Transcript Health Care Reform: The National and State Overview

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HFMA Idaho Chapter
2014 Winter Conference
January 15-17, 2014
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Innovation and Risk:
Bringing the Future of Payment
Reform into Focus
• Payment Reform: A Market in Transition
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Discussion Overview
• Innovation Payment Models
• Regulatory Environment & Transitioning
Traditional Fee for Service to VBP
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Payment Reform:
A Market in Transition
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True Reform Will Require Disruptive Innovation*
Simplifying
Technology
Low Cost
Business
Models
Regulations &
Standards
That Facilitate
Change
* Source: “The Innovator’s Prescription” by Clayton M. Christensen
Value
Network
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U.S. Supreme Court Ruling: June 28, 2012
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Supreme Court Examines Constitutionality
Individual Mandate
- Constitutional
Entire Affordable
Care Act
- Stands
Medicaid
Expansion
-State Option
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Value Based Payment: “a reform initiative whereby health care
providers will receive payment for service based on their
performance or the potential outcomes of the service”
Tying payment to performance is
perhaps the most significant aspect
of health care reform.
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The Foundation: Value-Based Payment
Lower
Cost
The de facto definition of “value” in
health care reform is the intersection
of lower cost and improved quality.
Providers who can lower costs and
deliver quality will be measured as
“value-based providers”
Improved
Quality
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* Source: Americas Health Insurance Plans (AHIP) accessed via web on 9/3/13 at:
http://www.ahip.org/searchResults.aspx?searchtext=payment reform activity
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Where Payment Reform is Happening*
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30+ states have insurance markets dominated by a single insurance company
(Median market share held by the largest insurance carrier in each state was 54%)
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A New Competitive Landscape:
Health Plans Gaining Market Control
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• Increase in Average Annual Deductibles 2008 to 2011:
– In-Network Increase:
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A New Competitive Landscape:
Increasing Control = Greater Contract Leverage
◊ Individual Coverage: 17.2% to $587
◊ Family Coverage: 12.4% to $1,317
– Out-of-Network Increase:
◊ Individual Coverage: 27.5% to $1,084
◊ Family Coverage: 30.9% to $2,591
• Increase in Average Annual Co-Insurance:
– In-Network Remained Constant:
◊ Physicians $20
◊ Hospitals 20%
– Out-of-Network Increased:
◊ Physicians: From median of 30% to 40%
◊ Hospitals: From 35% to 40%
• Paying at “Medicare like rates” vs. “usual and customary rates”
*Source: “Out-of-Network Care Adds to Health Expenses” by Michelle Andrews and Kaiser Health News dated April 16, 2012
summarizing data from HR consultant Mercer’s Annual Survey of Employer Sponsored Health Plans
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• Transitioning commercial contracting
– More “stiff arming” especially for smaller providers
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2014 Market Transitions to Monitor
• On-going provider operational challenges
– Revenue cycle issues
– Profitability continues to be squeezed
– Charge capture issues
• Exchange related impacts
–
–
–
–
–
–
Glitch continuation?
Reimbursement implications
“Surprise” narrow networks ?
Increased demand for medical services
Reprieves from mandates – how long will they last?
Consumer impact – choice & out-of-pocket costs
• Escalation in ruthless competition
– Formation of narrow networks impacting market share
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Expect Lower Provider Payment Rates, Less Patient Choice
Anticipated Provider Reimbursement Rates for
Exchange Plans
Catholic Health Initiatives
Modest discounts from
commercial rates
Millern Medical Center1
20% below commercial
rates
Tenet Healthcare
Up to 10% below
commercial rates
WellPoint Inc.
Between Medicare
and Medicaid rates
Meyers Health1
10% above
Medicare rates
Aetna’s Planned Reduction
in Exchange Network Size
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Trading Price for Volume on the Public Exchanges
25%-50% reduction in
exchange network size,
compared to networks
for typical commercial
products
Case in Brief: Aetna Inc.
• Health insurer planning to sell narrow
network exchange products in 14 states
Meriwether Hospital1
5% below commercial
rates
Source: Mathews AW and Kamp J, “Another Big Step in Reshaping HealthCare,” Wall Street
Journal, February 28, 2013, available at: www.online.wsj.com; Hancock J, “Aetna Cuts
Predictions for Obamacare Enrollment,” Kaiser Health News, April 30, 2013, available at:
www.capsules.kaiserhealthnews.org; Health Care Advisory Board interviews and analysis.
1) Pseudonym.
• Searching for providers agreeing to lower
rates in narrow network products
• Plans for rates to fall closer to Medicare than
commercial reimbursement
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Moving Beyond Basic Retail Clinics
Scope of Services
Basic Retail
Clinic
Full Primary
Care
Health
Insurance
Exchange
”
Potential Evolution of Health Care Products
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Walmart Eying the Health Care Industry
“That’s where we’re
going now: full primary
care services in five to
seven years.”
Vice President
Health and Wellness Payer
Relations
4,600+
4.2 miles
33%
Number of Walmart stores in
the
United States
Median distance
between a residence
and Walmart
Estimated portion of the US
population that visits
Walmart every week
Source: The Advisory Board Holmes TJ, “The Diffusion of Wal-Mart and Economics of Density,” May, 2006; Zimmerman A and Hudson K, “Managing Wal-Mart: How U.S.-Store
Chief Hopes to Fix Wal-Mart,” The Wall Street Journal, April 17, 2006, available at: www.wsj.com; Aboraya A, “Wal-Mart Plans to Offer Primary Care in 5-7 Years,” Orlando
Business Journal, January 11, 2013, available at: www.bizjournals.com/orlando; Aboraya A, “Exclusive: Wal-Mart Exploring Private Health Insurance Exchange for Small Biz,”
Orlando Business Journal, January 11, 2013, available at: www.bizjournals.com/orlando; Health Care Advisory Board interviews and analysis.
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Beyond Walmart
Walgreens Aims to Become the Premier Health Destination
2013: Launches three ACOs;
begins diagnosing and managing
chronic disease
2009: Launches flu
vaccine campaign
Vaccinations and
Physicals
2007: Acquires Take Care
Health Systems
Case in Brief: Walgreen Co.
• Largest drug retail chain in the United
States, with 372 Take Care Clinics
• In April 2013, became first retail clinic to
offer diagnosis and treatment of chronic
diseases
Chronic Disease
Monitoring
”
Simple Acute Services
Chronic Disease Diagnosis and
Management
2012: Offers three new
chronic disease tests
Not Just a Drugstore
“Our vision is to become ‘My Walgreens’ for
everyone in America by transforming the
traditional drugstore into a health and daily living
destination...”
Walgreen Co. Overview
Source: The Advisory Board Japsen B, “How Flu Shorts Became Big Sales Booster for Walgreen, CVS,” Forbes, February 8, 2013, available at:
www.forbes.com; “Take Care Clinics at Select Walgreens Expand Service Offerings,” Reuters, May 31, 2012, available at: www.reuters.com; Murphy T,
“Drugstore Clinics Expand Care into Chronic Illness,” The Salt Lake Tribune, April 4, 2013, available at: www.sltrib.com, Walgreens, “Company Overview,”
available at: www.walgreens.com; Health Care Advisory Board interviews and analysis.
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Innovation Payment Models
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Behavior-Intensive Diseases w/Deferred Consequences
Diseases with Immediate Consequences
Myopia
Chronic Back Pain
Psoriasis
Infertility
Hypothyroidism
GERD
Crohn’s Disease
Celiac Disease
Multiple Sclerosis
Technology Dependent Diseases
Motivation to Comply With
Best Known Therapy
Allergies
Ulcerative Colitis
Depression
Sickle Cell Anemia
Epilepsy
HIV
Type I Diabetes
Parkinson
Asthma
Congestive Heart
Cystic Fibrosis
Crushing costs of caring
Failurefor chronically
Coronary Artery Disease
ill are in this quadrant: diabetes,
Type II Diabetes
Chronic Hepatitis B
asthma, tobacco, obesity, CHF, affect
Schizophrenia
tens of millions of people each.
Osteoporosis
Alzheimer’s
Cerebrovascular Disease
Hypertension
Weak:
Deferred
Consequences
Hyperlipidemia
Bipolar Disorder
Diseases with deferred consequences
Minimal
Degree to Which Behavior Change is Required
Source: “The Innovator’s Prescription” by Clayton M. Christensen
Behavior dependent diseases
Strong:
Immediate
Consequences
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Payment Reform Models Focus:
Obesity
Addictions
Extensive
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100%
7%
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Chronic Conditions Drive Medicare Spending*
Zero or 1 condition
90%
32%
80%
Zero or 1 condition
19%
2 or 3 conditions
70%
28%
60%
50%
32%
4 to 5 conditions
2 or 3 conditions
40%
30%
23%
20%
4 to 5 conditions
46%
6 or more conditions
10%
14%
6 or more conditions
0%
Beneficiaries
* Source: MedPAC March 2013 Report to Congress Figure 1-5
Spending
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• Accountable Care
– Medicare Shared Savings
Program
– Medicare Advanced
Payment ACO
– Pioneer ACO
– Comprehensive ESRD Care
Initiative (LI/App.)
• Bundled Payment for
Care Improvement
• Primary Care Transformation
– Comprehensive Primary Care
Initiative
– FQHC Advance Primary Care
Practice Demonstration
– Graduate Nurse Education
Demonstration
– Independence at Home
Demonstration
– Multi-Payer Advanced Primary
Care Practice
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CMS Defined Innovation Models *
– Models 1 through 4
* Arising as a result of Affordable Care Act (ACA), and excluding programs in effect prior to ACA.
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• Medicaid & CHIP Initiatives
– Emergency Psychiatric
Demonstration
– Incentives for Prevention of
Chronic Diseases Model
– Strong Start for Mothers &
Newborns Initiative
◊ Reduce Early Elective Deliveries
◊ Enhanced Prenatal Care Models
• Medicare-Medicaid
Enrollees Initiatives
– Financial Alignment Incentives
– Reduce Avoidable
Hospitalizations Among
Nursing Facility Residents
• Initiatives to Accelerate
Testing & Development of
New Models
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CMS Defined Innovation Models *
– Health Innovation Awards
– State Innovation Models
• Initiatives to Speed
Adoption of New Models
– Community Based Care
Transitions Programs
– Innovation Advisors Program
– Million Hearts
– Partnerships for Patients
* Arising as a result of Affordable Care Act (ACA), and excluding programs in effect prior to ACA.
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Providers eligible to form an ACO:
– ACO professionals in group practice
– Networks of individual practices of ACO
professionals;
– Partnerships and joint ventures between
hospitals and ACO Professionals;
– Hospitals employing ACO professionals
– Critical Access Hospitals under Method II
– Federally Qualified Health Centers
– Rural Health Centers
•Cannot include providers participating in other
shared savings programs or demos or the
Independence at Home pilot.
ACO professionals :
• Physicians
• Nurse Practitioners
• Physician Assistants
• Clinical Nurse Specialists
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Medicare Accountable Care Organizations
Other eligible ACO participants
• Skilled Nursing Facilities
• Home Health Care
• Hospice
• Comprehensive outpatient
rehabilitation facility
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• On December 23rd CMS announced that 123 new organizations
will join the Medicare ACO program effective January 1, 2014
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ACOs Continue to Grow
• ACO enrollment has evolved and continued to grow since it was
launched in April 2012:
–
–
–
–
April 2012 initial: 27 organizations
July 2012: 89 additional organizations
January 2013: 106 additional organizations
December 2011: 32 Pioneer ACOs, w/~ 23 remaining
• Total ACO participation
– Over 360 organizations
– More than 5.3 million beneficiaries
– More than 50% of ACOs led by physician groups, with < 10,000
beneficiaries
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• Pioneer ACO First Year Results:
– Cost Reduction/Shared Savings:
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ACO Results to Date *
◊ Cost growth rate for 669,000 beneficiaries .3% vs. .8%
◊ 13 participants generated gross savings of $87.6 million
◊ 2 participants generated losses of approximately $4 million
– Quality Metrics
◊ 100% successfully reported quality measures
◊ Overall performed better for all 15 clinical quality measures
• 25 of 32 generated lower risk-adjusted readmissions rates
• Median rate for blood pressure control for beneficiaries with diabetes
was 69% vs. 55%
• Median rate for LDL cholesterol control for patients with diabetes was
57% vs. 48%
• CMS expects MSSP results later in year
* Source: CMS “Pioneer Accountable Care Organizations succeed in improving
care, lowering costs” July 16, 2013
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•
Prime Care Medical Network Inc.: San Bernadino and
Riverside counties, CA
•
University of Michigan Faculty Group Practice: southeastern
Michigan
•
Physician Health Partners LLC: Denver, CO
•
Seton Health Alliance: Austin,TX and surrounding counties
•
Plus : North Texas Specialty Physicians and Texas Health
Resources
•
Healthcare Partners Nevada ACO LLC: Clark and Nye
counties
•
Healthcare Partners California ACO LLC: Los Angeles and
Orange counties
•
JSA Care Partners LLC: Orlando, Tampa Bay and surrounding
south Florida
•
Presbyterian Healthcare Services: central New Mexico
(opted out of all Medicare ACO models)
•Seven who achieved no
savings are transitioning
instead to the Medicare
Shared Savings program
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9 Pioneer ACOs departing the Program
• Two are opting to
discontinue the Medicare ACO
model altogether.
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Timeline
•January – July 2013:
No-risk prep period.
•July 2013:
Risk Bearing
Implementation Period
• Model 1 – Acute Care Hospital Stay Only
(Retrospective): 3 participants representing
32 organizations
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CMS Bundled Payment Initiatives:
BPCI Models
• Model 2 –Acute Care Hospital Stay + Post
Acute Care Episode (retrospective): 55
participants representing 192 organizations.
• Model 3 – Post Acute Care Only
(Retrospective): 14 participants
representing 165 organizations
•
Model 4 – Acute Care Hospital Stay Only
(Prospective): 37 participants representing
75 organizations
Source: The Advisory Board: “What are BPCI participants bundling?” by Rob Lazerow dated February 1, 2013
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BPCI1 Participation by State
More than 450 Providers Participating in BPCI1
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Medicare’s Largest Payment Innovation Program
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Participation by Model Type
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BCPI Participants Favoring Longer Episodes
41%
36%
16%
7%
Model 1
Model 2
Model 3
Model 4
Hospital
Inpatient
Services
Hospital and
Physician
Inpatient and
Post-Discharge
Services
Post-Discharge
Services
Hospital and
Physician
Inpatient
Services
Source: Centers for Medicare and Medicaid Services; Health
Care Advisory Board interviews and analysis.
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Source: The Advisory Board: “What are BPCI participants bundling?” by Rob Lazerow dated February 1, 2013
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CMS Bundled Payments Initiatives:
What is Being Bundled?
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Bundled Payments:
Understanding Bundle Characteristics
Total Indexed Admissions
1,000
Total Admissions
1,327
Including Readmissions
Indexed
Total
Avg Cost
Cost
Indexed Admissions
Indexed
Total
Avg Cost
Cost
$
$
Service
Hospital
12,040
$
12,040,359
8,662
$ 8,661,981
SNF
3,134
3,133,676
-
-
HHA
2,169
2,168,509
-
-
MD
3,535
3,535,248
1,975
654
653,696
All Other
Total Costs
$
21,531
$
21,531,488
1,975,175
$
10,637
$ 10,637,156
Bundle Risk: Approximately 51% of total bundle costs occurred post-discharge!
CONFIDENTIAL: Subject to CMS Data Use Agreement #22626
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The Post Acute Care Path and Impact on Bundle
Avg Cost
20.0%
200
SNF
STAH
SNF
HHA
MD
$3,327
$12,608
$1,675
$1,928
All Other
TOTAL
$843
$20,381
Average SNF/HHA Cost per Episode
Discharge
Post Acute
Care
Path
18.0%
180
Home Care
STAH
SNF
HHA
MD
$1,895
$839
$4,150
$1,531
All Other
TOTAL
$897
$9,313
Avg Cost
62.0%
620
CONFIDENTIAL: Subject to CMS Data Use Agreement #22626
Community
Readmit
30.0%
NO Readmit
70.0%
Readmit
21.0%
NO Readmit
79.0%
Readmit
34.5%
NO Readmit
65.5%
$15,138
Avg Cost
Acute
Stay
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Bundled Payments:
STAH
SNF
HHA
MD
$3,826
$743
$1,752
$1,450
All Other
TOTAL
$522
$8,293
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Cardiovascular & Spine Services Bundles
• Payer: Walmart
– Six Participating Providers:
◊
◊
◊
◊
◊
◊
Virginia Mason Medical Center, Seattle,
WA
Mayo Clinic, Scottsdale, AZ , Rochester,
MN & Jacksonville, FL
Scott & White Memorial Hospital, Temple,
TX
Mercy Hospital, Springfield, MO
Cleveland Clinic, Cleveland, OH
Geisinger, Danville, PA
– Description: Beginning January 2013 1.1
million employees eligible for
consultation and care for certain cardiac
& Spine procedures at no additional cost.
Walmart will cover cost of travel, lodging,
and food for patient and one caregiver.
• Payer: PepsiCo
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Commercial Insurance BPI Activity: Large Employers
– Participating Providers: John
Hopkins, Baltimore, MD
– Description: Starting 12/11 began
waiving deductibles & co-insurance
for employees who receive cardiac
and complex joint replacement
surgery at John Hopkins.
• Payer: Lowes
– Participating Providers: Cleveland
Clinic, Cleveland, OH
– Description: Contract for heart
surgery program; will waive $500
deductible, out-of-pocket costs,
airfare, hotel and living expenses.
Source: The Advisory Board “Commercial Bundled Payment Tracker” accessed via web on 4/12/13 at:
http://www.advisory.com/Research/Health-Care-Advisory-Board/Resources/2013/Commercial-Bundled-PaymentTracker#lightbox/0/
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• Comprehensive Primary Care Initiative
– Multi-payer initiative fostering collaboration between public and private
health care payers.
– 497 primary care practices covering 7 states
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CMS Primary Care Transformation
◊ Includes 2,347 providers serving an estimated 315,000 Medicare
Beneficiaries
• Independence at Home Demonstration
– Tests the effectiveness of delivering comprehensive primary care services to
Medicare beneficiaries with multiple chronic conditions at home.
– Providers who succeed in reducing costs and meeting designated quality
measures will receive an incentive payment.
– Participants announced in April 2012 and include 15 different practices in 12
different states
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• Multi-Payer Advanced Primary Care Practice
– CMS participating in 8 states with multi-payer reform initiatives already being
conducted in states.
– Demonstration focuses in on if advanced primary care practice will reduce
unjustified utilization and expenditures, improve safety, effectiveness and
timeliness and efficiency of health care services.
– Monthly care management fee is paid to cover care coordination, improved
access, patient education, and other services to support chronically ill patients.
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CMS Primary Care Transformation
• FQHC Advanced Primary Care Practice
– A three-year demonstration program designed to evaluate the effect of advanced
primary care practice model (commonly referred to PCMH) in improving care,
promoting health, and reducing cost of care to Medicare beneficiaries served by
FQHCs.
– 493 participating FQHCs will be paid a monthly care management fee of $6.00
(paid quarterly) per eligible beneficiary attributed to their practice.
– Fee is in addition to the usual all-inclusive payment rate currently received.
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• Project Objectives:
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Patient Centered Medical Home –
Demonstration Project Overview *
– Identify and eliminate “gaps” in care
– Reduction of health risk factors and enhancement of quality of life
• Focused Clinical Conditions:
–
–
–
–
–
–
–
–
–
–
Asthma
Coronary Artery Disease
Hyperlipidemia
Hypertension
Adult/Adolescent/Childhood Immunizations
COPD
Diabetes
Anxiety/Depression
Breast/Cervical/Colorectal Cancer Screenings
Vital & Others
* Source: BCBSMT Presentation at MT HFMA on PCMH Demonstration Project Results Fall, 2011
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• Structure Incentives Based on Outcomes
–
–
–
–
–
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Patient Centered Medical Home:
Demonstration Project Incentive Plan*
Participation Amount
Quality Outcome Amount
Patient Satisfaction
TCOC Amount
Incentive s for Both Improving & Achieving Targets
• Additional Payment Incentives
– $200 PMPY for Care Management of Chronic Conditions
– $100 PMPY for Care Management of Preventive Conditions
• Potential Savings
–
–
–
–
Reduced ER visits
Preventable Admissions & Re-Admissions
Improved Health Status
Increased Productivity, Employee Morale & Reduced Absenteeism
* Source: BCBSMT Presentation at MT HFMA on PCMH Demonstration Project Results Fall, 2011
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Patient Centered Medical Home:
Demonstration Project Outcomes*
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State Innovation Models Initiative
• Provides up to $300 million to support the development and testing of statebased delivery system transformation models for multi-payer payment and
health care delivery system.
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CMS Centers for Medicare & Medicaid Innovation (CMMI):
• Three types of awards:
– Model Testing Awards:
◊ Six states received over $250 million to implement their State Health Care Innovation
Plans.
– Model Pre-Testing Awards:
◊ Three states received just over $4 million to continue developing State Health Care
Innovation Plans which will be submitted to CMS within six months from date of award.
– Model Design Awards:
◊ 16 states received almost $32 million to be used to develop a State Health Care
Innovation Plan, including application for an anticipated second round of Model Testing
awards.
◊ States that received the Model Design Award have six months to submit their plan to
CMS.
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State Innovation Model Initiatives
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State Innovation Models Initiative
• Model Design Award Recipient: Idaho $3 million
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CMS Centers for Medicare & Medicaid Innovation (CMMI):
– Project will result in a plan that will serve as the blueprint for integrating Idaho’s
patient-centered medical homes and move the state towards an accountable
care, integrated & sustainable delivery and payment system
– Multi-payer and multi-organizational
◊ Medicaid, Blue Cross, Regence BlueShield, Idaho Primary Care Association, Idaho
Hospital Association, Idaho Legislature & Governor’s office; etc.
– Project will address needed resources to enhance communication and
coordination of care across the health continuum
– Identify opportunities to improve patient care management through patientcentered medical homes
– Create mechanisms to link the local health care system through partnerships with
hospitals, primary care providers and county health & social service agencies
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State Innovation Models Initiative
• Model Testing Award Recipient: Oregon $45 million
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CMS Centers for Medicare & Medicaid Innovation (CMMI):
– The Oregon Coordinated Care Model (CCM) is aimed at realigning health care payment
and incentives so state employees, Medicare beneficiaries, and those purchasing
coverage through Oregon Health Insurance Exchange have high quality, low cost
sustainable coverage options.
– CCM will focus on integrating and coordinating physical, behavioral, and oral health care
and align incentives across medical and long-term care.
– Testing will be driven through Oregon’s Coordinated Care Organizations (CCOs) which
are risk-bearing, community based entities governed by a partnership among providers,
community members and entities taking financial risk for the cost of health care.
– CCOs have flexibility to institute their own payment and delivery reforms aimed at
achieving best possible outcomes and are accountable for the health care care of
populations they serve.
– CCOs will transform payment to a fully-capitated payment model increasingly based on
outcomes.
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Idaho Innovation Activity
• Health Care Innovation Awards:
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CMS Centers for Medicare & Medicaid Innovation (CMMI):
– Intermountain Health Care
◊ Geographic Reach: Idaho, Utah
◊ Funding Amount: $9.7 Million
◊ Est. 3 Year Savings: $67 Million
◊ Project Summary: Test new care delivery & payment model using an IT-based
simulation of human physiology, clinical events, and health care systems to forecast
which interventions will be most effective in reducing a persons risk, provide risk
stratification metrics for individual patients, and project benefits for specific
interventions.
– St. Luke’s Regional Medical Center, LTD
◊ Geographic Reach: Idaho, Nevada, Oregon
◊ Funding Amount: $11.8 Million
◊ Est. 3 Year Savings: $12.6 Million
◊ Project Summary: Establish remote ICU monitoring & care management in certain
portions of rural Idaho and eastern Oregon, with overall goal of early identification of
patients with specialized needs, improved care coordination, standardized practices,
increase access & reduce ICU days.
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Idaho Innovation Activity
• Health Care Innovation Awards (cont’d):
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CMS Centers for Medicare & Medicaid Innovation (CMMI):
– Trustees of Dartmouth College
◊ Geographic Reach: CA, CO, ID, IA, ME, MA, MI, MN, NW, NJ, NY, OR, TX, UT, VT, WA
◊ Funding Amount: $26.2 Million
◊ Est. 3 Year Savings: $64 Million
◊ Project Summary: Collaboration with 15 large health systems across country to hire
Patient and Friendly Activators (PFAs) who are trained to work with patients with multiple
chronic conditions to assist them with effective decision making in their care choices.
– University of North Texas Health Science Center
◊ Geographic Reach: 35 states, including ID, CO, MV, OR, & WA in the west and PNW
◊ Funding Amount: $7.3 Million
◊ Est. 3 Year Savings: $9.7 Million
◊ Project Summary: Through partnership with Brookdale Senior Living (BSL) will expand and
test BSL’s Transitions of Care Program which is based on an evidenced-based assessment
tool called “Reduce Acute Care Transfers” for residents living in independent living,
assisted living, and dementia specific facilities initially in Texas & Florida, but expanding to
other states during the grant period.
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3 year demonstration
• Help Medicare
beneficiaries manage
chronic conditions and
provide coordinated care
• Receive $6 monthly care
management fee for each
eligible Medicare
beneficiary
• Achieve Level 3 patientcentered medical home
recognition
Idaho Participants
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Federally Qualified Health Center (FQHC) Demonstration
– Adams County Health Center (Council)
– Family Medicine Health Center (Boise)
– Health West (Pocatello)
– Kaniksu Health Services (Bonners Ferry)
– Terry Reilly – Nampa Clinic (Nampa)
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Regulatory Environment &
Transitioning Traditional FFS
Payment to VBP
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American Taxpayer
Relief Act
January 2013
•
•
Extending CMS’s
authority to recoup
“excess payments”
related to transition
to MS-DRGs from
FFYE 2014 – FFYE
2017
$11 billion in
“exchange” for SGR
fix
Patient Protection & Affordable Care
Act (PPACA)
March 2010
•
•
New formula for DSH payments.
Established requirements for
pay-for-performance initiatives
MedPAC & OIG
2013 Reports
•
•
•
•
•
“Payment
equalization across
sites of service”
Elimination of CAH
designation for 849 of
1,329 CAHs
President Obama’s
September 2011
budget
CAH swingbed
reimbursement vs.
skilled nursing
facilities
Rural Health Clinic
(RHC) designation
and rules compliance
©2013 CliftonLarsonAllen LLP
Influencers of Hospital Medicare Reimbursement
CMS Annual Updates
•
•
•
•
ACA implementation
Value-Based-Payment
Readmissions
DSH Implementation
43
Payment Pressures: “Good Ole Days” At Risk
©2013 CliftonLarsonAllen LLP
MedPAC Pushing Equalization
“Last year we made a recommendation to equalize payment
rates for office visits provided in hospital outpatient
departments and physician offices. We will continue to
analyze opportunities for applying this principle to other
services and sectors, such as sectors that provide postacute care.”
MedPAC 2013
Report to Congress
44
• OPPS & PFS Final Rules
– Both rules have proposals for collection of new data from
hospitals differentiating OP services provided in “off-campus
provider-based clinics”.
©2013 CliftonLarsonAllen LLP
Emergence of Payment Equalization?
• PFS Proposed Rule – not final, but being analyzed
– Proposed implementation of a cap on certain physician
services (~200 codes) provided in an office setting that would
limit payment to be equal to HOPD or ASC
• OPPS Proposed/Final Rule
– Collapsing HOPD clinic & ED visits codes (ED change not
adopted)
◊ One code for HOPD clinic visits
◊ Type A & Type B for ED visits
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• Report issued in August 2013
• Concluded nearly two-thirds (849 of 1,329) of CAHs do not
meet the federal distance requirements
©2013 CliftonLarsonAllen LLP
OIG Report: Most CAHs Would Not Be……..
– Obtained CAH designation through states declaring “necessary
providers” or “NP”
• OIG recommended the following:
– CMS seek legislative approval to remove NP designation
– Seek legislative authority to revise CAH Conditions of Participation to
include alternative location-related requirements
– Ensure it periodically assess CAHs compliance
– Ensures consistency in application of “mountainous terrain”
• OIG estimated, based on 2011 data, decertification would
have save Medicare and beneficiaries $449 million
46
• Other topics discussed in OIG’s report:
– President Obama’s “2011 Plan for Economic Growth and
Deficit Reduction”:
©2013 CliftonLarsonAllen LLP
OIG Report: Most CAHs Would Not Be……..
◊ Reduce CAH reimbursement to 100% of costs, estimated savings $1.4
billion over 10 years
◊ Decertify CAHs fewer than 10 miles from another hospital, estimated
savings $690 million over 10 years
– OIG Report on Rural Health Clinic (RHCs) Compliance
◊ Numerous RHCs not compliant with requirements of being located in
rural and underserved areas
◊ Requirements do not effectively prevent RHC participation in areas
with existing health care providers
– OIG conducting nationwide study of CAH swing-bed services
◊ Comparing reimbursement for same level of care obtained in skilled
nursing facilities for 2005-2010
47
©2013 CliftonLarsonAllen LLP
Bipartisan Budget Act of 2013 & Pathway for
SGR Reform Amendment
• Signed into law December 26, 2013
• Avoids a second round of sequestration cuts
• Medicaid provisions:
– Officially recognizes Medicaid as “payer of last resort”
◊ Allows states to delay or avoid paying certain claims
◊ Additional time to collect medical child support payments when health insurance
is available through a “non-custodial” parent
– Extends Transitional Medical Assistance (TMA) program through 3/31/14
◊ Provides financial assistance to low-income families retain Medicaid coverage as
they transition from welfare to work
– Repeals Medicaid DSH reductions for 2014 and delays 2015 cuts by one year
◊ $500 million in 2014 – now repealed
◊ $600 million in 2015 – deferred to 2016
◊ Rebases 2023 Medicaid DSH allotment based on 2022 allotment
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• Temporarily avoids scheduled physician cuts
©2013 CliftonLarsonAllen LLP
Bipartisan Budget Act of 2013 & Pathway for
SGR Reform Amendment
– Deferred until April 1, 2014
– Instead of 20+% reduction, .5% increase
◊ Conversion factor will be $35.8228
• Extends other provisions of ACA & ATRA through March 31, 2014:
– Physician work geographic adjustment floor of 1.0
– Therapy caps on HOPD therapy services, as well as exceptions request
process to those caps
– Ground ambulance add-on payments
◊ 2% for trips originating in urban areas
◊ 3% for trip originating in rural areas
◊ Increase over base rate of ~ 22.6% for trips originating in “super rural” areas
– Medicare IP hospital low volume adjustment (retro active to 10/1/13)
– Medicare Dependent Hospital program (retro active to 10/1/13)
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©2013 CliftonLarsonAllen LLP
More SGR Legislation Being Introduced
Source: The Advisory Board Company
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©2013 CliftonLarsonAllen LLP
Final Medicare IP PPS Rule 2014
Payment Rate Update Overview
• The table below depicts the final and proposed payment rate updates for
Medicare services for 2014.
• Significant reduction to Physician Fee Schedule result of SGR, Congress will need
to override
• Home Health reductions due primarily to rebasing 60-day episode of care
payment as mandated by ACA. Rebasing phased in over a 4-year period.
Final Effective 10/1/13
Final Effective 1/1/14
Inpatient
Operating
Payment
Inpatient
Capital
Payment
Skilled
Nursing
Facility
Market Basket Increase
2.5%
0.9%
2.3%
2.5%
-
Productivity Offset - ACA Mandated
-0.5%
-
-0.5%
-0.5%
-
-
General Reduction - ACA Mandated
-0.3%
-
-
-0.3%
-
-
Recoupment of PY Increases from Coding
-0.8%
-
-
-
-
-
-
-
-
-
-
Description
Rebasing/ICD-9 Adjustments
Outpatient Physician
Update
Update
IP Adm. Med Rev/Forecast Error Adj.
-0.2%
-0.2%
-0.5%
-
Overall Proposed Payment Rate Change
0.7%
0.7%
1.3%
1.7%
-20.1%
Home
Health
2.30%
-3.35%
-1.05%
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Changes to Medicare DSH
• Mandated by Section 133 of ACA
©2013 CliftonLarsonAllen LLP
Final Medicare IP PPS Rule 2014
• Change funding to pay 25% of normal DSH payment (i.e.
“Empirically Justified Payment”)
• Remaining 75% (i.e. “Additional Uncompensated Care Payment”)
redistributed based on certain factors, after reduction for change
in uninsured population as estimated by CBO
• Total Medicare DSH reductions for FFYE 2014 estimated at
approximately $550 million
• DSH eligible hospital will receive “empirically justified payment”
and “additional uncompensated care payment” on a per discharge
basis, with adjustment when FFYE 2014 cost report is settled
52
©2013 CliftonLarsonAllen LLP
Final Medicare IP PPS Rule 2014
Walking Through DSH Payment Change
FACTOR 1: POOL FOR ADDITIONAL DSH PAYMENTS
VARIABLE DESCRIPTION
CMS Office of Actuary Estimated 2014 DSH Payments
DSH POOL
$
Less: 75% Reduction (DSH Pool Withheld to be used as Factor 1)
12,772,000,000
(9,579,000,000)
Emirically Justified DSH Payments FFY 2014 for All Hospitals
$
3,193,000,000
REMAINING DSH AMOUNT FOR FACTOR 1
$
9,579,000,000
FACTOR 2: ESTIMATED CHANGE IN UNINSURED POPULATION
VARIABLE DESCRIPTION
PERCENT
CBO Estimated Percent of Uninsured 2010
CBO Estimated Percent of Uninsured 2013
18%
17%
CBO Estimated Percent Change in Unisured
Additional Reduction Per ACA
-5.6%
-0.1%
TOTAL CHANGE IN UNINSURED PLUS ADD'L ACA REDUCTION
-5.7%
FY 2014 Est. DSH Pool Withheld
Percent Retained by CMS
$
9,579,000,000
-5.7%
FFY 2014 Remaining DSH Pool Available for Redistribution
$
9,032,997,000
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Walking Through DSH Payment Change
Factor 3 “Additional DSH Payment” determination will redistribute reimbursement
across hospitals based on DPP share to total DPPs causing financial impact to vary.
©2013 CliftonLarsonAllen LLP
Final Medicare IP PPS Rule 2014
SAMPLE HOSPITAL CALCULATION
VARIABLE DESCRIPTION
SAMPLE HOSPITAL
2013 Hospital Specific DSH Payment (Estimate Provided by CMS)
$
25% Payment of Historical DSH (Empirically Justified DSH Payment)
a
4,846,286
1,211,571
FFY 2014 Remaining DSH Adjusment Avaible to Providers (Product of Factor 1 X Factor 2)
9,032,997,000
Hospital Specific DSH Percent per CMS (Factor 3)
0.000488506
Hospital Specific Share of Additional DSH Payment from DSH Pool
b
$
4,412,670
2014 TOTAL ESTIMATED DSH PAYMENT
a+b
$
5,624,241
Estimated Percentage Change in DSH Payment vs. Prior Year
16.1%
54
DSH Settlement Implications
• CMS will settle DSH payments based on hospitals cost report
©2013 CliftonLarsonAllen LLP
Final Medicare IP PPS Rule 2014
• Factor 3, DSH pool allocation, will not be a part of this settlement
– This will be a fixed payment and for FFY 2014 will be based on and average
of the most recent three years MedPAR claims data
◊ FFY 2010, 2011 and 2012
– CMS believes paying the Uncompensated Care Payments based on
this estimate is within the scope of their authority based on how the
law is written
• However, if the cost report reflects the hospital no longer
qualified for the empirically justified DSH payments, ALL DSH
payments received will need to be repaid to CMS
– This includes the Empirically Justified AND Uncompensated Care payments
55
Connecting Performance to Reimbursement
Performance Periods Currently In Progress For Fiscal Years
2013
2014
2015
©2013 CliftonLarsonAllen LLP
Final Medicare IP PPS Rule 2014
2016
VBP
Readmissions
HAC
Payment adjustment
can no longer be
affected
Source: CMS; Advisory Board Analysis
Data collection in
process
Data collection not
yet started
56
Value Based Purchasing Program
• Penalty increases from 1% in FFYE 2013 to 1.25% in FFYE 2014
©2013 CliftonLarsonAllen LLP
Final Medicare IP PPS Rule 2014
• Program remains budget neutral with estimated $1.1 billion
available for VBP incentive payments
• Added new HAI to clinical processes of care domain
– HAI postoperative urinary catheter removal
• Added new outcomes domain with following measures
– AMI , HF & PN 30-day mortality rates
• FFYE 2014 and beyond domain weighting
57
©2013 CliftonLarsonAllen LLP
Final Medicare IP PPS Rule 2014
Value Based Purchasing Program
Payment Withhold By Fiscal Year
FY13
-1.00%
FY14
-1.25%
FY15
-1.50%
FY16
-1.75%
Evolving & Changing Measures
FY17
-2.00%
2013
2014
2015
2016
Total
20
24
26
25
New
20
4
3
4
Removed
-
-
1
5
AND DOMAIN WEIGHTS FFY 2013 - FFY 2016
FFY 2013
Final
FFY 2014
Final
FFY 2015
Final
FFY 2016
Final
Clinicl Process of Care
70%
45%
20%
10%
Patient Experience
30%
30%
30%
25%
Outcome Measures
-
25%
30%
40%
Efficiency Care Measures
-
-
20%
25%
Domain
58
©2013 CliftonLarsonAllen LLP
Final Medicare IP PPS Rule 2014
FY2016 Performance Periods
2012
2013
Oct 1
Oct 15
2014
Jan 1
Clinical Process of Care
Dec 31
Jan 1
Patient Experience of Care
Dec 31
Jan 1
Efficiency Measures
Dec 31
Jan 1
Outcome: CAUT/CLABSI/SSI
Dec 31
Outcomes: Mortality
Patient Satisfaction
June 30
June 30
January 2014
Finalized Measures
Source: CMS; Advisory Board Analysis
59
• Hospital Acquired Conditions (HAC) Reduction
Program
©2013 CliftonLarsonAllen LLP
Final IP PPS Rule
– Hospitals ranked in lowest quartile of HAC performance will
receive a 1% reduction to Medicare inpatient payments
– Penalty is not budget neutral and will be determined after
any adjustments applied for excessive readmissions or valuebased purchasing
– Two domains for evaluating performance
◊ Patient Safety Domain measures weighted at 35%
◊ Healthcare Associated Infection (HAI) measures weighted at
65%
– Program will continue to expand in future years
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• Hospital Readmissions Reduction Program
– Payment penalty increases from maximum of 1% in FFYE 2013 to 2%
in FFYE 2014
– Program is not budget neutral
– No new conditions for FFYE 2014, CMS will continue with current
conditions
©2013 CliftonLarsonAllen LLP
Final IP PPS Rule
◊ AMI, HF, PN
– Program will expand in FFYE 2015 to include current conditions, plus:
◊ COPD
◊ Total Hip Arthroplasty & Total Knee Arthroplasty
• Part B Inpatient Billing
– Allowing payment for Part B inpatient services if admission was
determined to be unnecessary or inappropriate post-discharge
61
Physician Value-Based Payment Modifier (VBP)
• Physician Value-Based Payment (VBP) Modifier
©2013 CliftonLarsonAllen LLP
Medicare 2014 Final PFS Rule
– Mandated by Section 3007 of Affordable Care Act (ACA)
– Intended to establish a value modifier that provides for differential payment
based on the quality of care provided compared to the cost of that care.
• VBP Modifier Rollout
– January 1, 2015: VBP implemented for groups of 100 & > physicians
– January 1, 2016: Expanded to groups of 10 to 99
– January 1, 2017: Expanded to include all physicians
• Performance vs. Measurement Period
– Two year lag on impact of performance
◊ CY 2013 performance measurement period for 2015 payment rates
◊ CY 2014 performance measurement period for 2016 payment rates
62
VBP Rollout Process
Groups with 100
or more
Physicians
No
Excluded from VPM in CY
2015, included in CY 2017
©2013 CliftonLarsonAllen LLP
Medicare 2014 Final PFS Rule
Yes
Satisfactorily
Report Group
PQRS
No
-1.0% Penalty in CY 2015
Yes
Elect Quality
Tiering?
No
0% Penalty in CY 2015
(No Adjustment)
Yes
Upward or downward
adjustment based on
quality & cost performance
* Source: Association of American Medical Colleges (AAMC) webinar July 31, 2012 accessed via web.
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VBP Domains & Application Methodology
Clinical Care
Patient
Experience
Patient Safety
Care
Coordination
Quality of Care
Composite
©2013 CliftonLarsonAllen LLP
Medicare 2014 Final PFS Rule
Based on equal
weighting of
scores for each of
the 6 quality
domains
Value-Based
Modifier
Efficiency
Total Overall
Costs
Total Cost
w/Specific
Conditions
Cost Composite
Based on equal
weighting of each
cost domain
Source: CMS PFS 2013 proposed rule, table 68
page 45007
64
©2013 CliftonLarsonAllen LLP
QRUR Report Example
65
Quality Composite Score
©2013 CliftonLarsonAllen LLP
QRUR Performance Highlights Page*
Cost compositee score
Beneficiaries average
risk score
Quality tiering
performance graph
Payment adjustment
based on quality tiering
* Source: CMS
66
VBP Modifier Payment Adjustments
• The table below depicts the 2016 adjustment to physician
payments based on the total performance score.
©2013 CliftonLarsonAllen LLP
Medicare 2014 Final PFS Rule
CY 2016 VBP Modifier Adj Amounts
Cost Range
Low
Quality
Avg
Quality
Low Cost
0.0%
1.0x *
Avg Cost
-1.0%
0.0%
High Cost
-2.0%
-1.0%
High
Quality
2.0x *
1.0x *
0.0%
* Groups of physicians eligible for an additional 1.0x if reporting PQRS quality measures and average beneficiary
risk score is in top 25 percent of all beneficiary risk scores.
Source: CMS PFS 2014 final rule, table 85 page 74770
67
• Health care payment system is being driven to “value based”
payments
©2013 CliftonLarsonAllen LLP
Parting Comments
• The transition in large part is market driven
• Many of the initiatives take aim at improving management,
access, and quality of care provided to patients with chronic
conditions
• Short-term outcomes show promise, but it will be years before
we understand the true benefit of this transition
• During transition, CMS will continue to refine current payment
systems to connect “value” to “reimbursement”
• Over time, CMS will expand & converge various quality
programs, measures and reporting requirements
68
©2013 CliftonLarsonAllen LLP
Questions/Comments
THANK YOU!
Rob Schile, CPA, PIC
Health Systems & Reimbursement
[email protected]
For information on health care reform, go to
CliftonLarsonAllen’s Health Care Reform Center at:
http://www.cliftonlarsonallen.com/healthreform/
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