SNF Services and Payment: Preparation for Today, Tomorrow, and 2020

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1 SNF Services and Payment: Preparation for Today, Tomorrow, and 2020 Accountable Care and the Comprehensive Landscape 63rd Annual AHCA/NCAL October 9,

2 The Future Under Health Care Reform Health care reform is designed to significantly alter: How We Pay for Care Bundled payments Payment reductions Shared Savings Value-based payment Independent Payment Advisory Board How Care is Organized Accountable care organizations Medical homes Episodes of care Health information exchange How Care is Delivered Center for Medicare and Medicaid Innovation Comparative effectiveness (evidence-based best practices) Multidisciplinary care teams across sites of service Electronic Health Records Care Transitions Improved coordination of care for dual eligibles 2 2

3 Accountable Care Organizations General Definition A group of health care providers working together to manage and coordinate care for a defined population, that share in the risk and reward relative to the total cost of care and patient outcomes. Medicare ACO Programs Medicare Shared Savings Program Pioneer ACOs Advanced Payment Initiative 3

4 Medicare ACO Programs Medicare Shared Savings Program (MSSP) = 115 ACOs Established January 1, 2012 Program requires the participating providers to form an ACO 5,000 Medicare beneficiary minimum for participation Two tracks: Savings only, Savings/Losses Two 2012 start dates: 4/1/2012 & 7/1/2012 Pioneer ACO Program = 31 Pioneer For organizations with prior ACO-like experience Must enter into outcomes-based contracts with multiple payers. 15,000 Medicare beneficiaries minimum Model transitions to greater financial accountability(risk) faster. January 1, 2012 start 4

5 Advanced Payment Initiative To be eligible, applicants for this initiative must apply for MSSP for an April or July 2012 start AND: Not include any inpatient facilities AND have less than $50 million in total annual revenue. OR Include only inpatient facilities that are critical access hospitals and/or Medicare low-volume rural hospitals AND have less than $80 million in total annual revenue. Application deadlines For April 1, 2012 start date Applications accepted between January 3 and February 1, 2012 For July 1, 2012 start date Applications accepted between March 1 and March 30, 2012 (consistent with Shared Savings Program) 5

6 ACOs: Advanced Payment Model Started April 1, 2012: Coastal Carolina Quality Care, Inc (New Bern, NC) Jackson Purchase Medical Associates, PSC (Paducah, KY) North Country ACO (Littleton, NH) Primary Partners, LLC (Clermont, FL) RGV ACO Health Providers, LLC (Donna, TX) Started July 1, 2012: Accountable Care Partners ACO, LLC (FL, GA) Coastal Medical, Inc. (MA, RI) Cumberland Center for Healthcare Innovation, LLC (TN) Golden Life Healthcare LLC (CA) Harbor Medical Associates PC (MA) Maryland Accountable Care Organization of Eastern Shore, LLC (MD) Maryland Accountable Care Organization of Western Maryland (MD, PA, WV) Medical Mall Services of Mississippi (MS) MPS ACO Physicians, LLC (CT) Physicians ACO, LLC (TX) PriMed, LLC (CT) Quality Independent Physicians, LLC (IN, KY) Reliance Healthcare Management Solutions (FL) St. Thomas Medical Group, PLLC (TN) Texoma ACO, LLC (TX) 6

7 Medicare ACO Requirements Requirements: Accountable for quality, cost and care Legal structure to receive/distribute incentives Sufficiency of PCPs to accept a minimum of 5,000 Promote evidence-based medicine & patient engagement Patient-centered care processes Leadership and management structure Report on quality measures and other performance data Three-year agreement 7

8 Final Medicare ACO Rules: Beneficiary Assignment Beneficiary assignment is: Prospective at the beginning of each performance year Updated quarterly based upon most recent 12 months of data Reconciled at the end of the performance year Methodology Identify all primary care services provided by physicians within most recent 12 months FQHCs/RHCs primary care services included if meet certain criteria Beneficiary assigned to the ACO whose PCP provided the greatest portion of primary care services For unassigned beneficiaries, they will look at primary care services received by other nonprimary care physicians and/or other ACO professionals such as nurse practitioners. 8

9 Final Medicare ACO Rules: Comparing the Two MSSP Payment Models One-sided Model Two-sided Model Maximum Sharing Rate 50% 60% Minimum Savings Rate (MSR) Shared Savings % 2.0% Share in first dollar savings after MSR met Share in first dollar savings after MSR met Shared Savings Cap 10% 15% Shared Losses Not applicable After 2% Minimum Loss Rate Shared Losses = 1- Quality Rate Year 1: 5% Year 2: 7.5% Year 3: 10% 9

10 Pioneer ACO Payment Models Year 1 Year 2 Year 3 Core Option A Option B Alternative 1 Alternative 2 60% - two-sided 10% sharing cap 10% loss cap, 1% MSR 70% - two-sided 15% sharing cap 15% loss cap, 1% MSR Population-based pymt of up to 50% of expected Part A & B revenue Risk: 70% - twosided 15% sharing cap 15% loss cap, 1% MSR 50% - two-sided 5% sharing cap 5% loss cap, 1% MSR 60% - two-sided 10% sharing cap 10% loss cap, 1% MSR Population-based pymt of up to 50% of expected Part A & B revenue Risk: 70% - two-sided 15% sharing cap 15% loss cap, 1% MSR 70% - two-sided 15% sharing cap 15% loss cap, 1% MSR 75% - two-sided 15% sharing cap 15% loss cap, 1% MSR Population-based pymt of up to 50% of expected Part A & B revenue Risk: 75% - twosided 15% sharing cap 15% loss cap, 1% MSR Same as above. Rebase using 2011, 2012, % - one-sided 5% sharing cap 2-2.7% MSR (depends upon # of beneficiaries) 70% - two-sided 15% sharing cap 15% loss cap, 1% MSR Population-based pymt of up to 100% of expected Part B revenue, less 3% discount Risk: Full risk for all Part B w/3-6% discount (depending upon quality scores) and shared risk for Part A (same as Yr 2) Same as above. Rebase using 2011, 2012, % - two-sided 10% sharing cap 10% loss cap, 1% MSR 70% - two-sided 15% sharing cap 15% loss cap, 1% MSR Population-based pymt of up to 100% of expected Part A& B revenue, less 3% discount Risk: Full risk for all Part A & B w/3-6% discount (depending upon quality scores) Same as above. Rebase using 2011, 2012, 2013 data Year 4 Same as above. Rebase using 2011, 2012, 2013 data Same as above. Rebase using 2011, 2012, 2013 data data data Year 5 Same as above. Same as above. Same as above. Same as above. Same as above. 10

11 Final Medicare ACO Rules Determining Shared Savings Shared Savings Formula Benchmark: Three-year risk & growth trend adjusted per beneficiary spending rate. Projected and updated based on National FFS spending rate. Minimum Savings Rate(MSR): One-sided model = 2.0 to 3.9 %,based upon # of assigned Medicare beneficiaries. Max savings = 10% of benchmark. Two-sided model = 2%. Max savings : 15% of benchmark. BYr 3 BYr. 2 BYr. 1 Historical 60% Most recent 3 years actual spending rate, 30% weighted by year. 10% ACO Specific Benchmark ACO Specific Benchmark ACO Specific Benchmark Y 1 Y 2 Y 3 11

12 2012 Medicare ACOs Allina Hospitals & Clinics Fairview Health Systems Park Nicollet Health Services Bellin-Thedacare Healthcare Partners Allina Hospitals & Clinics Genesys PHO Michigan Pioneer University of MI Dartmouth- Hitchcock ACO Eastern Maine Healthcare System Brown & Toland Physicians Healthcare Partners Medical Group Heritage California ACO Monarch Healthcare Primecare Medical Network Sharp Healthcare System Healthcare Partners of Nevada Presbyterian Healthcare Services North Texas ACO Seton Health Alliance OSF Healthcare System Bronx Accountable Healthcare Network Atrius Health Beth Israel Deaconess Physician Org Mt. Auburn Cambridge IPA Partners Healthcare. Steward Health Care Systems Franciscan Alliance TriHealth, Inc. Renaissance Medical Mgmt Co. = Pioneer & MSSP ACOs = Pioneer ACOs only = MSSP ACOs only As of July 2012 JSA Medical Group, a division of HealthCare Partners 12

13 Proposed Medicare ACO Rules The ACO Paradigm Patient Centered 13

14 Medicare Accountable Care Organizations 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 ACO professionals : Physicians Nurse Practitioners Physician Assistants Clinical Nurse Specialists Other eligible ACO participants Skilled Nursing Facilities Home Health Care Hospice Comprehensive outpatient rehabilitation facility Cannot include providers participating in other shared savings programs or demos or the Independence at Home pilot. 14

15 ACO Network ACO Network: A Team of Rivals ACO Providers: Bonus-Eligible Non-ACO Preferred Providers Non- Preferred Providers Primary Care Practitioners Hospitals Value Providers Low Quality, High Cost Providers 15

16 ACO Configurations Will Vary: PCP Model ACO Contracted Services Hospitals Specialists Post-acute Primary Care Group Practice Or Independent Practice Association 16

17 ACO Configurations Will Vary: Multi-Specialty ACO Multi-Specialty Group Practice Or Independent Practice Association Contracted Services Hospitals Post-acute 17

18 ACO Configurations Will Vary: Integrated Acute ACO Integrated Acute Care Delivery Systems Contracted Services Post-acute 18

19 ACO Configurations Will Vary: Continuum ACO The Integrated Continuum PCPs Hospitals Specialists Post Acute 19

20 ACO Configurations will vary: Others? ACO Value provider on orthopedic Chronic Care Management Alliance Contracted/Preferred Provider Services Specialists Hospitals Specialists Value provider on Cardiac Care 20

21 Key Aspects of Final Medicare ACO Rules Beneficiary Choice maintained Choice of Providers in/out of ACO Can opt out ACO prohibited from offering beneficiaries inducements for certain behavior. Contract Terms ACO can add or remove participants or providers throughout the contract. Requires a 30-day notice to CMS. CMS can terminate an ACO contract when a significant change occurs ACO is no longer able to meet the eligibility or program requirements. 21

22 Final Medicare ACO Rules Eligibility Requirements Required Processes Must establish processes as part of a quality assurance and improvement program that: Promote evidence-based medicine Promote patient/beneficiary engagement Patient experience of care survey Mechanism for evaluating health needs of ACO population Identifying community stakeholder partnerships to improve health Communicate clinical information and evidence-based medicine to beneficiaries Patient engagement and shared decision making Patient medical record access Internally report on quality and cost metrics Coordinate care among all providers Individualized care plans, care transition processes, etc. 22

23 Proposed Medicare ACO Rules Determining Shared Savings Shared Savings Formula Final Shared Savings= ACO achieved savings x ((Maximum Shared Savings %) x (Quality Score %)) Example: ACO savings $800,000 Maximum under Model I x 50% ACO-specific Quality Score x 87% = $348,000 Notes CMS withholds 25% of earned Shared Savings until end of agreement to offset potential losses. Failure to complete full three years = withhold forfeited Must be 90% or above on all quality metrics in order to achieve maximum savings rate. 23

24 What needed to be successful ACO According to Center for Health Care Quality and Payment Reform 1. Complete and timely information 2. Technology and skills for population management and care coordination 3. Adequate resources for patient education and self-management support 4. Culture of teamwork 5. Coordinated relationships 6. Ability to measure and report on quality 7. Infrastructure and skills to manage financial risk 8. Commitment to value by organizational leadership Source: How to Create Accountable Care Organizations, Center for Healthcare Quality and Payment Reform,

25 So What Does All of This Mean? While none of us has a perfect crystal ball, here are some of the expectations for the next few years: 1. We expect a decline in hospitalizations by up to 30% over the next ten years. 2. More care will likely move to home care & SNF; it is likely that remaining post-acute volume will be spread across fewer providers. 3. At present, MSSP ACOs will not have the authority to waive restrictive payment rules; Pioneer ACOs, however, have been afforded some greater flexibility 4. Bundled payments will change models of care, reduce length of stay, increase integration before & after services & change relationships w/ physicians 5. Volume of care provided in typically residential settings (like AL or even IL) will likely increase. 25

26 What are the ACOs Doing? Many of the ACOs are focused right now in two major tasks: 1. Attribution sorting out which Medicare beneficiaries may be IN or OUT of the ACO. 2. Physician Participation figuring out which primary care physicians are going to participate. Secondarily Some are still sorting out IT/EMR issues, quality management, communication and so on. Post-acute care, while recognizably important, is not far up on the priority list for many. 26

27 Why Isn t Post-Acute a Burning Issue? Here s Why: SNF care, or home health, accounts for very small fraction of the total healthcare dollar in any given market. They ll get to us. Will you be ready? 27

28 What We Think We Know. 1. The move to TCOC/ACO/Bundled Payment has created new models of care and experimentation 2. Care delivery changes have moved faster than payments. 3. Clinical quality improvements are expected to reduce acute care use by about 20% over the next five to eight years. Implications: Care is moving to a lower cost settings that are patient-centered Clients served in the community are likely to be sicker and frailer and will be served for longer periods or more episodes Care delivery model changes have not seen reimbursement follow Value-based payments will grow Patients and their families are struggling Community-based care models must also change to include effective technology, caregiver supports, specialty programming, frequency of interventions, greater integration, improved hand-offs, etc. 28

29 Reducing Potentially Preventable Admissions Collaborations appear to be improving performance outcomes at a faster rate. 29 May 8 th the th Q data was released showing a reduction of 1,915 potentially preventable readmissions or about a 9+% reduction in year 1.

30 Health Provider Strategies Hospital/Physician Integration Collaborations w/ new partners payers, vendors, etc. New Health Venture Capital Firms with non-traditional investors Joint venture between University of Pittsburgh Medical Center's health plan and the Advisory Board to provide ACO technology and outsourcing services. Post-acute providers creating a seamless care continuum Kindred, Genesis, LifeCare, Select, etc. Developing exclusive contracts to serve as PAC providers in selected markets. Implementation of Lean, Six Sigma and other cost efficiencies Advocate Health System in Chicago offers training for care integration and total cost of care management Health Care Mergers in 2011 valued at $227B Source: ACO service industry blooms - Healthcare business news and research Modern Healthcare

31 Changing Health Care Use One Example Wisconsin is one state that has made significant progress on reducing both admissions and readmissions to acute care. 59,000 57,000 55,000 53,000 51,000 49,000 47,000 45,000 Wisconsin Medicare Hospital Admission Rates There are currently discussions about how low admission and readmissions can be without impacting quality of care. 31

32 What Can We Expect? We believe seven emerging themes will prevail: Providers will be asked to accept greater financial risk for outcomes 2. Operational efficiency will be critical 3. Collaboration among all providers will be required for survival 4. Significant investments in technology will be necessary 5. Increased quality expectations, reporting and monitoring 6. Elevated regulatory risk 7. Increased focus on community-based services and care will result

33 Strawman Strategic Priorities for Health Care Providers 1. In each market in which you operate, position your organization to be #1 or 2 for key referral sources and collaborative partners 2. Develop / coordinate / collaborate to create a full continuum of capabilities in each market 3. Continue to investing technology and update physical plants to meet contemporary requirements 4. Improve operating performance and build balance sheet Overall focus: assemble basic performance data tighten pre- and post-acute network focus on developing relationships with Providers that will ultimately control or influence flow of funds 33 33

34 Possible Future Visions Community Focus Rehab Focus Clinically Complex Focus - Expand into Independent and Assisted Living - Private Duty Services - Focus is Age 75+ Market (Otherwise known as Retirement Living) - Continued emphasis on rehab as core business driver - Cultivate rehab excellence - Focus is Age 65+ Market (Otherwise known as Sub-Acute Care) - Multi-service continuum for complex care - Service offered in multiple settings - Potentially Age 55+ Market (Otherwise known as Chronic Disease Management) 34

35 Contact Us John Richter Managing Partner, Health Care CliftonLarsonAllen 35

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