Carol Wesolik Rose Wojciechowski

September 22, 2016

Bundled Payments

The Path to Efficiency and Effectiveness

NORTHWEST OHIO HFMA

• Overview of Current Episode Methodologies And Strategies In Play Today:

- Medicare

- Medicaid

- Commercial

• Steps To Design An Episode / Bundle

• How Is Risk Assigned And Assessed

• How Bundles Can Impact and Transform Front And Back Office Revenue

Cycle Operations

AGENDA

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Fee to Value Transition

The New Healthcare Economy

Once In A Lifetime $3.8 Trillion Reimbursement Shift

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Why Value Based Reimbursement?CMS is Driving Change

$47BCBO estimate of

10-year savings

associated with value

based reimbursement

CMS Savings Associated With

Alternative Payment Models

CMS ACO

Program Net

Savings

CMS Bundle

Demonstration

Net Savings

0.23%

1.72%

Sources:

• The Advisory Board Company analysis of Congressional Budget Office, Options for

Reducing the Deficit, 2014-2023, Washington, DC, 2015;

• https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2014-

Press-releases-items/2014-01-30.html

• Overall payouts on bundles

estimated to be 5% lower than

Medicare’s projected average

payments per episode under

current law

• First MANDATORY bundle

program started in 2016

• CMS goal to have 50% of

payments through value-based

by 2018

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Value Based ReimbursementThe State of Value-Based Reimbursement in 2016

Only 25% of providers and payers

feel they have the right tools to

automate value based models

~ 45% of payers and providers ready

to implement bundles

Estimation of Progression in Shift to VBRAmong payers who use other models than 100% fee-for-service only

Providers in a value-based

payment arrangement

Reimbursements tied to a

value-based payment

arrangement

36%

32%

Today

47%

42%

60%

54%

2 years

from now

5 years

from now

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* Per 2016 McKesson Report Journey to Value – survey completed by ORC International. Survey

responses included 155 Payers and 350 Providers.

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Episode - The continuum of care around a single admission for a specific condition

Bundle - Time-bound episodes of care that include virtually all the services related to the

treatment of specific condition and delivered at set case rate and may share risk

BPCI - Bundle Payments for Care Improvement - Medicare ● Instituted in 2013 - Four Models of Care which link payment for multiple services during an

episode of care

● 48 Episode Definitions in BPCI

● CJR - Comprehensive Joint Replacement Initiated in 2016 (DRG 469/470) for 67 MSA’s

● Cardiac / Hip & Femur Fracture - to be initiated in 2017 across 97 randomly selected MSA’s

https://innovation.cms.gov/initiatives/Bundled-Payments/index.html

Prometheus - HCI3’s (Healthcare Incentive Improvement Institute’s) Episode of Care

definitions are procedure and diagnosis codes grouped together to outline entire range of

treatment ● Encompasses over 90 clinical conditions

● Covers up to 65 yrs of age

● Commonly used by Commercial Payers

http://www.hci3.org/about_hci3

Custom - Provider-defined bundles ● Developed for complex care conditions OR to develop bundle design and case rate

● Include specific timeline pre / post discharge

● May include inclusion / exclusion of specific care processes

● May include specific quality criteria and performance measures

Episode / Bundle Methodologies

CMS Driving the Change

Source: SPG - Sachs Policy Group; CMS Bundled Payment Initiatives

Initiatives Program Summary

Bundled Payments for Care Improvement (BPCI) (expires 12/2018)

BPCI initiative consists of four models of care, which bundle payments for the multiple services beneficiaries receive during an episode of care.

Comprehensive Care for Joint Replacement (CJR) (starts 4/2016)

CJR model tests mandatory retrospective bundled Medicare payments for hip and knee replacements, referred to as lower extremity joint replacements (LEJRs).

Oncology Care Model (OCM) (starts 7/2016)

OCM is a multi-payer model designed to support the goals of the Cancer Moonshot launched by the Obama Administration. OCM is an episode-based payment model for physicians who administer chemotherapy.

Cardiac Bundled Payment Model (proposed 7/2017)

CMS proposes to implement bundled payment models for episodes of care surrounding an acute myocardial infarction (AMI) or a coronary artery bypass graft (CABG).

Cardiac Rehabilitation Incentive Payment Model(proposed 7/2017)

Cardiac rehabilitation incentive payment model tests the impact of providing an incentive payment to hospitals based on beneficiary utilization of coordinated cardiac rehabilitation services in the 90-day care period following hospital discharge

Orthopedic Bundled Payment Model(starts 7/2017)

CMS proposes to implement bundled payment model for episodes of care surrounding surgical hip/femur fracture treatments excluding lower extremity joint replacement (SHFFT). The SHFFT model builds on the framework established for CMS’s (CJR) model.

End State Renal Disease (ESRD) Bundled Payment System (starts 1/2017)

Under the ESRD bundle, all renal dialysis services provided to Medicare beneficiaries in an outpatient setting are reimbursed according to a bundled payment rate. This proposed rule is an amended version of the ESRD PPS.

BEGIN WITH THE DATA

ASSESS THE LANDSCAPE

UNDERSTAND HISTORICAL TRENDS

INDENTIFY GRANULAR TRENDS

NARROW CANDIDATES

OPERATIONALIZE

Data Analysis to Actionable Insights

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• What episodes should I prioritize?

• Where is my volume concentrated?

• Where are my dollars concentrated?

• What is my average spend per episode?

• Where are my outliers?

• Where is my region average?

• What is the average comparatively between

providers? Facilities?

Financial & Clinical AnalyticsPotential Questions to Address:

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Actionable Insight

• Ability to compare volume and cost between episodes

• Assist in contracting efforts

• Compare custom/modified definitions against

standard definitions 10

• Narrowing the candidates based on volume, cost,

and complications

• High complications = reduction in PACs cost

• High dollar = increased efficiencies

Prioritize ConditionsFast Track High-Value Episodes

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Assess ProvidersUncover the Sources of Unwarranted Variation

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Optimize NetworkLook Beyond the Performing Physician

Avg. Length of Stay

AverageCost

ReadmissionRate %

OverallRating

QualityRating

Operational Metrics

• Near real time reporting that is customizable

• Identify average length of stay by facility

• Identify readmissions

• Identify patients excluded from bundle and why

• Identify use of implant/device by case

• Measure other contract terms

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CMS BPCI ● Percentage of BPCI patients discharged to institutional PAC provider (SNF, IRF,

LTCH) decreased from 66% to 47% during first quarter

Geisinger Health System ProvenCare Total Hip and Total Knee Replacement Initiatives:

● 50% Decrease in Readmissions; 10% decrease in LOS

ProvenCare Perinatal Initiatives:

● Reduced NICU admissions by 25%; 23% reduction in NICU use; 26% reduction in

C-section; 68% reduction in birth trauma

ProvenCare CABG Initiatives:

● Hospital: Contribution margin increased 17.6%; Total profit per case improved $1,946

● Health Plan: Paid 4.8% less per case for CABG; Paid GHS providers 28 - 26% less

for GHS providers than outside network

Arkansas Health Care Payment Improvement Initiative (Medicaid)● C-Section rate reduced from 38.6% to 33.5% w/ estimated 2-4% direct savings (2014)

Source: Health Care Payment Learning & Action Network. Accelerating and Aligning Clinical Episode Payment Models. August 1, 2016.

Sample Early Results of

Bundled Payment Projects

Recent success announced within

Medicare’s BPCI Program

• Medicare’s Bundled Payment Program

• Program began in April of 2013

• 4 different tracks within the model

• In a recent report1, Track 2, which focuses on both acute and post-acute

settings, generated an estimated $864 for orthopedic surgery episodes

initiated at BPCI-participating hospitals than episodes initiated at similar,

non BPCI participating hospitals

• Patients at these hospitals indicated certain improved mobility metrics

1: CMS Bundled Payments for Care Improvement Initiative Models 2-4: Year 2 Evaluation & Monitoring Annual Report. Rep. The Lewin Group, Aug. 2016. Web. 20 Sept. 2016. <https://innovation.cms.gov/Files/reports/bpci-models2-4-yr2evalrpt.pdf>.

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The ProblemWhy is Value Based Reimbursement Challenging?

The AverCloudTM

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Data1

Bundle

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Clinical Analytics3

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Configuration4

Operational

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• Some concepts to consider?

o How do you verify the patient is eligible for coverage?

o How do verify the patient is eligible under the bundled payment

contractual arrangement?

o How do you construct claims and post remittance?

o How do you handle prospective, retrospective and bonus payments?

o How do you match payments to remittances?

Revenue Cycle:Operationalizing Bundled Payments

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• Eligibility check (270-271):

• 270-271 exchange (Insurance Coverage)

o Prescreening

• Business rules determine service and condition for bundle eligibility

• Claim Processing (837):

o Prospective Payment: Importance of Patient Control Number

o Retrospective Payment

• Remittance Processing (835):

o Prospective payment: Encounter matching

o Retrospective Payment: Encounter Matching

o Bonus Payment: Encounter Matching

Transaction Flows

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Payments:

• Payment Matching: Remittance to Payment

o Prospective Payment

o Retrospective Payment

o Bonus Payment (achieving performance thresholds)

• Cash Posting and Reporting

o PMS System

o General Ledger

o Performance Monitoring

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Transaction Flows

Thank You!

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