Avamere Family of Companies - Washington Health Care Association

Bundled
Payment
Primer
One Company’s Experience
Health Care Reform Brings New Focus on
Post-Acute Care
2020 Goal: Minimum 50 Percent of Total Medicare PAC
Provider Payments Bundled
Reduce Spend
by -2.85%
Billions
$35
$30
$25
$20
$15
$10
$5
$0
2013
Pilot began
Oct. 1
2015
Add new
participants
Jan. 1
2017
2018
All PAC
providers
2020
Rapid Expansion of Bundling
In the next 5 years, bundled
payments will represent 35%
of U.S. health systems’
revenue
24% of health plans currently
implementing bundled
payment contracts
Health Plans
Health Systems
Average Percentage of Hospital Revenues
by 20181
38%
35%
27%
Bundled Payment Implementation Plans2
No
Plans
42%
Currently
Implemented
24%
Bundled Payment Implementation
Progress2
What phase of bundled payment plan
implementation is your health plan
currently in?
Planning to
Implement
34%
Fee-for-Service
1Source:
Bundled
Payments
Capitated or
other payments
w/insurance risk
Early
Mid
Late
Unsure
Health Enterprise Partners, “Seizing Opportunity in the Wake of Reform-Executive Perspective Survey, 2012”
Avality, The Health Plan Readiness to Operationalize New Payment Models, April 2013. The study was administered by independent research firm Porter Research in the
fourth quarter of 2012. Porter Research completed interviews with qualified participants of 39 health plans that represented more than 50% of total covered lives in the United
States. Target participants included: quality management leadership, medical directors, and chief medical officers.
2Source:
Understanding Bundling and Why PostAcute Care is Critical to Success
Bundled Payment for beginners
1: Patient has acute
Based on actual cost VS. target
price, Medicare either risk OR
gain shares
care stay
5:
Payor
Acute
Care
Traditional Medicare
patients belonging to
target DRG enters
network
2:
SNF or HH becomes
episode initiator
4: “Bundler” manages
HH
ALF
3:
SNF
ILF
90 Day Episode
PAC “charges” for 90
days
 SNF stay
 HH services
 All supplies
 MD visits
 OP service
 ED visits
 Hospital
readmissions
Source: http://www.nejm.org/doi/full/10.1056/NEJMp1315607
7
Tremendous Variation in PAC Spending Provides
Opportunity for Value Creation
PAC Only, 73%
Acute Care Only,
27%
Diagnostic Tests,
14%
Procedures, 14%
Drugs, 9%
If regional variation in
PAC spending did not
exist, Medicare
spending variation
would fall by 73%
Source: Variation in Health Care Spending, Institute of Medicine, October 2013
8
Significance of Post-acute Costs Vary by
Clinical Condition
Stroke
Hip and Femur Proc.
Cardiac Bypass
Heart Failure
0%
Hospital
Physician
20%
40%
Post-Acute Care
Source: MedPAC September 2012; MedPAC Analysis of 2004-2006 5% Medicare claims files
60%
80%
Readmissions
100%
Other
Four Models of Bundled Payment
Types of Services Included in Bundle
Inpatient hospital and physician
services
Model 1
Acute Hospital
Stay Only

Related post-acute care services
Model 2
Acute Hospital
+
Post-Acute


Other services defined in the bundle
(Part A & Part B)
Awardees
21
Model 4
Acute Hospital
Stay +
Readmissions







148
152
22
Post-acute care services
Related readmissions
Model 3
Post-Acute
Care Only
Model 2 Versus Model 3
Model 2
Bundle Holder/At-Risk Entity = Hospital
EpisodeInitiating
Hospital
Admission
PAC Services
Physician
Services
Readmissions
Other Services*
Model 3
Bundle Holder/At-Risk Entity = PAC Provider
Hospital
Discharge
EpisodeInitiating PAC
Service
Other PAC
Services
Physician
Services
Readmissions
Other Services*
Note: Bundle holders may put in place contracts with downstream providers in which they share both financial risk and
reward for the episodes
* Includes Part B drugs, hospital outpatient services, DME, and laboratory services
Potential Roles for Post-Acute Providers
Model 2
• Episode Integrated Provider to
Model 2 Awardee Convener
(preferably with gainsharing to share
risk)
• Vendor to Model 2 Awardee
Convener (accept referrals according
to predetermined criteria)
Model 3
• Model 3 Awardee or Awardee
Convener (accept risk, control gains)
• Model 3 Facilitator Convener (might
be applicable for large post-acute and
LTC systems that are loosely affiliated)
• Vendor or Episode Integrated
Provider to Model 3 Awardee
• Partner to Model 2 Convener (create
and control bundling structure)
12
Franciscan Alliance ACO Focused on
Post-acute Care…and Made Gains
• Number of SNFs in the ACO network fell from 30 to 9
• Significant reductions in LOS of network providers: dropping from 42
days to less than 28 days
• Corollary reductions in readmission also led to cost savings and reduced
risk for the hospital, system, or ACO
– For one network SNF, the acute care hospital readmission
rate fell from 18% to less than 2% in 12 months
• Family and patient satisfaction with
discharge management is also improved, given
hospital/SNF effort to better coordinate care
along the continuum
13
Controlling Readmissions Is Key to Success in
PAC
Cost of 30-Day Fixed Length Episode With and Without Readmission
No Readmission
$29,803
$23,527
Readmission
$32,262
$23,844
$23,034
$19,243
$18,128
$14,977
$12,301
$8,492
$12,075
$5,514
MS-DRG 247
MS-DRG 470
MS-DRG 481
MS-DRG 192
MS-DRG 194
DRG 247: Percutaneous cardiovascular procedure with drug-eluting stent w/MCC
DRG 470: Major joint replacement or reattachment of lower extremity w/o MCC
DRG 481: Hip and femur procedures except major joint w/CC
DRG 192: Chronic obstructive pulmonary disease w/o CC/MCC
DRG 194: Simple pneumonia and pleurisy w/CC
DRG 291: Heart failure and shock w/MCC
Source: Dobson DaVanzo (2012). Medicare Payment Bundling: Insights from Claims Data and Policy Implications
MS-DRG 291
Orthopedics Example: Bundling Changes Use
of Acute and Post-Acute
15
A Closer Look at Model 3
Criteria for Beneficiary Inclusion in Episode
in Model 3
• Beneficiary is:
– Eligible for Part A and enrolled in Part B
– Admitted to or initiates services with an episode initiator within 30
days after the beneficiary has been discharged from an acute care
hospital for an MS-DRG included in a clinical episode associated with
the episode initiator
• Beneficiary must:
– Not have end-stage renal disease
– Not be enrolled in any managed care plan, e.g., Medicare Advantage,
health care prepayment plans, cost-based health maintenance
organizations)
Entities That Can Initiate Episodes in Model 3
Skilled nursing
facilities (SNF)
Inpatient
rehabilitation
facilities (IRF)
Home health
agencies (HHA)
Long-term care
hospitals
(LTCH)
Physician
group
practices (PGP)
Bundled Payment Components
Defined
population
Defined
period of
time
Quality of
care
Fixed price
Defined Population
Defined
population
Defined
period of
time
Quality of
care
Fixed price
Bundled Payment: 7 Diagnostic Groups
48 Diagnostic Families: Orthopedics
Orthopedics
• Major joint replacement of the lower extremity
• Hip & femur procedures except major joint
• Spinal fusion (non-cervical)
• Revision of the hip or knee
• Lower extremity & humerus procedure except hip, foot, femur
• Double joint replacement of the lower extremity
• Fractures femur and hip/pelvis
• Amputation for MSK/CT or endocrine/nutrition or circ disorder
• Back & neck except spinal fusion
• Cervical spinal fusion
• Major joint upper extremity
• Combined anterior posterior spinal fusion
• Complex non-cervical spinal fusion w/spinal curv/malig/infxn/9+fusion
• Removal of devices (both hip/femur and other)
• Knee procedures w/ and w/o infection
• Medical non-infectious orthopedic problems (sprains, strains, back pain)
48 Diagnostic Families: Cardiology and
Cardiothoracic Surgery
Cardiology
• CHF
• Percutaneous coronary
intervention
• Cardiac arrhythmia
• AMI discharged alive
• Pacemaker
• Cardiac defibrillator
• Chest pain
• Transient ischemia
• Pacemaker device replacement or
revision
• AICD generator or lead
Cardiothoracic Surgery
• Cardiac valve
• CABG
• Major cardiovascular procedure
48 Diagnostic Families: Internal, Pulmonary
Medicine, Neurology, Other
Internal Medicine
Neurology
Pulmonary Medicine
• UTI
• Nutritional & misc
metabolic
disorders
• Peripheral vascular
disorders (medical)
• Atherosclerosis
• Stroke w/ and w/o
T-PA
• Syncope & collapse
• Simple
pneumonia/Respira
tory infections
• COPD,
bronchitis/asthma
• Other respiratory
Other
•
•
•
•
•
•
•
Sepis
Major bowel
Cellulitis
GI hemorrhage
GI obstruction
Renal failure
Esophagitis,
gastroenteritis &
misc digestive
• Other vascular
• Red blood cell
disorders
• Diabetes
Top Bundles for All Model 3 Participants
Represents Participants & Conditions Moved Into Phase 2*
1.
2.
3.
4.
5.
6.
7.
8.
Congestive heart failure (94%)
COPD, bronchitis/asthma (79%)
Simple pneumonia & respiratory infections (77%)
UTI (75%)
Other respiratory (73%)
Acute myocardial infarction (AMI) (64%)
Cardiac arrhythmia (63%)
Cardiac defibrillator, Cardiac valve, Chest pain, Coronary artery bypass graft surgery,
Medical peripheral vascular disorders, Other vascular surgery, Percutaneous coronary
intervention, Stroke (63%)
9. Fractures femur and hip/pelvis (56%)
10. Sepsis (55%)
* 84 Model 3 awardees (55%) have moved into Phase 2
Source: CMS.gov, February 2014
Sample data: 1st look
Episodic Stats
All DRG's
Episodes % Readmit
CV
$ Episode $ Readmit
$ HHA
$ SNF
$ DME
$ MD
$ OP
$ Outlier
5,370
21.2%
0.47
$ 25,144 $ 2,200 $ 1,617 $ 17,914 $
227 $ 2,066 $
700 $
552
Cardiac
683
24.3%
0.45
$ 28,861 $
2,118 $
1,835
$ 21,305
$
170 $
2,102
$
652
$
426
High Cost Ortho
695
17.3%
0.41
$ 29,891 $
1,739 $
1,838
$ 23,291
$
229 $
1,925
$
571
$
236
Infection
631
30.9%
0.47
$ 28,314 $
3,467 $
1,579
$ 19,574
$
192 $
2,416
$
697 $
1,060
Low Cost Ortho
1,462
12.6%
0.58
$ 18,521 $
1,179 $
1,506
$ 13,136
$
215 $
1,750
$
640
$
356
Medical
907
22.8%
0.51
$ 26,872 $
2,357 $
1,656
$ 19,380
$
180 $
2,142
$
612
$
780
Respiratory
488
21.3%
0.45
$ 24,626 $
2,183 $
1,474
$ 16,954
$
241 $
2,028
$
725
$
614
Surgical
504
32.0%
0.43
$ 26,194 $
4,060 $
1,455
$ 15,982
$
453 $
2,586 $
1,252
$
617
Episodic Stats
All DRG's
% Share
SNF LOS
SNF Rate
% HHA
HHA Rate
34.0
$
527
50.5%
$ 3,203
Cardiac
13%
39.7
$
536
54.5%
$
3,370
High Cost Ortho
13%
42.8
$
544
56.3%
$
3,267
Infection
12%
38.2
$
512
47.7%
$
3,309
Low Cost Ortho
27%
24.2
$
543
48.6%
$
3,098
Medical
17%
37.6
$
516
50.8%
$
3,258
Respiratory
9%
33.7
$
503
45.7%
$
3,226
Surgical
9%
31.3
$
510
50.0%
$
2,910
Defined Period of Time
Defined
population
Defined
period of
time
Quality of
care
Fixed price
Start and End of Episode
Start of Episode
• Post-acute care with an episode initiator (SNF, LTCH, IRF, or HHA) within 30 days
after discharge from an acute care hospital for an MS-DRG included in a clinical
episode associated with the episode initiator
End of Episode
• 30, 60, or 90 days after the initiation of the episode
Length of Episodes for Current Model 3
Bundlers
All Episodes
Name of Episode
No. Participating
% Participating
30-day episodes
0
0.0%
60-day episodes
53
3.0%
90-day episodes
1,729
97.0%
All Episodes Total
1,782
100.0%
Source: CMS.gov February 2014
Fixed Price
Defined
population
Defined
period of
time
Quality of
care
Fixed price
Payment Parameters
• Payment from CMS to providers: traditional FFS payments
• Discount provided to Medicare defined by episode length: 3% discount
for episodes of 30, 60, or 90 days in length
• Reconciliation:
– Medicare pays awardee difference between target price and actual
cost of care for an episode if actual cost of care is less than target
price
– Awardee pays Medicare difference between target price and actual
spending if actual cost of care exceeds target price
Included Services in Bundle:
Which Include Broad Clinical Episode Categories
• Physicians’ services
• Durable medical equipment
• Inpatient post-acute care services • Part D drugs
• Inpatient hospital readmission
• NOTE: HOSPICE IS NOT INCLUDED
services
• Long-term care hospital services
• Inpatient rehabilitation facility
services
• Skilled nursing facility services
• Home health agency services
• Clinical laboratory services
Target Price and Reconciliation Process
Quarterly Payment
Reconciliation
Upfront FFS Payments
Set Target Price
• Price is set based on
baseline episode costs
for each selected
episode at DRG family
level; then 3% discount
applied
• May include lowvolume adjustment
• Medicare pays all Part
A and Part B providers
who serve patients
identified as
participating in the
initiative using current
FFS payment systems
• Approximately six months
after patient’s episode
ends, actual expenditures
are compared to target
price:
• If expenditures exceed
target price, awardee
pays difference to
Medicare
• If expenditures less
than target price,
Medicare pays
difference to awardee
33
Target Price: SNF as episode initiator (Sample Case Study)
21.2% 90 day readmission
rate
50.5% received HH
at $3,203/episode
SNF Episodic Stats: (All) ; (All)
$227
All DRG's
$17,914
$2,200
$1,617
$552
$2,066
0%
$ Readmit
20%
$ SNF
40%
$ HHA
$ DME
60%
80%
100%
$ MD
$ OP
$ Uncontrol
34 days LOS at $527/day
Historic “bundled Price” = $25,144
Mandatory 3% savings = $754
Projected “target price” = $24,390 OR less
Quality of Care
Defined
population
Defined
period of
time
Quality of
care
Fixed price
Care Redesign is Integral to Bundling
• Care redesign includes all of the providers and suppliers of care
who must work together to achieve goals
• Care redesign focuses on using evidence-based practices to
redesign the care provided for a specific bundle that will
measurably improve care, prevent readmissions and ED visits, and
improve patient outcomes
• Pathways extend from the hospital into the
post-acute settings, home health, assisted living, and home
36
Bundling Care Redesign Strategies
Evidence-Based Care Practices
Clinical
Competency
Care Pathways
INTERACT 3.0
PCP/NP Onsite Access
RiskStratification
Palliative Care
Tele-health
Health Coach
Certification
Care
Transitions
37
Risk and Rewards of
Participating in Model 3
Bundling
Bundled Payment: where the risks are
5: Patient goes to ED or gets readmitted
Payor
Hospital
1: Not a
preferred
provider to
hospitals
6: Medicare penalty
Unable to identify
“bundled” patients
due to poor episode
management
HH
2:
ALF
SNF
Unable to track bundled
patients in continuum
3:
ILF
4: Patient referred to
90 Day Episode
non-”Network”
provider
Time Value of Taking Action
When is the right time to take on risk-based reimbursement?
REV/CASE
ALOS
Impact of Per Diem and LOS Decreases on Revenue / Case
$13,000
35
$12,000
30
$11,000
Providers’ Optimal
Jumping On Point
25
$10,000
$9,000
20
$8,000
15
$7,000
10
$6,000
$5,000
Per Diem
$4,000
5
Year 1
400
Year 2
360
Year 3
360
Year 4
340
Year 5
340
Year 6
340
0
Revenue/Avg Case
Average Length of Stay
Payors’ Preferred
Jumping Off Point
Risks and Rewards of Model 3 Bundling
Rewards
Risks
Gain experience managing risk
Insufficient bandwidth to
successfully execute bundled
payment initiative
Capture gains from reducing
hospitalizations and retain
revenues from reducing length of
stay
Insufficient scale or inadequate
management of readmissions
leads to making payments to CMS
Access valuable data during Phase
1 to learn more about your
Acuity level of referrals increases
position in your market
relative to baseline
Keys to Managing Downside Risk in Model 3
Robust care redesign that targets readmissions
Selection of diagnostic families for bundling
Achieving sufficient scale
Stratify patients by risk to customize intensity of interventions
Conveners in Bundled Payment
•
•
•
May apply
with or
behalf of designated
awardees
Entity
that serves
an on
administrative
and technical
assistance
function for
one or more
designated
awardees
Not providers
themselves,
but
rely on partner
providers
May choose to bear risk or not bear risk
Source: CMMI Bundled Payment Application, http://innovation.cms.gov/initiatives/Bundled-Payments/bpci-archive.html
Overview of Bundling Arrangements
Submission Type
Risk-Bearing
Single Awardee
(Episode Initiator)
Non–Risk-Bearing
Awardee
Convener
Episode Initiator
Facilitator
Convener
Designated Awardee
(Episode Initiator)
This entity takes risk
under the facilitator
convener
Designated Awardee
Convener
This entity takes risk
under the facilitator
convener
Episode Initiator
Market Selection Considerations
•
•
•
•
Degree of Medicare Advantage penetration
Are referring hospitals involved in Model 2 bundling
Are referring hospitals involved in ACOs
Baseline performance of potential episode initiators
Is your organization ready to consider bundled
payments?
•
•
•
•
•
•
•
Clinical progress relative to baseline years
Administrative bandwidth
Clinical bandwidth to adopt new care strategies
Episode management
Primary care resources
Data management
Hospital relationships (C- level)
Contact:
Donna Mueller
Vice President of Business Development
Infinity Rehab
dmueller@infinityrehab.com
1-888-75-REHAB