Practice Transformation Academy Webinar #4: Costing Out Services that Generate Outcomes Nina Marshall, MSW Senior Director, Policy and Practice Improvement
Webinar Logistics We recommend calling in on your telephone Remember to enter your Audio PIN so we can unmute your line if you have a question Audio PIN: Will be displayed after you login This button should be clicked if you re calling in by telephone. Here s your audio PIN
How to ask a question Use the questions dialogue box to submit questions. OR To speak, please raise your hand. You are currently muted. We will call on you in the order in which hands are raised and unmute your line.
Costing
Value in Value-Based Payments = Quality Cost
Poll Question Who do we have with us today? Administrators/Program Staff Finance Direct care staff Other
Poll Question What statement best describes you? I am a costing newbie I understand what costing means in concept, but not in practice We ve costed out our services in FFS but not yet for bundled or other VBP arrangements We re comfortable with our costs for both FFS and bundled payment arrangements
Costs Depends on Who is Paying the Bills For example: State Medicaid Authority Medicaid Managed Care Organization Participating Providers Total Cost of Care Unit Costs
Cost Revenue Margin Payers Provider payments, admin costs, facilities, QI functions, etc. PMPM from those issuing the contract Revenue less costs; subject to Medical Loss Ratio (MLR) Providers Staff salaries, hourly staff fees, overhead, training, facilities, etc. Payer payments, grants, etc. Revenue less costs
Value in Value-Based Payments = Cost Payer cares about contracted rates Provider decisionmaking informed by own costs Quality
Provider Costs for Services Not your Medicaid fee schedule Not an individual clinician s salary divided by number of available billable hours Is based on: Salaries, hourly staff payments, IT, administrative costs, facility costs and other overhead costs Impacted by reimbursable and non-reimbursable activities Everything necessary to make your service happen
Costing for Fee-for-Service What are all of the costs that it takes to make a service happen Example: 90792/psychiatric assessment: Appointment scheduling time Direct clinician time AND Intake time (e.g., by social worker, front desk or care management staff) Documentation time Overhead costs like facilities, staff meetings, other nondirectly reimbursable activities necessary to do the work Examples of other factors influencing cost: Travel time No show rates
Gathering Data Time studies Workflow diagrams Working with finance team Historical data re: volume, length, type of services
Time Study: All Staff Time Monday Tuesday Wednesday Thursday Friday 8:00-8L15 8:15-8:30 Activity note 8:30-845 8:45-9:00 9:00-9:15 Etc.
Analysis Options: Time, Wait, Cost, Revenue
Example 90792 Activity Staff Type Hourly Cost Hour Increment Appointment Scheduling Appointment reminder Direct care time Admin Assistant Admin Assistant $18 0.25 $4.50 $18 0.25 $4.50 Cost (Hourly cost x Hour increment) Psychiatrist $100 0.4 $40.00 Documentation Psychiatrist $100 0.16 $16.00 Other Costs $50.00 TOTAL PER 90792 $115.00
Forecasting Value Added Activities
Cost Flexibility in VBP Arrangements FFS limitations: Only receive payment if service delivered within (1) authorization limits, (2) personnel/clinician type requirements, (3) prescribed duration Inhibits creativity and use of alternative care strategies Incentivizes volume, not outcomes VBP opportunities: Manage towards the outcome, not the specific service requirements More client-centered What if you had $500 to spend? exercise
8 Steps to Bundled/Case Rate 1. Define the Population 2. Estimate the Penetration Rate 3. Define the Levels of Care 4. Estimate the Case Mix 5. Estimate the Utilization at Each Level of Care 6. Estimate the Cost per Unit of Service 7. Run the Calculations & Set the Case Rates 8. Identify the Performance Metrics Download: CASE RATE TOOLKIT: Preparing for Bundled Payments, Case Rates, & the Triple Aim (National Council for Behavioral Health)
Steps to Develop a Case Rate 1. Define the Population Who could receive the service(s)? 2. Estimate the Penetration Rate Who is likely to receive the services? 3. Define the Levels of Care What types of services are needed? 4. Estimate the Case Mix For those receiving the services, how many will need services by LOC? 5. Estimate the Utilization at Each Level of Care What s the anticipated volume + type of service for each level of care? 6. Estimate the Cost per Unit of Service Apply costs to separate activities to attain an estimated cost/unit 7. Run the Calculations & Set the Case Rates Apply the costs/unit to the volume and population estimates 8. Identify the Performance Metrics How will you know if (a) your services are aligned with client needs, (2) if your utilization and LOC assumptions are right?
Step 1. Defining the SBIRT Population Calculate the number of clients who are attributed to your organization meaning the number of people who receive these services from your agency. For example, total population of people served is 10,000 which includes children, adolescents and adults.
Step 2. Estimating the Penetration Rate The penetration rate is the number of clients who are likely to receive the case rate service. For this example adult clients who are going to receive SBIRT services will be included All adults clients will receive at least a brief intervention screening for alcohol misuse or addiction. This means the total population of clients served (i.e., 10,000) 6,000 adult clients will receive an SBIRT service.
Step 3. Define the Categories of Care/Levels of Care The SBIRT service can be broken in three levels or categories of care: 1. (Level One) Brief intervention: Screening using a research validated tool. 2. (Level Two) Brief treatment: For clients who screen positive. 3. (Level Three) Referral to Treatment: For clients for whom a brief treatment is not effective.
PAUSE in the 8 Steps Importance of Levels of Care and Defining Population Eligibility for Services
PMPM Breakdown to Payers
Back to It: Step 4. Estimate the Case Mix Using historical claims data, determine on average, using at least a year s worth of data to calculate the average, how many clients receive each level of care. Step 4 ABC Healthcare SBIRT Case Mix Intensity SBIRT Service Adults Level One Brief Intervention 50% Level Two Brief Treatment 40% Level Three Referral to Treatment 10%
Step 5. Estimate the Utilization at Each Level of Care Using claims data determine minimum, average and maximum amount of time spent at each level of care. Step 5 ABC Healthcare Level of Care Utilization SBIRT Service Intensity Minimum Average Maximum Level One 5 mins 15 mins 25 mins Level Two 10 mins 25 mins 40 mins Level Three 15 mins 35 mins 70 mins
Step 6. Estimate the Cost per Unit of Service Code Payer Description MD/DO 99408 Commercial & Medicaid 99409 Commercial & Medicaid G039 6 G039 7 G044 2 G044 3 H004 9 H005 0 Medicare Medicare Medicare Medicare Medicaid Medicaid Alcohol &/or substance abuse structured screening & brief intervention services; 15 to 30min Alcohol &/or substance abuse structured screening & brief intervention services; greater than 30min Alcohol &/or substance abuse structured screening & brief intervention services; 15 to 30min Alcohol &/or substance abuse structured screening & brief intervention services; greater than 30min Prevention: Screening for alcohol misuse in adults including pregnant women once per year. No coinsurance; no deductible for patient Prevention: Up to four, 15 minute, brief face-to-face behavioral counseling interventions per year for individuals, including pregnant women, who screen positive for alcohol misuse; No coinsurance; no deductible for patient Alcohol &/or drug screening (code not widely used) Alcohol &/or drug service, brief intervention, per 15 min (code not widely used) Step 6 ABC Healthcare Cost Per Unit of Service Registered Registered Nurse Nurse Masters Behaviorist Doctorate Behaviorist Masters Below Masters 75% 75% 0% 85% 85% 0% 75% 75% 0% 85% 85% 0% 75% 75% 0% 85% 85% 0% 75% 75% 0% 85% 85% 0% 75% 75% 0% 85% 85% 0% 75% 75% 0% 85% 85% 0% 75% 75% 0% 85% 85% 0% 75% 75% 0% 85% 85% 0% TOTAL: Unit Cost $ 33.41 $ 65.51 $ 29.42 $ 57.69 $ 17.33 $ 25.14 $ 24.00 $ 48.00 $ 37.56 Hourly Cost $66.82 $131.22 $58.84 $115.38 $17.33 $100.56 $96.00 $192.00 $ 97.27
Step 7. Run the Calculations & Set the Case Rates Step 7 ABC Healthcare SBIRT Case Rate SBIRT Level Description Average Hours Rate Case Rate Level One Brief Intervention 15 mins $97.27 $24.32 Level Two Brief Treatment 25 mins $97.27 $40.85 Level Three Referral to Treatment 35 mins $97.27 $56.42 Step 7 ABC Healthcare SBIRT Total Cost of SBIRT Services Description Case Mix Cases Case Rate Level One 50% 3000 $24.32 Level Two 40% 2400 $40.85 Level Three 10% 600 $56.42 Totals 100% 6000
Step 8. Identify Performance Metrics Are the services provided leading to good outcomes? How do you know this? How will you know if people are in the right level of care? How much service is being provided to people? How do clinicians know how much service to provide? Is the delivery mechanism the best (e.g., group vs. individual; telephonic or home-based vs. office-based)
Recap 1. Define the Population Who could receive the service(s)? 2. Estimate the Penetration Rate Who is likely to receive the services? 3. Define the Levels of Care What types of services are needed? 4. Estimate the Case Mix For those receiving the services, how many will need services by LOC? 5. Estimate the Utilization at Each Level of Care What s the anticipated volume + type of service for each level of care? 6. Estimate the Cost per Unit of Service Apply costs to separate activities to attain an estimated cost/unit 7. Run the Calculations & Set the Case Rates Apply the costs/unit to the volume and population estimates 8. Identify the Performance Metrics How will you know if (a) your services are aligned with client needs, (2) if your utilization and LOC assumptions are right?
Possible Places to Start Top performance measures for pay for performance arrangements Follow Up After Hospitalization for Mental Illness (31.5%) Readmission Rates (15%) Access (15%) Chronic Conditions Cost Calculator Analyze your charges to payers by diagnostic group and start to breakdown your costs
Resources Free Bhbusiness Online Courses Case Rate Toolkit MTM Services Kathy Dettling Chronic Conditions Cost Calculator New York: Medicaid Cost & Utilization Reports
BHbusiness Courses Free and self-paced Costing Out Your Services Complete worksheets for activity-based costing Determine whether you are costing out your services correctly. Explore process map costing to assist in budget projections. Select one or two services to cost out, identify key uses for cost data, and learn how this ties into revenue forecasting. Bundled Payments Demonstrate basic knowledge of bundled payment financing Understand impact on your clinical and business processes Assess organizational readiness for bundled payment financing Develop plan to address opportunities/barriers arrangements
Thank you! Presenter Contact Information Nina Marshall NinaM@thenationalcouncil.org