How to Make CJR a Success Negotiating Gainsharing Agreements Friday, April 29, 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 Fred Bentley Vice President fred.bentley@avalere.com Christopher Donovan Partner cdonovan@foley.com Frederick Geilfuss II Partner fgeilfuss@foley.com 2016 Foley & Lardner LLP 1 1
Topics Covered 1. Brief Overview of CJR Program 2. Leveraging the Data 3. Round Table Discussion of Issues 4. Q & A 2 Brief Overview Mandatory Program for 67 MSAs, Nearly 800 Hospitals DRGs 469 and 470 Inpatient Stay Plus 90 days Post-Discharge All Part A and Part B Services with Limited Exceptions 5-Year Program 1 st Year Upside Only; Thereafter Upside and Downside 3 2
Overview (cont) No Bundled Payment Paid as Such All Bill Fee-For-Service Measure All Medicare Payments During Episode Against Episode Target Price Episode Target Price Years 1 & 2: 2/3 Hospital Specific; 1/3 Regional Year 3: 1/3 Hospital Specific; 2/3 Regional Years 4 &5: 100% Regional Quality Impact; Discount Rate (3%); Caps; and Percentage Sharing Program Waivers 3-day in-patient stay before SNF admission (if SNF has 3-star rating) Incident to direct supervision for physician home visits Telehealth (waives geographic site requirement) Preferred providers in discharge planning 4 Overview (cont) Hospital at Core Hospital May Share Upside and Downside, but Requires a Contract with Collaborators (Providers) Contract Requirements are Specific Hospital Must Keep 50% of Downside; No One Collaborator Can be Responsible for More than 25% Physician Upside Limited to 50% of the Total Medicare Approved Amounts Under the Physician Fee Schedule Fraud and Abuse Waivers 5 3
Importance of Regional Costs Region is not the MSMA Target Episode Prices for Nine Census Regions If Price Over the Regional Target, May Well Owe Money Back 6 Step #1 Understanding Your Financial Position Relative to the Market Estimated Hospital Gains or Losses Under CJR - Middle Atlantic Census Region $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 ($1,000,000) ($2,000,000) ($3,000,000) Avalere analysisof the 2012 and 2013 Medicare StandardAnalyticalFiles. Includes episodes initiatingbetween Jan 1, 2012 and Sept 30, 2013. Data excludes Part B services except for homehealth. 7 4
Spending Distribution across the Episode TOTAL MEDICARE PAYMENT PER EPISODE = $25,565 Physician, $1,675 DME, $122 Readmissions, $1,155 OP, $604 Almost 40 percent of episode spending occurs after discharge HHA, $2,123 IRF, $1,568 Index Hospital stay, $13,193 SNF, $5,034 LTACH, $91 Avalere analysisof the 2012, 2013 and 2014 Medicare StandardAnalyticalFiles. Includes episodes initiatingbetween Jan 1, 2012 and Sept 30, 2014. Physicianand DME paymentsestimatedusing 5% national sample, all other paymentsreflect averages derived from 100% of Medicare claimsnationally. Avalere analysisexcludes all physicianand outpatient spending from the post-dischargeperiod. 8 Post-Hospital Discharges Vary Widely by Region Hospital Discharge Destination by Care Setting for Major Joint Replacement 90-Day Episodes in 3 CJR Markets Beaumont/ Port Arthur TX 41% 9% 48% 2% New York/ Newark/ Jersey City NY/NJ 22% 51% 21% 5% 1% Los Angeles/ Long Beach/ Anaheim 8% 38% 38% 15% 1% 0% 20% 40% 60% 80% 100% IRF SNF HHA Home Other 1 2012 and 2013 Standard AnalyticsFiles (SAF) from Centers for Medicare and Medicaid Services (CMS). Data reflects 90 day episodes beginning between October 1, 2012 and September 30, 2013. Data excludes Part B services except for homehealth. 2 Other includes LTACH, dischargeto death, and other IP. 9 5
CJR Creates Gainsharing Opportunities for Providers COLLABORATION AGREEMENT DISTRIBUTION ARRANGEMENT LTCHs, SNFs, HHAs, IRFs, physician group practices, and individual practitioners* may enter into collaboration agreements with CJR hospitals, which may include oneor two-sided risk arrangements This arrangement applies to physician group practices that choose to distribute gainsharing payments to its member practitioners; Member practitioners cannot independently enter into a collaboration agreement with a CJR hospital 1 *Individualpractitionersare considered physicians, non-physicianpractitioners, and providersor suppliersof therapy services. 2 A physiciangroup practiceis not obligated to distributegainsharingpaymentsto its members. 3 Medicare Program; ComprehensiveCare for Joint Replacement Payment Model for Acute Care HospitalsFurnishing Lower ExtremityJoint Replacement Services 10 CJR Collaborators Can Share in Upside and Downside Risk GAINSHARING PAYMENTS ARE COMPRISED OF: 1) RECONCILIATION PAYMENTS, 2) INTERNAL COST SAVINGS, OR 3) BOTH Gainsharing Payments: Payments from CJR participant hospitals to collaborators Alignment Payments: Payments from collaborators to participant hospitals Source: Medicare Program; ComprehensiveCare for Joint Replacement Payment Model for Acute Care Hospitals FurnishingLower ExtremityJoint Replacement Services 11 6
Reconciliation Payments Can Be Distributed Across Multiple Providers Medicare ILLUSTRATIVE EXAMPLE $20,000 Available for Gainsharing Disbursement $10,000 Internal Savings Hospital $10,000 Reconciliation Payments Physician Practice SNF IRF HHA $500 $1,000 $2,000 $700 12 Roundtable Discussion/Q&A 7