Value Based Payment Models: What are they and strategies for success

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1 Value Based Payment Models: What are they and strategies for success Melinda Hancock National Chair Elect Region IV March 2015

2 Shaping the Curve 2

3 The Continuum of Risk Source: Hancock, M., Hannah, B. Determining Your Organization s Risk Capability, HFM, May

4 Moving Away From FFS Issued on 1/26/15 HHS has set a goal of tying 30 percent of traditional, or fee-for-service, Medicare payments to quality or value through alternative payment models, such as Accountable Care Organizations (ACOs) or bundled payment arrangements by the end of 2016, and tying 50 percent of payments to these models by the end of HHS also set a goal of tying 85 percent of all traditional Medicare payments to quality or value by 2016 and 90 percent by 2018 through programs such as the Hospital Value Based Purchasing and the Hospital Readmissions Reduction Programs. This is the first time in the history of the Medicare program that HHS has set explicit goals for alternative payment models and value-based payments. To make these goals scalable beyond Medicare, Secretary Burwell also announced the creation of a Health Care Payment Learning and Action Network. Through the Learning and Action Network, HHS will work with private payers, employers, consumers, providers, states and state Medicaid programs, and other partners to expand alternative payment models into their programs. Per correspondence on 1/26/15 from Centers for Medicare & Medicaid Services <cmslists@subscriptions.cms.hhs.gov> 4

5 Examples Description Another Way of Looking at This 85% by 2016 and 90% by 2018 of this category 30% by end of 2016 & 50% by end of 2018 of this category Category 1: Fee for Service No Link to Quality Payments are based on volume of services and not linked to quality or efficiency Limited in Medicare feefor-service Majority of Medicare payments now are linked to quality Category 2: Fee for Service Link to Quality At least a portion of payments vary based on the quality or efficiency of health care delivery Hospital value-based purchasing Physician Value-Based Modifier Readmissions/Hospital Acquired Condition Reduction Program `Category 3: Alternative Payment Models with FFS infrastructure Some payment is linked to the effective management of a population or an episode of care Payments still triggered by delivery of services, but opportunities for shared savings or 2-sided risk Accountable care organizations Medical homes Bundled payments Category 4: Population- Based Payment Payment is not directly triggered by service delivery so volume is not linked to payment Clinicians and organizations are paid and responsible for the care of a beneficiary for a long period (eg, >1 year) Eligible Pioneer accountable care organizations in years 3-5 Some Medicare Advantage plan payments to clinicians and organizations Some Medicare-Medicaid (duals) plan payments to clinicians and organizations SOURCE: Source: Rahul Rajkumar, MD, JD; Patrick H. Conway, MD, MSc; Marilyn Tavenner, RN, MHA CMS- Engaging Mulitple Payers in Payment Reform. JAMA. 2014;311(19(:

6 Aetna Value Based Care is emerging as a solution to address rising health care costs, clinical inefficiency and duplication of services, and to make it easier for people to get the care they need. In value-based models, doctors and hospitals are paid for helping keep people healthy and for improving the health of those who have chronic conditions in an evidence-based, cost-effective way. This is a departure from the traditional fee-for-service approach. With fee-forservice, doctors and hospitals are paid based on the number of health care services they deliver, such as tests and procedures. Payment generally has little to do with whether their patients health improves - 6

7 Aetna Defines 4 Models 1. Accountable Care Organization 2. Patient Centered Medical Home 3. Pay 4 Performance (FFS Base) 4. Bundled Payments 7

8 United Transition 8

9 United: Value Based Care 9

10 United Metrics What metrics are used for UnitedHealthcare s value-based initiatives? HEDIS Basic and HEDIS Extended Quality Measures Quality Defects Intermediate Outcomes HAC/HAI Optimal/Tier 1 Prescription Drugs Efficient Lab Use Risk adjusted ER and Admission Rates Readmission Rates/Avg Lengths of Stay Potentially Avoidable Hospitalizations Total Cost of Care Targets 10

11 Anthem Value Based Anthem is committing $38 billion in its move away from fee-for-service to valuebased payments. The company, which operates Blue Cross and Blue Shield plans in 14 states, aims to increase its value-based payments to $65 billion by late "We're changing the way providers and insurers interact with one another to lower medical costs," Anthem chief executive officer Joe Swedish told Forbes. "Currently, we have more than $38 billion in spend tied to valuebased contracts, representing 30% of our commercial claims and approximately 40,000 providers." Anthem's move toward value-based payments is part of a trend among private payers that aims to improve healthcare while reining in costs by rewarding health outcomes and quality of care, as opposed to treatments and procedures 11

12 CMMI Initiatives Mandatory Value Based Purchasing Readmission Reduction Program Hospital Acquired Conditions Value Based Payment Modifier SNF Value Based Purchasing Voluntary Medicare Shared Savings Program Bundled Payment for Care Improvement Comprehensive Primary Care Initiative Health Care Innovation Grants Community Based Care Transitions Program In Process ACO Investment Model Beneficiary Engagement Model Opportunities Medicare IVIG Demonstration Comprehensive ESRD Initiative Transforming Clinical Practices Initiative 12

13 Alignment of Strategy and Metrics Questions to Ask How many metrics am I tracking? How many metrics are duplicated? Do they have the same numerator and denominator? Source? Are they aligned with our results and strategic goals? What contracts are coming up for renewal that should have new metrics or should be at risk (mgd care, medical directorships, PMAs, etc.) What are we focused on?

14 Program shift each year Hospital Mandatory Programs Value Based Purchasing 1.0% 1.25% 1.5% 1.75% 2.0% Readmission Reduction Program 1.0% 2.0% 3.0% 3.0% 3.0% Hospital Acquired Conditions % 1.0% 1.0% TOTAL 2.0% 3.25% 5.5% 5.75% 6.0% 14

15 Reform Timeline

16 VBP Shifting of Domain Weights Medicare Inpatient % Reimbursement At Risk 1% 1.25% 1.5% 1.75% 2% Each year, not only do the domains shift, but the dollars increase and the metrics change.

17 Considerations for Today Metric Medicare Spend Per Beneficiary CLABSI, CAUTI, Cdiff, SSI, MRSA Mortality Influenza Vaccination & Elective Deliveries prior to 39 weeks TKA&THA Complication Why In 2017 Performance Period now and worth 25% of 2017 VBP Double count for HAC and all in effect for 2017 Back to 25% of 2017 VBP While only 5% of 2017 VBP and in the current performance period, they are the main measures for this domain. New for FY 2019 VBP but started performance period on 1/1/15

18 VBP FY'13 TOTAL PERFORMANCE Earned Back Unearned Available $$ % Earned CGH $288,853 $540,406 $829, % VBP FY'15 TOTAL PERFORMANCE Earned Back Unearned Available $$ % Earned System $4,925,357 $6,187,541 $11,112, % $288,853 $4,925,357 Breakeven Point: $5,301,360 Breakeven Point: $451,333 $0 $11,112,898 Overall Performance $0 $829,259 Chesapeake General Performance System was penalized $376,003 in FY 15 VBP Program Must acknowledge the amount UNEARNED Of the programs dollars made available: System did not capitalize on $6,187,541

19 Readmission Reduction Program 9% of Current and Future Medicare Reimbursement at Risk 3% penalty of Medicare Reimbursement at risk each program year Measured Populations 30 days from DISCHARGE AMI, HF, PN, COPD, THA & TKA August 2014: CABG Added to FY 2017 Performance Periods: 3 Year Rolling Program FY 15: July 1, 2010 June 30, % FY 16: July 1, 2011 June 30, % FY 17: July 1, 2012 June 30, % FY 18: July 1, 2013 June 30, % FY 19: July 1, 2014 June 30, % Currently participating in 3 performance periods simultaneously

20 How are Readmissions Measured? Scoring Index based at 1.0 Calculate Excess Readmission Ratio Facility Predicted Value Facility Expected Value Excess Readmission Ratio > 1 = BAD Excess Readmission Ratio < 1 = GOOD

21 Drilldown on 2015 Readmissions 21

22 Readmissions by Measure Last 3 Years AMI COPD HF PN THA / TKA 22

23 Hospital Acquired Conditions 12 Hospital Acquired Conditions Identified Divided in to 2 Domains If a hospital is in the BOTTOM QUARTILE (worst performing 25% in the country), it will be penalized a FULL 1% of Medicare Reimbursement Penalties will begin FY 15 (beginning October 1, 2014) *1% After DSH, Uncompensated Care, and IME

24 Hospital Acquired Conditions: FY 2017 First Domain: PSIs Second Domain: CDC Pressure Ulcer Rate Foreign Object Left in Body CLABSI CAUTI Iatrogenic Pneumothorax Rate SSI Following Colon Surgery (FY 2016) Postoperative Physiologic and Metabolic Derangement Rate Postoperative Pulmonary Embolism and Deep Vein Thrombosis Rate Accidental Puncture and Laceration Rate SSI Following Abdominal Hysterectomy (FY 2016) Methicillin-Resistant Staphylococcus Aureus (MRSA) Bacteremia (FY 2017) Clostridium Difficile (FY 2017)

25 Metrics in Play for 2017 C Diff Per Hospital Compare on 2/14/15 Data is as of 1/1/13-12/31/ MRSA SSI Hyster SSI Colon Natl Avg State Avg Hospital

26 Thoughts from John Glaser, CEO Under payment models that reward efficiency and high-quality care, if a hospital or health system is losing money due to inadequate clinical performance, it cannot afford to wait one or more months to find out the problem. Healthcare leaders should understand how their organizations are performing today so they can take corrective action before revenue loss becomes a hemorrhage. -May 2014 HFM Magazine

27 Physician Penalties Arrive The Penalty Phase Year/Progra m erx % % % PQRS SOURCE: Medical Group Management Association (MGMA) 2014 Meaningful Use Value Modifier % -1.0%* -1.0% % -2.0% -2.0% % %** (each year) -4.0% MIPS 2018*** up to -4% 2019*** up to -5% 2020*** up to -7% 2021*** up to -9% * Penalties will be greater for unsuccessful e-prescribers ** Penalty amount could increase up to 5% depending on meaningful use success rates ***MIPS information is estimate only 27

28 Value Based Payment Modifier Medicare Value Based Payment Modifier Based on 2013 data affecting all by 2017 The modifier will be budgetneutral for Medicare and will adjust Part B payments based on the quality and cost of care delivered. Assessment Low Cost Average Cost High Cost High Quality 4.0%* 2.0%* 0.0% Average Quality 2.0%* 0.0% -2.0% Low Quality 0.0% -2.0% -4.0% * Physicians who score in these categories who treat high-risk beneficiaries could receive an additional one percentage point in bonus money. (2015 rule) SOURCE: Proposed 2013 physician fee schedule, Centers for Medicare & Medicaid Services, Federal Register, July 30 (gpo.gov/fdsys/pkg/fr /pdf/ pdf)

29 Bundled Payments There are 4 models to choose from and each one has its unique attributes MODEL 1 MODEL 2 MODEL 3 MODEL 4 MODEL NAME Retrospective Acute Care Hospital Stay Only Retrospective Acute Care Hospital Stay plus Post-Acute Care Retrospective Post-Acute Care Only Acute Care Hospital Stay Only SCOPE OF EPISODES Entire Hospital Up to 48 Episodes Up to 48 Episodes Up to 48 Episodes SERVICES INCLUDED IN EPISODES All Part A services paid as part of the MSDRG Payment All non-hospice Part A and B services during the initial inpatient stay, post-acute period and readmissions All non-hospice Part A and B services during the post-acute period and readmissions All non-hospice Part A and B services (including the hospital and physician) during initial inpatient stay and readmissions PAYMENT Retrospective Retrospective Retrospective Prospective BPCI DISCOUNT 0.5%, and increasing over time 2-3% 3% % NUMBER OF ADMITTED BPCI HEALTHCARE ORGANIZATION S AS OF 7/31/ ,055 4, Note: Model 1 is on a different implementation timeline than Models 2, 3 and 4. 29

30 Fundamentals of the Program CMS created 48 Episodes, each with up to 15 individual MS-DRG codes Can be categorized into 9 Service Lines; illustrative purposes only Spine (5) Cardiac Services (12) Vascular Services (3) Model 2, 3, or 4 applicants may select 1-48 Episodes for testing DHG Category: Vascular Services Episode: Major cardiovascular procedure MS-DRGs 237 & 238 Orthopedics (10) Neurology (2) Oncology / Hematology (1) Episode: Medical peripheral vascular disorders MS-DRGs 299, 300, & 301 Episode: Other vascular surgery Pulmonology (3) General Surgery (2) General Medicine / Internal Medicine (10) MS-DRGs 252, 253, & ves/bundled-payments/ 30

31 How do you WIN in BPCI?

32 Reasons for BPCI & Episode Selection 32

33 Outpatient Bundling/OCM Summary of additional Bundled Models Comprehensive APCs 25 Comprehensive APCs Effective 1/1/15 Mandatory for all OPPS hospitals Up to 6 months of care Key to success will be management of internal cost structure Oncology Care Model Covers outpatient chemotherapy care for up to 6 months For Oncology physician practices Several participation requirements Open to other payers to participate Includes Part A, B and D Performance Based Measures and Quality Monitoring Measures 33

34 Medicare Shared Savings Program Now an annual enrollment process Another 89 started 1/1/15 Growth in beneficiaries 34

35 Explanation Of How MSSP Works And Are Structured. Fundamentals of the MSSP Program DESIGN ELEMENT ONE-SIDED MODEL TWO-SIDED MODEL SHARED SAVINGS PAYMENT CYCLE Sharing Rate Up to 50% based on quality performance Up to 60% based on quality performance Minimum Savings Rate (MSR) Varies by number of assigned beneficiaries 2% Shared Savings Method First dollar sharing once MSR is met or exceeded First dollar sharing once MSR is met or exceeded Maximum Sharing Cap Total shared savings payments cannot exceed 10% of benchmark Total shared savings payments cannot exceed 15% of benchmark Minimum Loss Rate None ACO repays share of all losses if expenditures are more than 2% higher than benchmark Shared Loss Rate None One minus final sharing rate applied once minimum loss rate is met; loss rate is capped at 60% Maximum Loss Cap None Losses capped at 5%, 7.5%, 10% in years 1, 2, 3, respectively Health Care Advisory Board,

36 ACO Early Results To date, MSSP and Pioneers have generated $817M of savings with $372M returned in savings Pioneers: second year was better than first year ($96M vs $87M). Achieved a 1% lower spending trend overall for the Medicare population vs FFS. Almost 1/3 of original participants have left the program MSSP ACOs: Almost 25% of 2012/2013 participants were able to share savings of over $300M. Another quarter reduced spending but not enough to share savings. One ACO overspent by $10M and owed $4M back. 36

37 And then there were 19 37

38 ACO Early Quality results Overall higher average performance Pioneer ACOs: all reported quality and mean quality scores increased 19% and overall improvement on 28 of 33 quality measures. Also reported improved average performance scores for patient and caregiver experience for 6/7 measures. MSSP ACOs: improved in 30 out of 33 measures and overall increase in patient experience over FFS. Also achieved higher average performance on 17/22 GPRO measures. 9 MSSPs failed to report quality scores: 4 of which would have qualified for shared savings McClellan, M.B., Kocot, L., White, R. Katikaneni, P., Medicare ACOs, Continue to Improve Quality,Some Reducing Costs. Brookings.9/22 38

39 Challenges to Current Model Fee For Service underlying structure Reset of Base Benchmarks Required two sided transition Upfront costs (2012 cohort study) Beneficiary assignment retrospective Long settlement periods 39

40 On December 1, CMS proposed a 3 rd Track MSSP Proposed Expansion Issue Track 1: Current Track 1: Proposed Track 2: Current Track 2: Proposed Track 3: Proposed Risk One Sided No change Two Sided No change Two Sided Transition To Two Sided Assignmen t Benchmark s Quality Sharing Rate 1 st agreement is one sided but subsequent are two sided Preliminary prospective assignment for reports. Retrospective assignment for financial reconciliation Reset at the start of each agreement period Up to 50% based on quality Remove requirement to transition to two sided Can go straight into two sided but cant go back to track 1 No change Same as Track 2 No change Same as Track 1 No change Prospective assignment for reports and financial reconciliation Seeking alternatives Same as Track 1 Seeking alternatives Up to 50% based on quality for 1 st agreement period, reduced 10 % points for each subsequent pd under this model Up to 60% based on quality No change Same as Track 1 and seeking alternatives MSR/PPL 2%-3.9%/10% No change 2%/15% No change 2%/20% Loss Sharing Limit N/A No change 5% Yr 1, 7.5% Yr 2, 10% Yr 3 No change 15% Up to 75% based on quality 40

41 Next Generation ACO Model Current MSSP participants and new applicants Two application rounds: 2015 & 2106 Three one year performance periods with two additional one-year extensions Smoothing cash flow through alternative payment mechanisms Discount rather than MSR Quality, Regional and National Efficiency components 41

42 Key Improvements Refined Benchmarking Reward quality performance Rewards attainment of and improvement in cost containment Transition away from reference to historical ACO expenditures Improve Engagement Increased access to visits Reward payment for care from the ACO Decision process for alignment Collaboration on communication 42

43 Types of Entities & Functions 43

44 Examples of Relationships 44

45 45

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