Melinda S. Hancock, FHFMA,CPAPartner, DHG Healthcare 2015-16 Chair, HFMA

September 2015

HFMA Maine Chapter2015 Annual Meeting

Objectives of Today’s Presentation

• Identify key trends in healthcare finance

• Describe how these trends impact healthcare finance professionals

• Discuss strategies for success in the current healthcare environment.

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Go Beyond the Status Quo

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“It isn’t the mountains ahead to climb that wear you out; it’s the pebble in your shoe.”

Muhammad Ali

Shaping the Curve

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It’s Been 5 Years…Still Divided?

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Medicare Spend Flattens

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The Unexplained Gap

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CMS Accelerates the Tipping Point for Everyone

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2011 2015 2016 2018

Traditional, Fee for Service Alternative Payment Models

“…HHS goal of 30 percent traditional FFS Medicare payment through alternative payment models by the end of 2016… 50 percent by the end of

2018” HHS Press Office 1-26-15

85% of payment tied to quality and value metrics (ex. Hospital Value Based Purchasing, Hospital Readmission Reduction Program)

Category 1: Fee for Service—No Link to Quality

Category 2: Fee for Service—Link to Quality

Category 3: Alternative Payment Models with Fee For Service Base

Category 4: Population-Based Payment

• Payments are based on volume of services and not linked to quality or efficiency

• At least a portion of payments vary based on the quality or efficiency of healthcare delivery

• Some payment is linked to the effective management of a population or an episode of care

• Payments still triggered by delivery of services, but opportunities for shared savings or 2-sided risk

• Payment is not directly triggered by service delivery so volume is not linked to payment

• Clinicians and organizations are paid and responsible for the care of a beneficiary for a long period (e.g., >1 year)

• Limited in Medicare fee-for-service

• Majority of Medicare payments now are linked to quality

• Hospital value-based purchasing

• Physician Value-Based Modifier Readmissions/Hospital Acquired Condition Reduction Program

• Accountable care organizations • Medical homes • Bundled payments

• Eligible Pioneer accountable care organizations in years 3-5

• Some Medicare Advantage plan payments to clinicians and organizations

• Some Medicare-Medicaid (duals) plan payments to clinicians and organizations

Another Way of Looking at This

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30% by end of 2016 & 50% by end of 2018 of this category

85% by 2016 and 90% by 2018 of this category

Des

crip

tion

Exam

ples

Source: Rahul Rajkumar, MD, JD; Patrick H. Conway, MD, MSc; Marilyn Tavenner, RN, MHACMS- Engaging Mulitple Payers in Payment Reform. JAMA. 2014;311(19(:1967-1968

The Continuum of Financial Risk

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Source: Hancock, M., Hannah, B. “Determining Your Organization’s Risk Capability”, hfm magazine, May 2014.

Go Beyond Current Use of Technology

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“Under payment models that reward efficiency and high-quality care, if a hospital or health system is losing money due to inadequate clinical performance, it cannot afford to wait one or more months to find out the problem. Healthcare leaders should understand how their organizations are performing today so they can take corrective action before revenue loss becomes a hemorrhage.”

~John Glaser, CEO, Siemens, hfm magazine, May 2014

New Technology• Clinical technology

• Personalized medicine, new drugs, new treatments• Shift to ambulatory, less invasive, new modalities

• Health IT• From EHRs to advanced health information infrastructure• Rise of personal devices as key platform for healthcare delivery

and coordination

Big Data – Big Deal?

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$600To buy a disk drive that can store all of the world’s music

6.8 BillionCell phone subscriptions in 2013 including more subscriptions than people in the US (327M vs 318M)

30 BillionPieces of content shared on Facebook permonth

60% Potential increase in retailers’ margin possible with big data

40%Projected growth in global data generated per year

vs. 5% Growth in global IT spending

$300 billionAnnual value to U.S. health care of “big data” – 2x total annual healthcare spend of Spain

1.5 millionMORE data savvy managers needed to take advantage of big data in the United States

Source: McKinsey Global Institute Analysis

How Do Top Performers Use Analytics?

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Compare your organization to the top performers.

Capability Progression:Where Is Your Organization?

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Estimated Long-Term Value of “Big Data” Levers

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Clinical Operations

Accounting & Pricing

Public Health

New Business Models

Research & Development

$165 Billion

$108 Billion

$47 Billion

$100 Billion $200 Billion $300 Billion

Outcomes & Cost AnalyticsClinical DecisionsTransparency of Medical DataRemote MonitoringAdvanced Profile Analytics

Fraud DetectionOutcomes Based Pricing

Predictive ModelingBig Data Clinical TrialsPersonalized Medicine (Genome)Analyzed Disease Patterns

Source: McKinsey Global Institute, “Big Data”, p. 50

Go Beyond Current Experiences

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Summary of Innovation Models

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Accountable Care Episode Based Payment Initiatives

Primary Care Transformation Medicaid & CHIP Population To Accelerate Testing

of New ModelsSpeed Adoption of

Best Practices

ACOs BPCI Models 1-4 Advanced Primary Care Initiatives

Reduce AvoidableHospitalizations for NF residents

State Innovation Models :Round 1 & 2

Beneficiary Engagement Model

Advanced Payment ACO ACE Demonstration Comprehensive Primary

Care InitiativeFinancial Alignment Incentive for

Medicare & MedicaidFrontier Community Health Integration

Community Based Care Transitions

Comprehensive ESRD Care Initiative

Oncology Care Model

FQHC AdvancedPrimary Care Practice

Strong Start for Mothers & Newborns Maryland All Payer Health Care Action and

Learning Network

ACO Investment ModelSpecialty

Practitioner Payment Model

Graduate Nurse Education

Medicaid Innovation AcceleratorProgram

Health Care Innovation Round 1&2

Innovation Advisors Program

Next Generation ACO Model

Comprehensive Care for Joint Replacement

(CCJR)

Independence at Home Medicaid Prevention of Chronic Diseases

Health Plan Innovation Initiatives Million Hearts

Pioneer ACO Multi Payer Advanced Primary Care Practice

Medicaid Emergency Psychiatric Demonstration

Medicare Care Choices Award Partnership for Patients

Rural Community Hospital Demonstration

Transforming Clinical Practice

Medicare IVIG Demonstration

http://innovation.cms.gov/initiatives/#views=models

Anticipated Penetration of Value-Based Payment

Financial Impacts on Efforts to Date

Perceptions on Enabling Readiness

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Becoming Risk Capable

Reform Across the Continuum

SNF Value Based Purchasing (VBP)Star RatingAlt Pmt Models- Hi End

HHVBPStar RatingAPMs- Low End

VBP/RRP/HACVBPM/PQRS/MIPSMeaningful UseComp Care For Total JointsStar Rating Roll out

Advanced Payment Models: Commercial/Medicare/State

Larger share of $TransparencyAbility to shop

HFMA Value Project Research

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hfma.org/valueproject

Go Beyond Current Models of Collaboration

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Creation of Vivity

Key Elements:• No deductible• Move away from FFS• Shared care mgmt.• Common EHR• Joint wellness services• Shared financial

risk/gain

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Anthem partnered with 7 major hospitals to form Vivity.

HFMA Is Reaching Out

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hfma.org/physician hfma.org/healthplan

Go Beyond Current Thinking: Quality

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And Now We Present…

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In Place Now:Nursing Facilities Hospital HCAHPS (Added Spring 2015)Dialysis CentersMedicare Advantage PlansHome Health Agencies (Started July 2015)

Coming Soon:Overall Hospital Rating (expected 2016)

ORIENTATION CALL

PRE-VISIT DOC

REQUEST

INTRO MEETING

VERIFICATION PROTOCOL

IMPROVEMENT STRATEGIES

EXIT INTERVIEW

FINDINGS REPORT

ON SITE VERIFICATION GOALS

Refine and finalize verification protocol

Disseminate ideas to use the survey and results in quality improvement

Collect feedback from hospitals on how Leapfrog can make the survey and the display of survey results more actionable so they can be used even more effectively in quality improvement

Develop and test a business model to sustain the national roll-out of the on-site data verification program

Transparency: Quality and Price

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“Participants repeatedly said they wanted to see a resource, or ask their doctor, to better understand what a particular test or procedure would cost before they agreed to it, and wanted to comparison shop among providers when possible. They said that they also wanted the ability to know what a treatment should cost before they agreed to it, and needed more transparent information on price in order to do this….They were very interested in efforts to share information on price and quality.”

Source: Robert Wood Johnson Foundation. Consumer Attitudes on Healthcare Costs: Insights from Focus Groups in Four U.S. Cities. Jan. 2013. http://www.rwjf.org/en/library/research/2013/01/consumer-attitudes-on-health-care-costs--insights-from-focus-gro.html

Failing Grades

31http://www.catalyzepaymentreform.org/images/documents/2015_Report_PriceTransLaws_06.pdf

Patient Perspective

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Timeline of Performance Periods

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Penalties and Pay for Performance

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Value-Based Care Programs: United

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$70

Value-Based Payments

2015 2018

$65B in Value Based Contracting by 2018YE – 30% of commercial claims

Shared Savings

Shared Risk

Capitation + PBC

Condition or Service-Line

Programs

Performance Based

Contracts

Primary Care

Incentives

Fee-For-Service

Achieving specific

METRICS

Managing a specific

CONDITION orSERVICE LINE

Managing entire POPULATION HEALTH

$43B in Value Based Contracting by 2015YE

Performance-Based Programs

Episodes Service

Line Programs

Accountable Care Programs (ACOs)

Degree of Care Provider Integration and Accountability

Leve

l of F

inan

cial

Inte

grat

ion

Innovation and Strategic Integration

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SYSTEM/FACILITY STRATEGIC PLAN

PAYMENT MODELS

CLINICALLY INTEGRATED NETWORKS/POST ACUTE CARE NETWORKS

Mandatory Reform Elements

Managed Care/Direct to Employer Opportunities

Go Beyond the Acute Care Space

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Physician Penalties Arrive

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SOURCE: Medical Group Management Association (MGMA) 2014

Year/Program eRX PQRS Meaningful Use

Value Modifier MIPS

2012 -1.0%

2013 -1.5%

2014 -2.0%

2015 -1.5% -1.0%* -1.0%

2016 -2.0% -2.0% -2.0%

2017 -2.0% -3.0-5.0%**(each year) -4.0%

2018*** up to -4%

2019*** up to -5%

2020*** up to -7%

2021*** up to -9%

* Penalties will be greater for unsuccessful e-prescribers** Penalty amount could increase up to 5% depending on meaningful use success rates***MIPS information is estimate only

The Penalty Phase

MACRA: Physician Payments• Payment rates for 2015-2019 will be .5% annually and then frozen

2020-2025. Thereafter tiered .25% (MIPS participants) or .75% (APM participants).

• Creates MIPS: Merit-Based Incentive Payment System

– Starts 2019 & combines EHR incentive program, PQRS and VBPM

• Develops 4 categories of measures

– Quality, Resource Use, Clinical Improvement, & EHR Use

• Range of payment adjustments

– In 2019: -4% to +12%

– In 2027: -9% to +27%

• Program is budget neutral

• Allows providers in Alternative Payment Models (APMs) to opt out of MIPS and can be eligible to receive 5% lump sum bonus 2019-2024

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SNF Value-Based Purchasing

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• One year performance periods and baseline

• Requires 2 metrics: all cause readmissions and preventable readmissions

• Effective 10/1/18, with a 2% withhold

• Part of SGR fix in 2014 so not budget neutral: only 50%-70% to be returned to SNFs

• Same formula as hospital readmissions penalty

Medicare: Home Health Agencies1. Announced in July the start of Star Ratings2. Low spend providers in APMs3. On July 6, 2015, CMS proposed the HHVBP• Authorized by the ACA and implemented by CMMI as of

1/1/16 with the first payment year to be 1/1/18. Baseline year is CY15.

• Comments due by Sept. 4, 2015• Will be among all HHAs in 9 states: random selection

• Mass., Md., N.C., Fla., Wash., Ariz., Iowa, Neb., Tenn.

• Payments adjusted (performance year) Year 1 CY16 and 2 CY17: 5% Year 3 CY18: 6% Year 4 CY19 and 5 CY20: 8%

Go Beyond the Numbers

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What Engagement Means in This Context

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Adaptation of Max Weber’s typology of social action can be applied in many venues of change for health care.

1. To engage in a noble shared purpose

2. To satisfy a self interest

3. To earn respect

4. To embrace tradition“In the face of ever-increasing complexity, the hard work and best intentions of individual physicians can no longer guarantee efficient, high-quality care. Fixing health care will require a radical transformation, moving from a system organized around individual physicians to a team based approached focused on patients. “- Engaging Doctors in the Health Care Revolution, Thomas E. Lee, MD and Toby Cosgrove, MD

Help Consumers Make Sense of the Numbers

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hfma.org/dollars

Equip Staff for Success in the Consumerism Era

• Agenda for live training on site for your patient access staff

• Slide deck that can be customized

• Sample financial policies

• Coaching guidelines

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hfma.org/dollars

Educate Consumers

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• Describes how to request price estimates, step by step

• Clarifies what estimates may or may not include

• Explains in-network and out-of-network care

• Defines key terms

• New: Provides information on assessing healthcare qualityhfma.org/consumerguide

Go Beyond Comfort Zones

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Certification Reflects Strategic Importance of Finance

• Closely aligned with contemporary healthcare business environment

• Designed for financial professionals, clinical and nonclinical leaders, and payers

• Emphasizes the learning needed to shape the business environment

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Stay Up to Date

• hfma.org

• Daily and weekly online news

• Social media– Facebook

– LinkedIn

– Twitter

• HFMA Forums

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In Conclusion…

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Summary of Potential Next Steps

• How are you performing on VBP/RRP/HAC and what is your exposure for the upcoming years?

• What other value based contracts do you have and what are the performance periods?

• Check on your Star reports in your Qnet?• What are your quality and transparency strategic

plans?• What other pieces of the continuum do you

impact?• How do you and your teams GO BEYOND?

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