codes (6 &5) Past 7 days OASIS 8 Varies Assessment day CARE 25 6 2-3 day period IRF- PAI-The Inpatient Rehabilitation Facility Patient Assessment Instrument MDS- Long Term Care Minimum Data Set OASIS- The Outcome and Assessment Information Set CARE- The Continuity Assessment Record and Evaluation

Continuity Assessment Record and Evaluation (CARE) Development Public Comment Based on review of existing assessment tools in Medicare program (MDS, OASIS, IRFPAI), hospital assessments + extensive input from each of the providers/research communities (hospitals, SNFs, HHAs providers/ accreditors/consumers). Reliability Tests Pilot Tests CARE Development Association meetings & presentations Open Door Forums Technical Expert Panels

The IMPACT Act: What does it do? Paves the way for standardizing post-acute care assessment data for quality, payment, and discharge planning, and for other purposes. All PAC providers including HH, SNF, IRF and LTCH s included Standardized collection on functional status, cognitive function, medical needs and conditions, impairments and other categories deemed necessary by Secretary Some data are already submitted by each PAC provider, but varies by type of provider, Act calls for replacing duplicative data collection Resource use data also collected to estimate per beneficiary spend Includes payment refinement provisions via report from MedPAC to Congress in 2016 based on PAC PRD data and report from CMS

Timeline of Activity Home Health Agencies January 1, 2017 Reporting Quality Measures for skin integrity Reporting Quality Measures for medication reconciliation Reporting Resource Use and Other Measures January 1, 2019 Reporting Quality Measures for cognitive function and functional status Reporting Quality Measures for occurrence of major falls Reporting Quality Measures for the ability of a PAC provider to relay health information, and care preferences of an individual Reporting Alignment of Claims Data with Standardized Patient Assessment Data

Timeline of Activity Skilled Nursing Facilities October 1, 2016 Reporting Quality Measures for cognitive function and functional status Reporting Quality Measures for skin integrity Reporting Quality Measures for occurrence of major falls Reporting Resource Use and Other Measures October 1, 2018 Reporting Quality Measures for medication reconciliation Reporting Quality Measures for the ability of a PAC provider to relay health information, and care preferences of an individual Reporting Alignment of Claims Data with Standardized Patient Assessment Data

Timeline of Activity Inpatient Rehabilitation Facilities October 1, 2016 Reporting Quality Measures for cognitive function and functional status Reporting Quality Measures for skin integrity Reporting Quality Measures for occurrence of major falls Reporting Resource Use and Other Measures October 1, 2018 Reporting Quality Measures for medication reconciliation Reporting Quality Measures for the ability of a PAC provider to relay health information, and care preferences of an individual Reporting Alignment of Claims Data with Standardized Patient Assessment Data

Timeline of Activity Long-term Care Hospitals October 1, 2016 Reporting Quality Measures for skin integrity Reporting Quality Measures for occurrence of major falls Reporting Resource Use and Other Measures October 1, 2018 Reporting Quality Measures for cognitive function and functional status Reporting Quality Measures for medication reconciliation Reporting Quality Measures for the ability of a PAC provider to relay health information, and care preferences of an individual Reporting Alignment of Claims Data with Standardized Patient Assessment Data

How will this be implemented? Setting-Agnostic Quality Measures The CMS Center for Clinical Standards and Quality will develop quality metrics that can measure patient s medical, functional, and cognitive status. Refined PAC Payment Approaches The CMS Center for Medicare will develop standardized payment methods for: Chronically Critically Ill populations Skilled Nursing Facility populations Inpatient Rehabilitation Facility populations Home Health populations

Where do we go from here? For the next 19 years, 10,000 people will turn 65-year old everyday!

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