WASHINGTON RURAL HEALTH ACCESS PRESERVATION. Enabling Rural Hospitals in Washington State To Survive and Thrive

Transcription

1 WASHINGTON RURAL HEALTH ACCESS PRESERVATION Enabling Rural s in State To Survive and Thrive

2 Origin and Goals of WRHAP Project WSHA/DOH New Blue H Project Identified issues threatening sustainability of healthcare in rural areas Organized the Project Identified most vulnerable hospitals Healthier Initiative Goal of improving healthcare and moving to value-based payment Model 2: Reform for Rural Communities Federal State Innovation Model (SIM) grant providing financial support to develop payment reforms for rural healthcare providers Initial WRHAP Meeting in June 2015 WSHA, DOH, HCA, Commissioners and CEOs/CFOs of PHDs Discussed and prioritized problems Identified potential solutions s agreed to participate in a planning process 2

3 Focus: 13 Financially Vulnerable Critical s 3

4 Public Districts Serving Small, Isolated Rural Communities Population Served ED Visits/Day Average Acute/Swing Census Clinic Visits/Day Odessa Memorial 1, Garfield County 2, East Adams care 3, Ferry County Memorial 4, Dayton 5, Morton General 7, Willapa Harbor 8, North Valley 10, Forks Community 10, Cascade Medical Center 10, Three Rivers 14, Mid-Valley 15, Columbia Basin 15,

5 Significant, Persistent Financial Losses 5

6 Losses Covered by Local Taxes, Highest Rates in Smallest PHDs 6

7 Travel Times Would Increase Minutes if Closed 7

8 w/o s, Travel Time to ED Would Go Up 25+ Min. for 75,000 8

9 Focus of Work Over Past 2 Years Why are WRHAP hospitals having financial difficulties? Which service lines are causing financial problems? Are costs too high? Are payments too low? Should services be delivered in different ways? What are the problems with the current payment systems? Do they support or penalize high-quality care? Do they support or penalize efficient care delivery? Which alternative payment models would better support high-quality health care services in small rural communities? Are there ways to provide better/higher payment to rural hospitals without increasing overall healthcare spending? How can we explain all of this to policy-makers & payers and convince all payers to participate? 9

10 Data Collection Required to Enable Detailed Analysis Challenges Net revenue by service line is not available in standard financial reports Total charges by service line are available, but deductions from revenue are only shown in aggregate Service line margins by payer are not available in standard reports Different payers pay different amounts that may or may not cover costs Multiple payment systems with complex rules for each one and utilization in one service line affects staffing and costs allocated to other service lines Solutions 10 WRHAP hospitals provided more detailed information for analysis Cascade, Columbia Basin, Dayton, East Adams, Garfield, Mid-Valley, Morton, Three Rivers, North Valley Simulation models developed to estimate impacts of changes in costs, utilization, and alternative payment models 10

11 Findings: 5 Service Lines Cause Deficits /Primary Care Clinics 100% of WRHAP PHDs analyzed had significant clinic losses in 2015 On average, clinic revenues only covered 2/3 of clinic costs Clinics are largest contributor to overall deficits (30% or more of total) Emergency Department 80% of WRHAP PHDs had losses on ED visits s for ancillary services during ED visits reduced losses, but 40% of WRHAP PHDs had losses even with ancillary revenues Nursing Home/Assisted Living 100% of WRHAP PHDs with nursing and/or assisted living facilities had losses Ambulance 100% of WRHAP PHDs with ambulance services had significant deficits Inpatient 70% of WRHAP PHDs had losses on inpatient services s for ancillary services during admissions reduced losses, but 30% of WRHAP PHDs had losses even with ancillary services 11

12 Operating Margins by Service Line 12

13 Three Identified as Priorities for Reform Emergency Department Emergency services are essential for retaining/attracting businesses & residents in small communities Clinic to primary care is essential for promoting health of residents and reducing overall spending on healthcare Communities cannot attract/retain independent primary care providers and need hospital-based clinics Nursing and Long-Term Care Needed to enable elderly residents to return home from the hospital and to remain in the community Communities currently lack access to home health & hospice services 13

14 Causes of Deficits for ED Visits are high because of low volume, not inefficiency WRHAP EDs average 1-26 visits per day, even though providers at most of the hospitals could handle as many as visits per day must pay providers to be on call regardless of # of visits, so cost of staffing the ED is fixed and average cost per visit is high Visit payments are below cost Commercial Health Plans: s are below cost per visit in smaller hospitals Uninsured: Some communities have large number of uninsured patients who use the ED for care but cannot afford to pay full cost : Pays only 99% of the costs of ED visits : amounts are intended to cover costs, but MCO payments are not reconciled to actual costs 14

15 ED Visit Margins by Payer 15

16 Causes of Deficits for /Primary Care Clinics are high because of low volume, not inefficiency WRHAP clinics have 4,000-6,000 visits per year, whereas a primary care physician in an urban area may have 6,000-7,000 visits per year must pay to have providers staff the clinic regardless of the # of visits, so the cost per visit is high Visit payments are below cost Commercial health plans: payment rate for primary care visits is below average cost of delivering a visit MCOs: s are below the average cost of a visit, and the encounter rates have not been rebased to costs in years In 5 of 10 clinics, encounter rates were 35-46% lower than cost in 2015 : Pays only 99% of allowable costs for Clinics, and it reduces payments further if physician visits are below productivity standards which may be impossible to meet in rural areas 16

17 Clinic Margins by Payer 17

18 Most ED and Clinic are / Beneficiaries ED Visits Clinic Visits /MCO 36% 39% 25% 29% Advantage 3% 5% Commercial 27% 23% Self-Pay 8% 5% Total 100% 100% Average Distribution of Visits by Payer in 2015 for 6 WRHAP s 18

19 Causes of Deficits in Long-Term Care payments for long-term nursing care and assisted living services are lower than the cost of delivering care at WRHAP facilities averaged /day, but payments were only per day Pro-Share Supplemental s reduce the deficits for nursing care but do not eliminate them does not pay for long-term nursing care services in separate facilities, but does indirectly pay for a portion of the cost of long-term nursing care services if they are delivered in a swing bed and if the hospital also has acute inpatients or skilled nursing facility (SNF) patients during the year 19

20 Nursing Care and Assisted Living Facility Margins by Payer 20

21 Inadequate Support for Current Clinic and primary care payments do not support delivery of Patient-Centered Medical Home services No payment for phone/ contacts or services delivered to patients by nurses that could avoid need for a clinic or ED visit; payment is only made for face-to-face visits with physicians, nurse practitioners, and physician assistants No payment for care management/coordination to help ensure patients get the services they need and avoid duplication, medication conflicts, etc. No payment for behavioral health services delivered directly in clinic in coordination with physical health services Helping patients avoid Emergency Department visits or inpatient admissions would increase the hospital s deficit ED and inpatient admission payments are based on the number of visits/admits or the payer s share of total visits/admits, so revenue decreases if visits/admits decrease, but cost of staffing ED and inpatient unit does not change s for ancillary services would also decrease if visits/admits decrease Inadequate payment and regulatory barriers limit access to home health services that could avoid admissions & nursing facility stays rates do not support in-home services in sparsely-populated areas and hospitals/clinics cannot provide cost-based services unless there is no home health agency 21

22 - Isn t As Good As It Sounds Current for ED Loss - from & to & on # of Visits Weaknesses of Current System only pays 99% of costs, and not all costs are covered No reconciliation to ensure MCO rates matched actual cost Only the portion of costs attributed to & patients based on # of visits is covered 22

23 Insurance s for Visits May or May Not Cover Current for ED Insurance s for Visits - from & to Other Insured to & on # of Visits Weaknesses of Current System only pays 99% of costs, and not all costs are covered No reconciliation to ensure MCO rates matched actual cost Only the portion of costs attributed to & patients based on # of visits is covered Fee for service payments for insured patients are below cost per visit in smaller hospitals 23

24 Lower Volume s Lose Money at Standard Rates Number of ED Visits Per ED Visit Average Commercial ED Visit 24

25 Nobody Covers the to Uninsured Current for ED Loss Insurance s for Visits - from & for Uninsured to Other Insured to & on # of Visits Weaknesses of Current System only pays 99% of costs, and not all costs are covered No reconciliation to ensure MCO rates matched actual cost Only the portion of costs attributed to & patients based on # of visits is covered Fee for service payments for insured patients are below cost per visit in smaller hospitals Serving uninsured patients reduces cost-based payments and increases deficits 25

26 Is There a Better Way? Current for ED Loss Insurance s for Visits - from & for Uninsured to Other Insured to & on # of Visits? 26

27 Recognize that Fixed Continue Regardless of Visits Current for ED Loss Insurance s for Visits for Uninsured to Other Insured Margin Variable of Visits - from & to & on # of Visits Fixed Of Operating ED 27

28 Pay for Fixed With a Per-Resident Current for ED Loss Insurance s for Visits for Uninsured to Other Insured Population- for ED Margin Variable of Visits - from & to & on # of Visits (Annual) Per Insured Resident Fixed Of Operating ED 28

29 Pay Smaller Amounts Per Visit (Larger for Non-Resident Visitors) Current for ED Loss Insurance s for Visits for Uninsured to Other Insured Population- for ED Small Per Visit Margin Variable of Visits - from & to & on # of Visits (Annual) Per Insured Resident Fixed Of Operating ED 29

30 Performance- Current for ED Loss Insurance s for Visits to Ensure Quality & for Uninsured to Other Insured Population- for ED P4P Small Per Visit Margin Variable of Visits - from & to & on # of Visits (Annual) Per Insured Resident Fixed Of Operating ED 30

31 Population- for Emergency Department Current for ED Loss Insurance s for Visits for Uninsured to Other Insured Population- for ED P4P Small Per Visit Margin Variable of Visits - from & to & on # of Visits (Annual) Per Insured Resident Fixed Of Operating ED 31

32 Fixed of ED Are Sustained Regardless of Volume of Visits Population- for ED Population- for ED Margin Per Visit Margin Few Visits Per Visit Many Visits (Annual) Per Insured Resident Fixed Of Operating ED (Annual) Per Insured Resident Fixed Of Operating ED 32

33 Proposed Three-Part Alternative Model for ED 1. Population-,, and major commercial payers pay the hospital an annual membership fee for each of their insured residents living in the community to support access to the Emergency Department amount is based on the proportion of the residents of the community insured by the payer and the estimated cost of staffing an ED to meet the expected volume of need for the community Achieves a result similar to the Maryland global payment model without requiring a full rate regulation system 2. Per-Visit /payers who do not reside in the community or participate in the population-based payment continue to pay for each visit but at a much lower rate than today 3. Performance- (P4P) Population- and Per-Visit s are adjusted based on the hospital s performance in delivering quality care and addressing residents emergency service needs locally rather than in other EDs 33

34 A Similar Approach Could Be Used for Inpatient & Ancillary Svcs - + Commercial FFS Loss Insurance s for for Uninsured to Other Insured Population- P4P Small Per Service Margin Variable of - from & to & on Amount of (Annual) Per Insured Resident Fixed Of Operating Inpatient & Ancillary 34

35 WA Health Care Authority WRHAP Proposed a Trended Global Budget - + Commercial FFS Loss Insurance s for - from & for Uninsured to Other Insured to & on Amount of State Proposal for Global Budget Global Budget for on Net Revenue in Base Year Inflation Global Budget for on Net Revenue in Base Year Inflation Global Budget for on Net Revenue in Base Year 35

36 WRHAP Have Increased More Than Inflation - + Commercial FFS Loss for Uninsured State Proposal for Global Budget Increase in Inflation Inflation Insurance s for - from & to Other Insured to & on Amount of Global Budget for on Net Revenue in Base Year Global Budget for on Net Revenue in Base Year Global Budget for on Net Revenue in Base Year of Delivering 36

37 Budget on Past Revenues & Low Trend Would Increase Losses - + Commercial FFS Loss Insurance s for - from & for Uninsured to Other Insured to & on Amount of State Proposal for Global Budget Increase Loss in Global Budget for on Net Revenue in Base Year Inflation Global Budget for on Net Revenue in Base Year Inflation Global Budget for on Net Revenue in Base Year of Delivering 37

38 Payers Want to Encourage Efficiency in Care Delivery - + Commercial FFS Loss Insurance s for - from & for Uninsured to Other Insured to & on Amount of Loss Inflation Global Budget for on Net Revenue in Base Year State Proposal for Global Budget Increase in of Delivering Inflation Global Budget for on Net Revenue in Base Year Ways to Reduce?? Lower 38

39 So WRHAP PHDs Need to Show Are As Low As Possible - + Commercial FFS Loss Insurance s for - from & for Uninsured to Other Insured to & on # of Visits of Delivering? Ways to Reduce Lower 39

40 Current Visit- s for Clinic Visit- Weaknesses of Current System only pays 99% of costs, and not all costs are covered Only the portion of costs attributed to patients based on # of visits is covered - for Visits to 40

41 Current Visit- s for Clinic Visit- Encounter s to Weaknesses of Current System only pays 99% of costs, and not all costs are covered Only the portion of costs attributed to patients based on # of visits is covered MCO encounter payments are far below cost of visits - for Visits to 41

42 Current Visit- s for Clinic Visit- Insurance s for PCP Visits Encounter s - for Visits to Other Insured to to Weaknesses of Current System only pays 99% of costs, and not all costs are covered Only the portion of costs attributed to patients based on # of visits is covered MCO encounter payments are far below cost of visits Fee for service payments for insured patients are below cost per visit 42

43 Current Visit- s Do Not Cover of Clinic Visit- Loss Insurance s for PCP Visits Encounter s - for Visits to Other Insured to to Weaknesses of Current System only pays 99% of costs, and not all costs are covered Only the portion of costs attributed to patients based on # of visits is covered MCO encounter payments are far below cost of visits Fee for service payments for insured patients are below cost per visit 43

44 Is There a Better Way? Visit- Loss Insurance s for PCP Visits Encounter s - for Visits to Other Insured to to? 44

45 Most Clinic Are Fixed Regardless of # of Visits Visit- Loss Insurance s for PCP Visits Encounter s - for Visits to Other Insured to to Variable Of Operating Clinic Fixed Of Operating Clinic 45

46 Pay a Predictable Amount to Manage Care for Regular Visit- Population- Loss Insurance s for PCP Visits Encounter s - for Visits to Other Insured to to Risk- Adjusted Monthly Per Enrolled Patient Variable Of Operating Clinic Fixed Of Operating Clinic 46

47 Pay Per Visit for Occasional Visitors Visit- Population- Loss Insurance s for PCP Visits Encounter s - for Visits to Other Insured to to Per Visit for Non- Enrolled Risk- Adjusted Monthly Per Enrolled Patient Variable Of Operating Clinic Fixed Of Operating Clinic 47

48 Base a Portion of on Quality and Visit- Loss Insurance s for PCP Visits Encounter s - for Visits to Other Insured to to Population- P4P Per Visit for Non- Enrolled Risk- Adjusted Monthly Per Enrolled Patient Margin Variable Of Operating Clinic Fixed Of Operating Clinic 48

49 Population- for Primary Care Clinic Visit- Loss Insurance s for PCP Visits Encounter s - for Visits to Other Insured to to Population- P4P Per Visit for Non- Enrolled Risk- Adjusted Monthly Per Enrolled Patient Margin Variable Of Operating Clinic Fixed Of Operating Clinic 49

50 Proposed Model for Clinics 1. Comprehensive Primary Care (CPCSP) For patients formally enrolled with the practice, the clinic would receive a monthly, acuity-stratified payment for each patient that could be used to deliver a wide range of services, including services not currently billable or reimbursable under existing payment systems, such as care management and non-face-to-face visits 2. Encounter- (EBP) For patients who are not formally enrolled for ongoing care but come to the clinic for specific services, the clinic would receive a per-visit payment 3. Performance- The amounts of the CPCSP and EBP payments would be increased or decreased based on the clinic s performance in delivering quality care and on controlling total healthcare spending. 4. Optional Additional Monthly s Care Coordination/Management Behavioral Health Home Care 50

51 Clinic Model is Similar to Medical Home Pmts Comprehensive Primary Care Comprehensive Primary Care : Per-beneficiary per month payment for attributed patients amounts based on current average FFS payments per beneficiary to the practice, so practices with higher revenues under FFS continue to receive higher revenues WRHAP CAH Primary Care Clinic APM Comprehensive Primary Care : Three tiers of monthly payment per enrolled member based on physical or behavioral health conditions and presence of serious risk factors Care Management Fee: Five tiers of additional monthly payments per attributed beneficiary based on HCC risk scores and presence of dementia Performance Incentive Two components based on quality/utilization Single per patient payment regardless of patient needs; reduced for poor performance Continued FFS s s for all services to all patients but at 35%-60% of current rates Performance- Two components based on quality/utilization s increased or decreased based on good/poor performance s based on patient need as well as performance level Encounter- per visit only for patients who are not enrolled for monthly payment 51

52 State APM4 Proposal Visit- State APM4 Proposal Loss Insurance s for PCP Visits Encounter s - for Visits to Other Insured to to Quality P4P Per Visit for Non- Assigned Flat Per Patient for Assigned 52

53 State APM4 Proposal Would Not Match of Small Clinics Visit- State APM4 Proposal Loss Insurance s for PCP Visits Encounter s - for Visits to Other Insured to to Loss Quality P4P Per Visit for Non- Assigned Flat Per Patient for Assigned Variable Of Operating Clinic Fixed Of Operating Clinic 53

54 New Models Need to Pay More, Not Just a Different Way Emergency Department Primary Care Clinic Loss Insurance s for Visits - from & P4P Small Per Visit (Annual) Per Insured Resident Loss Insurance s for PCP Visits Encounter s - for Visits P4P Per Visit for Non- Enrolled Risk- Adjusted Monthly Per Enrolled Patient Current Proposed Current Proposed 54

55 Can We Afford to Pay More for CAH? Current System Improved Spending on CAH Current s to Critical Deficits Improved for Critical 55

56 Most Spending for Residents of WRHAP PHDs Occurs Elsewhere Current System Improved Total Healthcare Spending on District Residents s for Delivered by Providers Outside of Public District Spending on CAH Current s to Critical Deficits Improved for Critical 56

57 70-80% of Spending Does Not Go to PHD 57

58 A Big Increase for CAH is a Much Smaller Increase in Total Spending Current System Improved Total Healthcare Spending on District Residents s for Delivered by Providers Outside of Public District s for Delivered by Providers Outside of Public District 2% Increase Spending on CAH Current s to Critical Deficits Improved for Critical 10% Increase 58

59 Loss of Local Current System Failure of CAHs Total Healthcare Spending on District Residents s for Delivered by Providers Outside of Public District Spending on CAH Current s to Critical Deficits CAH Closes 59

60 Loss of Local Could Increase Total Spending Current System Failure of CAHs Total Healthcare Spending on District Residents s for Delivered by Providers Outside of Public District s for Delivered by Providers Outside of Public District Spending on CAH Current s to Critical Deficits CAH Closes 60

61 Better May Save More vs. Doing Nothing Current System Improved Failure of CAHs Savings for Payer Total Healthcare Spending on District Residents s for Delivered by Providers Outside of Public District s for Delivered by Providers Outside of Public District s for Delivered by Providers Outside of Public District Spending on CAH Current s to Critical Deficits Improved for Critical CAH Closes 61

62 Spending in WRHAP Counties is Below State & U.S. 62

63 Spending for Residents of WRHAP Counties 63

64 Spending for Residents of WRHAP Districts 64

65 There May Be Ways to Create Savings to Offset Higher s Current System Total Healthcare Spending on District Residents s for Delivered by Providers Outside of Public District Spending on CAH Current s to Critical Deficits 65

66 Many Examples of Potentially Avoidable Spending Total Healthcare Spending on District Residents Current System Avoidable Spending s for Delivered by Providers Outside of Public District Specialist visits for problems that could be addressed by a primary care provider admissions for problems that could have been avoided with better primary care readmissions that could have been avoided with better primary care, local rehabilitation, or home health care Unnecessary and duplicative laboratory tests and imaging studies Surgeries for back pain without an adequate trial of appropriate physical therapy receiving fruitless treatment or dying in the hospital due to lack of hospice services Spending on CAH Current s to Critical Deficits 66

67 Better for CAHs/RHCs Could Potentially Reduce Total Current System Improved Total Healthcare Spending on District Residents Spending on CAH Avoidable Spending s for Delivered by Providers Outside of Public District Current s to Critical Deficits Savings for Payer Avoidable s for Delivered by Providers Outside of Public District Improved for Critical 67

68 Win-Win-Win for, Payers, and Current System Improved Total Healthcare Spending on District Residents Spending on CAH Avoidable Spending s for Delivered by Providers Outside of Public District Current s to Critical Deficits Savings for Payer Avoidable s for Delivered by Providers Outside of Public District Improved for Critical Win for Win for Payers Win for 68

69 Instead of Viewing PHD as a Provider of Specific CURRENT FUTURE NOTE: Graph not drawn to scale LTC Nursing Facility Post-Acute Rehab Low-Complexity Medical Admissions Outpatient Laboratory and Imaging Basic ED Primary Care Clinic Care Management Behavioral Health Home Care 69

70 Give the PHD the Resources to Manage Population Health CURRENT FUTURE NOTE: Graph not drawn to scale LTC Nursing Facility Post-Acute Rehab Low-Complexity Medical Admissions Outpatient Laboratory and Imaging Basic ED Primary Care Clinic Care Management Behavioral Health Home Care LTC Nursing Facility POPULATION Post-Acute HEALTH Rehab MANAGEMENT Home Care Low-Complexity DISTRICT Medical Primary Admissions Care Outpatient Medical Laboratory Home and Imaging Emergency & Basic Essential ED Behavioral Home Health & Care Community- Management Long-Term Care Primary Care Clinic 70

71 Replace Low, Complex s w/ a Simple, Value- System CURRENT FUTURE NOTE: Graph not drawn to scale LTC Nursing Facility Post-Acute Rehab Low-Complexity Medical Admissions Outpatient Laboratory and Imaging Basic ED Primary Care Clinic Care Management Behavioral Health Home Care Deficit Per Diem for NF Commercial: Fees for / Fees for Visits MCO State Hosp. Rate FFS 100% Hosp. : 99% of Hosp&Clinic No for Care Mgt & Non-Traditional LTC Nursing Facility POPULATION Post-Acute HEALTH Rehab MANAGEMENT Home Care Low-Complexity DISTRICT Medical Primary Admissions Care Outpatient Medical Laboratory Home and Imaging Emergency & Basic Essential ED Behavioral Home Health & Care Community- Management Long-Term Care Primary Care Clinic Performance- Pmt FFS for Visitors & New Population- for Primary Care, Emergency, IP/OP, & Long-Term Care 71

72 NOTE: Graph not drawn to scale Reducing Avoidable Spending CURRENT Avoidable High-Complexity Admits/Procedures Avoidable Advanced Testing & Outpatient Procedures Avoidable Specialty Consults Trauma/Severe ED LTC Nursing Facility Post-Acute Rehab Low-Complexity Medical Admissions Outpatient Laboratory and Imaging Basic ED Primary Care Clinic Care Management Behavioral Health Home Care Outside the Community Deficit Per Diem for NF Commercial: Fees for / Fees for Visits MCO State Hosp. Rate FFS 100% Hosp. : 99% of Hosp&Clinic No for Care Mgt & Non-Traditional FUTURE Savings High-Complexity Admits/Procedures COORDINATED SPECIALTY Advanced Testing CARE & Outpatient Tele-Consults Procedures Specialty Appropriate Consults Trauma/Severe Tertiary ED LTC Nursing Facility POPULATION Post-Acute HEALTH Rehab MANAGEMENT Home Care Low-Complexity DISTRICT Medical Primary Admissions Care Outpatient Medical Laboratory Home and Imaging Emergency & Basic Essential ED Behavioral Home Health & Care Community- Management Long-Term Care Primary Care Clinic Performance- Pmt FFS for Visitors & New Population- for Primary Care, Emergency, IP/OP, & Long-Term Care 72

73 Next Steps Try to develop a proposal that meets the needs of both the WRHAP hospitals and the state and other payers Determine which hospitals are willing to participate as voluntary pilot sites Refine the details for phased implementation beginning as early as