how do we get paid for that? a look at value-based methodologies shaping up in michigan michigan...
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How do we get paid for that? A Look at Value-Based Methodologies Shaping Up in Michigan
Michigan Primary Care Association2015 Annual Conference
www.mpca.net
Our Time TodayEnvironmental ScanHow Health Centers are Paid
TodayWhat’s ChangingProminent Payment Reform
Models and What they Mean for Health Centers
Preparing for Payment Reform
“The underlying business model of Michigan’s health care system will move from expanding acute care, high-cost specialty care, and diagnostic services, to a business model based on prevention, primary care, and effective care management.”
“Consistent with MDHHS’s policy to move reimbursement from FFS to value-based payment models, Contractor agrees to increase the total percentage of health care services reimbursed under value-based contracts over the term of the agreement.” “HHS has set a goal of tying 30% of traditional, or fee-for-service, Medicare payments to quality or value through alternative payment models, such as Accountable Care Organizations (ACOs) or bundled payment arrangements by the end of 2016, and tying 50% of payments to these models by the end of 2018.”
What We See and Hear
What’s Driving ReformIn the
Environment MiPCT Healthcare Innovation
Awards Medicare Shared Savings
Program and ACOs Medicaid Managed Care
(Health Plan) Re-Bid MI Health Link HHS Alternative
Payment Model Goals Medicaid Health Homes State Innovation Model Aligning Government
Structures (“River of Opportunity”)
In Health Centers PCMH Recognition Meaningful Use Team-Based Practice Care Team Expansion Process Re-Design Enhanced Accountability Enabling Services and
Social Needs Formalized Partnerships Integrated Care and
Planning Health Information
Exchange Health Center Network
Development
Medicaid ContextFiscal Pressure: How to control
spending in the face of budget shortfalls◦“Medicaid growth is simply unsustainable
and threatens to consume the core functions of state government.”
Quality Improvement: Making Medicaid a more effective, higher value program
Health Reform: Taking on a larger role in an uncertain political environment
An Outside View“In retrospect, PPS provided perverse
incentives: the higher the per-unit cost of providing care and the more face-to-face patient encounters, the higher the total revenue”
“The disparity of reimbursement between FQHCs and other private PCPs caring for the Medicaid population will leave FQHCs non-competitive if these structural supports are eliminated in the future”
Health Center Payers TodayPayer 2013 2014 2014
Percent of Total
Change Percent Change
Uninsured
181,494 127,730 20.8% Decreased
53,764
- 29.6%
Medicaid 261,526 319,905 52.0% Increased 58,379
+22.3%
Medicare 59,441 64,931 10.5% Increased 5,490
+9.24%
Private 83,317 102,650 16.7% Increased 19,333
+23.2%
Medicaid Payment to FQHCs TodayThe Medicaid program reimburses FQHCs through
multiple mechanisms that, when combined, equal an established payment rate per patient visit (called an encounter) ◦ About $162 per encounter in 2015 for urban Centers and
$145 for rural CentersThe core payment mechanisms include:
◦ Fee screen payments for services (i.e. do this and Medicaid will pay you this much)
◦ Quarterly interim wraparound payments (based on an anticipated number of encounters)
◦ Reconciliation settlements (following a reconciliation report and process often called a wraparound payment)
Many Medicaid health plans provide other revenue to Health Centers outside the established payment rate through incentives and bonuses
A (Very) Simplified Payment ExampleA Health Center provides 100 encounters this year and their encounter rate is $162The Center receives $80 per visit
in fee screen payment from a Medicaid health plan
The Center receives a quarterly interim payment of $1,750 from MDHHS
The Center receives a settlement payment of $1,200 at the end of the year
Medicare Payment to FQHCs TodayThe Medicare program also reimburses FQHCs using
an established payment rate per patient visit (called an encounter) for most services ◦ The based payment rate in 2015 is $158.85 ◦ The rate is adjusted based on geographic region and type
of visit (established patient vs. new patient or preventive service)
FQHCs are paid fee screen payments for a small subset of Medicare items not considered “FQHC services”
FQHCs submit a cost report to Medicare as part of this payment process
When Medicare beneficiaries are enrolled in a health plan (Medicare Advantage) FQHCs receive part of their payment from the health plan and part from Medicare (often called wraparound)
Private Insurance Payments to FQHCs TodayMost private insurance companies pay Health
Centers using fee screen payments for services ◦ A Health Center’s contact with the insurance
company contains a fee schedule that establishes the payment for each covered service
Many private insurance companies add bonus payments for achieving quality of care measures to their fee screen payments
Some private insurance companies add bonuses, other payments on a per member per month basis or pay Health Centers a share of their total savings for reducing high-cost care
Broadly Speaking
Lessening Payments Based on Volume
Growing Accountability for Outcomes
Expanding Focus on Value
Increasing Financial Reward
Increasing Financial Risk
What’s a value-based payment?The term “value” is widely used to
describe the combined assessment of both the quality and cost of a healthcare service
Conceptually, a “high-value” service is one that has high quality and low cost
Value-based payment is used to describe a payment model where the amount of payment for a service depends in some way on the quality or cost of the service that is delivered
What’s the Timeline? Payers are approaching Health Centers and
provider networks right now ◦ There’s a reason you see so many payers at this
year’s conference! Many environmental factors are pushing
payers toward payment reform in a more tangible manner that we have seen before
Anticipate substantive change in the next two years (i.e. before the end of 2018) and for payment to continue to evolve over the course of the next eight years◦ It won’t happen all at once, this is an iterative
process
Value-Based Payment Facets
Flexibility• PMPM
Base• Bundled
Payment• Partial
Capitation
Investment• PMPM
Add-On Payment
Incentive• Quality
and/or Performance Bonus
• Shared Savings
Hybrid
Flexibility- PMPM Base Per member per month (PMPM) base payment is often
discussed as a possible Alternative Payment Methodology (APM) for FQHCs
In most case, the conversation focuses on converting the amount of revenue currently received from encounter payments into a PMPM payment
For Example:◦ A Center averages 4 encounters per patient per year at $162 per
encounter = $648 in total revenue◦ Rather than pay per encounter, the Center receives $54 per
member per month The PMPM base offers Centers flexibility in the type of
services offered (i.e. revenue isn’t exclusively determined by visits with providers)
Centers continue to report information which reflects the services they provide and patient quality indicators
Centers may or may not experience a reconciliation process to account for patient utilization that differs from expectations
How It’s Working in OregonOregon is piloting a conversion of PPS
into a PMPM (per member, per month)◦MCO or CCO will pay a PMPM rate
comparable to any primary care provider◦State will pay a PMPM wraparound based
on prior year’s wraparound payments◦CHCs report cost, quality and access
indicators◦Pay for Performance or other bonus
payments are separate
Flexibility- Bundled Payment A payment is described as “bundled” when it covers
multiple healthcare services, particularly if those services had previously been paid for separately
Bundling multiple services delivered by the same provider into a single payment can encourage greater efficiency and allow more flexibility to deliver innovative services
For Example:◦ Several European countries have implemented a bundled
payment for specific chronic conditions (diabetes most prominently)
◦ The primary care providers receive reimbursement on a per patient per year basis for a specific set of services associated with the condition
◦ Providers continue to receive other payments for services unrelated to the bundled payment condition
Bundles payments are currently being extensively piloted and tested in relation to acute illnesses and surgical procedures
Flexibility- Partial Capitation Capitation is a payment model in which
a healthcare provider is paid based on the number of individuals cared for, rather than on the number of services provided◦Capitation can be global (i.e. all services),
but for FQHCs partial capitation (i.e. a specific subset of services) is a more likely prospect
Partial capitation is most often paid as a fixed amount per patient, so Centers are more at risk for unanticipated utilization
Investment- PMPM Add-OnSeveral payers are now offering
smaller PMPM add-on payments to provide revenue support for valuable provider infrastructure like PCMH recognition
These add-on payments are generally a low dollar amount per member per month (e.g. $2.50) but they can add up to a significant revenue source◦A Health Center with 2,000 members could
earn $60,000 per year at $2.50 PMPM
Incentive- BonusesBonuses (also called incentives) are
usually fixed amounts of money which provider receive for meeting specific goals
Most commonly, providers get paid bonuses for meeting and reporting quality and/or access standards ◦The Healthcare Effectiveness Data and
Information Set (HEDIS) is the most common group of standards used by payers
Incentive- Shared Savings Shared savings is a payment arrangement between a
payer and a provider in which a portion of the payment to a provider is related to how much the payer is spending on those services compared to a benchmark
Generally, shared savings stem from primary care, care coordination and care transitions work that reduces or prevents high cost emergency department and inpatient utilization
Shared savings are usually paid as a percentage, for example:◦ The benchmark cost of a beneficiary’s services is $1,500◦ The actual cost of a beneficiary's services this year was $1,200◦ The provider gets paid $60 (20%) of the total savings and the
payer keeps $240 Sometimes the percentage of shared savings a provider
receives is related to the provider’s quality/performance (i.e. better performance on quality measures equals a higher amount of shared savings)
Transformation is Underway AlreadyWhat is your Health Center working on?
◦ Obtaining PCMH Recognition◦ Meaningfully Using Health Information Technology◦ Participating in Health Information Exchange◦ Improving Coding and Documentation (including ICD-
10) ◦ Practicing in Teams◦ Expanding the Care Team (including CHWs) ◦ Re-Designing Processes to Increase Efficiency ◦ Building Stronger Enabling Services to Address Social
Needs◦ Formalizing Collaboration with Other Providers and
Community Agencies ◦ Integrating Care and Treatment Planning◦ Building and Participating in Networks with Other
Health Centers
Preparing for Payment ReformEmpowered and Informed Board of Directors Shared Organizational Vision for Payment ReformLeadership CommitmentPartnerships between Providers and Social Services Strong Change Management Practices Robust Care Coordination SkillsPCMH Recognition Fully-Integrated ServicesData-Driven Understanding of Population Health
NeedsCollection and Use of Patients’ Socio-Economic
Characteristics to Address Social Needs Identification, Stratification and Management of
Patient Risks
Preparing for Payment ReformStaffing and Facility Plans which Account for
Payment ChangeFunctional Health Information ExchangeEHR Supports for Clinical Practice System-Level Patient Utilization DataTimely, Nimble Performance Management
Capabilities Internal Performance Compensation ModelsFull Understanding of the Costs of ServicesProactive Revenue Cycle Modeling and
Management Strategy for Internal Coordination of Payer Priorities Evidence-Based Processes for Care Transitions
Coming Soon: Readiness AssessmentMPCA will be partnering with
NACHC and JSI to lead Michigan Health Centers in a comprehensiveness assessment process
The results will not only inform your internal planning and work, but be used on a statewide basis to tailor supports
We’ll need your help for the assessment process to be meaningful!
Questions? Comments?Payment Reform Glossary:
◦www.paymentreformglossary.org Payment Reform Primer:
◦http://bit.ly/1VLOCVe Readiness Assessment (Preview):
◦http://bit.ly/1KvIWvl