BPCI Advanced: Updates from CMS and Details on the New Pricing Methodology. April 26, MedAxiom Consulting, LLC. All rights reserved.
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1 BPCI Advanced: Updates from CMS and Details on the New Pricing Methodology April 26,
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3 Keely Macmillan GM BPCI Advanced Archway Health Joel Sauer Vice President MedAxiom Consulting Ginger Biesbrock Vice President MedAxiom Consulting 3
4 THE SOLUTION Add slide about MedAxiom / Archway relationship EDUCATION DATA READINESS & OPTIMIZATION TOOLS & SOLUTIONS The MedAxiom & Archway Health partnership is intended to make design and implementation of bundled payment programs as simple as possible for heart programs. The team combines the expertise of CV consultants, proven healthcare operators, big data analysts, and technology entrepreneurs. 4 4
5 Introduction CMS announced the voluntary Bundled Payment for Care Improvement (BPCI) Advanced program on Tuesday Jan 9 th Non-binding application due March 12, 2018 for Oct 1 st, 2018 start date Open window period in 2019 for Jan 1, 2020 start date Goals of today s webinar: BPCI Advanced Application Timeline & Updates from CMS Details on the New Pricing Model Address questions from the group
6 BPCI Advanced Application Timeline & Updates from CMS 01 6
7 BPCI Advanced Timeline Providers must decide by Aug 1 st whether to participate in BPCI Advanced starting Oct 1 st Updates from CMS CMS received great interest in BPCI Advanced; are continuing to work through the program s high volume of inquiries Data and target prices to be released in May Further Details on Pricing Methodology: CMS currently working on specifications and plan to make them available soon File formats for the historical claims files: CMS is still finalizing the data file layouts and variables and will provide sample file layouts to Applicants prior to the release of the historical data Archway has asked CMS to provide more specificity Applicants should expect to review their data and target prices in June
8 Details on the new Pricing Methodology 02 8
9 Archway s Pricing Experts MAH-JABEEN SOOBADER, PH.D, MPH, CHIEF ANALYTICS OFFICER JUN WANG, PHD, MD PRINCIPAL DATA SCIENTIST BONGANI MNGOMEZULU, VP OF ANALYTICS
10 CMS Goals Informing BPCI-A Pricing Methodology Encourage both high and low cost providers to participate Reward participants improvement over time Adjust for patient case mix that is not under the providers control Allow for trends in regional and other relevant provider characteristics Induce Medicare savings while maintaining high quality care
11 Overview of Episode-Specific Price Setting Start with 4 years of historical baseline data: Standardize payments to remove variations caused by geography (e.g. Area Wage) and Payment Policy (e.g. IME) Apply Index Price Trending to standardize year to year variation in pricing (e.g. inflation, changes in DRG weight, etc) Apply Patient Case Mix Adjustment to account for varying levels of patient severity Apply Peer Adjusted Trend (PAT) Factor to account for differences in peer hospitals
12 Overview of Episode-Specific Price Setting Start with 4 years of historical baseline data: Standardize payments to remove variations caused by geography (e.g. Area Wage) and Payment Policy (e.g. IME) Apply Index Price Trending to standardize year to year variation in pricing (e.g. inflation, changes in DRG weight, etc) Apply Patient Case Mix Adjustment to account for varying levels of patient severity Apply Peer Adjusted Trend (PAT) Factor to account for differences in peer hospitals
13 Overview of Episode-Specific Price Setting Start with 4 years of historical baseline data: Standardize payments to remove variations caused by geography (e.g. Area Wage) and Payment Policy (e.g. IME) Index Price Trending to standardize year to year variation in pricing (e.g. inflation, changes in DRG weight, etc) Apply Patient Case Mix Adjustment to account for varying levels of patient severity Apply Peer Adjusted Trend (PAT) Factor to account for differences in peer hospitals
14 Overview of Episode-Specific Price Setting Start with 4 years of historical baseline data: Standardize payments to remove variations caused by geography (e.g. Area Wage) and Payment Policy (e.g. IME) Index Price Trending to standardize year to year variation in pricing (e.g. inflation, changes in DRG weight, etc) Apply Patient Case Mix Adjustment to risk-adjust for varying levels of patient severity (episode specific regression) Apply Peer Adjusted Trend (PAT) Factor to account for differences in peer hospitals
15 CMS to apply Episode Specific, Two-Stage Risk Adjustment Stage 1: Benchmark participant against other providers with patient populations of similar levels of expenditure risk Patient Case-mix Adjustment HCCs Demographics (age, dual eligibility, etc) Recent resource use Long term Institutional MS-DRGs APCs Episode Specific Factors (fractures)
16 CMS uses Hierarchical Condition Categories (HCCs) to risk adjust payments based on patient complexity Methodology uses a patient s documented diagnostic coding history to predict financial utilization and risk Accurate coding and complete documentation is needed to capture the full complexity of a patient population 2017 CMS-HCC Risk Adjustment Model (V. 22) 9,500 ICD-10-CM codes map to one or more of the 79 HCC codes included Version 22 HCC Examples: Cancer, Heart Disease, Kidney Disease, Liver Disease, Pneumonia, Major Depressive, Bipolar, Paranoid Disorders, Drug/Alcohol dependence
17 Example: Impact of Patient Case-mix Adjustments Avg Episode Payment per HCC Count for MS-DRG 470, MJRLE Avg Episode Payment per HCC Count for MS-DRG 291, CHF w/mcc
18 CMS to apply Episode Specific, Two-Stage Risk Adjustment Stage 1: Benchmark participant against other providers with patient populations of similar levels of expenditure risk Patient Case-mix Adjustment HCCs Demographics (age, dual eligibility, etc) Recent resource use Long term Institutional MS-DRGs APCs Episode Specific Factors (fractures)
19 Example: Impact of Patient Case-mix Adjustments Avg Episode Payment by Age category and dual eligibility status for MS-DRG 470, MJRLE Avg Episode Payment by Age category and dual eligibility status for MS-DRG 291, CHF w/mcc 28,192 31,261 Age Dual Eligibility Age No Yes Dual Eligibility
20 CMS to apply Episode Specific, Two-Stage Risk Adjustment Stage 1: Benchmark participant against other providers with patient populations of similar levels of expenditure risk Patient Case-mix Adjustment HCCs Demographics (age, dual eligibility, etc) Recent resource use Long term Institutional MS-DRGs APCs Episode Specific Factors (fractures)
21 Overview of Episode-Specific Price Setting Start with 4 years of historical baseline data: Standardize payments to remove variations caused by geography (e.g. Area Wage) and Payment Policy (e.g. IME) Index Price Trending to standardize year to year variation in pricing (e.g. inflation, changes in DRG weight, etc) Apply Patient Case Mix Adjustment to risk-adjust for varying levels of patient severity (episode specific regression) Apply Peer Adjusted Trend (PAT) Factor to account for differences in peer hospitals (episode specific regression)
22 CMS to apply Episode Specific, Two-Stage Risk Adjustment Stage 2: Benchmark participant against other providers with similar hospital-level characteristics (peer groups) Patient Case-mix Adjustment HCCs Demographics (age, dual eligibility, etc) Recent resource use Long term Institutional MS-DRGs APCs Episode Specific Factors (fractures) Peer Groups Adjustment Census Division- 9 regions Academic Medical Centers Urban-Rural Safety-Net Hospitals- >60% duals Bed-size
23 9 US Census Regions CMS employed Census Regions in CJR and Cardiac EPMs pricing methodology
24 Example: Impact of Regional Adjustments for AMI States vs 9 Regions
25 Example: Impact of Regional Adjustments for CHF States vs 9 Regions State: $22,317 - $28,506 Regional: $23,230 - $27,380
26 Example: Impact of Regional Adjustments for OP PCI States vs 9 Regions State: $14,516 - $17,420 Regional: $14,983 - $16,584
27 CMS to apply Episode Specific, Two-Stage Risk Adjustment Stage 2: Benchmark participant against other providers with similar hospital-level characteristics (peer groups) Patient Case-mix Adjustment HCCs Demographics (age, dual eligibility, etc) Recent resource use Long term Institutional MS-DRGs APCs Episode Specific Factors (fractures) Peer Groups Adjustment Census Division- 9 regions Academic Medical Centers Urban-Rural Safety-Net Hospitals- >60% duals Bed-size
28 Example: Impact of Peer-Group Characteristics Comparing Like Providers Episode: Major Joint Replacement of Lower Extremity. MS-DRG: 470
29 Setting Hospital and PGP Prices 03 29
30 Hospital Benchmark Price Based on hospital historical performance with adjustments for trends in spending of peer group hospitals and patient case mix: Hospital Benchmark Price = Standardized Baseline Spending x Patient Case Mix Adjustment x Peer Adjusted Trend Factor
31 Calculation of Hospital Benchmark Price (HBP) Adjust for hospital historical payment Adjust for patient severity Adjust for hospital peer group trend Dollar Amount (Average episode spending across hospitals) $40,350 Efficiency Measure Standardized Baseline Spending Patient Case Mix Adjustment Peer Adjusted Trend Factor Hospital Benchmark Price x 1.06 $42,962 x 0.81 x 1.36 $47,327 x 0.99 $40,125 x 0.80 x 1.15 $36,915
32 Hospital-Specific PGP Benchmark Price PGP benchmark price builds upon Hospital Benchmark Price PGP will have unique benchmark price for each hospital that initiates an episode Hospital-specific PGP Benchmark Price = Hospital Benchmark Price x PGP Offset x PGP Relative Case Mix PGP Offset Measures PGP s historical efficiency relative to the efficiency of the acute hospital during baseline PGP Relative Case Mix Measures PGP s case-mix relative to the case-mix of the ACH during the baseline
33 Adjust for PGP historical payment Adjust for PGP patient severity Calculation of PGP Benchmark Hospital Benchmark Price PGP Offset PGP s historical efficiency relative to hospital PGP Relative Case Mix PGP-ACH Benchmark Price Price $47,327 x 1.00 x 1.06 $50,167 PGP 1-ACH1 x 0.96 x 0.93 $42,254 PGP 2-ACH1 x 1.06 x 0.88 $34,434 PGP 1-ACH2 $36,915 x 1.00 x 1.15 $42,452 PGP 2-ACH2
34 Preliminary and Final Target Price Preliminary Target Price = Benchmark Price - Program Discount(3%) x Real $ conversion Final Target Price = Preliminary Target Price adjusted with Case Mix and Real $ Conversion in Model Year Participants will receive Preliminary Target Price during the application process (May 2018) Final Target Price will be determined after performance period is complete to account for case-mix changes during implementation
35 Calculation of Preliminary Target Price Adjust for 3% program discount Convert standardized $ to real $ Preliminary Benchmark Price (hospital or PGP) Program Discount (3%) Preliminary Target Price (in standardized $) Real to Standardized Payment Ratio (Reverse payment standardization) Preliminary Target Price (in real $) $47,327 x 0.97 $45,907 x 1.01 $46,366
36 Additional Risk Protection Individual Case Level: Capping episode payment at 1 st and the 99 th percentiles to reduce the impact of outlier spend and protect providers from loss due to catastrophic events Aggregate Episode Initiator Level: 20% stop-loss
37 Implications of Pricing Methodology 04 37
38 Impact of Model Year and Baseline Period on Opportunity ~ 2 Year Lag ? ? Model Year ? ?
39 Evaluating Your Opportunity during Five-Year BPCI Advanced Performance Period Low-cost hospital with continuous cost reduction Low-cost hospital with no cost reduction Scenario 1: Initially highperforming lowcost provider (assumes 10% lower cost than peer group) $14,000 $13,000 $12,000 $11,000 $10,000 $9,000 Peer Group Performance Actual Performance Target Price $14,000 $13,000 $12,000 $11,000 $10,000 $9,000 Peer Group Performance Actual Performance Target Price $8, $8, Model Year Model Year If an initial low cost provider (assume 10% lower cost) continues to reduce costs but at a lower rate of reduction (3%) than peer groups (5%), the provider will maintain 3-5% savings during the program If the provider reduces cost at the same rate as its peer group, the provider could increase savings from 7% to 18% If initial low cost provider doesn t reduce their cost while peer groups are reducing the cost (5%) they will likely lose their initial 2% pricing advantage and could end up losing 2% at later model years
40 Evaluating Opportunity during Five-Year BPCI Advanced Performance Period High-cost hospital with continuous cost reduction High-cost hospital with no cost reduction Scenario 2: Initially lowperforming high-cost provider (assumes 10% higher cost than peers) $15,000 $14,000 $13,000 $12,000 $11,000 $10,000 $9,000 $8,000 Peer Group Performance Actual Performance Target Price Model Year $15,000 $14,000 $13,000 $12,000 $11,000 $10,000 $9,000 $8, Model Year Peer Group Performance Actual Performance Target Price The high cost provider (assumes 10% higher cost than peer group) will require a 7% cost-reduction to break even in the first year If the high cost provider continues to reduce the cost at the same rate as peer group (5% cost reduction), the provider will begin to save in 2020 and increase their savings from 2% to 10% If high-cost provider does not reduce their cost while the peer groups are reducing their cost (5%), the provider will lose throughout the model year and their losses will increase over time from 8% to 12%.
41 Criteria Archway will be evaluating to help providers make informed decisions on program and episode participation Risk Parameter Sample Size Payment Variation Episode Post-Acute Spend Price Risk Quality Measures Savings Opportunity Break Even Catastrophic/cases outliers High cost patients Definition The number of episodes in the measurement period Variation among episode payment Percent of episode PAC spend Difference between target price and historic spend Impact of quality measure on discount or savings Amount of potential savings from Benchmark The amount of savings opportunity to break-even on price Evaluate stop-loss threshold for outliers Percent of high cost patients that don t reach stop loss
42 Criteria Archway will be evaluating to help providers make informed decisions on program and episode participation Risk Parameter Trending Baseline Trending Pre-Implementation Price Advantage Stability PGP-AC Heterogeneity within Episode Impact of model pricing parameters Prior Value Based Experience Market Advantage Program Policy and Pricing Changes Definition Episode Risk in by quarter Episode Risk in 2017 Q1-Q3 Evaluation of savings relative to savings of peers over time Exposure ratio of patients at multiple hospitals Evaluate within episode the impact of case-mix on pricing variations Evaluate within episode the impact of model fit to savings BPCI Participant, ACO etc. Local market characteristics-competitive Evaluate potential program changes based on prior BPCI and OCM
43 Keys to Success 1 2 Providers will need to understand their historical performance to fully evaluate their opportunity in the program. What impacted their price What are the major cost drivers of price relative to their peers Implementation strategies will need to be provider specific. High-cost providers will benefit from reducing costs through improving quality and efficiency Low-cost providers will need to evaluate their pricing advantage, as well as their ability to further improve against feasible benchmarks. 3 Providers will need to continuously evaluate their opportunity during the 5-year performance period ( ). Success will be driven not just by your initial pricing, but also pricing changes over the course of the program and your opportunity to increase savings relative to their peers. 4 With hospital-specific prices for PGPs, new alignments will be forged between PGPs and hospitals Partnering with the right providers will be critical
44 Community Learning 05 44
45 Archway Academy Online, self-paced learning program to get you prepared for BPCI Advanced Join the Discussion Forum and see what your peers are asking
46 Participate in Archway s BPCI Advanced Workshop Tuesday, June 26, 2018 Join other applicants for a one-day event featuring BPCI Advanced insights and updates from experienced program experts Shared learning and best practices from BPCI participants Networking with other applicants and peers Detailed data and pricing model review One-on-one meetings to review your data Strategies for how to drive success in the first few program quarters Demonstration of the latest features in Archway Carelink and Analytics Workshop Details: Time: 10 am to 9 pm, including cocktails and dinner following the program Location: Archway Main Office, 311 Arsenal Street, Watertown, MA (10 minutes from downtown Boston) Cost: Event registration is complimentary and includes all meals and activities Additional: Participants are responsible for transportation and lodging RSVP today to reserve your spot. Contact events@archwayha.com. Space is limited.
47 Keely Macmillan GM BPCI Advanced Archway Health Q&A Ginger Biesbrock Vice President MedAxiom Consulting Joel Sauer Vice President MedAxiom Consulting 47
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