Eight Indispensable Financial Considerations of Shifting from Volume to Value Reimbursement

Transcription

1 Eight Indispensable Financial Considerations of Shifting from Volume to Value Reimbursement September 25-26, 2017 Max Reiboldt, CPA President CEO

2 Learning Objectives This session will provide you with the knowledge to: Manage new legislative requirements and structural changes (from accountable care organizations to clinically integrated networks) and develop future strategic mindsets to accommodate these changes Respond to financial reporting changes as a result of the reimbursement shifts and the ramifications (from overhead to charge capture to how best collect) 2

3 The Volume to Value Shift

4 Volume to Value Shift The major imperative in healthcare today: Quality and Patient Safety ,000 preventable deaths in US hospitals due to medical errors ,000 preventable deaths due to medical errors Costs of Healthcare Slow down in cost inflation secondary to recession is now picking back up Expansion of insurance coverage through ACA is driving increased utilization Aging of population driving more and more costs related to chronic illness The Value Equation = Q/C Consumerism and Patient Demands Cost shifting by payers and providers ending up in the laps of consumers High deductibles and co-pays causing consumers to demand more value 4

5 Volume to Value Shift Payers CMS 90 % VBRs by end of 2018 MACRA fully implemented by 2020 Voluntary bundled payment pilots now mandatory Commercial Payers Anthem - $38 B shift from FFS to FFV in January 2015 Aetna 70+ ACO health plans in place across the country United development of PCP networks MIPS and Alternative Payment Models (APMs) Patients Providers Structural/Organizational Considerations ACOs / CINs / PHOs / IPAs to CINs Consolidation Hospital physician employment / mergers / acquisitions Operations Providers as payers Niche players undercutting large systems Questions to Ponder Has VBR lost momentum in 2017? Are you involved in VBR at all? 5

6 The Affordable Care Act s Path to Payment Reform and Corresponding Impact on the Healthcare Industry Federal and state agencies and commercial payers have used the momentum behind the law to begin driving to various forms of: Value-based contracting for hospitals and physicians (MACRA) Accountable care, and Population health management initiatives 6

7 Key Examples of These Trends Include: In 2016, CMS extended value-based alternative payment models to its fee-for-service program in addition to expanding the MSSP and Pioneer ACO (Next Generation) programs. Medicare Advantage and many managed Medicaid plans are selectively partnering with high performing and risk-ready providers to ensure that patient engagement, accurate documentation, and gaps-in-care quality targets and ratings are met or risk becoming unprofitable. Commercial payers are leveraging accountable care as a new generation of tools to reencourage a fifteen year relaxation of price and performance competition between providers by linking commercial accountable care initiatives to narrow network benefit designs that manage unit costs, drive deeper discounts, and reduce hospital admissions. In 2017, MACRA is a definitive foray into VBR; commercial payers are more deliberate in their advancement into VBR. 7

8 The Future of the ACA? ACA has not yet been repealed/replaced by Congress The future of the ACA is at best, uncertain Some changes still are likely but when? Many spin-offs from the ACA will likely continue: MACRA Bundled Payments (some holdbacks) CPC + (Capitated Population Health Management) 8

9 MACRA General Themes Payment reform is not going away Providers have up- and down-side risk based on quality and cost metrics Success depends on being cost conscious and providing efficient high quality care The market will see increased participation in similar arrangements by all payers 9

10 Focus on MACRA Five Key Traits of MACRA 1. Repeals the Sustainable Growth Rate formula (a.k.a. Doc Fix ) and provided new updates to the Medicare Physician Fee Schedule (MPFS) 2. Authorizes Medicare to change how it rewards clinicians: value over volume 3. Creates the Merit-Based Incentive Payments Systems (MIPS), which aggregate three separate payment programs and creates a fourth: Physician Quality Reporting Program (PQRS) Value-Based Payment Modifier Medicare EHR Incentive Program Clinical Practice Improvement Activities 4. Provides bonus payments for participation in eligible alternative payment models (APMs) 5. Extends CHIP and community healthcare funding 10

11 Evolution of Bundled Payments 2009 Brookings Institute Study bundled payments most effective way to bend the cost curve Bundled Payment Care Initiative (BPCI) Comprehensive Care for Joint Replacement (CJR) ** On the horizon: Hip fracture AMI/Cardiac Rehab Ambulatory bundles: cataracts, colonoscopy Primary care bundles: by patient population as opposed to procedure/ clinical condition as in specialty bundles ** Expansion of CJR and hip fracture bundled payment programs now under proposal to be discontinued. Commentary period will end and final rule issued in October. 11

12 What s happening with CJR / Hip Fractures and Episodic Payment Models for AMI / Cardiac Rehab? A proposed rule would cancel the Episode Payment Models (EPMs) and Cardiac Rehabilitation (CR) incentive payment model and rescind the regulations governing these models. It also proposes to revise certain aspects of the Comprehensive Care for Joint Replacement (CJR) model, including: (1) giving certain hospitals selected for participation in the CJR model a one-time option to choose whether to continue their participation in the model; (2) technical refinements and clarifications for certain payment, reconciliation and quality provisions; (3) and to increase the pool of eligible clinicians that qualify as affiliated practitioners under the Advanced Alternative Payment Model (APM) track Commentary period closes October 16 th Does this signal an end to bundles? 12

13 Bundled Payment Success Stories Heart Bypass Demonstration Project 1991 Decreased spending by 10% (CMS) Acute Care Episode Project 2009 Cardiac and orthopaedic episodes Costs decreased by 3% in five organizations (CMS) Bundled Payment Care Initiative (BPCI) ,000 bundles across 24 surgical and 24 medical conditions Achieved savings an order of magnitude higher than ACOs Comprehensive Joint Replacement (CJR) 2016 Now under consideration to be put on hold 13

14 How bundled payments work Projected spend determines budget Cumulative Fee-For-Service (FFS) payments for appropriate care Reduction of FFS payments for potentially avoidable complication (PAC s) Discount (3-5%) to drive coordination of care between providers and avoidance of duplication of services and other inefficiencies Quality/patient satisfaction goals must be met before any incentive payments are distributed Savings against budget shared between payer and providers If spending exceeds budget penalty payments also shared between providers and payers 14

15 Drill down on the bundled payment model Appropriate care = evidence based, best practice, guidelines Discount = extra dollars that can be gleaned through coordination of care between providers and clear communication of roles and responsibilities Potentially avoidable complications = avoiding never events, allowing for PAC s that happen despite best practice (emphasis on potentially avoidable) Quality performance triggers any payment of savings = distinct difference between this model and managed care / capitation models of the 80 s and 90 s 15

16 Bundled Payments Five Essentials 1. Payment covers the overall care required to treat the condition 2. Payment is contingent on delivering good outcomes 3. Payment is adjusted for risk 4. Payment provides a fair profit for effective and efficient care 5. Providers are not responsible for unrelated care or catastrophic cases 16

17 Capitated Population Health Capitated Population Health Management Example: CPC + Comprehensive primary care program recently expanded to CPC+ Emphasizes patient / provider engagement through multi-disciplinary primary care delivery and advanced healthcare information systems Regionally-based multi-payer (CMS, Commercial Plans and State Medicaid Agencies) program Track 1 FFS plus Care Management Fee (CMF) plus P4P (Expected CMF = $15 PMPM) Track 2 Reduced FFS plus Comprehensive Primary Care Plus Payment (capitated payment paid quarterly) plus P4P (Expected CMF = $28 PMPM) 17

18 Essentials of Preparation for capitated PHM contracts Clinically integrate your primary care providers Train PCPs in the essentials of population health management Health risk assessment and risk stratification Chronic care management (CCM) Non-traditional care delivery, e.g. telemedicine Emphasis on preventive care and wellness services Value-based referrals to specialists Recognition of all PCP practices as NCQA Level III PCMHs Start with CPC + Track 1 and then move onto Track 2 (Track 1 and Track 2 are defined on the previous slide) Be first to market with a primary care platform that can take on capitated population health management 18

19 Key Considerations 1. Payers (government and commercial) are moving (slowly) toward VBR, providers should re-tool the delivery system in order to reliably deliver high quality care at low cost, i.e. higher value. 2. Consumers are now responsible for more of their own healthcare costs; they too will demand higher value from providers and not tolerate volume-only caregivers. 3. Large self-insured employers are more value conscious and may be willing to bypass third party payers and directly contract with providers who can deliver high-value care. 4. While VBR has slowed and we do not know for sure what Washington will do, calculated preparedness is warranted. 19

20 Operational Changes in a Value-Based Care Delivery Model

21 Financial Operations Under VBRs Value-based reimbursements will demand changes in financial operations. Thus, providers should consider: Cost Accounting Moving from cost accounting proxies (e.g. charge to cost ratios) to activity based cost accounting (e.g. TDABC) Knowing true costs will be important in pricing services such as bundled payments Billing and Collecting Whether insourced or outsourced, billing for FFV will be different than for FFS (e.g. MIPS payments will depend on submission of quality, cost, meaningful use and clinical practice improvement activity data) Income Distribution Payments under FFV reimbursements should be distributed according to performance measures. This will require an income distribution plan (IDP) model different from most standard physician compensation agreements. Hybrid Applications With most still dealing in a FFS environment, with some FFV, a hybrid system of financial reporting/management will be required. 21

22 Contracting for Value-Based Reimbursement VBRs will also drive changes in providers contracting strategies and tactics Shared Savings OVERARCHING STRATEGY (Increased VBR Market Share) Bundled Payments Capitated Payments Eliminate waste and inefficiency Coordinate care and avoid complications Proactively manage populations and emphasize preventive care But with FFS still predominant, traditional contracting strategies will likewise be necessary. 22

23 Delivering High Value Care Not simply a matter of negotiating new contracts Must update the care delivery system Care Design Lean Process Mapping Best Practice Care Process Design Outcomes Measurement Quality true outcomes vs process measures Cost true costs vs cost accounting proxies 23 Continuous Process Improvement Real time data capture Care processes refined via an iterative process over time Question: When does sufficient VBR critical mass exist to completely re-tool?

24 Key Considerations (cont d) 5. Upgrade cost accounting capabilities. But when? How much? 6. Learn how to capture performance data that will be needed to accompany claims in a VBR environment. 7. Adopt an overarching VBR contracting strategy (capture the largest market share of VBR agreements) 8. Develop tactics for addressing each type of VBR bundles, shared savings, capitation etc... while still operating in a mostly FFS environment 24

25 Drivers for Modifying the Economics of Physician Compensation Contracts

26 Alignment vs. Integration Why must we integrate? MACRA- MIPs/APMs Shared Savings Bundled Payments Patient Centered Medical Home Value-Based Incentives Capitation Alignment/consolidation alone is not enough to drive success! 26

27 Transition in Payment Models 27 Source: Miller, H.D., From volume to value: Better ways to pay for health care

28 Transition in Payment Models Delivery System Value-driven coordinated care Goal Interim/virtual coordination arrangements Present Market Volume-driven care Fee-for-service Virtual episode-of-care and comprehensive care payment Episode-of-care or comprehensive care payment Payment System 28

29 Changing Payment Models Fee-For- Service Providers paid a specified amount for each service provided Shared Savings Bundled Payments Value-Based Purchasing Pay-For- Performance Incentives for higher quality measured by evidence-based standards Percentage reimbursement at risk, earned back by high quality outcomes Single payment for episodes of treatments, shared by hospital and physicians Percentage of savings from reduced cost of care shared with hospitals and physicians Increasing Provider Risk Global Payments All services compensated in one payment that manages the patient across the delivery system 29

30 Impact of Changing Payment Models Operational Requires changes to how we are currently practicing Additional costs- IT tools, staffing, contracting, etc. Financial At-risk vs. guaranteed Changes in amount Changes in incentive drivers 30

31 Conclusions Although VBR has not entered the market as quickly as anticipated, organizations should be proactive and prepared with other payers likely to follow MACRA In this transitional period, a balance must be struck between limiting cost of care yet also providing high quality care to patients. Understanding the economic drivers of VBR and the upside and downside risk that comes with value-based contracting. 31

32 Contact Us: Max Reiboldt, CPA President/CEO Coker Group Holdings, LLC Lakeview Parkway, Suite 400 Alpharetta, GA 30009