9/23/2016. Our Services. Transitioning from Fee-for-Service to Value-based Reimbursement. Key Trends and Strategies for Rural Health Providers

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1 Transitioning from Fee-for-Service to Value-based Reimbursement Key Trends and Strategies for Rural Health Providers Paul MacLellan, CEO >> Health care consulting company >> Wholly owned subsidiary of The Doctors Company >> 20 years experience in value-based contracting >> Proven ability to help physicians and groups successfully transition to value-based contracting >> Projecting we will help physicians earn over $25M this year in valuebased contracts Our Services Consortium of Independent Physician Associations (CIPA) Contracting Vehicle Membership Organization Business & Clinical Transformation Support Physician Group Advisory & Management Physician Alignment & Network Development Value-based Contracts (Negotiation, Implementation & Optimization Physician Organization Management Clinical Transformation Population Health Management Health IT Infrastructure Development & Implementation Data Analytics & Reporting Patient-Centered Medical Home CareBridge Care Management Clinical Measures Performance Improvement Business Transformation EHR Selection, Implementation & Optimization Revenue Cycle Management HIPAA Privacy & Security Compliance Group Purchasing Program 1

2 Our Clients Serving 90 clients representing more than 5,000 physicians caring for over 1,000,000 patients >> Independent Physician Associations >> Physician Hospital Organizations >> Accountable Care Organizations >> Medical Practices >> Health Systems >> Hospitals Our Service Delivery Model >> Client Focused Teams >> Expert consultants that simplify complexity and drive change >> Strong operations infrastructure and a multidisciplinary team of clinical, technical and administrative experts >> 2015 Outcomes: Nearly 150 PCMH designated practices 4,500 unique educational encounters conducted $19 million in net revenue earned by clients 2,500+ onsite physician and physician organization interactions 200 large group and onsite billing and coding training workshops 5,000 new patient-centered capabilities implemented 32 percent increase in overall HEDIS performance What is Value-Based Reimbursement? 2

3 What is Value-Based Reimbursement (VBR)? >> Payment mechanism that measures, reports, and rewards excellence in health care delivery >> Value-based purchasing involves the actions of: Public sector purchasers (government) Health plans Employers Coalitions Individual consumers >> Making decisions that take into consideration access, price, quality, efficiency, and alignment of incentives P4P Value-Based Reimbursement (VBR) >> Encourages health care providers to deliver the best care at the lowest cost >> Effective health care services and high-performing health care providers are rewarded with: Improved reputations through public reporting Enhanced payments through differential reimbursements Increased market share through purchaser, payer, and/or consumer selection VBR Rationale Rise in U.S. Health Care Costs 3

4 VBR Rationale Rise in U.S. Health Care Costs VBR Rationale Lagging Health Care Quality VBR Rationale Lagging Health Care Quality 4

5 Change in Health Care is Accelerating >> Escalating health care costs >> Consistent struggle to meet quality metrics >> Health care delivery system must change >> Insurance companies, government, employers, and consumers all driving change >> Technology is a disruptive force Key Health Care Industry Trends >> 7 years into Affordable Care Act (ACA) Medicare catalyst for payment reform Medicaid expansion, health exchanges, innovation projects, underwriting and benefit structure changes >> Cost pressures Pain for everyone involved as financial models evolve >> From hospital to health system Consolidation increasing friction between physicians and systems Key Health Care Industry Trends >> The right care. Right time. Right place. First time. Adherence to evidence-based care a challenge Primary care models rapidly changing left and right hand largely unconnected >> Shifting from volume to value Payers shifting risk to providers to reduce cost >> The empowered and informed patient Increased out-of-pocket costs distort decision making >> Cost transparency increasing 5

6 Transparency in Action >> Turing Pharmaceuticals ACA Impact >> 20 million new covered lives >> Affordable premiums and competition will be a challenge in 2017 enrollment cycle >> Employer sponsored insurance stable >> Health care stress and health care related bankruptcies begin to decline >> Health care renaissance underway U.S. Health Care Spending >> U.S. health care spending U.S. annual spend $3 Trillion Rest of the developed world annual spend $3.2 Trillion >> Total spend = cost per unit x number of units 6

7 We Have a Cost Per Unit Problem >> Highly disjointed system with significant administrative overhead >> High level of government and insurance regulation and reporting >> U.S. health care spending Focus on specialty care vs. primary care Malpractice and defensive medicine Consumer choice Free market pricing vs. government set pricing Options for Managing Total Spend >> Provide coverage to fewer people >> Cover fewer services >> Drive innovation to create system efficiency >> Pay everyone in the system less; Pressure will continue to mount Payment Reform in Action MACRA Timeline Older Incentives MU, PQRS and VBPM end Medicare Physician Fee +.5% annual increase Schedule (MPFS) 0% changes +.75% for APM providers +.25% for others APM lump sum payments Look back + 5% of MPFS annual payment MIPS fee schedule adjustments based on composite score (quality, advancing care information, clinical practice improvement activities, and resource use) Look back +/ 4% of MPFS in 2019, +/ 5% in 2020, +/ 7% in 2021, +/ 9% in 2022 and onward + Adjustments of up to 3x to achieve budget neutrality Annual bonus of up to a 10% for achieving top 25th percentile until

8 MACRA Begins in Less Than Four Months >> Medicare Access & CHIP Reauthorization Act (MACRA) >> New program dramatically changes Medicare fee-for-service business >> Key dates: January 1, 2017 start of measurement period 2018 initial performance reports published 2019 first year of fee schedule adjustments >> Retires multiple stand-alone programs such as Meaningful Use and PQRS, and creates one integrated scoring mechanism >> Two paths available, but most physicians will initially be in path known as Merit-based Incentive Payment System (MIPS) MIPS Adjustments to the Medicare Physician Fee Schedule Composite score based on: 1. Quality Measures (50%) 2. Resource Use (10%) 3. Clinical Improvement Activities(15%) 4. Meaningful Use (25%) MIPS program is budget neutral VBR Programs are Here >> CMS initiatives in Nebraska: Healthcare Innovation Awards Transforming Clinical Practices Initiative/Practice Transformation Network Accountable Care Organizations (ACOs) FQHC Advanced Primary Care Practice Demonstration BPCI, Million Hearts, and more >> Risk sharing and at-risk contractual arrangements >> Bundled payments >> High-deductible health coverage (consumer directed care) >> Quality measurement and reporting 8

9 VBR Drives Change Connecting the Dots: FFS to VBR Key Pitfalls To Avoid >> Jumping into downside risk contracts >> Weak payer capabilities >> Technology and data analytics requirements >> Member/patient impact and lack of involvement >> Lack of significant review and ongoing monitoring >> Lack of communication >> Weak organized systems of care >> No time left to practice medicine! 9

10 Key Strategies to Succeed >> Contract and reimbursement review Language terms, requirements from both a payer and provider perspective, financial terms, risk sharing analysis, market participation/results assessment >> Technology and data analytics capability Review capability from both a payer and provider perspective >> Ongoing monitoring and data analysis Financial analysis and reporting Population identification, stratification, predictive modeling and reporting Value-based Care: Data Drives Positive Patient and Financial Outcomes Key Strategies To Succeed >> Effective communication Between payer and provider(s) Amongst providers >> Care coordination capabilities Comprehensive care management, connectivity between stakeholders, quality programs, and outcomes measurement >> Member/patient engagement >> Strong health care provider community Hospitals, primary care, specialists and ancillary providers working closely together with aligned incentives 10

11 Other Provider Incentives >> A range of other incentives available for providers from CMS and other health plans that could be considered: Primary care physicians not participating as Patient-Centered Medical Homes (PCMHs) Specialists Physician organization participants Accountable Care Organization participants Hospitals Ancillary providers >> Rural health providers: Health Professional Shortage Area Rural Health Center Federally Qualified Health Center Paul MacLellan, CEO pmaclellan@medicaladvantagegroup.com 11