PREPARING FOR VALUE BASED PAYMENT: Financial Considerations

Transcription

1 PREPARING FOR VALUE BASED PAYMENT: Financial Considerations Presented by: Peter R. Epp, CPA October 19, 2015 HMA

2 Overview Payment Reform Initiatives Medicare Medicaid Overview of Value-Based Purchasing Patient-Centeredness Managing the Cost per Patient In-House Services Global Payments/Budgets Transitioning to Tomorrow 2

3 Medicare s Payment Reform Goals On January 26, 2015, DHHS announced its goals and timeline for shifting Medicare reimbursement from volume to value Goal for shifting Medicare fee-for-service reimbursement to alternative payment models (e.g. ACOs and/or bundled payment models) 30% by % by 2018 Additional goal of tying traditional Medicare payments (fee-for-service) to quality and value (e.g. Hospital Value Based Purchasing and Hospital Readmissions Reduction programs) 85% by % by 2018 DHHS will also intensify its work with states and private payers to support adoption of alternative payment models, attempting to exceed the goals/timeline set by Medicare 3

4 Medicare s Payment Reform Goals Fee-for-service linked to quality = Categories 2 though 4 Alternative Payment Models = Categories 3 and 4 4

5 New York State - DSRIP and Value Based Payment Roadmap DSRIP is a 5-year incentive payment program to be paid in addition to the Medicaid program to assist providers with transforming to a highperforming healthcare delivery system During the DSRIP project period (April 1, 2015 March 31, 2020), the Medicaid program will be transitioning to value-based payment When we wake-up on April 1, 2020, the Medicaid program will be reformed to include integrated Performing Provider Systems with: 100% Medicaid managed care AND 80-90% Value Based Payment 5

6 VBP Arrangements The 3- Legged Stool VBP arrangements contain a hybrid of several different payment models to incentivize and tie together desired behaviors The key components of VBP arrangements include: Base Compensation Models Fee-for-service Partial capitation Care management PMPM Quality Incentive Payments Global Payments/Budgets Surplus-sharing/Risk-sharing Global capitation VBP Arrangements Quality Incentive Payments 6

7 Elements of a Value- Based Payment Model An ACO manages the total cost of care (global budget) for patients attributed to the ACO Beneficiaries are assigned to an ACO based on a specified attribution algorithm MCO pays providers within the ACO for services provided and monitors the global budget. MCOs pay providers for specific services (Base Compensation) Fee-for-service versus partial capitation PMPM case management fee Providers may also be eligible for quality incentive payments Surplus-sharing/Risk-sharing arrangements: Surpluses/losses shared amongst providers based on an algorithm established by the governing body Amount of surpluses/losses shared are often impacted by performance against specified performance metrics! 7

8 Summary VBP Arrangements Success in VBP arrangements requires: Knowledge of the payment mechanisms that drive each component of these arrangements Development of new workflows and reporting The key components of VBP arrangements include: Base Compensation Models Fee-for-service Partial capitation Care management PMPM Quality Incentive Payments Global Payments/Budgets Surplus-sharing/Risk-sharing Global capitation 8

9 Base Compensation Payment Models (In- House Services) As VBP arrangements evolve, payments to FQHCs will change away from the traditional per visit model Payment will be moving towards quality outcomes and patientcenteredness As such, the financial model and mindset must change! Budgeting Financial reporting Operations/Clinical Revenue/Cost Per Visit Revenue/Cost Per Patient 9

10 Managing the Cost Per Patient (In- House Services) Financial Performance per Patient ` Patient A Patient B Revenue Per Member Per Year: Fee-for-service Capitation Care Management Fee Quality Incentive Payments Cost Per Member Per Year (PMPY) $ 300 $ 300 $ 250 $ 375 Financial Success $ 50 $ (75) How does a health center manage financial risk? 10

11 Today - Improving Efficiencies And Reducing The Cost Per Visit All-inclusive cost per visit analysis The following variables impact the all-inclusive cost per visit and must be managed to improve financial performance: Salary levels and staffing mix Support staff ratios (direct care versus patient support) Amount of enabling and ancillary services Administrative/overhead infrastructure Provider productivity/clinician capacity $ 1,542,100 10,000 visits = $ per visit Center s will continue to monitor/manage these cost/operating metrics as they move to Value Based Payment! 11

12 Today Evaluating Cost Per Patient Simple Cost PMPM Calculation Per Visit per Patient Basis: Service Description Patient Utilization Unit Cost Utilization varies by health condition of patient! Annual Cost per Patient Primary Care 3 visits PMPY $175 per visit $ 525 Behavioral Health Care 1 visit PMPY $100 per visit 100 Care Management (PCMH) 1 patient $75 per patient 75 Total Direct Care 700 Administration/HIT 20% of direct 140 Total Cost PMPY $ 840 Total Cost PMPM $ 70 This example highlights the importance of understanding patient utilization of services on a high level! The analysis would be further enhanced if utilization and cost were analyzed on a per procedure basis (use of a cost-based charge structure)! 12

13 Tomorrow Evaluating Cost Per Patient Service Description Primary Care: Patient Utilization Unit Cost (per procedure RVU) Annual Cost per Patient Office Visits 3.00 $ 150 $ 450 Immunizations Medical Nutrition Behavioral Health Care: Individual psychotherapy Group psychotherapy PCMH Services: Cost-Based Charge Structure Complex Cost PMPM Calculation Per Procedure per Patient Basis: Case management Total Direct Care 820 Administration/HIT 20% of direct 164 Total Cost PMPY $984 Total Cost PMPM $ 82 And what about the Social Determinants of Health! 13

14 Evaluating Care Management Fee Arrangements Financial success with care management PMPM payments requires understanding care management costs PMPM Key financial metrics Care manager capacity (productivity) Patient utilization Productivity: Patient Utilization: # of service units/fte # of service units/patient/year (e.g. 2,400/FTE) (e.g. 12/patient/year) Panel Size = 200 patients/fte If the personnel cost of a care manager is $75,000 and requires annual HIT support of $10,000, what is the cost PMPM? $35 PMPM ($85,000 annual cost 2,400 member months) What happens to the cost PMPM if patient utilization increases? 14

15 Success in VBP Arrangements for In- House Services As Centers move away from fee-for-service payment arrangements to VBP, patient-centered care, the drivers of success expand: Proper coding of services provided required for appropriate riskstratification of patients Managing provider productivity impacts panel size and thereby revenue Managing the cost per patient Improving cost efficiencies (per visit or per unit) Monitoring clinical staff capacity and panel sizes Managing patient utilization and health condition Actuarial mix of patients including cost and utilization patterns Unusual utilization patterns and drilling down to the patient level and identifying high utilizers of services Improving quality metrics and accessing incentive payments 15

16 Global Payment/Budgets Key Considerations Key items which impact success: Panel formation Enrollees Attribution Development of overall budget Utilization assumption based (bottom up) Paid Claims Historic baseline or revenue based (top down) Medical Loss Ratio Protections against outliers Stop Loss Carve-Outs 16

17 Patient Attribution In a fee-for-service demo where patients retain freedom of choice, the payer assigns beneficiaries to ACOs based on their specific attribution algorithm Usually beneficiaries are assigned to an ACO if the beneficiary receives the plurality of his or her primary care services from primary care physicians within the ACO Attribution models will also include specific look-back periods for claims data to make attribution decisions Attribution models may also include a 2-step processes in which beneficiaries are first assigned to specific sub-populations, and then attributed based on specific attribution algorithms In a mandatory managed care environment, the beneficiary is generally attributed to their assigned Primary Care Provider ACO participants that bill for primary care services are generally required to be exclusive to an ACO for a specific payer 17

18 Budget/Benchmark Setting Setting a Budget Target Bottom Up Approach: Service Description Expected Utilization Unit Cost Cost Per Patient Per Year Inpatient Care 1 $3,000 per discharge $ 3,000 Emergency Services 1 $500 per visit 500 Specialty Care 2 $150 per visit 300 Primary Care* 3 $125 per visit 375 Behavioral Health Care* 1 $100 per visit 100 Laboratory 8 $25 per lab test 200 Radiology 2 $100 per xray 200 Pharmacy 12 $25 per script 300 PCMH Services* 170 Administration/HIT 855 TOTAL $6,000

19 Surplus/Risk- Sharing Key Considerations Keys to Success Monitor the cost and utilization of services provided by other providers: Analyze total cost PMPM by actuarial class Cost per unit (visit or procedure) Utilization trends Identify high cost patients Identify high utilizers of services Analyze high cost providers (unit cost) Further analyze by health condition Ensure quality measures are met Health information exchange systems Quality partners have been identified and arrangements executed Informatics and data reporting systems to manage all services provided to the patient Benchmarks and expected utilization patterns identified 19

20 Using Third- Party Claims Data Analyze the high cost and high utilizing members Combine Claims data files Determine the Total Cost of Care by patient and PMPM Determine Total Cost of Care for patients with like conditions (e.g., all diabetic patients regardless of comorbidities) Stratify the high cost/high utilizing members and develop plans to better manage care and reduce the Total Spend Clinical interventions to manage utilization Outreach efforts/patient engagement Specialty referral practices and high cost specialists Link to EHR/PMS, ED Use and High Risk Member Reports 20

21 Using Third- Party Claims Data 21

22 Using Third- Party Claims Data 22

23 Is Your Center Prepared for VBP? QUESTION 27. The health center has identified the up-front costs of participation in the proposed payment model. 28. The health center is able to track system-level utilization and cost data for its patients. 29. The health center has analyzed how payment timing and methodology for a proposed payment reform model relates to health center revenue cycle management needs. 30. The health center has experience and capacity to manage performance-based contracts. 31. The health center has secured appropriate legal and compliance expertise for payment reform activities. 32. The health center has developed a business case for linking reimbursement to utilization and social complexity of health center patients and health center cost structure. 33. The health center has analyzed its ability to engage in risk-based contracts. 34. The health center has an established strategy for coordination of performance-based incentives and payment reform strategies across payer types. 35. The health center has analyzed the relationship between payment reform models and health center PPS or alternate payment methodology (APM) payment for Medicaid. 36. The health center has developed internal payment incentives based on quality and patient outcomes rather than volume. 37. The health center is leveraging all the available state and local assistance and funding to support payment reform and service delivery transformation efforts. Excerpt NACHC Payment Reform Readiness Assessment Tool 23

24 Preparing Financial Management Systems for VBP Cost Efficiency of Current Operations In preparation for VBP, centers need to ensure that services currently provided in-house are provided efficiently as well as with high quality Efficiency is attained through the management of Actual cost of providing services Clinician productivity (coupled with quality) Historically, centers have monitored the cost per visit of providing services; this measurement needs to move down to a per procedure basis Coding is also critical to improving efficiency and quality 24

25 Preparing Financial Management Systems for VBP Cost Efficiency of Current Operations What should a health center do today? Monitor/manage provider productivity levels Move from a per visit basis to a per procedure basis Regularly review provider productivity reports with clinical leadership Monitor/manage productivity/capacity levels of non-provider staff Improve cost efficiencies and reduce the current cost of care per unit Concentrate efforts on reducing the current cost of care (move from a per visit to a per procedure basis) Aside from productivity, identify other areas for improvement (e.g. support staff ratios, panel sizes) Refine and utilize your cost-based charge structure as a unit costing system Begin to capture services for non-cpt codable services (e.g. social determinants of health) 25

26 Preparing Financial Management Systems for VBP Financial Analysis of Patient Centered Care Success under VBP requires a financial system that provides financial and operational data to understand the underlying cost of a patient and linked to their clinical conditions For services provided in-house Coding of services is imperative as costs need to be captured and measured at the per procedure basis Managing the utilization of services provided per patient is the second variable in understanding the cost per patient VBP will also require centers to take on the management of care outside of its 4 walls These analysis will require new capabilities and systems 26

27 Preparing Financial Management Systems for VBP Financial Analysis of Patient Centered Care What should a health center do today? Further enhance coding accuracy of providers Coding training during orientation with annual updates Monitor coding practices and address anomalies Consider hiring of HIM professionals certified coders Move to managing the total cost per patient for in-house services Manage/monitor utilization of services Move from a per visit to a per procedure analysis Consider non-cpt codable services Manage quality metrics that drive incentive payments Document/catalog metrics which drive quality incentive payments Design reports to manage/monitor metrics; understand data elements Review quality incentive payment programs and metrics with clinical leadership on a regular basis and implement clinical interventions to improve outcomes 27

28 Preparing Financial Management Systems for VBP Financial Analysis of Patient Centered Care (continued) What should a health center do today? Actively engage with the management of the total cost of care of assigned patients/members Consider participation in shared-savings arrangements Demand claims data from third party payers! Monthly Data Reports Member Enrollment Roster Member Emergency Room Utilization and Cost Member Inpatient Utilization and Cost High Risk Identification List (Top 10% High Risk Members) Recent Claims Data Outpatient Medical Claims Outpatient Behavioral Health Claims Pharmacy Claims Inpatient Claims 28

29 Preparing Financial Management Systems for VBP Financial Health VBP brings with it many unknowns to the financial well-being of health centers Prior to participation in VBP, centers need to ensure that their financial house is in order Financial condition and reserves Operational financial performance under today s financing mechanisms 29

30 Health Center Success in VBP Arrangements Fee-For-Service Partial Capitation Global Budgets Managing the Visit Effective Coding Cost Efficiencies Managing the Patient In-House Patient Utilization Panel Sizes Quality Metrics Managing the Patient Total Cost Overall Patient Utilization High Value Providers Quality Metrics 30

31 Changing Role of the CFO & Finance Function Additional roles/functionality of the future Connecting with clinical leadership: Understand metrics/outcome measures that drive incentive payments Managing patient utilization both in-house as well as out-house Better understanding of the health center s patient base to impact attribution Patient satisfaction Primary care and preventive services coding Create dashboards that monitor performance that drives revenue 31

32 Changing Role of the CFO & Finance Function Additional roles/functionality of the future Emphasis on cost accounting and unit-costing Analyze/drive cost efficiencies Need to develop a new internal budget model centered around patients in-house versus out-house Heightened involvement with collaborations and strategic planning Documenting value Understanding funds flow Risk management managing risk-sharing arrangements New required skill sets/functionality Care management/coordination Clinical informatics Business intelligence solutions 32

33 Successful Transition to Tomorrow CFO + CMO = BFFs 33

34 CONTACT INFORMATION Peter R. Epp, CPA, Partner Practice Leader Community Health Centers CohnReznick LLP

35 October 19, 2015 Preparing for Value-based Payment: Clinical Considerations Art Jones, MD HealthManagement.com HMA

36 Hypothesis: Successful FQHC Transition to Accountable Care Requires 1. Patient Centered Medical Homes 2. Clinical and Financial Integration (with shared governance and decision authority) with reform minded partners 3. Data analytics and connectivity real time 4. Targeted, innovative model for the full continuum of care 5. Multi-payer outcomes based payment 6. Patient engagement/wellness programs 7. Leadership committed to practice transformation AccountableCareInstitute.com 2

37 Clinical Focus Improving transitions of care Care Management of high risk patients Behavioral and physical health integration Reducing low value medical practices Performance on Quality Parameters Becoming more member centric AccountableCareInstitute.com 3 3

38 High Value, Consumer-facing Practice Transformation Team-based care with non-billable providers Enhanced access to primary care Urgent care center level of access Expanded hours Nurse triage Phone consultation Management over the patient portal E-consults for specialty care Structured care management at the PCP practice level informed by analytics fed by multiple data sources including real time hospital ADT alerts and impactable social risk factors Home and nursing facility visits Telemedicine AccountableCareInstitute.com 4

39 Distinct Provider Types When health care is not integrated, continuous linkage to care from the hospital to outpatient providers represents a greater challenge Social Workers Hospital Communitybased Orgs. Other Specialists Primary Care Physicians Mental Health Clinics AccountableCareInstitute.com

40 Integrated Health Systems The New York DSRIP Model Integrated health systems offer better linkages to care between the hospital and outpatient providers Social Workers Substance Abuse Providers Other Specialists Hospital Mental Health Clinics Primary Care Physicians

41 Comprehensive, Community-based, Integrated The New York FQHC Model Medical Home Network All Rights Reserved Do Not Use Without Permission 7

42 Oregon Results for 3 Pilot FQHCs Paid a PMPM APM within a CCO Metrics: (January 1st 2013 through December 31st 2013): Tobacco Screenings hit and remained at 100% Weight control for kids increased by 145% Childhood immunizations increased 115% Patients with a favorable survey response regarding their care team averaged 96% among the health centers (a 50% increase) Increases seen in diabetes control, cervical cancer screening, weight control for adults. Depression screening unchanged Decrease in blood pressure control HMA 8

43 Oregon APM 1 st Year Results Inpatient utilization: average decrease in trend of 20.3% Inpatient Utilization Per 1000 by Facility & Population Mosaic OHSU Virginia Pre APM Post APM Pre APM Post APM Pre APM Post APM Year , Year , Year 3 (Pilot) , , Note: Year 3 Pre-APM is counter-factual projection (trend). Post-APM is actual data. Optumas, HMA 9

44 Oregon APM 1 st Year Results ED utilization: average decrease in trend of 5.6% Outpatient ER Utilization Per 1000 by Facility & Population Mosaic OHSU Virginia Pre APM Post APM Pre APM Post APM Pre APM Post APM Year , Year , Year 3 (Pilot) Note: Year 3 Pre-APM is counter-factual projection (trend). Post-APM is actual data. Optumas, HMA 10

45 Minnesota FQHC Urban Healthcare Network 10 FQHCs in the Twin Cities with an attributable population of 24,000 (total MA population 50,000) Based on historical underspending in primary care, and overspending in hospital/er care Only IHP model consisting of independent provider groups. Secured business partner (Optum) to assist with infrastructure and data analytical support Upfront investments costs borne solely by IHPs= $0 state support Year One Results 10.3% ER Visits $2.6 Million in MA Savings For Year 1, 100% of savings accrued to the state even though FUHN fronted 100% of costs! HMA 11

46 Medicaid Integrated Health Partnerships (IHP) Demonstrations Total Cost of Care (TCOC) or Accountable Care Organization (ACO) approach to delivering health care to specific set of patients Move away from Fee-For- Service to provider group assuming risk 6 organizations initially serving 100,000 Medicaid enrollees Baseline 2% Threshold Actual TCOC Base Year 1 Year 2 Year 3 Savings split 50/50 between state and HCDS after meeting 2% cost threshold Must also meet QUALITY BENCHMARKS HMA 12

47 Medical Home Network: Driving Delivery Transformation in Chicago MHN ACO Providers MHN ACO Geography 9 FQHCS 3 Hospital Systems 86 Medical Homes 360 PCPs 120 Care Managers 1200 Specialists 5 Hospitals MHN ACO & CountyCare Membership Medical Home Network All Rights Reserved Do Not Use Without Permission

48 Growth in Total Cost of Care: MHN vs. non MHN Matched Cohort Trend 10.0% Trend Over Baseline Period 8.0% MHN Risk Adjusted 6.0% 4.0% 9.3% 2.0% 0.0% -2.0% -1.9% 1.4% 4.3% In Year 2, MHN risk-adjusted PMPM growth in total cost of care is 5% lower than non-mhn -4.0% Performance Year 1 vs. Baseline Performance Year 2 vs. Baseline 14 Medical Home Network All Rights Reserved Do Not Use Without Permission

49 Improvements in Patient Engagement and Care 71.4% of 80,000 members have completed Health Risk Assessment July 2014 May % reduction in bed days/1000* 13.9 % reduction in ED visits/1000* 35% reduction in readmission rates* Reduction in global care of care results pending claims run out * Reflects the reduction achieved by MHN PCPs as compared to non-mhn PCPs in the CountyCare program; MHN has 48% of the ~180,000 CountyCare member population. CountyCare is a no-cost publicly funded managed care health plan in Cook County, Illinois. 15 Medical Home Network All Rights Reserved Do Not Use Without Permission

50 The Building Blocks for Delivery System Transformation & Population Management 16 Medical Home Network All Rights Reserved Do Not Use Without Permission

51 Challenges to Care Coordination Services Patients expected to coordinate on their own Telephonic care management ineffective in engaging patients Lack of systematic approach to care management with tools and electronic platform Outpatient providers unaware of patient admits and discharges Lack of timely bidirectional information exchange

52 Care Management Connect: Tracking Quality Assessments & Indicators TM Medical Home Network All Rights Reserved Do Not Use Without Permission 18

53 Medicaid/ACA Socioeconomic Risk Prediction Tool & Outcomes HRA Completion Rate MHN ACO 71% External Network 31% FINDINGS 1. MHN s risk stratification algorithm accurately correlates with subsequent cost of care 2. Presence of risk factors even in the absence of historical high inpatient or emergency room utilization increases subsequent cost of care by approximately 29% 3. Inability to complete a screening HRA in an individual accessing subsequent health care services approximates the cost of a moderate risk member (January 2015 June 2015) % Members Inpatient ER Visits % of with Admits Medical /1000 HRA Risk Profile Count Members No Claims /1000 PMPM Relative Cost No HRA - no claims 4,088 22% 100% 0 0 $0 0 No HRA - with claims 8,303 44% 0% 1, $ % Low 1,270 7% 29% $ % Low: 1-3 risk factors 3,306 17% 19% $ % Medium: 4-5 risk factors/high ED 878 5% 14% $ % High: >5 risk factors/ high inpatient 879 5% 11% 1, $ % Total 18,274 Medical Home Network All Rights Reserved Do Not Use Without Permission

54 Medical Home Network: Driving Effective Population Health MHN judges effective care management by its ability to lower patient risk Medical Complexity Behavioral Health Complexity Social Complexity Criteria High Risk Frequent ED Use Avoidable Hospitalization Chronic PQI (potentially avoidable hospitalization) Gaps in Care Criteria High Risk Hospitalization or ED Use for SMI or SA High PHQ9 Untreated SA Criteria High Risk Barriers to therapeutic compliance Level of Risk Low Risk Low Risk Low Risk Medical Home Network All Rights Reserved Do Not Use Without Permission

55 Are PCMH/P4P/Shared Savings Payments Enough or Do We Need an Alternative Payment Methodology? Reimbursement Structure: All MCOs/Payers offer P4P with uniform parameters measured in a standardized fashion All MCOs/Payers offer shared savings/capitation based on standard set of services Contracts cover most if not all of a provider s panel FQHC IPA Behavioral Health Specialists Managed Care Organizations & Direct Payers IDS Aggregates data from multiple MCOs/Payers for total actual performance Establishes a performance/incentive method to pass rewards to the practice level to providers that are creating value Provides performance reports, transparency & consultation to individual practices/providers Manages contracting process Hospital PCP PCP PCP PCP PCP PCP 5 PCP 6