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TRANSCRIPT
Bundled Payments2017 and Beyond
Outline for Discussion
This session will briefly review bundled payment models;
Insightful information on how bundled payment programs have grown;
We will also provide details on the newly proposed Episode Payment Models (EPMs);
We will suggest ideas how to strategically address EPMs for your organization;
Although the current administration may delay bundled payments, they are here to stay and work needs to get done to succeed with them.
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They’re Here!
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Session Description
Background Information – Healthcare Costs are a problem and CMS is taking steps to address;
Overview on Bundled Payments & Why CMS is promoting;
Review of CMS’ Common Bundled Payment Programs;
Cardiac Episode Payment Models in Chicago MSA 7/1/17 –Description;
Possible Approaches & Strategic Implications.
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17.8% of GDP
U.S. health care pending increased 5.8 percent to reach $3.2 trillion or $9,990 per person;
Hospital Care – 32% of total & costs increased 5.6% driven by continued growth in non-price factors (use and intensity of services);
Physician & Clinical Services – 20% of costs. Spending increased 6.3% despite lower prices;
Prescription Drugs – 10% of total costs. Spending increased by 9.0% in 2015.
2015 Healthcare Costs in the USA
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Accountable care models
Episode-based models
Oncology care model
Primary care transformation programs
Initiatives focused on Medicaid & CHIP Population
Initiatives designed to accelerate the development and testing of new payment and delivery models
Initiatives to speed the adoption of best Practices
Total of 82 Initiatives
Center for Medicare & Medicaid Innovation (CMMI) “Experiments”
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Value-based Care - Definition
Outcomes Cost Value
Outcomes are hard to measure but we’re in process of defining/refining
Costs are easily measurable
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Medicare’s commitment towards quality-based payments grows.
CMS Payment Changes 2015-2018
80%
20%
85%
30%
90%
50%
By 201820172016
Quality based payment programs
Hospital Value-Based Purchasing Hospital Readmissions Reduction Hospital-Acquired Condition Reduction End-Stage Renal Disease (ESRD) Quality Incentive Value-Based Modifier
Alternative payment programs
Pioneer Accountable Care Organization Medicare Shared Savings Program Bundled Payments for Care Improvement Comprehensive Primary Care Initiative
Patient Centered Medicare Homes Comprehensive End Stage Renal Disease Oncology Care Model Medicare/Medicaid Financial Alignment
All Medicare Payments
% of payments linked to quality programs
% of payments linked to alternative programs
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Historical Medicare Value-based Payment Demonstrations
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Medicare’s 1990’s Heart Bypass Bundled Payment Demonstrated Significant Savings
-HCFA 1998 Report Summary
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CMS’ move to Value-based reimbursement is NOT optional.
It effects everyone!
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Commercial Payors are also Investing in Value-based Care AETNA: “AETNA’s value-based payment models aim to pay for value
delivered, not services rendered”.
– Models: ACOs, PCMHs, P4P (cost/quality metrics), Bundled Payments
– Currently has 22% of spend running through VBCs touching 1.5M lives
BCBS: “Blue Cross Blue Shield Plans are Leading the Market in Developing and Executing VBC programs”.
– Models: ACOs, PCMHs, P4P programs, Bundled Payment Programs.
– 350 programs in 49 states, engaging 155,000 PCPs and 60,00 Specialists, covering more than 24 million BCBS enrollees.
United Healthcare: “Value-based contracting models represent an evolution in clinical and payment methodologies that will create quality and cost outcomes, foster greater accountability, and take advantage of innovations in medical technology”.
– Models: ACOs, PCMHs, Clinical Integration Payments, Premium Designations, Centers of Excellence Designations.
– Projected 50-70% of enrollees to be touched by VBC initiatives by 2016.
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The “Bundled” payment combines payment for physician, hospital and other provider services into a single payment.
Creates incentives for providers to deliver care more effectively through care coordination;
Providers may be jointly accountable and may realize a gain or loss based on how they manage resources;
Armed with information on historical costs, an organizations can begin to determine true value and/or emerging strategic issues;
May be “Prospective” or “Retrospective” in nature;
Other terms include Episode Payment Models (EPMs) and Episodes of Care Groupers (ECG’s).
Bundled Payment Overview
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Voluntary - Bundled Payment Care Initiative through 2017 –there are 341 hospitals (and additional provider participation);
Mandatory Hospital Bundles;
◦ Comprehensive Joint Replacement (CJR) – 2016 in 790 hospitals in 67 Metropolitan Statistical Areas (MSAs);
◦ Episode Payment Models (EPM)– Cardiac bundles – 7/1/17 in 1,127 hospitals and 98 MSAs – INCLUDING CHICAGO;
◦ Surgical Hip and Femur Fracture Treatment (SHFFT) – added to the existing CJR hospitals/MSAs;
◦ Cardiac Rehab Project – 45 EPM MSAs and 45 non-EPM MSAs (not including Chicago).
Two Main CMS Bundled Payment Programs
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JAMA Study published September 21, 2016
First 21 months of BPCI, Medicare payments declined more for BPCI-
participating hospitals than those provided in comparison hospitals;
With no significant change in quality outcomes.
Initial BPCI Performance Conclusions
Study Group3 YR
Baseline PatientsPerformance
Period Patients
BPCI Hospitals 27,441 31,700
Non BPCI Hospitals (control group) 29,440 31,696
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Initial BPCI Performance Conclusions cont’d
JAMA Study published September 21, 2016
First 21 months of BPCI, Medicare payments declined more for BPCI-participating hospitals than those provided in comparison hospitals;
With no significant change in quality outcomes.
Study Group3 YR
Baseline PatientsPerformance
Period Patients
BPCI Hospitals (178) 27,441 31,700
Non BPCI Hospitals (control group) 29,440 31,696
Study Group3 YR Baseline Cost/Patient
(90 day episode)
Performance Period Cost/Patient
(90 day episode)Change Reduction %
BPCI hospital costs 30,551 27,265 (3,286) 12.1%
Non BPCI Hospital Costs 30,057 27,938 (2,119) 7.6%
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$104,166,200 – Savings from BPCI Participants
$62,383,360 - Savings from control group
$166,549,560 - Total Savings to Medicare from study participants!
This explains CMS interest in Bundled Payments
JAMA Conclusions –21 Month Savings to Medicare
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Reducing Costs associated with initial hospitalization (Hospital payments);
Reducing COSTs associated with the 90 day bundle (CMS cumulative payments);
From a Risk perspective, hospital internal costs reductions do NOT change the costs associated with the bundle (CMS payments).
Achieve quality requirements (CMS is changing to make sure these programs qualify as an “Advanced APM (under MACRA)
Generic CMS Bundled Payment Savings Paradigm – General Framework
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More on CMS Bundled Payment Savings Paradigm– Initial Hospital Stay
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Minimal variation exists within the initial hospital stay
Patient Name Hospital Part B Acute Totals
a $10,124 $2,233 $12,357
b $10,124 $2,280 $12,403
c $10,630 $1,810 $12,440
d $10,124 $2,336 $12,460
e $10,124 $2,439 $12,563
f $10,654 $1,932 $12,586
g $10,654 $1,995 $12,649
h $10,654 $1,998 $12,652
i $10,124 $2,592 $12,716
j $10,124 $2,601 $12,725
k $10,563 $2,166 $12,729
l $10,654 $2,079 $12,733
m $10,359 $2,381 $12,740
n $10,654 $2,100 $12,755
o $10,563 $2,201 $12,763
p $10,359 $2,413 $12,771
q $10,124 $3,044 $13,168
r $10,654 $2,556 $13,210
s $10,563 $2,763 $13,325
t $10,654 $2,673 $13,327
More on CMS Bundled Payment Savings Paradigm– Post Acute Spend
Tremendous variation exists in the post acute environment
Patient Name Hospital Acute Totals Post Acute Totals Episode Totals
a $10,124 $12,357 $2,023 $14,375
b $10,124 $12,403 $23,898 $36,297
c $10,630 $12,440 $45,585 $58,022
d $10,124 $12,460 $6,687 $19,143
e $10,124 $12,563 $24,419 $36,980
f $10,654 $12,586 $12,333 $24,915
g $10,654 $12,649 $2,709 $15,352
h $10,654 $12,652 $4,041 $16,689
i $10,124 $12,716 $66,066 $78,776
j $10,124 $12,725 $25,024 $37,739
k $10,563 $12,729 $31,992 $44,715
l $10,654 $12,733 $10,978 $23,701
m $10,359 $12,740 $40,583 $53,323
n $10,654 $12,755 $2,559 $15,305
o $10,563 $12,763 $29,833 $42,587
p $10,359 $12,771 $26,879 $39,638
q $10,124 $13,168 $25,909 $39,071
r $10,654 $13,210 $90,096 $103,288
s $10,563 $13,325 $7,521 $20,842
t $10,654 $13,327 $22,365 $35,686
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Internal costs of providing care are important but do not dictate success under a bundled payment program;
Acute care totals & Hospital DRGs are essentially a fixed cost component to the program;
Post-Acute – Variable expenses and the key to success under a CMS bundled payment program
Conclusions
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DRG payment is nothing more than an interim payment to the hospital
Success/failure under the bundled payment program is the ultimate payment (and an adjustment to the DRG payment)
Welcome to value-based reimbursement & the new paradigm!
CMS Bundled Payment Program Summary
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Voluntary Bundles; Bundled Payments for Care Initiative (BPCI )
BPCI Models
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= Current = Proposed
Voluntary Bundles; BPCI - Summary
Target prices determined on 3 years historical costs & trended forward;
Target prices determined 100% based on organizations historical experience;
4 Model programs were introduced;
CMS program from 2013 through 2017;
The breakdown of participants by provider type as follows:
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Provider Type Participants
Acute Care Hospitals 341
Skilled Nursing Facilities 622
Physician Group Practices 252
Home Health Agencies 81
Inpatient Rehab Facilities 9
How BPCI Works
For Model , awardees guarantee a 2% savings to CMS (historical price less 2% savings = Target Price). For Model 3, CMS required a minimum 3% savings.
Retrospective Model - CMS processes all claims at 100% of allowed charges for all providers.
Organizations must achieve quality measures but were able to propose their own (therefore does NOT qualify as an Advanced APM program under MACRA.
CMS introduced a number of waivers – Most popular enabled physician gainsharing up to 50% of their professional services.
CMS provides quarterly reconciliations:
– CMS adjusts Trend/Wage index factors
– If the sum of individual patients claim costs are less than the Target Price, the organization retains 100% of this surplus.
– If the sum of individual patients’ claim costs are greater than the Target Price, the organization owes CMS this difference.
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Voluntary Bundles; Bundled Payments for Care Initiative Advanced
(BPCI Advanced)
New program to be introduced – 2018 and beyond;
Will qualify for Advanced APM status which means CMS will mandate quality measures.
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Comprehensive Care for Joint Replacement (CJR) Program
CJR Statistical Summary
Design principals similar to BPCI;
790 hospitals began testing the CJR model in 2016;
67 MSAs;
Published reports have estimated that 2/3rds of hospitals will lose money on this program;
Surgical Hip and Femur Fracture Treatment (SHFFT) was added to the current CJR mandate;
Excludes Chicago market.
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Episode Payment Models (EPMs)
The Proposed Models
In August 2016, the CMS Innovation Center published a proposed rule;
The rule proposes:
◦ Three new episode payment models (EPMs)
◦ A Cardiac rehabilitation (CR) incentive payment model
◦ Refinements to the (CJR) model
The new payment models begin on July 1, 2017 an continue through December 31, 2021 (5 performance years);
The models are intended to provide the opportunity to achieve high quality care, improve health for beneficiaries, and reduce Medicare spending.
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Acute Myocardial Infarction (AMI Episodes);◦ AMI DRGs: 280-282 and PCI DRGs: 246-251 with AMI ICD-
CM diagnosis code
Coronary Artery Bypass Graft (CABG) episodes;◦ MS-DRGs: 231-236
98 MSAs randomly selected including Chicago;
Episode Length – Initial hospital admission plus 90 days discharge.
Cardiac EPMs - Overview
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Target Prices – phased towards regional price targets by DRG. 1st year is 2/3rd historical costs & 1/3 regional;
Discount to CMS – 3% but this can be adjusted to as low as 1.5% based on performance on quality measures;
Hospitals will be provided with historical experience & development of Target Prices.
EPM Basics
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Cardiac EPM Quality Measures
AMI Quality Measures:
◦ Hospital 30-Day, all-cause, risk-standardized mortality rate (RSMR) Following Acute Myocardial Infarction (AMI) Hospitalization (NQF # 0230) (MORT-30-AMI)
◦ Excess Days in Acute Care after Hospitalization for AMI
◦ HCAHPS Survey (NQF# 0166)
◦ Voluntary Hybrid Hospital 30-Day, all-cause, risk-standardized Mortality Measure (NQF # 2473) (Hybrid AMI Mortality) data submission
CABG Quality Measures:
◦ Hospital 30-Day, all-cause, risk-standardized mortality rate (RSMR) Following Coronary Artery Bypass Graft (CABG) Surgery (NQF # 2558) (MORT-30-CABG)
◦ HCAHPS Survey (NQF # 0166)
Good performance reduces the discount to CMS by 50% (3% down to 1.5%).
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Cardiac EPM Sharing Gains and Losses
New term - collaborators to support efforts to improve quality and reduce costs;
Collaborators may include:◦ Physician and non-physician practitioners◦ Home Health agencies◦ Skilled Nursing facilities◦ Long term care hospitals◦ Physician group practices◦ Inpatient rehabilitation facilities◦ Providers of outpatient therapy services◦ Hospitals◦ Critical access hospitals◦ Accountable care organizations (ACO) that participate in the MSSP
Gainsharing payment or losses must be based on quality of care and provision of EPM activities;
Gainsharing capped at 50% for physicians. Enables gainsharing programs with physician group practices;
The EPM must retain 50% of the downside risk, but can share the remaining risk with collaborators (limited to 25% with an one collaborator and 50% with an ACO).
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Cardiac EPM Waivers
Gainsharing - of federal fraud and abuse laws, due to financial arrangement opportunities
Of the 3-Day SNF rule for the AMI model in year 2
Home Visits Waiver
Telehealth Waiver
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Cardiac EPM Beneficiary Protections
Beneficiaries’ access to care would not be impacted by EPMs;◦ Copayments would not change
◦ May still select any provider of choice with no restrictions
◦ May still receive any Medicare covered service with no new restrictions
◦ EPM participants are required to notify beneficiaries of the payment model
Beneficiaries can only be offered certain items or services that are reasonably connected to their medical care during the episode.
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Cardiac Rehabilitation (CR) Incentives
90 MSAs in total; 45 participating in EPMs (out of 98 in total) & 45 not. Excludes Chicago;
CMS will incent cardiac rehabilitation services utilization post-discharge within the 90-day episode:
◦ First 11 CR services post-discharge from CABG or AMI admission: $25
◦ Remaining CR services in 90-day episode: $175
CMS believes CR is capable of achieving significant improvements in patient outcomes, but is currently underutilized;
An annual, reconciliation report and payment will be issued;
CMS will allow transportation to/from CR services as a beneficiary engagement incentive.
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The break down on Cardiac EPM spending How costs have been disbursed for each cardiac service can
suggest an approach to reduce spending:
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CategoryCosts
Related to IP Stay
Readmission Costs
Suggested Approach to Reduce Spending
AMI 35% 22%Establish an effective care continuum to prevent readmissions
CABG 60-70% 6%
Most patients are discharged to a SNF; develop post-acute protocols and preferred partners. Medical Device utilization.
Cardiac EPMs –Impact on Local Hospitals
Industry Sources examined 2013-2014 data from CMS under the proposed EPM. They found that:
◦ 85% of hospitals would not have gains or losses exceeding $500,000 per year.
◦ However, 15% could experience significant penalties.
◦ Hospitals with higher cardiac care spending are more likely to struggle to meet CMS targets.
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CABG Hospital X Regional
Episodes 109 13,141
Cost per Episode 36,845 41,554
Anchor Inpatient 29,050 32,435
Skilled Nursing Facility 2,925 2,476
Home Health Agency 2,159 1,565
Inpatient Readmits 1,597 3,639
Outpatient 1,113 1,439
Facility after initial discharge
Home Health 30,357
Skilled Nursing 45,510
Other Inpatient Facility 42,845
Perspective – Brief Glance at One Chicagoland Hospital (2014 & 2015 combined numbers)
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AMI Hospital X Regional
Episodes 175 32,266
Cost per Episode 19,907 20,738
Anchor Inpatient 7,613 8,213
Skilled Nursing Facility 5,332 3,313
Home Health Agency 5,169 6,903
Inpatient Readmits 1,003 901
Outpatient 790 1,408
Facility after initial discharge
Home Health 15,695
Skilled Nursing 30,152
Other Inpatient Facility 21,005
Development of Target Prices (Simplified Summary)
Summary / EpisodeAnnual Episode
Estimate2 Yr Cost Ave
Approx. Target Price
CABG 55 36,845 37,261
AMI 88 19,907 19,578
1st year target price = 2/3 Hospital and 1/3 regional costs.
Moves to 100% regional over 5 year period.
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Summary / EpisodeAnnual Episode
Estimate2 Yr Cost Ave
Approx. Target Price
CABG 55 36,845 37,261
AMI 88 19,907 19,578
Annualized Totals Current Costs Target Price Costs
CABG 2,008,053 2,030,708
AMI 1,741,863 1,713,093
Totals 3,749,915 3,743,802
1st year target price = 2/3 Hospital and 1/3 regional costs.
Moves to 100% regional over 5 year period.
Even though this hospital had better then avg. costs, it is essentially a breakeven at starting point.
Stop loss/stop gain – 5% of target moving to 20% over 5 years.
Development of Target Prices (Simplified Summary)
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Summary / EpisodeAnnual Episode
Estimate2 Yr.
Cost AveApprox.
Target Price
CABG 55 36,845 37,261
AMI 88 19,907 19,578
Development of Target Prices (Simplified Summary)
Annualized Totals Current Costs Target Price Costs
CABG 2,008,053 2,030,708
AMI 1,741,863 1,713,093
Totals 3,749,915 3,743,802
Value of achieving quality (1.5% of Target Price)
CABG 30,461
AMI 25,696
Totals 56,157
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1st year target price = 2/3 Hospital and 1/3 regional costs.
Moves to 100% regional over 5 year period.
Even though this hospital had better then avg. costs, it is essentially a breakeven at starting point.
Stop loss/stop gain – 5% of target moving to 20% over 5 years.
Performance on quality measures are important and hospitals are already performing measures.
Achieve program quality measures;
Collaborate with physicians & post acute
network;
Success is primarily a function of post acute
expenses;
◦ Reduce readmits – complications are expensive
◦ Avoid inpatient rehab where possible
◦ Lower SNF lengths of stay (and avoid where possible)
◦ Expand home health services
CMS Episodes of Care Basics
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Approach Action Steps
Minimum financial impact too small & too many other initiatives
Education & Monitoring of results
Moderate- some investment related to value-based medicine
Development of Post-Acute Network & steerage
Specific Strategies related to reducing Readmits
Aggressive - additional investment
Develop & invest in Care Redesign
May tie this to existing ACO engagement initiative
Gainsharing with physicians/others
Hiring of Care coordinators
Investment in technology
All In - playing to win Seek to implement BPCI Advanced for 2018
Possible Approaches to Review
Every hospital will need to understand the underlying data and methodology;
Will start with a capabilities/readiness assessment for each hospital.
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Care Redesign Workflow
Map existing episode care management workflow;
Highlight process gaps based on industry leading and evidence-based practices;
Identify workflow value points and high-return opportunities for improvement;
Present alternative workflow design(s) and related performance enhancements;
Determine resource needs and return on investment (ROI) for changes.
Provider Alignment and Sharing Arrangements
Determine gainsharing opportunities;
Determine internal cost savings opportunities (optional);
Engage providers in sharing model and design;
Annual accounting and distribution of funds.
Care Redesign & Alignment Summary
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Transparent Results – Expect all of the results to be publicly available;
Advantages to size & scale – Greater ROI on investments with larger volumes;
Coordination of Care through an Episode of Care will work – higher outcomes/lower costs;
Don’t forget Advanced APM – it’s a winner for physicians and hospitals;
Winners will also grow market share.
Longer Term Implications / Summary
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Questions & Open Discussion
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Thank you FIHFMA & Chicago Health Executive Forum for hosting a great program today!
Chad Beste
Partner, PBC Advisors, LLC
Visit us at www.pbcgroup.com