Bundled Payments Getting it Right! Christopher McBride, V.P., TRG

Transcription

1 Bundled Payments Getting it Right! Christopher McBride, V.P., TRG 1

2 TRG Overview Founded in 2001, Located in Denver, CO (Division of Vizient) Clients include Physician Practices, Hospitals, and Health Systems Key Focus is Physician-Hospital Alignment Higher Quality Lower Cost Better Patient Experience Have Been Involved in Every Medicare Bundled Payment- Related Effort Since the Participating Centers of Excellence in the 1990s Currently Working with Over 30 Hospitals and 60 Physician Groups in Models 2 and 4 of BPCI as well as CJR 2

3 Today s Topics 1. Bundled Payments Payors and Bundled Payments The 20+ Year Tango 3. BPCI Bigger and Bolder than Anything Before 4. CJR The Choice Isn t Yours 5. The Future and Some Wise Words 3

4 Bundled Payments Who, What, How? The Antithesis of Per-Click, Fee-for-Service Medicine Q: Average # of Claims for a Total Joint Surgery (MS DRG #470) over a 90 day episode? Answer: 25 A Method of Creating Transparency and Price Predictability through Shifting Risk from Payer to Provider 4

5 Air Travel in the Unbundled Age Ticketing Fees Change Fees Checked Bag Fees Carry-On Fees Lavatory Fees (!!) The study named United as the top airline for producing ancillary revenue in the world, estimating its annual haul at $5.86 billion. What were once habits are now vices (with apologies to The Doobie Brothers) 5

6 Bundled Payment Success Story Fee Free (40+ Years of Profitability ONLY Major US Airline to NEVER File for Bankruptcy) 6 6

7 What s the Magic Word? 7

8 Key Objectives of Bundled Payments At a Minimum, Bundled Payments Look to: Create a Fixed and Predictable Transparent Reimbursement per MS-DRG Include all Hospital and Physician Services Rendered During an MS-DRG LOS including 72 Hours Prior for the Hospital and, Increasingly, 90 Days Post-Discharge Inclusive of Many Components Eliminate Outlier Payments Shift Risk for the Good, Bad, and Ugly to Providers RISK Providers Payers 8

9 Volume to Value: CMS Announces Goals Medicare move towards Alternate Payment Models (ACO and Bundles) Year 30% % 2018 Medicare payments tied to quality or value Year 85% %

10 Bye-Bye Fee-for-Service It s So 90s Our first goal is for 30% of all Medicare provider payments to be in alternative payment models that are tied to how well providers care for their patients, instead of how much care they provide and to do it by Our goal would then be to get to 50% by Sylvia Mathews Burwell, HHS Secretary, January 26, 2015 What percent of system revenue will be in valuebased agreements by 2020? <25% >75% 50 75% Source: 2015 Survey, MedAssets Healthcare Executive Forum 26 49% 10

11 MEDICARE SPENDING ($B) The Shift to Fee-for-Value Alternative Payment Model (APM) Reimbursement Alternative Payment Models Fee for Services 287 $186B Increase in APM reimbursement

12 PAYORS AND BUNDLED PAYMENTS Bundled Payments Te Adoro! The 20+ Year Tango Then Why Haven t You Married Me? 12

13 The Father of Bundled Payments 13

14 You Heard It Here First Of the many 'firsts' with which I have been involved at the Texas Heart Institute including the first successful human heart transplant in the United States and the first total artificial heart transplant in the world the achievement that may have the greatest impact on health care did not occur in the operating room or in the research laboratory. It happened on a piece of paper... when we created the first-ever packaged pricing plan for cardiovascular surgical procedures. Denton Cooley 14

15 Medicare s 20+ Years of Bundled Payment Demonstration Projects In the Beginning 1991 Medicare Participating Heart Bypass Demonstration Implemented 15

16 Medicare s 20+ Years of Bundled Payment Demonstration Projects In the Beginning Medicare Participating Heart Bypass Demonstration Sites St. Vincent s Hospital, Portland St. Joseph Mercy Hospital, Ann Arbor Methodist Hospital, Indianapolis University Hospital, Boston The Ohio State University Hospital, Columbus St. Joseph s Hospital of Atlanta St. Luke s Episcopal Hospital/THI, Houston 16

17 Early Private Payor Bundled Initiatives 17

18 Medicare s 20+ Years of Bundled Payment Demonstration Projects The Long and Winding Road 1996 Medicare Participating Centers of Excellence Demonstration Cardiovascular and Orthopedic Not Implemented 1997 Medicare Provider Partnership Demonstration All Inpatient DRGs Not Implemented 2001 Medicare Participating Centers of Excellence Demonstration Cardiovascular and Orthopedic Not Implemented 18

19 The Case for ACE National Health Expenditure Growth Period of initial demonstrations SOURCE: U.S. Department of Health and Human Services 19

20 Then Along Came ACE 2008 Acute Care Episode ( ACE ) Demonstration Cardiovascular and Orthopedic Implemented 4 State Focus: Colorado, New Mexico, Oklahoma and Texas Ortho 90 Medicare Hip and Knee; 125 Total Cardiac 100 Medicare CABG / VALVE; 200 Total All-Payor 200 Medicare PTCAs; 400 Total All-Payor Hospitals Submitted Bundled Pricing Bids for 28 Cardiovascular and/or 9 Orthopedic DRGs Inclusive of Medicare Discount (Discount not Prescribed) Bundled Bid was Inclusive of ALL Part A, Part B, Outliers, and Capital Pass-Through Reimbursements for IP Episode Medicare Shared 50% of Savings with Medicare Beneficiaries Physicians Could Make Up to 25% Above Medicare FFS through Gainsharing All Claims Adjudication and Payment Facilitated by a Single Fiscal Intermediary (TrailBlazer) 20

21 2008 Then Along Came ACE Oregon Idaho Montana Wyoming South Dakota Minnesota Wisconsin Michigan Nebraska Iowa Nev ada Utah Colorado Kansas Missouri Lovelace Health System, Albuquerque California Arizona New Mexico Exempla Saint Joseph Hospital, Denver Hillcrest Medical Center, Tulsa Illinois Indiana Kentucky Oklahoma Tennessee Arkansas Oklahoma Heart Hospital, Oklahoma City Alabama Texas Louisiana Baptist Health System, San Antonio Florida 21

22 ACE Aced It! Baptist Health System of San Antonio Took $1 Million Out of Operating Costs through Gainsharing Opportunities Shared with Physicians Three Months After Project Commencement, Hillcrest Medical Center in Tulsa Experienced their Largest Volume Month Ever Hillcrest Saw a 40% Decrease in Total Costs for Orthopedic Services Coordination of Care Amongst Providers Baptist Reduced 96 Order Sets to 1 22

23 Overall Positive ACE Results Hospital A Hospital B Hospital C Hospital D CMS Volume/Market Share Cost Reduction Physician Alignment Quality Would you do it again? Yes Yes Yes Yes Yes Source: TRG interpretations of verbal and written surveys and CMS publications 23 23

24 Bundled Payments The Devil s in the Details Q: IF BUNDLED PRICING IS SUCH A GREAT IDEA, WHY HASN T IT CAUGHT ON? 1. Medicare Dropped the Ball in 1996 Over 100 Hospitals Applied to Participate Y2K and the Balanced Budget Act 2. Payer Steerage/Limiting Choice The Go-Go Days of the 1990s 3. Historic Difficulty in Managing a Single Payment FIs Different for Parts A and B 24

25 Bundled Payments Traditional Prospective Model HOSPITAL REIMBURSEMENT $$$ ALL CONSULTING PHYSICIAN REIMBURSEMENT $$$ CORE PHYSICIAN REIMBURSEMENT $$$ BUNDLED PRICE 25

26 Medicare Cracks the Code on Bundled Payment Methodology 26

27 2011- Bundled Payments for Care Improvement (BPCI) Open to ALL Hospitals Across the Country Enabled Non-Hospital Entities to participate (e.g. Physicians, Remedy, navihealth, etc.) Select from 48 Episodes Consisting of 181 MS-DRGs Four Possible Participation Models; 3 of Which Include Significant Post-Operative Care Common Discount Percentage No Market Exclusivity No Savings Payment to Beneficiaries but Physicians Eligible to Earn 50% Above Medicare FFS through Gainsharing 3 of 4 Models are RETROSPECTIVE with Spend Reconciliation i.e. All Providers Bill and Collect as Normal 27

28 2011- Bundled Payments for Care Improvement (BPCI) 3 Year Voluntary Program 4 Models; Over 1500 Participants Model 2 is the Most Inclusive BPCI Model Includes Acute A&B, 90-Day Post-Discharge Related Readmissions and Virtually All Post-Acute Expenditures Except Hospice Participants Agree to Reduce Medicare s Historical Spend by 2% Overall If Successful in Reducing Below the 2% Discounted Target Price, Participants Retain Savings If Unsuccessful, Participants Owe CMS the 2% Plus Any Overages BPCI Model 2 Gave Impetus and Birth to CJR 28

29 Bundled Payments for Care Improvement (BPCI) Initiative BPCI Initiative: Model 1 Total number of Participants:11 BPCI Initiative: Model 2 Total number of Participants: 628 BPCI Initiative: Model 3 Total number of Participants:859 BPCI Initiative: Model 4 Total number of Participants:9 29

30 BPCI Model 2 Target Pricing The Black Box 30

31 BPCI Model 2 Target Pricing: Reconciliation Summary MS- DRG Risk Track MS-DRG Baseline Price, Before Discount National Trend Factor Target Price Calculation Ratio of Wage Adjustment Factors MS-DRG Performance Period Benchmark Price 469 A $43, $43,987 $43, A $23, $23,353 $22,886 MS-DRG Performance Period Target Price, Discounted MS- DRG Risk Track Number of Performance Period Episode Cases Total Performance Period Target Amount Performance Period Results Total Performance Period Unadjusted Amount Total Performance Period Adjusted Amount Net Payment Reconciliation Amount (NPRA) 469 A 18 $775,939 $609,084 $609,084 $166, A 220 $5,034,918 $4,846,487 $4,819,119 $215,799 $382,655 31

32 BPCI Model 2: Target Price Construction: Baseline Trending Target Price Calculation MS- DRG Risk Track MS-DRG Baseline Price, Before Discount National Trend Factor Ratio of Wage Adjustment Factors MS-DRG Performance Period Benchmark Price MS-DRG Performance Period Target Price, Discounted 469 A $43, $43,987 $43, A $23, $23,353 $22,886 Historical claims data captures admissions from July 2009 June 2012 for eligible* BPCI patients Eligible BPCI patients are traditional Medicare Fee-for-service beneficiaries that must be enrolled in both Parts A and B, must not be enrolled in a Medicare Advantage plan, must not have End Stage Renal Disease, and must not have Medicare as a secondary payer Trend earlier two years of data to be in terms of 2012 dollars Winsorize payments using trim points for the selected Risk Track Apply low volume adjustments Apply national case mix indices 32

33 BPCI Model 2: Target Price Construction: National Trend Factor Target Price Calculation MS- DRG Risk Track MS-DRG Baseline Price, Before Discount National Trend Factor Ratio of Wage Adjustment Factors MS-DRG Performance Period Benchmark Price MS-DRG Performance Period Target Price, Discounted 469 A $43, $43,987 $43, A $23, $23,353 $22,886 National Trend Factor, as defined by CMS: i.e. changes in MS-DRG mean episode payments for all episodes nationally between the performance quarter and the baseline period, which capture health care market basket changes 1, policy changes 2, and secular trends 3 that affect service volume and prices nationally For Example 1. MS-DRG Payment Changes 2. Sequestration 3. National Utilization Changes 33

34 BPCI Model 2: Target Price Construction: Wage Adjustment Factors Target Price Calculation MS- DRG Risk Track MS-DRG Baseline Price, Before Discount National Trend Factor Ratio of Wage Adjustment Factors MS-DRG Performance Period Benchmark Price MS-DRG Performance Period Target Price, Discounted 469 A $43, $43,987 $43, A $23, $23,353 $22,886 Ratio of Wage Adjustment Factors The baseline price gets adjusted either up or down depending on what has happened to the wage indices at the hospitals that you practice at; CMS does not want to artificially penalize/reward you for changes in area wages Wage Factor Performance Period Wage Factor Ratio of Wage Adjustment Factors

35 BPCI Model 2: Target Price Calculation: Winsorization How Medicare Adjusts for Risk Participants selected from three risk tracks, each having a unique lower and upper threshold Highest Risk/Opportunity Lowest Risk/Opportunity 1 st %tile 5 th %tile A B C 99 th %tile 95 th %tile 5 th %tile 75 th %tile Threshold values are established utilizing the distribution of episode payments nationally Payments below the lower threshold will be brought up to equal the lower threshold for calculation purposes Payments above the upper threshold will be brought down to equal the upper threshold, plus 20% of the difference between the threshold and the actual payment Both the baseline and the performance period episode payments are adjusted 35

36 BPCI Model 2: Target Price Construction: The True-Up Process When does it occur? Each quarter is trued-up three times after the originally released reconciliation; quarterly results are not considered final until the third true-up Performance Period Quarter Original Reconciliation First True-Up Second True- Up Final True-up Q January 2016 April 2016 July 2016 October 2016 Q April 2016 July 2016 October 2016 January 2017 Q July 2016 October 2016 January 2017 April 2017 What can change? Trend factors, winsorization trim points, and performance period total spend are all recalculated Episodes can potentially fall out of the program (e.g. if a patient enrolls in a Medicare Advantage plan) Additional claims can be processed 36

37 2016: CJR: Required i.e. MANDATED Participants All IPPS hospitals within the 67 selected MSAs (approx. 800 hospitals) The selection process utilized a stratified random sampling methodology of all MSAs with the following exclusions: 1. MSAs with less than 400 LEJR episodes 2. MSAs with less than 400 non-bpci LEJR episodes 3. MSAs with greater than 50% of eligible CJR episodes currently in Phase 2 of BPCI 4. MSAs with greater than 50% of eligible CJR episodes not paid under IPPS 37

38 The Basics of CJR Defining CJR Program Timeframe Included Services Reconciliation CJR is a mandatory bundled payment program for Lower Extremity Joint Replacement episodes, as initiated by MS-DRGs (unlike BPCI, consideration is given for patients with fractures) The program begins on April 1, 2016 and runs for almost five years until December 31, 2020 Services that occur during the anchor hospitalization and spanning through 90 days post-discharge Inpatient Hospital Services, Professional Services, Readmissions, Skilled Nursing Facility, Inpatient Rehab Facility, Long Term Care, Home Health, Outpatient, Durable Medical Equipment, Hospice Annual retrospective reconciliation of Medicare s actual spend versus the target price Does not impact provider payments 38

39 The Basics of CJR Target Price Quality Risk Protection Waivers Based on 3 year historical spend that blends hospital-specific performance with a regional average Discount between 1.5% - 3.0% depending on a hospital s quality composite score Hospitals will know the Target Price in advance unlike BPCI Quality performance is required to be eligible for a reconciliation payment Includes 2 mandatory metrics: THA/TKA Complication Rate HCAHPS CMS has implemented stop-loss and stop-gain limits on aggregate NPRA to minimize risk Stop Gain: 5%, 5%, 10%, 20%, 20% Stop Loss: 0%, 5%, 10%, 20%, 20% Allow for gainsharing arrangements with physicians and other providers 39

40 The Big Difference Between BPCI and CJR We propose to calculate (CJR) episode target prices using a blend of hospital-specific and regional historical average (CJR) episode payments, including (CJR) episode payments for all (CJR) eligible hospitals in the same U.S. Census division Page 119, CMS-5516-P Years 1 and 2: 2/3 Hospital, 1/3 Regional Year 3: 1/3 Hospital, 2/3 Regional Years 4 and 5: 100% Regional and the Target Price baseline will be updated every two years to a more recent 3-year period (i.e. 3 baselines throughout CJR) If a hospital has historically been lower than the region, the hospital will be rewarded as they are measured against a target price that has been inflated by the regional experience. If a hospital has historically been higher than the region, the hospital will be penalized as they are measured against a target price that has been deflated by the regional experience. 40

41 Are Bundled Payments the Future? CHF? COPD? CABG? Fee-for- Service? 41

42 Are Bundled Payments the Future? Being an ally of the United States is like living on the banks of an enormous river. The soil is wonderfully fertile but every four or eight years the river changes course and you may find yourself alone in a desert. Muhammad Zia-ul-Haq President of Pakistan

43 Are Bundled Payments the Future? CMS Pays the Bills for 1 out of Every 3 People in the United States 43

44 Providers Unable to Successfully Manage the Episode Will Be Pushed Out of the Game CJRI and ConnectiCare ACE demonstration Anthem BCBS of MO and SSM Health Care CalPERS reference pricing Bundled Payments for Care Improvement initiative National Orthopaedic & Spine Alliance Duke and BCBS of NC CMS proposes and finalizes CJR rule BPCI is extended for 2 add l years Kroger designates 19 hospitals for total joint replacement NC Specialty Hospital and BCBS of NC Innovation Escalates Florida Ortho Institute and Florida Blue Walmart partners with hospitals for spine surgery General Electric pursues direct contracting strategy. 4 Centers designated for TJR CCF Creates National Heart Network. Targets 24 sites for bundled pmt contracting Bundles are the default reimbursement for Medicare TJR. CMMI Initiatives Commercial Direct to Employer Future Prediction ACE = Acute Care Episode; BCBS = Blue Cross and Blue Shield; CalPERS = California Public Employees Retirement System; CJR = Comprehensive Care for Joint Replacement; CJRI = Connecticut Joint Replacement Institute; TJR = total joint replacement. 44

45 Current Private Payor Bundled Payment Initiatives 45

46 How to Prepare for a Bundled Future Begin Changing Mindset and Focus No Longer Volume per se Participate in any Bundled Opportunities Look Local! Look Beyond the Four Walls of the Hospital to Establish Relationships with High Quality, Efficient Providers If You Have Employed or Contracted Physicians on a wrvu Model, Evaluate Other Structures Begin Sharing Relevant Data with Physicians Determine Who Efficient, High Quality Physicians Are ENGAGE YOUR PHYSICIANS!! 46

47 CASE STUDY: BPCI Model 2: SIGNATURE MEDICAL GROUP Awardee Convener CMS Bundled Payments for Care Improvement (BPCI) Convener for Largest Orthopedic Bundled Payment Initiative 47

48 CASE STUDY: BPCI MODEL 2; SIGNATURE MEDICAL GROUP 48

49 CASE STUDY: BPCI MODEL 2; SIGNATURE MEDICAL GROUP PARTICIPATING ORTHOPEDIC GROUPS IN 26 STATES & OVER 60 CITIES 49

50 CASE STUDY: BPCI MODEL 2; SIGNATURE MEDICAL GROUP RESULTS Q1 and Q2 of 2015 Readmissions Reduced 12 to 70% SNF Unnecessary Utilization Reduced 10 to 50% IRF Unnecessary Utilization Reduced 30 to 80% Average Patient Satisfaction Scores over 97% Selected Quality measures achieved and frequently surpassed Average ICS Savings (Implant Costs BPCI Cases Only) : $887 per Case Note: Physician Gainsharing Maximum Approximately $700 per Case Top Performing SMG Groups Have Reduced Episode PAC Spend Between $2750 and $3750 per Case 50

51 How Much Does the Average Orthopedic Surgeon Know About Costs? % of Surgeons that could correctly identify the costs of the implants they use Correct Incorrect 79% 21% Correct Incorrect 503 Surgeons (96%) responded Okike et al., Health Affairs (Millwood) Jan; 33(1):

52 The Art of Anticipation 52

53 The Art of Anticipation I skate to where the puck is going to be, not to where it is. --Wayne Gretzky All-Time NHL Point Leader 53