MAPPING THE ACO TERRAIN BEFORE MAKING THE JUMP 2/24/2015. February 25, 2015

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1 MAPPING THE ACO TERRAIN BEFORE MAKING THE JUMP February 25, 2015 Eddie Marmouget, BKD National Industry Partner- Health Care Lynn Barr, NRACO Founder & Chief Transformation Officer 1

2 TO RECEIVE CPE CREDIT Participate in entire webinar Answer polls when they are provided If you are viewing this webinar in a group Complete group attendance form with Title & date of live webinar Your company name Your printed name, signature & address All group attendance sheets must be submitted to within 24 hours of live webinar Answer polls when they are provided If all eligibility requirements are met, each participant will be ed their CPE certificates within 15 business days of live webinar AGENDA Introductions Opening Comments Pathway to Sustainability Collaboration Explained Closing Remarks Questions 2

3 The Task Force will develop timely and actionable policy and program design recommendations for the private sector, the Centers for Medicare & Medicaid Services (CMS), Congress and others; new delivery and payment models; and the best-practice tools, benchmarks and approaches to implement them. Initial priorities include improving the Accountable Care Organization (ACO) model, developing common bundled payment framework and improving care for high-cost patients. Health Care Transformation Task Force Lynn Barr Founder & Chief Transformation Officer National Rural Accountable Care Consortium 3

4 Pathway to Sustainability Informational Webinar Lynn Barr, MPH Who is the Consortium? First ACO created by nine rural CEOs in Michigan, Indiana and California. Currently 30 rural health systems in nine states under six ACOs. Will be operating in most states in (c)3 governed by founders promotes collaboration, education, peer-learning and healthcare reform policy development. Services organization provides simple, inexpensive, comprehensive programs for transforming community health systems to prepare for and participate in new payment models. 8 4

5 The Speed of Change is Increasing Secretary Burwell s historic announcement Our first goal is for 30% of all Medicare provider payments to be in alternative payment models that are tied to how well providers care for their patients, instead of how much care they provide and to do it by Our goal would then be to get to 50% by Our second goal is for virtually all Medicare fee-for-service payments to be tied to quality and value; at least 85% in 2016 and 90% in Only 36 percent of the 1,201,363 professionals who were eligible to participate in 2012 participated in PQRS, so how is that going to happen? 9 How will the Secretary Achieve Her Goal? 10 5

6 Democrats, Republicans and CMS Agree No increases for 10 years 2015 PFS pays 4% bonus or 4% penalty in 2017 for top quartile performers on ACOlike quality measures and cost per beneficiary pays 8% bonus or 4% penalty 2019 pays 24% bonus or 12% penalty 11 HHS 2016 Budget Performance Year YIKES!! No legislation required. 12 6

7 Fee For Service Dying by 1,000 Cuts Increased cost-sharing for beneficiaries Standardization of payments for outpatient services to physician fee schedule. RAC Audits CAH mileage issues CAH 101% under fire Payment reductions Sun-setting special payments 13 If you could see what we see because we have the data. Rural providers typically have higher UNIT costs (not cost per life) and will start having lower quality scores because they do not participate in PQRS or other ambulatory quality programs. Patients are getting 80% of their care outside of the rural health system. A cardiologist could risk losing ~$100K per year if his patients are high cost or if their quality scores are low, and much of this is out of his direct control it depends on the health system they come from. Providers are going to steer their patients to high value partners. They will look on Physician Compare, Hospital Compare and other sources where you aren t listed! AND SO WILL YOUR PATIENTS! 14 7

8 And that Puts the Target on Your Back We have to find a way to participate in these programs, even though we don t have to. The greatest threat to the sustainability of rural healthcare systems is market forces that will force doctors and patients to choose high value providers and partners and rural will be left behind. 15 How do you win? Get involved in policy discussions and help map out future payments. Orient your mission toward population health, line up payment models as quickly as possible, and build market share. Get data to find your opportunities to improve cost and quality. Get waivers and clinically integrate with others to create market power, improve coordination and reduce costs while maintaining independence. Enter data-informed arrangements that get you more of the premium dollar. 8

9 Do You Want to be the Chef or the Lunch? 10,000 lives = $80 million in healthcare spending by your community. Payor profit is LIMITED to $12 million. You are lucky to make $500K. Path to Sustainability Actuarial analysis PCMH Get data and establish processes Your sustainability comes from gaining more of the premium dollar by saving payors money, and some day becoming the payor. 9

10 What is the Medicare Shared Savings Program? Transitional payment program Requires formation of an Accountable Care Organization (ACO) Providers become accountable for the cost and quality of care for a defined population. Waivers and complete claims data files help participants to achieve goals. If successful, Medicare shares up to 50% of savings. If not successful, no penalty. ALL EXISTING REIMBURSEMENT STAYS THE SAME! How Does Shared Savings Work? ACO Programs All existing reimbursement stays the same! ACO s Baseline Spending per Patient - based on previous 3 years, for all ACO participants $10,00 0 ACO s Year 1 Spending per Patient $9,50 0 $50 0 $25 0 xq $20 0 Saving s Shared Savings (50%) Quality Score Adjusted Shared Savings 10

11 Four Quality Domains At-Risk Populations Patient and Caregiver Experience Preventive Health Care Coordination and Patient Safety Focus Care Coordination on Top 10% Patients to Achieve Savings $84,293 $35,986 Top 5% 6-10% Care Coordination Wellness Promotion { } $15,320 $4,381 $ % 26-50% % 11

12 Key Elements of a Rural ACO Multiple entities must come together to qualify. ACO owned and governed by members Typically the Hospital covers costs for community Providers Local steering committee oversees program Data-driven community-based care coordinator assists chronically ill Advice Nurse Hotline reduces ED utilization Physician education on best practices CEO, project manager and physician champion lead change from a reactive to a proactive health system. Proactive care increases market share, improves community health and patient satisfaction. 23 What is the ACO Investment Model? Medicare pre-pays shared savings for two years Payments recovered from shared savings If no savings, no repayment as long as ACO complies with the program for 3 years. 12

13 AIM Pre-Payment An upfront, fixed payment: $250,000 An upfront, variable payment: Assigned beneficiaries multiplied by $36. A monthly payment of varying amount depending on the size of the ACO: Assigned beneficiaries multiplied by $8, for up to 24 months or until it ceases participation If 5,000 beneficiaries are assigned, the ACO would get $250,000 +$180,000 up front ($430,000) plus $480,000 per year for 2 years = $1,390,000 If 10,000 beneficiaries are assigned, the ACO would get $250,000 + $360,000 up front ($610,000) plus $960,000 per year for 2 years = $2,530,000 AIM Repayment Repayment is deducted from shared savings. ACO must complete contract term or repay funds. If ACO completes term and does not have sufficient savings to repay funds, pre-payment will be forgiven. 13

14 AIM Eligibility Must also become a Medicare ACO. Less than 10,000 beneficiaries No hospital in the ACO, unless it is a CAH or PPS with 100 beds or fewer. The ACO is not owned or operated in whole or in part by a health plan. PPS Hospitals DIY ACO Pro Forma Up-Front Costs are $600,000, Operational Costs are $1.2 million per year per CMS estimate (data from AHA and NAACOs is higher) = at least $4.2 million AIM Funding is $250,000 plus $36/life up front and $8 PMPM for 24 months = $1.6 million 28 14

15 PPS Hospitals DIY ACO 29 PPS Hospitals NRACO Pro Forma Up-Front Fees are $25,000 per site, minimum $100,000 per ACO, Monthly Fees are $10,000 per site, 36 months + 1PMPM if more than 2000 lives per site = $1 - $2 million depending on number of sites. AIM Funding is $250,000 plus $36/life up front and $8 PMPM for 24 months = $1.6 million 30 15

16 PPS Hospitals NRACO Pro Forma 31 CAHs DIY ACO Pro Forma Up-Front Costs are $600,000, Operational Costs are $1.2 million per year per CMS estimate (data from AHA and NAACOs is higher) = at least $4.2 million CAH gets 50% Medicare reimbursement of costs and fees. AIM Funding is $250,000 plus $36/life up front and $8 PMPM for 24 months = $1.6 million 32 16

17 CAHs DIY ACO 33 CAHs NRACO Pro Forma Up-Front Fees are $25,000 per site, minimum $100,000 per ACO, Monthly Fees are $10,000 per site, 36 months + 1PMPM if more than 2000 lives per site = $2.3-$3.8 million depending on number of sites. CAH gets 50% Medicare reimbursement of costs and fees. AIM Funding is $250,000 plus $36/life up front and $8 PMPM for 24 months = $1.6 million 34 17

18 CAHs NRACO Pro Forma 35 What are the risks? Transforming your delivery system is a lot of work. What will you stop doing that you do now, so you can spend time learning, redesigning workflows and reaching out to your patients? If your ACO closes before the third year, you have to pay back your grant funds so contract carefully to protect yourself. If you are really good at coordinating care, and you don t build market share at the same time with these programs, you could lose admissions, your payor mix could change and you could lose revenue you must regulate the pace of change and build market share at the same time. If your collaborators have losses, they will wipe out your savings and you will not get paid your bonus don t count on shared savings

19 Provider Transformation Network (PTN) Not ready for an ACO? If you don t have physicians who will participate If you are going to implement a new ambulatory EMR in the next two years. If your CEO is going to retire in the next two years. If your board won t support it. Then what? Technical assistance to help you get ready will be available this summer. Look for announcements on who is approved. They need rural providers! 37 Conclusion Getting paid for population health is your key to your sustainability. Community health systems are perfectly poised for success in population health programs. ACOs are a good transitional program to optimize your delivery sytem for population health payment models -- and if you join now, CMS will pay for it. Most rural providers do not have population size or resources to form an ACO must collaborate to participate in Healthcare Reform. Rural markets have the most low hanging fruit never-managed populations yield immediate return. Your future survival depends on having high quality, low cost, and getting more of the premium dollar. Becoming accountable for your patients cost and quality will get you there. 19

20 QUESTIONS? CONTINUING PROFESSIONAL EDUCATION (CPE) CREDITS BKD, LLP is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: The information in BKD webinars is presented by BKD professionals, but applying specific information to your situation requires careful consideration of facts & circumstances. Consult your BKD advisor before acting on any matters covered in these webinars. 20

21 CPE CREDIT CPE credit may be awarded upon verification of participant attendance For questions, concerns or comments regarding CPE credit, please the BKD Learning & Development Department at THANK YOU! FOR MORE INFORMATION Eddie Marmouget National Industry Partner- Health Care 21

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