Financial and Data Analytics to Support Risk Based Models of Care

Financial and Data Analytics to Support Risk Based Models of Care 2014 LEADING AGE OF MICHIGAN LEADERSHIP INSTITUTE Betsy Rust, CPA, Partner and Beth Sullivan, Senior Manager www.plantemoran.com 0

Session Objectives Describe Data Analytics Understand Various Risk Based Models of Care Review Data Requirements that will help to facilitate success Provide actionable items www.plantemoran.com

Data Analytics 4

What is Data Analytics Analytics is the discovery and communication of meaningful patterns in data. www.plantemoran.com 5

Source: Dale Sanders, Health Catalyst www.plantemoran.com 6

Healthcare Analytics Adoption Model Level 8 Level 7 Level 6 Level 5 Cost per Unit of Health Payment & Prescriptive Analytics Cost per Capita Payment & Predictive Analytics Cost per Case Payment & The Triple Aim Clinical Effectiveness & Accountable Care Contracting for & managing health. Tailoring patient care based on population outcomes. Diagnosis-based financial reimbursement & managing risk proactively Procedure-based financial risk and applying closed loop analytics at the point of care Measuring & managing evidence based care Level 4 Automated External Reporting Efficient, consistent production & agility Level 3 Automated Internal Reporting Efficient, consistent production Level 2 Standardized Vocabulary & Patient Registries Relating and organizing the core data Level 1 Integrated, Enterprise Data Warehouse Foundation of data and technology Level 0 Fragmented Point Solutions Inefficient, inconsistent versions of the truth Source: Dale Sanders www.plantemoran.com

Challenge of Predicting Anything Human Source: Dale Sanders www.plantemoran.com 8

The Basic Process of Predictive Analytics Source: Dale Sanders www.plantemoran.com

Data Isn t Always the Answer Most common Causes of Readmissions 1. Patients have no family or other caregiver at home 2. Patients did not receive accurate discharge instructions, including medications 3. Patients did not understand discharge instructions 4. Patients discharged too soon 5. Patients referred to outpatient physicians and clinics not affiliated with the hospital Robert Wood Johnson Foundation, Feb 2013 www.plantemoran.com 10

Getting Started Forget about Past Practice with Data/Reporting Start with the End in Mind Seek input from interdisciplinary leadership Continuous Evaluation of Efficacy of Information Utilize Actual, Budget and Benchmark/Target on Dashboards Preserve database capacity for future additions www.plantemoran.com 11

Actionable Item Resident Database Increase patient data collected at admission Insurance Coverage Validate with PHOTO Referring Hospital Hospital DRG SNF Admitting DRG SNF Diagnoses (More is better) Other Clinical Measurements Admitting Physician Primary Care Physicians Other Physicians Home Health Provider Preference www.plantemoran.com 12

Actionable Item Establish SNF Service Lines Collect data for each distinct segment of your Organization Short Term Clinical/Rehabilitation Long Term Supportive Care Memory Care Hospice/End of Life Identify appropriate Market, financial, clinical and other performance indicators for each service line www.plantemoran.com 13

Moving Medicare from FFS to Managed Care Source = Avalere Health, Leading Age PEAK Summit 2014 www.plantemoran.com

Actionable Item Managed Care Market Analysis Number of Enrollees Estimated Population 65 plus 27,000 Distribution Facility has Contract Facility Experience Medicare Advantage 29% 15% Berrien H0390 PACE OF SOUTHWEST MICHIGAN, INC. National PACE 82 1% Berrien H1509 UNITEDHEALTHCARE INSURANCE COMPANY Local PPO 188 2% 5% Berrien H2320 PRIORITY HEALTH HMO/HMOPOS 58 1% Berrien H3916 HIGHMARK, INC. Local PPO 14 0% Berrien H4875 PRIORITY HEALTH Local PPO 81 1% Berrien H5216 HUMANA INSURANCE COMPANY Local PPO 2,248 29% o 5% Berrien H5521 AETNA LIFE INSURANCE COMPANY Local PPO 72 1% Berrien H6609 HUMANA INSURANCE COMPANY Local PPO 110 1% Berrien H8145 HUMANA INSURANCE COMPANY PFFS 207 3% Berrien H9572 BCBS OF MICHIGAN MUTUAL INSURANCE COMPANY Local PPO 4,163 54% x 90% Berrien R5826 HUMANA INSURANCE COMPANY Regional PPO 523 7% x Total Enrollment 7,746 100% 100% x o Facility has established contract Individual patient authorization required no contract Integrated Care Estimated Dual Eligible Population * 10,000 37% Meridian Coventry Cares *Guesstimate for Example Total Duals in Region Four = 21000 https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and- Reports/MCRAdvPartDEnrolData/Monthly-MA-Enrollment-by-State-County- Contract.html www.plantemoran.com 15

Sample Utilization Dashboard Utilization ALOS Revenue Per Day Actual Budget Actual Budget Actual Budget Facility Profile Overall Performance 90% 92% 180 190 280 295 Short Term Rehabiliation 25% 27% 30 24 465 460 Private/Insurance 2% 1% 30 24 300 300 Medicare 15% 16% 30 24 475 480 Medicare Advantage RUG Based 5% 10% 25 24 460 480 Medicare Advantage Non RUG 2% 0% 24 24 400 380 Duals ICO 1% 0% 30 24 465 480 Payer Sources Long Term Care 60% 60% 270 300 $ 245 $ 250 Private Pay 25% 30% 270 300 250 260 Insurance 9% 5% 270 300 250 260 Medicaid 10% 20% 270 300 230 230 Medicaid Managed Care 4% 2% 270 300 230 230 Duals ICO 10% 3% 270 300 230 230 PACE 2% 0% 270 300 230 230 Hospice/End of Life 15% 13% 45 32 $ 240 $ 240 Private Pay 2% 5% 45 32 270 270 Insurance 3% 0% 45 32 270 270 Medicaid 10% 8% 45 32 230 230 www.plantemoran.com 16

Actionable Item Sample Dashboard 30 Day Readmission MY Innerview Actual Budget Benchmark Actual Budget Benchmark Overall Performance 14% 15% 18% 68% 70% 75% Short Term Rehabiliation 14% 15% 18% 68% 70% 75% Private/Insurance 13% 15% 18% 68% 70% 75% Medicare 13% 15% 18% 68% 70% 75% Medicare Advantage RUG Based 13% 15% 18% 68% 70% 75% Medicare Advantage Non RUG 18% 15% 18% 68% 70% 75% Duals ICO 15% 15% 18% 68% 70% 75% Long Term Care 68% 70% 75% Private Pay 68% 70% 75% Insurance 68% 70% 75% Medicaid 68% 70% 75% Medicaid Managed Care 68% 70% 75% Duals ICO 68% 70% 75% PACE Other Items for Consideration Nurse Staffing Hours Five Star Rating Quality Indicators Survey Compliance Hospital Admissions Falls Other Hospice/End of Life 68% 70% 75% Private Pay 68% 70% 75% Insurance 68% 70% 75% Medicaid 68% 70% 75% www.plantemoran.com 17

Risk Based Models of Care 18

What Makes an Arrangement Risky? Revenue Arrangement Range of Services Number of Providers Price Pay for Performance Customer Engagement www.plantemoran.com 20

Moving Toward Risk Based Financial Arrangements Private Pay Services Medicare PPS Program Low Risk MAP SNF Flat Rate Moderate Risk Medicaid Services - FFS Bundled Payment Demonstration Continuing Care at Home MAP SNF RUG Based Full Risk PACE Provider PMPM Capitated Rate www.plantemoran.com 21

Bundled Payments Care Initiative 22

Why Bundling? CMS, MEDPAC and others view bundling as viable solution for payments going forward Encourages longer term management of an episode of care commensurate with population health strategies in general Encourages collaboration and commitment to care coordination and transitions Additional avenue for savings on traditional Medicare fee for service patients (similar to ACOs) www.plantemoran.com 23

Bundled Payment Demonstration Physician Services Model 2 Hospital + PAC SNF Services Hospital Readmissions Model 3 PAC Episode of 30 60 or 90 days 48 Clinical Episodes Home Health Part B Drugs Outpatient DME/Laboratory Episode Identified by Hospital MS DRG Emergency Room Visits Medicare Fee For Service Population Only www.plantemoran.com 24

Fundamentals of Bundled Payments Establish Baseline for Episode Initiator Target Price 7/09-6/12 Experience 3% Clinical Redesign Process Established for Episodes and analysis of current performance 1/1/13 and later Go Live for Episodes Providers paid at Standard Medicare Rates Reconcile with CMS on Target Price vs actual Episodic Cost www.plantemoran.com 25

Establishing the Target Price Joint Replacement of Lower Extremity MS DRG 469, 470 Episodes 200 Average Cost per Episode $ 15,900 SNF $ 10,500 IRF 100 LTCAH 50 HHA 1,800 DME 200 Physician 1,800 Readmissions 1,000 Outpatient 400 Other 50 www.plantemoran.com 26

Care Redesign Analyze Underlying Data Length of Stay Readmission Rate Utilization of HHA and Other Evaluate and Redesign Pathway Length of Stay Management Care Transitions (Home) Ongoing Care Monitoring Preventing ED and Readmissions Physician Coordination www.plantemoran.com 27

Start of Bundled Payment At Risk Phase SNF Patient Enters the Demonstration Through Episode Initiator (e. g. Admitted To SNF from Hospital where Hospital Claim Coded with MS DRG 469). Awardee at risk for all services this beneficiary accesses during episode www.plantemoran.com 28

Time of Reckoning - Reconciliation Average Cost per Episode $ 15,900 $ 14,820 Target Price 15,423 There are some CMS Reporting requirements on participation, outcomes measures, and other items SNF $ 10,500 9,800 IRF 100 150 LTCAH 50 HHA 1,800 2,200 DME 200 200 Physician 1,800 1,600 Readmissions 1,000 500 Outpatient 400 350 Other 50 20 Awardee would receive additional funds from CMS $ 603 www.plantemoran.com 29

Actionable Item Data Collection Collect Data in language that is useful for managing clinical episodes across the Continuum Transition from per patient day measurements to per episode Increase patient data collected at admission Hospital DRG SNF Admitting DRG SNF Diagnoses (More is better) Other Clinical Measurements Admitting Physician Primary Care Physicians Other Physicians Home Health Provider Preference www.plantemoran.com 30

Episodic Information by Diagnosis Source: Evangelical Homes of Michigan www.plantemoran.com 31

Types of ACOs Pioneer ACOs https://data.cms.gov/aco/medicare-shared-savings-program-accountable-care-o/pfam-u3vp Higher Potential Reward and Risk Expected to transition to full risk contract in year #3 Expected to contract with participating network providers on a risk basis as well Higher number of beneficiaries needed (>15,000) Shared Savings Plans (MSSPs) Achieve savings for CMS based on spending per beneficiary while achieving quality outcomes and participant satisfaction Advanced Payment Model ACO Special type of MSSP for rural and physician owned ACOS Provides financial incentives needed to develop infrastructure www.plantemoran.com 32

MI Health Link Managed Care for Duals Demonstration 33

Transitioning Funding for Duals www.plantemoran.com 34

Source of Health Plan Rates Health plan rates will be calculated assuming a savings percentage and an amount for performance/quality CMS Health Plan Capitation Rates MDCH Medicare Part A and B Medicare Part D Medicaid Services A separate payment will be made by MDCH to Prepaid Inpatient Health Plans for behavioral health services www.plantemoran.com 35

Components of Capitation Rates - Medicaid DRAFT -NOT FINAL Based on 2010 2013 Data Subtier A = privately owned Subtier B = publicly owned LOC - = MI Choice Waiver Regional Variations Region SNF A SNF B Waiver Community 1 96.8% 97.4% 98.9% 98.0 4 101.0% 101.7% 100.0% 103.5% 7 98.8% N/A 100.0% 100.4% 9 104.6% 108.0% 102.1% 95.7% www.plantemoran.com 36

Components of the SNF Rates SNF Tier A SNF Tier B PMPM Per Diem PMPM Per Diem Nursing Facility 83.89% $ 4,951 $ 165 87.75% $ 7,377 $ 246 Inpatient Hospital 0.21% 13 0.42 0.08% 7 0.22 Outpatient Hospital 0.29% 17 0.56 0.05% 4 0.14 Prescription Drugs 0.04% 2 0.07 0.04% 3 0.11 Other Ancillaries inc Home Help 0.38% 22 0.74 0.06% 5 0.16 Physician 0.33% 19 0.64 0.05% 4 0.13 Copayment/Supplementals 14.85% 877 29.22 11.97% 1,006 33.55 Total 100.00% $ 5,902 $ 197 100.00% $ 8,407 $ 280 Rate 65 plus $ 5,902 $ 8,407 www.plantemoran.com 37

Components of Capitation Rates Medicare Medicare A/B Determined for each CBSA Adjusted for Various factors Subjected to Quality Withhold Draft Rates (NOT FINAL) Macomb $818 PMPM Wayne $869 PMPM Berrien $759 PMPM Medicare D Risk Adjusted with low income provision Estimated $75 PMPM www.plantemoran.com 38

Case Study ICO Total Funds Available SNF Region 4 $6736 TOTAL PMPM $5902 $759 $75 Medicaid Funds Medicare A & B Medicare D It is assumed based on regional variations that actual rate for Medicaid Portion would be higher reflecting variation noted by Actuary www.plantemoran.com 39

Actionable Item Sizing Up the Competition - Price Average Privately Owned Only $198 Southwest Region Rates Effective 10/1/13 per MDCH www.plantemoran.com 40

CMS MOU What is a Standard Medicaid Rate Wayne County www.plantemoran.com 41

CMS MOU What is a Standard Medicaid Rate Macomb County Provider Name Medicaid Reimbursement Rate QAS Medicaid Reimbursement Rate w/qas Romeo Continuing Care $ 117.24 $ 24.25 $ 141.48 Warren Woods Health and Rehabilitation $ 142.70 $ 29.63 $ 172.34 Autumn Woods Residential Health $ 149.84 $ 29.69 $ 179.53 Clinton Aire Healthcare Center $ 162.01 $ 32.61 $ 194.62 Romeo Nursing Center $ 162.36 $ 34.11 $ 196.47 Shore Pointe Nursing Center $ 168.27 $ 34.08 $ 202.35 Father Murray Nursing and Rehabilitation Centre $ 174.11 $ 35.79 $ 209.90 Regency Manor Nursing & Rehabilitation Center LLC $ 175.73 $ 37.17 $ 212.89 Henry Ford Continuing Care Corporation Roseville $ 177.97 $ 37.45 $ 215.42 Sanctuary at the Abbey $ 185.41 $ 38.82 $ 224.23 Medilodge of Richmond Inc $ 188.15 $ 38.81 $ 226.96 Medilodge of Sterling Heights $ 193.27 $ 39.56 $ 232.83 St. Anthony Healthcare Centre $ 193.74 $ 37.02 $ 230.76 Cherrywood Nursing and Living Center $ 194.43 $ 39.21 $ 233.64 St. Mary's Rehab & Healthcare Center $ 194.67 $ 39.44 $ 234.11 The Village and Rehabilitation Care Center $ 196.70 $ 39.01 $ 235.71 Evangelical Home Sterling Heights $ 198.76 $ 41.12 $ 239.88 Lakepointe Senior Care and Rehab Center $ 199.46 $ 41.12 $ 240.58 Bortz Health Care of Warren $ 199.88 $ 41.12 $ 240.99 Sanctuary at Fraser Villa $ 200.41 $ 41.07 $ 241.49 The Village of East Harbor $ 203.87 $ 41.12 $ 244.98 Average Floor for a Class III Provider $ 179.95 $ 216.72 www.plantemoran.com 42

Current Medicaid Rate Sources Base Support www.plantemoran.com 43

Differentiating Your SNF What is Your Price? What is the Value Proposition www.plantemoran.com

Actionable Item Understand Your Cost Structure Compare costs to Peer Organizations Determine whether cost differentials relate to: Acuity Differentials Efficiency and Process Issues Price of supplies/services Don t forget to consider cost that is not currently reimbursed by Medicaid (non-allowables) www.plantemoran.com 45

Medicaid Kalamazoo County www.plantemoran.com 46

Medicaid Kalamazoo County www.plantemoran.com 47

Medicare Kalamazoo County www.plantemoran.com 48

Improving Cost Accounting Capabilities 49

What are your Costing Objectives Build the Patient Database Accordingly www.plantemoran.com 50

Sources of Information Patient Identifiers Information Collected in Patient Database Allows for data analysis by these identifiers Actual Service Utilization Capture of Room, Board, and all ancillary services utilized by patient Revenue Journals, Billing Logs Cost of Services Utilized Direct Identification of Costs to a Patient where possible Reasonable estimate of Costs based on Actual Service utilization and other factors when direct identification is not possible www.plantemoran.com 51

Actionable Items Patient Database Increase patient data collected at admission and discharge BE DILIGENT Hospital DRG SNF Admitting DRG SNF Diagnoses (More is better) Other Clinical Measurements Admitting Physician Primary Care Physicians Other Physicians Home Health Provider Preference Discharge Disposition (SPECIFIC TYPE Home, Home with Home Care, Expire, Hospital, etc) Discharge Destination (ACTUAL FACILITY NAME) www.plantemoran.com 52

Actual Service Utilization What method is used to collect this information for each individual patient charge? Diagnostics and Other Pharmacy Room and Board Medical Supplies Therapy Does facility use gross or net method of recording revenue? How does the facility capture the cost of each of these services? www.plantemoran.com 53

Actionable Item Room and Board Cost Determination Potential Source of Information is Medicare Routine Cost (BEFORE adjustments for nonallowables) Best when Facility has distinct part units for Medicare and other units separately accounted for Can utilize time studies to estimate differential if all beds combined for costing www.plantemoran.com 54

Therapy Services SNF has per RUG per day Contract Ultras $ 105 Very High 90 Highs 65 Mediums 45 Lows 25 Lots of Methods possible with Therapy Services Non RUG patients billed at $1 per minute Individual Patient Charges are captured through the revenue journal to the general ledger based on CPT codes due to claim billing requirements www.plantemoran.com 55

Pharmacy Services Laboratory, Diagnostics Most Pharmacy companies provide detail billing by resident. Pharmacy expenses are marked up and recorded as revenue for individual patients Example: Pharmacy Cost per Omnicare for March, 2014 for Mary Smith $400 Facility marks up 125% and records $500 in Pharmacy charges www.plantemoran.com 56

Medical Supplies Example: Supply Cost per Tracking System for March, 2014 for Mary Smith $200 Facility marks up 125% and records $250 in charges Area of least reliable charge capture for most providers Barcodes, Kiosks or Other Tracking mechanisms that generate patient specific records of supplies are needed and must be used by staff Typically the costs are marked up similar to pharmacy and medical supplies and recorded for an individual patient in the general ledger www.plantemoran.com 57

Pulling it All Together Mary Smith Cost of Care for June, 2014 Mary Smith particulars Services Mary Smith received Mark ups and other information needed to get cost of individual services Cost of Room and Board for Mary Smith www.plantemoran.com 58

Process for Costing Transfer Patient database and utilization information from information system into excel (Health MedX, Point Click Care, etc) Utilize Medicare Cost Report and other accounting information to convert revenue information into cost information Sort and analyze data as needed to meet Organization objective www.plantemoran.com 59

Information for Excel Spreadsheet Patient Name and Service Dates Payor Changes may be used in lieu of discharge Admission Patient Name Date Discharge Date Mary Smith 7/1/2014 7/13/2014 Medicare RUG Information Multiple entries for one patient will be needed due to RUG changes RUG RUG Effective Date Service Days RUB 7/1 7/14 13 All other Patient Identifiers Admitting Hospital Health Insurance Admitting DRG St. Joseph Oakland BlueCareNetwork 469 Revenue/Charge Information All charges for the patient from the revenue journal or billing log Room and Board Therapy Charges Pharmacy Charges Supplies Diagnostics Total 3900 5200 500 250 100 9950 www.plantemoran.com 60

Costing Parameters for Mary Smith Medicare Routine Cost ALL COST add back non allowable $250 Therapy Cost - (Mary received ultra high therapy) $105 Mark up Factors (Facility uses 125% for all) 125% www.plantemoran.com 61

Cost of Care Mary Smith July 2014 Charges Service Days 13 Room and Board Therapy Pharmacy Supplies Diagnostics Total $ 3,900 $ 5,200 $ 500 $ 250 $ 100 $ 9,950 Cost Service Days 13 Room and Board Therapy Pharmacy Supplies Diagnostics Total $ 3,250 $ 1,365 $ 400 $ 200 $ 80 $ 5,295 Cost per patient Day $407 Cost per episode $5295 Average Length of Stay 13 days Blue Care Network Revenue PPD RUB RUG Rate $450 www.plantemoran.com 62