Gain Sharing under the New All Payer Demonstration Model

Transcription

1 Gain Sharing under the New All Payer Demnstratin Mdel January 9, 2014 The Maryland Hspital Assciatin HSCRC call fr papers: Gain sharing and ther physician alignment prgrams: Legal, plicy and peratinal analysis f the pprtunities f and barriers t sharing savings and ther physician alignment effrts, in rder t align physician payment with the new hspital payment mdels and incentives. The paper shuld cnsider whether gain sharing r ther physician alignment initiatives shuld be implemented n an all-payer basis and hw this might be accmplished. The paper may cnsider whether there are pprtunities t use the current Alternative Rate Setting Methds (ARM) structure t fster gain sharing r ther physician alignment prgrams, and whether ther plicy r regulatry changes are needed.

2 Intrductin Under Maryland s prpsed All-Payer Demnstratin Mdel, Maryland hspitals will be perating beginning January 2014 under a dramatically new set f perfrmance targets and incentives designed t reward quality imprvements and cst reductins. While the prpsal defines a new payment mdel fr hspitals nly, successful hspital perfrmance will be strngly tied t changing physician practice patterns. Unquestinably, changing physician practice patterns will be dependent n (1) aligning the hspital and its affiliated physicians with a cmmn set f cst/quality perfrmance targets, (2) allcating new resurces t bth in-hspital and ut-f-hspital service settings t equip physicians t meet these targets, and (3) financially rewarding physicians fr meeting these targets. Histrically, hspitals have been prhibited frm incentivizing/rewarding their referring physicians n the basis f cst savings and utilizatin metrics; the Fraud and Abuse laws and prvisins f the Civil Mnetary Penalties have limited gainsharing activity t prevent verutilizatin and/r underutilizatin that might therwise ccur under different incentive mdels. Mre recently, hwever, CMS has acknwledged that these same Fraud and Abuse laws may impede physician-hspital alignment effrts, alignment that is increasingly identified as a frmula fr successful ACOs. Recgnizing the need t reduce these barriers fr ACOs, CMS issued waivers in 2012 t prvide exemptins frm Fraud and Abuse laws t ACOs that participate in the Medicare Shared Savings Prgram and meet specified terms and cnditins. These waivers allw eligible ACOs that meet the requirements fr participatin in the Medicare Shared Savings Prgram t distribute savings generated frm ACO peratins t participating prviders and entities. Purpse The purpse f this paper is t discuss the key attributes fr gainsharing mdels in Maryland and assess alternative ptins fr incrprating gainsharing mdels in Maryland tgether with the new All Payer Demnstratin Mdel. This paper addresses the fllwing questins: Objectives f gain sharing What wuld gain sharing accmplish in the demnstratin mdel? What Maryland hspital perfrmance requirements need gain sharing t achieve imprved hspital system imprvements? Arund what perfrmance gals will Maryland hspitals want t align physicians/ther prviders? Key attributes: What are the key attributes f a successful mdel in Maryland at this stage? Optins fr cnsideratin: A Framewrk Under current prvisins: What mechanisms/mdels might be available? Under ACO waivers: What is currently permitted under the ACO waivers? What cnditins apply? Readiness in Maryland: Hw rganizatinally ready are Maryland hspitals and physicians fr gain sharing, and what issues must be anticipated? Assessment f ptins: What makes the mst sense fr Maryland hspitals, in cntext f 2

3 Terms and cnditins t meet requirements Extent f legal prtectin prvided t allw flexibility/innvatin Organizatinal readiness f Maryland hspitals t implement Expediency and near-term implementatin Objectives fr Maryland: Perfrmance gals/incentive targets At the State level, the verall bjective f gain sharing is t prmte physician engagement and fuel effrts t meet the hspitals cst/quality imprvement targets. The bjective f gain sharing is t prmte physician engagement by aligning financial incentives with the hspital s incentives under the new payment mdels t be rlled ut under the State s demnstratin mdel. Gain sharing incentives wuld functin t define and align hspital-physician perfrmance targets and incentivize physicians t meet these imprtant targets. While the HSCRC is changing the hspital reimbursement system away frm fee-fr-service incentives, physicians are ften reimbursed n a fee-fr-service system that cntinues t reward and incent vlume grwth. Because physicians are respnsible fr care delivery, the misalignment between hspital and physician financial incentives may limit the ability f prpsed hspital changes t reduce readmissins and reduce preventable ambulatry sensitive cnditins. We wuld expect the first stage gain sharing perfrmance targets t reflect fur majr imprvement areas f emphasis, aligning directly with HSCRC perfrmance measures and statewide perfrmance gals. These include: 1. Reduce admissin rates fr Preventin Quality Indicatrs (PQIs) - Similar t admissin rates fr ambulatry sensitive cnditins, PQIs are natinally defined measures recgnized as reflecting the availability and effectiveness f cmmunity-based care. Admissin rates fr specific cnditins such as urinary tract infectin, asthma, r pneumnia may be tracked, r cmpsite scres fr PQI cnditins may be tracked t reflect brader cmmunity-wide ppulatin management. In TPR regins, featured by a sle cmmunity hspital and accuntability fr a sizable Cunty ppulatin, a hspital might establish chrt-specific targets fr reducing PQI admissin rates (e.g. diabetes patients; COPD patients); a sle cmmunity hspital might als establish glbal targets fr reducing the cmpsite admissin rate fr a set f chrnic PQIs. Hspitals with a smaller ppulatin base, r a patient base mre widely disbursed acrss physician practices may define target reductins in chrnic PQIs based n a raw number reductin in ttal PQI admissins. 2. Reduce readmissins rate - Maryland must reduce its readmissin rate t the natinal average ver the curse f a five year perid. There are several ptins fr actin t imprve readmissin rates: Overall readmissin rate establish general prcedures t imprve readmissin rates fr all patients, such as prviding clear instructins t patients upn discharge Readmissin rate fr frequent, high-cst patients identify repeat patients with particular clinical r sciecnmic issues that result in frequent and ften high-cst use f services 3

4 Readmissin rate by admissin surce (e.g. nursing hme admissins) Establish a target reductin in readmissins rate, invest in new resurces/interventin strategies, and define a statistically meaningful number f patients t evaluate in aggregate. Specialty care management define a specialty patient ppulatin and a specialty base f physicians expected t case manage a ppulatin chrt (e.g. COPD; psychiatry) 3. Reduce cmplicatins rate in the acute care setting based n MHAC definitins (PPCs nt present n admissin) Maryland must achieve an annual aggregate reductin f 6.89 percentage pints ff f the current rate in the 65 PPCs ver the curse f the 5 year perid fr a cumulative reductin f 30 percent in PPCs. Tward this end, gainsharing perfrmance targets wuld be expected t include the fllwing: 4. Imprve perfrmance n QBR metrics Lnger-term, hspital gain sharing mdels are likely t include additinal perfrmance targets: 5. Chrnic disease ppulatins: Reduce annual csts f hspital care Lnger-term, hspitals/physician rganizatins will be expected t define management csts fr episdes f care and annual cst f care targets fr specific chrnic disease chrts. Readiness will depend upn use f hme-based services and scial services, use f extenders, adptin f telehealth services, and/r effective care transitins management 6. Cst per admissin: Reduce csts f DRG-specific/CPT-specific cases with high degree f variatin - Based n hspital-specific data, individual hspitals and affiliated physicians may need t examine clinical practice variatin and csts per admissin fr particular subgrups t identify pprtunities t reduce unnecessary resurce utilizatin. Similarly, specialty grups may need t cnsider new evidence/new prtcls fr rutine ancillary utilizatin per admissin. 7. Hspital-specific, lcal area health imprvement targets These targets wuld reflect pprtunity areas where cmmunity based interventin strategies have the ptential t impact utilizatin and quality f care n a lnger-term hrizn (e.g. new disease management effrts; access t 24 hur cnsult line; linkage t scial services; etc.). Key Attributes f a Successful Gain Sharing Mdel in Maryland The key attributes f a successful mdel in Maryland include the fllwing: All payr mdel s that incentives will be applied equally and gainsharing prgram des nt encurage/result in disparities in care 4

5 Quality imprvement targets t serve largely as the basis fr perfrmance targets and incentives The majrity f quality targets shuld be aligned with HSCRC quality imprvement targets t achieve hspital gals and ultimately the utcmes required under the hspital demnstratin mdel Allwance fr hspital-specific defined targets in additin t the abve t meet the specific needs f the cmmunity served by the hspital and its physicians N allcatin f financial incentives unless sme percentage f quality targets are met t insure an apprpriate balance between financial and quality perfrmance under gain sharing arrangements Hspital cntrl/hspital authrity fr financial rewards The mst effective design fr these arrangements is t ffer each hspital the flexibility it needs t cnstruct such arrangements, subject t the apprpriate legal parameters. The hspital wuld be respnsible fr designing these arrangements t meet its specific rganizatinal and cmmunity gals. Therefre, the design f these prgrams wuld depend n the specific circumstances faced by the hspital in terms f its patient ppulatin and physician relatinships. Each hspital culd face unique circumstances with respect t physician relatinships, the services it ffers, and the resurces available t devte t financial incentives. Eligibility fr gain sharing Independent practitiners, hspital-emplyed physicians, ACOs, and prviders managing patients in pst-acute facilities Extenders? Primary care physicians, specialty physicians, and ER physicians affiliated with the hspital Nte: Physicians may cntinue t receive payment n a FFS basis, but be permitted t earn gain sharing dllars thrugh the hspital Pst-acute facilities and hme care agencies Allw hme care agencies/pst-acute facilities t determine hw funds are distributed within facilities Participatin and distributin frmulas shuld allw/reflect/credit: Rle f cmmunity-based physicians in achieving perfrmance targets Intensity f care and increased reliance n pst-acute settings Increase in utilizatin, service intensity, and/r service cmplement f hmebased services Aggregate perfrmance measures Sufficient size physician base and patient base t prduce aggregate perfrmance measures 5

6 Safeguards If quality declines, n dllars are allcated Aggregate perfrmance reviews (see abve) Upper limit n sharing incentives with individual physicians Savings threshld fr distributin (cnsistent with ACO mdel) Legal prtectin Brad enugh legal prtectin t allw hspital-specific mdels/innvatin Expediency: Optin that can be implemented in the near-term Optins fr Maryland Hspitals: A Framewrk Under current prvisins, in the absence f special waivers r apprvals, Optin 1 and Optin 2 might be implemented t allw Maryland hspitals t gainshare with referring physicians and ther prviders: Optin 1: Existing cnstructs using HSCRC as a vehicle The Alternative Rate Methdlgy (ARM) ffers an ptin fr payers and hspitals t wrk tgether fr unique payment arrangements within the parameters f current HSCRC regulatry authrity. At this time, these arrangements are mst prminent with transplant cases, althugh a number f these arrangements have existed ver the years. These arrangements require that hspitals receive regulated rates and that an entity utside the hspital bear the risks if the arrangement fails t generate savings. Optin 2: Hspital pre-funding f incentive pl This ptin wuld allw each hspital t pre-fund an incentive pl based n the hspital s prjectins f pprtunity ptential /savings pprtunities, and based n its willingness t share savings. The hspital defines the perfrmance targets, signs cntracts with physicians wh wish t participate, and distributes incentive dllars based n achievement f targets by physician practice perfrmance n specified quality metrics. The hspital may incentivize prviders thrugh distributin f shared savings directly t the practice r thrugh reinvestment f savings in hspital prgrams/resurces t supprt care management and quality imprvements. Alternatively, the HSCRC might seek exemptin frm current legal prhibitins against gainsharing thrugh Optin 3: 6

7 Optin 3: Applicatin f ACO waivers t the State f Maryland under the Hspital Demnstratin Mdel The State wuld seek CMS and OIG apprval t extend the same legal prtectins already granted t ACOs fr gainsharing ( ACO waivers ) t Maryland s Demnstratin Mdel. The premise wuld be that the Maryland payment mdel is cnceptually similar t the ACO mdel (a macr ACO ), perating with the same bjectives and benefitting similarly frm physician-hspital alignment. In additin, Maryland hspitals can adpt the same safeguards as are required by the ACO waivers, and the HSCRC can effectively enfrce the same cnditins required by the OIG. The specific allwances prvided by these waivers and the cnditins that wuld apply are defined belw. ACO Waivers: What is permitted and what cnditins apply? Until nw, the legal cnstraints n gainsharing have centered n 3 basic prvisins (referred t here cllectively under the term Fraud and Abuse ): Physician Self-Referral Statute (the Stark law) Prhibits physicians frm making referrals fr designated health services reimbursable by Medicare r Medicaid t entities with which they have a financial relatinship. Anti-Kickback Statute (AKS) Prhibits prviders frm knwingly and willingly ffering, paying, sliciting r receiving cmpensatin in exchange fr referrals r services that are reimbursable under Medicare r Medicaid. Civil Mnetary Penalty law prvisin (gain sharing r CMP) - Prhibits a hspital frm making a payment directly r indirectly t induce a physician t reduce r limit services t Medicare r Medicaid beneficiaries under that physician s direct care Each f these laws reflects gvernment cncerns abut clinical decisin-making being affected by financial incentives in place f standards f care; gvernment has been cncerned abut bth verutilizatin and underutilizatin that may result frm a physician s financial stake in utilizatin patterns. At the same time, each f these prvisins can be barriers t physician hspital alignment and cllective effrts tward care imprvement. As ACOs have been launched and Shared Savings Prgrams have been peratinalized, CMS and the OIG have had t re-balance the Fraud and Abuse laws -- designed t maintain independent clinical decisinmaking -- with the need t prmte the gals f ACOs, i.e. care crdinatin and cllabrative initiatives fr quality imprvement. In respnse (Octber 2011), CMS and OIG issued a set f 5 waivers that prtect/exempt ACOs participating in Shared Savings Prgrams frm each f these legal cnstraints. The waivers establish an exemptin frm the Fraud and Abuse laws abve t allw the fllwing activities (amng thers): Financial relatinships between ACO participants if reasnably related t the purpses f the Medicare Shared Savings Prgram. The term reasnably related is defined by six characteristics: 7

8 Prmting accuntability fr the quality, cst, and verall care fr a Medicare ppulatin Managing and crdinating care fr Medicare FFS beneficiaries thrugh an ACO Encuraging investment in infrastructure and redesigned care prcesses fr high quality and efficient service delivery (e.g. apprpriate reductin in Medicare csts and expenditures) Evaluating health needs f the ACOs assigned ppulatin Cmmunicating clinical knwledge and evidence-based medicine t beneficiaries Develping standards fr beneficiary access and cmmunicatin Distributin f shared savings amng ACO participants during the year in which the shared savings were earned. The waiver permits the ACO t distribute shared savings amng individuals/entities within the ACO as well as thse entities that assist the ACO in meeting the quality and savings gals fr this Shared Savings plan. These exemptins are accmpanied by certain requirements/cnditins: ACO eligibility fr Shared Savings Accuntability fr a minimum f 5,000 Medicare beneficiaries Agreement t participate fr at least 3 years Gvernance, leadership, and management structure requirements Senir level medical directr in charge f clinical management Reprting f cst and quality measures; prmtin/adptin f evidence-based medicine guidelines Perfrmance requirements (MSSP) Quality targets Part f a dcumented prgram 33 quality measures acrss 4 dmains Care crdinatin/patient safety, preventive health, at-risk ppulatins, patient experience Minimum attainment level fr at least ne measure in each f the 4 dmains Savings definitin: Minimum Savings Rate (MSR) Per capita expenditure benchmark defined fr assigned Medicare enrllees Savings target established based n number f beneficiaries assigned (2-4% savings rate) Physician participatin Pls f at least 5 physicians fr each perfrmance measure Payment by hspital t grup f physicians n an aggregate basis Within a practice grup, payment t each physician n a per capita basis based Distributin f savings ACO must meet bth the MSR savings requirement and the minimum quality perfrmance standards First dllar savings distributin nce the minimal savings rate is achieved 8

9 Cap at 50% f cst savings n a first dllar basis, up t a maximum f 10% f the benchmark May be distributed directly t ACO participants/prviders r used fr activities related t the Shared Savings Prgram The financial relatinship must be reasnably related t the purpses f the MSSP and distributins are reasnably related t the purpses f the MSSP Restrictins/Safeguards Quality cntrls N distributin f savings if quality metrics diminish / unless quality benchmarks are met Annual rebasing f quality standards Cmpliance plan in place Transparency Dcumentatin fully available Ntice/disclsure t patients Nt based n vlume r value f referrals Evidence n Physician Gain Sharing: An Overview f the New Jersey Mdel In 2009, the New Jersey Hspital Assciatin launched a physician gain sharing demnstratin prgram at 12 hspitals, prviding dctrs with bnuses fr saving the hspitals mney when prviding care t Medicare patients. The prgram included quality cntrls t prtect patients, and three mechanisms t reduce csts: efficiency strategies, quality standards, and financial incentives. In the first 18 mnths f the prgram, participating hspitals recgnized $38.6 millin in cumulative savings, which equates t $540, r 5.6 percent, per admissin. The Centers fr Medicare & Medicaid Service s (CMS) Bundled Payments fr Care Imprvement Initiative allws gain sharing that is based n the New Jersey demnstratin. Mdel 1, an inpatient-nly part f the CMS initiative, is a test f gain sharing. CMS issued five criteria fr gain sharing arrangements in the demnstratin 1 : Gain sharing must supprt care redesign t achieve imprved quality and patient experience, and anticipated cst savings. Ttal incentive payments t an individual physician r nn-physician practitiner must be limited t 50 percent f the aggregate annual Medicare payment amunt determined under the Physician Fee Schedule. Incentive Payments must nt be based n the vlume r value f referrals, r business therwise generated, between hspital and a physician r nn-physician practitiner. 1 Bundled Payments fr Care Imprvement Initiative fr Mdel 1 Parameters Dcument 9

10 Physician r nn-physician practitiner participatin in gain sharing must be vluntary. Individual physician and nn-physician practitiners must meet quality threshlds and engage in quality imprvement t be eligible t participate in gain sharing. As nted abve, the federal gvernment has been careful abut gain sharing, in part due t cncerns abut fraud and abuse laws, including the Civil Mnetary Penalty Law, federal antikickback statutes, and federal physician self-referral (Stark) laws that address prviders stinting n patient care r cherry picking healthier patients, and hspitals ffering physicians bnuses that g beynd savings achieved, in rder t generate physician lyalty and drive referrals. The Office f the Inspectr General must apprve physician gain sharing arrangements and, s far, has apprved nly thse with a limited scpe and nly n a time-limited demnstratin basis. New Jersey addressed these key cncerns in its demnstratin by perating within the parameters CMS utlined in its Bundled Payments fr Care Imprvement initiative. The New Jersey prgram established brad guidelines fr the redesign f patient care management, and quality mnitring and maintenance that cmplement the physician gain sharing methdlgy. This allwed hspital-based steering cmmittees, which are at least 50 percent physicians, t wrk with medical staff, clinical departments, and hspital administratrs t align prvider interests and maximize the effectiveness f the gain sharing methdlgy. The New Jersey prgram used the Applied Medical Sftware Perfrmance Based Incentive System gain sharing methdlgy. During the first year, the maximum physician incentive was apprtined as ne-third fr perfrmance and tw-thirds fr imprvement. The ttal physician incentive was a cmbinatin f a surgical and medical incentive frmula. Cmputatins were perfrmed at the case level fr each admissin. Descriptins f the incentive frmulas fllw: Surgical Imprvement: Measures a physician s current perfrmance cmpared with the prir year, adjusted fr case mix and severity f illness ((Prir Year Cst Current Year Cst)/(90 th Percentile f Patient Cst Best Practice Nrm 2 ) )(Maximum Physician Incentive) Surgical/Medical Perfrmance: Measures a physician s resurce utilizatin cmpared t their peers, adjusted fr case mix and severity f illness. ((90 th Percentile f Patient Cst Current Year Cst)/(90 th Percentile f Patient Cst Best Practice Nrm))( Maximum Physician Incentive) 2 Best Practice Nrm is set at the 25 th percentile f patient cst. 10

11 The medical incentive payment used the same perfrmance incentive frmula as the surgical perfrmance frmula (described abve) but used a revised medical imprvement incentive frmula. Medical Imprvement Incentive: Accunts fr lss f physician incme as a result f shrter lengths f stay (Prir Year LOS Current Year LOS) (Maximum Physician Incentive per Day) As part f their participatin in the Mdel 1 demnstratin, hspitals were required t prvide Medicare with discunted care. Medicare required a discunt f 0.5 percent in the secnd sixmnths f Year 1, 1 percent in Year 2, and 2 percent in Year 3. T maintain the financial health f the hspital and ensure the sustainability f the prgram, steering cmmittees culd tie incentives t the achievement f a minimum ecnmic threshld based n specific hspital needs. In the future, a methdlgy will be develped t measure year-ver-year imprvement at the hspital level. The physician incentive payment will be tied t verall hspital perfrmance t ensure that hspital financial cnditin is taken int cnsideratin. Participating hspitals had t realize sufficient imprvement in perfrmance t enable them t make incentive payments. Additinally, physician invlvement culd be expanded t add ancillary physicians and cnsultants t the prgram beginning in Year tw n a vluntary basis. The New Jersey experience can be used t guide the cnstructin f a gain sharing prpsal t CMS and the OIG fr Maryland under the Hspital Demnstratin Mdel. Maryland s Organizatinal Readiness fr Gainsharing Maryland hspitals face rganizatinal and peratinal challenges in implementing physician-hspital gainsharing mdels, reflecting its early stage f physician-hspital rganizatin. At this pint, the health care system in Maryland des nt have many ACO entities nr large physician rganizatins; excluding faculty practice plans, nly a limited number f sizable physician rganizatins currently perate. This raises a number f implementatin issues and plicy cnsideratins which must be anticipated: Infrastructure requirements Calculatin f savings and distributin methdlgy are data-intensive initiatives, and t the degree that hspital mdels include cmmunity-based prviders and pst-acute prviders, these effrts will pse additinal challenges. In additin, frnt-end develpment f perfrmance targets and accmpanying prtcls typically are resurce-intensive effrts. Methdlgies/plicies fr eligibility and savings distributin 11

12 In the absence f a single chesive physician rganizatin affiliated with the hspital, it may be mre difficult fr the hspital t establish the distributin methdlgy acrss primary care, specialty, and hspital-based practitiners. Mre specifically, the methdlgy will need t credit cmmunity-based primary care prviders wh may be mst respnsible fr utilizatin reductins and quality imprvements but wh are nt rganizatinally tied t the specialty practices at the hspital Allcatin f funds fr distributin At this early stage in the Maryland Demnstratin Mdel, it will be difficult fr hspitals t estimate the pprtunity ptential and available funds fr shared savings. At the same time, plicies will be required that establish minimum savings threshlds befre distributin. Malpractice issues Finally, as hspitals extend gainsharing pprtunities t nn-emplyed physicians, issues f liability/cncerns abut malpractice may need t be weighed. Remaining Questins The alignment f incentives between hspitals under the new demnstratin mdel and physicians wh cntinue t perate in the fee-fr-service wrld is necessary t achieve financial success and imprve the quality f care. Financial incentives fr hspitals reach natural limits t their efficacy withut physician engagement because physicians direct clinical care. Gain sharing authrity is crucial as a tl ging frward. If gain sharing is necessary t align incentives, the related questin is hw substantial the incentives need t be t align incentives and can hspitals affrd the amunt f mney necessary t accmplish the intended gals. These issues will be addressed in further versins f this paper. 12