Bundled Payment Value Based Purchasing and ACOs

Bundled PaymentValue Based PurchasingandACOs Presented by: Rusty Ross Mike Scribner Rhonda Durden

Session Objectives • Discuss the Centers for Medicare and Medicaid Innovation • Bundled Payments and the Models • Partnership for Patients • Value Based Purchasing • ACOs • Clinical Quality and Integration

Health Care Trends • The era of unchecked Fee For Service is Ending • Bundled Payments • ACOs • Limited Provider Networks • Increased Medical Management • High Deductible Health Plans • Quality Measurements are going to be an increasing part of the picture • Health Grades • Physician Quality Reporting Initiatives (PQRI) • Move towards population management and disease management

Bundled Payments • CMS Innovation Initiated Voluntary Program • Accepting applications for four broadly defined models of care. • Three models involve a retrospective bundled payment arrangement, and one model would pay providers prospectively. • By giving providers the flexibility to determine which model of bundled payments works best for them, it will be easier for providers of different sizes and readiness to participate in this initiative.

Retrospective Payment Bundling • In these models, CMS and providers would set a target payment amount for a defined episode of care. • Applicants would propose the target price, which would be set by applying a discount to total costs for a similar episode of care as determined from historical data. • Participants in these models would be paid for their services under the Original Medicare fee-for-service (FFS) system, but at a negotiated discount. • After the conclusion of the episode, the total payments would be compared with the target price. • Participating providers may then be able to share in those savings.

Retrospective Payment Bundling Providers have the flexibility to choose whether to define an episode of care as: • Hospital services provided to a beneficiary during an acute inpatient stay, where physicians are partners in improving care (Model 1); • Hospital, physician, post-acute provider, and other Medicare-covered services provided during the inpatient stay as well as during recovery after discharge to the home or another care setting (Model 2); or • Hospital, physician, post-acute provider, and other Medicare-covered services beginning with the initiation of post-acute care services after discharge from an acute inpatient stay (Model 3). In models 2 and 3, components of the bundle may include clinical laboratory services and durable medical equipment.

Prospective Payment Bundling • Under Model 4, CMS would make a single, prospectively determined bundled payment to the hospital that would encompass all services furnished during the inpatient stay by the hospital, physicians and other practitioners. • Physicians and other practitioners would submit “no-pay” claims to Medicare and would be paid by the hospital out of the bundled payment.

Value Based Purchasing Overview • The Affordable Care Act (ACA) of 2010 mandated the implementation of an inpatient hospital value-based purchasing program (VBP). • A pay-for-performance program that will link Medicare payment to quality and patient satisfaction performance. • Implementation begins federal fiscal year 2013 (October 1, 2012). • Implementation of VBP would not increase Medicare spending.

Overview This program does not apply to: • Psychiatric facilities • Rehab facilities • Long term care facilities • Children’s Hospitals • Cancer Hospitals • Hospitals in Maryland and Puerto Rico • Critical Access Hospital and small rural hospitals with insufficient numbers of measures

Value Based Purchasing • To implement VBP program that assesses hospital quality performance using quality measures from three domains: • Clinical process of care • Patient experience of care (HCAHPS) • Patient outcomes* (mortality) *Outcomes domain would not be part of the FFY 2013 VPM Program

Value Based Purchasing • 17 Clinical Measures • 3 AMI measures • 3 HF measures • 4 PN measures • 7 SCIP measures • 3 for SCIP • 4 SCIP measures that represent Healthcare-Associated Infections • Eight dimensions of HCAHPS

Value Based Purchasing • The initial performance period is: July 1, 2011 through March 31, 2012 for the FY 2013 payment determination • This will be compared to their performance baseline of July 1, 2009 through March 31, 2010

Overview of Calculations • Hospitals could earn up to 10 achievement points for each useable process measure for the achievement of certain quality standards.

Calculations Clinical process of care domain is weighted at 70% and the patient experience of care is weighted at 30%.

Timeline: • Hospitals will receive their preliminary VBP score no later than August 1, 2012, via CMS QualityNet accounts. • Base-operating DRG will be reduced by 1 percent beginning October 1, 2012. • Hospitals will learn their final VBP score on November 1, 2012, and have 30 days to review and submit corrected information. • VBP incentive payments will begin January 1, 2013, with retroactive adjustments for any FFY2013 discharges paid prior to that date.

Accountable Care Organizations Final Rule

What is an ACO? (In case you have been living under a rock…) Accountable Care Organization (ACO) • Means a legal entity that is recognized and authorized under applicable State law; • Identified by a Taxpayer Identification Number (TIN); • Comprised of an eligible group of ACO participants that work together to manage and coordinate care for Medicare FFS beneficiaries; and • Have established a mechanism for shared governance that provides all ACO participants with an appropriate proportionate control over the ACOs decision making process.

Eligible Entities • ACO professionals in group practice arrangements. • Networks of individual practices of ACO professionals. • Partnership or joint venture arrangements between hospitals and ACO professionals. • Such other groups of providers of services and suppliers as the Secretary determines.

Assignment of Beneficiaries • Assigned based on “plurality” of primary care services with a PCP in an ACO. • Based on allowed charges, not a simple count of services. • Assigned retrospectively for calculating savings. • CMS will provide list of beneficiaries. PCPs can only participate in 1 ACO.

ACO – Final Rule changes • The final rule no longer require that all ACOs risk losing money. • Providers can choose to participate in an ACO and share in Medicare savings without risk or take on more risk for the chance to earn larger savings. • The final rules also reduced the number of quality measures from 65, a number that many providers called redundant and costly, to 33. • A major change was the inclusion of community health centers and rural health clinics. • The final rules allow these providers to lead ACOs, a process that would have been difficult under the previously proposed rules. • CMS has also given providers more time to prepare for the launch of ACOs. • The initial response to these changes has generally been favorable, but with the vast amount of information being released, organizations will likely take months to synthesize all the aspects of these new rules.

ACO – Final Rule Concerns • Technology • 50% of PCPs in ACO must meet “Meaningful Use” Criteria for an EHR • ACOs Need to aggregate patient data from different provider systems (HIE) and have analytical skills to mine, review and act on the data (Data Informatics) Not a cheap or Quick Implementation and we are not there • Beneficiary Limitation • Beneficiaries can seek care outside an ACO where they are assigned • Not clear on if CMS will allow for beneficiary inducements to keep them in network No Stick….No Carrot…No Nothing

ACO – Final Rule Concerns • Financial • Costs are large to start an ACO but becoming more flexible. • Financial returns are measured by CMS after the fact based upon their risk adjusted data. • Shared Savings limited (greater opportunities if downside risk shared). • Initial results for Physician Group Project on which ACOs are based has had mixed results and negligible savings (approx. $300 per member) with some groups having no savings after large cost expenditures. This is complicated stuff…… At this point, are the limited financial gains worth the large start up costs and regulatory risk?

ACO – Final Rule Concerns • PCPs can participate in only 1 ACO. What if it’s not yours? • 50% of participating PCPs must hit meaningful use by end of 2012. • Can’t add new physicians to ACO during Agreement period.

ACO vs. CHPs • More activity in ACO-look alike plans, such as Community Health Plans around the country. • New rules are better but so far not likely to spur much change in ACOs themselves. • Commercial/CMO/MA plans chomping at the bit to use these mechanisms.

ACOs and CHPs Will drive the following: • Scramble to buy up primary care physicians. • A push to connect providers through health exchanges: • Allowing better care coordination • Real outcomes data for the rural providers • Most providers are unsure what that data would reflect • Pay for performance mechanisms….moving slowly now, will gain traction.

Flavors of ACO/CHPs we see: • Large territory providers partnering with large insurance carriers. • Large urban physician groups partnering with carriers and other downstream costs. • Some talk of groups of rural providers with enough potential membership with carriers.

PCPs are Key Primary care physicians are key going forward • Their role as gatekeepers will be funded more substantially. • It is probable that they will take a more active role in managing downstream costs. • It will be in their best interest to know if their referrals are made to cost effective providers and avoid duplicative testing, etc. • A shift in power in the market will likely be experienced to acknowledge their role in the market.

Revenue Growth The goal is for fee-for-service pricing mechanisms to be going away or deemphasized in the future. Therefore, growth strategies built around “add ancillary services or another doc” solely may not drive additional growth in the future. In the future: • The key to revenue growth may be to coordinate care and manage costs better. • More IT/clinical decision support resources will be needed, period.

Know where you stand • What is your VBP score? • What is the state of ACO/CHP in nearest tertiary facilities? • Understand your referral flow. Where does care go from your market? • Where are the missing links in PCP network? Not just in town, but between you and the next larger facility.

Information Technology • Investing in Electronic Health Records Technology • PCPs • Specialists • Hospitals • Linking providers through a Health Information Exchange (HIE) within system or as part of a larger regional entity (likely). • Reviewing Current Quality Measures and Developing Clinical Pathways. • Monitor Provider performance to pathways through system reports.

Thank you for joining us today Please contact any of our presenters after the presentation if you have additional questions: Rusty Ross – Morris, Manning & Martin, LLP Mike Scribner – Strategic Healthcare Partners Rhonda Durden – Emanuel Medical Center

Bundled Payment Value Based Purchasing and ACOs