S U S T A I N I N G T H E C O M M U N I T Y H E A L T H C E N T E R M O D E L : Lessons From Other States

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1 S U S T A I N I N G T H E C O M M U N I T Y H E A L T H C E N T E R M O D E L : Lessons From Other States Presented by: Peter R. Epp, CPA M a y 7,

2 O V E R V I E W Introduction Payment Reform Initiatives Medicare Medicaid Overview of Value-Based Purchasing - Keys to Success Base Compensation Quality Incentive Payments Global Payments/Budgets Transitioning to Tomorrow 1

3 I N T R O D U C T I O N One of the overarching objectives of Health Reform initiatives - Transform the Medicare and Medicaid reimbursement systems and drive delivery system reform Fee-For-Service Bundled Payments Value-Based Purchasing To prepare for payment reform, health centers must: Improve cost efficiencies today and generate reserves Create the business processes and reporting necessary for success in the future 2

4 M E D I C A R E S P A Y M E N T R E F O R M G O A L S On January 26, 2015, DHHS announced its goals 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 (feefor-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

5 W H A T I S A B U N D L E D P A Y M E N T? The Bundled Payments initiative is comprised of broadly defined models of care, which link payments for multiple services beneficiaries receive during an episode of care. Medical Home Acute Care Bundling Primary Care Physicians Specialty Care Physicians Outpatient Hospital Care and ASCs Inpatient Hospital Acute Care Long Term Acute Hospital Care Inpatient Rehab Hospital Care Skilled Nursing Facility Care Home Health Care Post Acute Care Episode Bundling Total Cost of Care Bundle

6 W H A T I S V A L U E - B A S E D P U R C H A S I N G? Value-Based Purchasing ( VBP ) is part of the effort to link the payment system to a value-based system to improve healthcare quality Medicare s Hospital VBP program A % of a hospital s payments are withheld by Medicare and maintained in a pool During the year, each hospital s quality of services are scored (attainment and improvement) The pool is then redistributed to the hospitals based on each individual hospital s Total Performance Score as compared to its peers Those providers that receive higher Total Performance Scores will receive higher incentive payments than those that receive lower Total Performance Scores Medicare s ACO and Shared Savings innovation 5

7 M E D I C A R E S S H A R E D S A V I N G S P R O G R A M Elements of the payment model - ACO providers and suppliers are paid for specific items and services as it currently does under the Fee-for-service payment systems ACOs may choose 1 of 2 program tracks Track 1: ACO to operate on a shared savings only arrangement for the duration of their first agreement Track 2: ACO to share in savings and losses for the duration of the agreement, in return for a higher share of any savings it generates CMS establishes a benchmark for each ACO using the most recent available 3 years of per-beneficiary expenditures for Medicare Fee-for-service beneficiaries assigned to the ACO The amount of an ACO s shared savings or losses depends on its performance on quality measures. An ACO that meets the program s quality performance standards will be eligible to receive a share of the savings if its assigned beneficiary expenditures are below its own specific updated expenditure benchmark. Certain ACOs will be accountable for sharing losses by requiring ACOs to repay Medicare for a portion of losses. 6

8 M E D I C A R E S S H A R E D S A V I N G S P R O G R A M Patient Attribution - Beneficiaries will be assigned to an ACO, in a two-step process, if they receive at least one primary care service from a physician within the ACO: 1) The first step assigns a beneficiary to an ACO if the beneficiary receives the plurality of his or her primary care services from primary care physicians within the ACO. 2) The second step only considers beneficiaries who have not had a primary care service furnished by any primary care physician either inside or outside the ACO. Under this second step, a beneficiary is assigned to an ACO if the beneficiary receives a plurality of his or her primary care services from specialist physicians and certain non-physician practitioners (nurse practitioners, clinical nurse specialists, and physician assistants) within the ACO. Primary care services mean the set of services identified by the following HCPCS codes: , , through 99350, G0402, G0438, G0439 ACO participants that bill for primary care services must be exclusive to a single Medicare Shared Savings Program ACO 7

9 M U L T I - P A Y O R A D V A N C E D P R I M A R Y C A R E P R A C T I C E D E M O N S T R A T I O N CMS will participate in multi-payer reform initiatives in selected states to make advanced primary care practices more broadly available Advanced primary care (APC) practices, or medical homes, utilize a team approach to care, with the patient at the center APC practices emphasize prevention, health information technology, care coordination and shared decision making among patients and their providers The demonstration program will pay a monthly care management fee for beneficiaries receiving primary care from APC practices The care management fee is intended to cover care coordination, improved access, patient education and other services to support chronically ill patients 8

10 N E W Y O R K S D S R I P P R O G R A M The overarching goal of the DSRIP plan is to: Transform the health care delivery system in New York Reduce avoidable hospital use by 25% statewide and achieve significant improvements in other health and public health measures at both the provider systems and state levels Reduce Medicaid spending trend rates statewide DSRIP requires the creation of Performing Provider Systems that are expected to be collaborative networks of care that are responsible for most or all Medicaid beneficiaries in the given geography or medical market area Should include all of the major providers of Medicaid services in the region Must have a minimum of 5,000 attributed Medicaid beneficiaries a year in outpatient settings The State s expectation is that at the end of 5 years, Performing Provider Systems will contract directly with managed care plans to meet all the health care needs of Medicaid beneficiaries, and 80-90% of managed care payments to providers will be based on value instead of volume 9

11 N E W Y O R K S D S R I P P R O G R A M By 2020, 80-90% of all Medicaid MCO payments must be in Value-Based Payment Levels 1-3 Options Level 0 VBP Level 1 VBP Level 2 VBP All care for total population FFS with bonus and/or withhold based on quality scores FFS with upside-only shared savings when outcome scores are sufficient FFS with risk sharing (upside available when outcome scores are sufficient; downside is reduced when outcomes scores are high) Level 3 VBP (only feasible after experience with Level 2; requires mature PPS) Global capitation (with outcomebased component) 10

12 N E W Y O R K S D S R I P P R O G R A M Outcome Targets % Met 50% of Outcome Targets met < 50 % of Outcome Targets met Outcome Worsen Examples of potential VBP Arrangements Level 1 VBP Upside only 50-60% of savings returned to PPS/ Providers Between 10 50/60% of savings returned to PPS/ Providers (sliding scale in proportion with % of Outcome Targets met) No savings returned to PPS/ Providers Level 2 VBP Up- and downside When actual costs < budgeted costs 90% of savings returned to PPS/ Providers Between 10 90% of savings returned to PPS/ Providers (sliding scale in proportion with % of Outcome Targets met) No savings returned to PPS/ Providers Level 2 VBP Up- and downside When actual costs > budgeted costs PPS/ Providers responsible for 50% of losses. PPS/ Providers responsible for 50%-90% of losses (sliding scale in proportion with % of Outcome Targets met). PPS/ Providers responsible for 90% of losses. For Stop Loss see text. 11

13 N E W Y O R K S D S R I P A T T R I B U T I O N Step 1: Medicaid utilizing members will be placed into one of these population subcategories based on a mutually exclusive hierarchy (Left to Right) Step 2: After a member is assigned to a population subcategory, the member will then been assigned to a PPS based on a hierarchal loyalty algorithm that is specific to their population subcategory (Top to Bottom. 12

14 O R E G O N M E D I C A I D H E A L T H S Y S T E M T R A N S F O R M A T I O N Coordinated Care Organizations (CCOs) Governed by partnership of providers, community members and other stake holders Tasked with the development of new models of integrated care: patient-centered and team-focused; integrated physical, behavioral and dental health A global budget that grows at a sustainable, fixed rate with payment alternatives that incentivize positive health outcomes Safety-net FQHCs to be paid under an Alternative Payment Method (APM) rather than the encounter method 13

15 O R E G O N M E D I C A I D H E A L T H S Y S T E M T R A N S F O R M A T I O N APM is aligned with Health System Transformation objectives Move away from billing for each office visit De-links the treadmill of churning office visits for payment by paying a Per Member Per Month (PMPM) payment Maintain same level of revenue in to the FQHCs Oregon to pay a PMPM (wraparound) payment to supplement payments received from the MCOs up to the total PMPM payment target for each FQHC based on historical payment experience Historical payment = 3.5 visits X $150 Medicaid rate = $525 PMPY Oregon supplemental payment = $525 PMPY MCO payments regardless of the number of FQHC billable visits provided PMPY Quality and access measures developed to make sure they do not deteriorate Payment based on attributed members to the FQHC given an 18-month lookback on claims data 14

16 M A S S A C H U S E T T S P R I M A R Y C A R E P A Y M E N T R E F O R M I N I T I A T I V E ( P C P R I ) Comprehensive Primary Care Payment (CPCP): A risk adjusted*, per Panel Enrollee, per month payment for a Defined set of primary care services, Medical home services, and Options for a defined set of behavioral health services 3 tiers of CPCP rates will be developed - Tier Type of Behavioral Health Integration Level of Behavioral Health Covered Services 1 Non-Co-Located but Coordinated None 2 Co-Located Minimum 3 Clinically Integrated Maximum * Risk-adjusted means a health center s rate will be adjusted to reflect (1) the demographics of patients served and (2) adjusted for CPCP services provided by external providers 15

17 M A S S A C H U S E T T S P R I M A R Y C A R E P A Y M E N T R E F O R M I N I T I A T I V E ( P C P R I ) Quality Incentive Payment: Additional payments for achieving certain thresholds relative to selected quality measures Shared Savings/Risk Payment: Additional payment/payback, with an option of one of the following 3 risk tracks, with varying levels of risk and reward - Track Risk Arrangement Minimum Panel Size Risk/Reward 1* Upside/Downside 5,000 For all 3 years, receive/owe 60% of difference between actual and target spend levels, with a risk corridor 2* Transitioning to Downside 5,000 Year 1 - similar to Risk Track 3 Year 2 transitional downside risk Year 3, similar to Risk Track 1 3 Upside Only 3,000 For Year 1, receive an increasing amount of the savings, capped at 50% Year 2 expected to move up to Track 2 or 3 * Require certification as a risk-bearing provider 16

18 E L E M E N T S O F A V A L U E - B A S E D P A Y M E N T M O D E L 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 17

19 P A T I E N T A T T R I B U T I O N 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 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 a ACO for a specific payer 18

20 O T H E R C O M M O N T H E M E S Integration of physical and behavioral health care services Medicare s Advanced Primary Care initiative Massachusetts Primary Care Payment Reform Initiative New York s DSRIP Integrated Primary Care bundle Development of FQHC integrated care networks As competition for health center patients increases, FQHCs need to join forces to maintain market share With the expansion of global payment/budget models, FQHCs need to pool patients to increase members and minimize risk and share best practices Creation of shared service-type arrangements to obtain high-quality services at reasonable cost 19

21 S U M M A R Y V B P A R R A N G E M E N T S 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 20

22 E V A L U A T I N G F E E - F O R - S E R V I C E P A Y M E N T M O D E L S Fee schedules % of Medicare Physician Fee Schedule versus payer-specific fee schedule Evaluating the fee schedule Average payment per visit based on CPT code frequency analysis Comparison of reimbursement versus cost Per visit Per procedure (requires the creation of a cost-based charge structure) Evaluation of appropriateness of coding Benchmarking E&M coding Proper coding of all ancillary services 21

23 E V A L U A T I N G F E E - F O R - S E R V I C E P A Y M E N T M O D E L S In evaluating the fee schedule, Centers should apply its annual CPT coding frequency to the fee schedule to estimate the expected payment rates as compared to: Average cost per visit Cost-based charge structure 2013 Medicare Physician Fee Schedule (MPFS) Annual Reimbursement under MPFS CPT CPT Description CPT Annual Frequency Office/outpatient visit new 100 $ , Office/outpatient visit new 650 $ , Office/outpatient visit new 1,850 $ , Office/outpatient visit new 1,750 $ , Office/outpatient visit new 650 $ , Office/outpatient visit est 200 $7.13 1, Office/outpatient visit est 450 $ , Office/outpatient visit est 2,300 $ , Office/outpatient visit est 1,800 $ , Office/outpatient visit est 250 $ ,800 Totals 10,000 $ 644,389 Average Reimbursement per Visit ($644,389 10,000) $

24 E V A L U A T I N G F E E - F O R - S E R V I C E P A Y M E N T M O D E L S Utilizing the Cost-Based Charge Structure, fee schedules can be compared to cost: On a per procedure basis, versus On a per visit basis CPT Annual Frequency 2013 Medicare Physician Fee Schedule (MPFS) Cost per Procedure (CBCS) Annual Reimbursement under MPFS Annual Cost by CPT CPT Description Variance Procedure Variance Office/outpatient visit new 100 $20.99 $62.50 $(41.51) 2,099 6,250 (4,151) Office/outpatient visit new 650 $39.70 $ $(66.30) 25,805 68,900 (43,095) Office/outpatient visit new 1,850 $60.74 $ $(91.26) 112, ,200 (168,831) Office/outpatient visit new 1,750 $ $ $(126.72) 181, ,375 (221,760) Office/outpatient visit new 650 $ $ $(152.87) 86, ,900 (99,365) Office/outpatient visit est 200 $7.13 $29.50 $(22.37) 1,426 5,900 (4,474) Office/outpatient visit est 450 $19.83 $62.50 $(42.67) 8,924 28,125 (19,201) Office/outpatient visit est 2,300 $40.18 $ $(63.32) 92, ,050 (145,636) Office/outpatient visit est 1,800 $61.89 $ $(90.11) 111, ,600 (162,198) Office/outpatient visit est 250 $87.20 $ $(115.80) 21,800 50,750 (28,950) Totals 10,000 $ 644,389 $1,542,050 $(897,662) Average Reimbursement per Visit (10,000 visits) $ $ $(89.77) 23

25 I M P R O V I N G E F F I C I E N C I E S A N D R E D U C I N G T H E C O S T P E R V I S I T Improving financial performance in today s FQHC Medicaid and Medicare reimbursement systems is driven by reducing the total cost per visit as compared to established payment rates Improving efficiencies and thereby reducing the cost per visit will help a CHC prepare for future payment models! Example of Prospective Payment Rate Financing Model: FQHC Medicaid All-inclusive Rate per Visit $ Total Operating Costs $ 1,542,100 Divided by: Total Visits 10,000 Total Operating Cost per Visit Operating Loss per Visit $ (4.21) 24

26 I M P R O V I N G E F F I C I E N C I E S A N D R E D U C I N G T H E C O S T P E R V I S I T All-inclusive cost per visit analysis The following variables impact the calculation of the allinclusive 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 $ 1,542,100 10,000 visits = $ per visit 25

27 I M P R O V I N G E F F I C I E N C I E S A N D R E D U C I N G T H E C O S T P E R V I S I T Variables Impacting Cost per Visit Health Center A Health Center B Salary levels Direct-care support staff ratio Patient support staff ratio Enabling/Ancillaries 2 FTE $200, :1 = 5 $65, :1 = 4 $35,000 Case $75,000; Health $50,000 $ 400,000 2 FTE $150, , :1 = 6 $65, , :1 = 6 $35, ,000 Case $75,000; Health $50,000 $ 300, , , ,000 Fringe benefits 23% of salaries 227,700 20% of salaries 235,750 Direct other expenses Supplies, etc. 67,400 Supplies, etc. 53,950 Overhead/infrastructure 20% 257,000 25% 328,500 Total costs 1,542,100 1,643,200 Visits 5,000 visits/md FTE 10,000 4,000 visits/md FTE 8,000 Total Cost per Visit $ $

28 I M P R O V I N G E F F I C I E N C I E S A N D R E D U C I N G T H E C O S T P E R V I S I T Impact of Productivity FFS Payment Models Provider A Provider B Provider C Provider Productivity (visits) 3,000 3,500 4,000 Average FFS Revenue per Visit $ $ $ Total Revenue 450, , ,000 Provider Salary 175, , ,000 Direct Support Staff 125, , ,000 Total Salary Cost 300, , ,000 Fringe Benefits (25%) 75,000 75,000 75,000 Total Salary and Benefits 375, , ,000 Variable $10/visit (e.g. Supplies) 30,000 35,000 40,000 Total Direct Costs 405, , ,000 Overhead (25%) 101, , ,750 Total Costs 506, , ,750 Surplus/(Loss) ($56,250) $12,500 $81,250 Revenue per visit $ $ $ Cost per visit $ $ $ Surplus/(Loss) per visit ($18.75) $3.57 $

29 S U C C E S S I N T H E F E E - F O R - S E R V I C E P A Y M E N T M O D E L Whereas reimbursement rates are held fixed or have minimal trend factors, surpluses are generated through improving operational efficiencies Proper coding of services provided Creating additional revenue through improved provider productivity Improving cost efficiencies Increased provider productivity Managing staffing and cost metrics Coding and cost efficiencies are at the cornerstone of success in future payment models! 28

30 P A R T I A L C A P I T A T I O N A R R A N G E M E N T S Partial Capitation Arrangements Patient A Annual Revenue Rate ($25 PMPM) 12 months = $300 Annual Cost: Patient B Rate ($25 PMPM) 12 months = $300 Cost per visit $125/visit $125/visit # of visits per year 2 visits/year 3 visits/year Annual Cost $250 $375 Financial Success $50 $(75) How does a health center manage financial risk? One patient with unusually high utilization can have a dramatic downward impact on financial performance! 29

31 P A R T I A L C A P I T A T I O N A R R A N G E M E N T S The paradigm shift in managing partial capitation arrangements Fee-For-Service Payment Model Payment based on the # of units (visits) provided Capitation Payment based on the # of patients assigned to the Center Revenue Equation # of units rate = revenue # of patients rate PMPM 12 months = revenue Financial Success Increase productivity and the # of units to increase revenue Reduce the cost per unit, manage patient utilization and minimize risk through increased # of patients and improved health outcomes Increased Provider Productivity More visits = Increased revenue More capacity More patients = Increased revenue 30

32 P A R T I A L C A P I T A T I O N A R R A N G E M E N T S Impact of Productivity Capitation Models Provider A Provider B Provider C Provider D Provider "capacity" (visits) 3,000 3,500 4,000 4,000 Average Visits per Patient Panel Size (Members) 857 1,000 1,143 1,333 Number of Member Months (Members x 12) 10,286 12,000 13,714 16,000 Capitation Revenue PMPM $42.50 $42.50 $42.50 $42.50 Total Revenue 437, , , ,000 Total Expenses (driven by volume) 506, , , ,750 Surplus/(Loss) ($69,107) ($2,500) $64,107 $161,250 31

33 P A R T I A L C A P I T A T I O N A R R A N G E M E N T S Simple Cost PMPM Calculation Per Visit per Patient Basis: Service Description Patient Utilization Unit Cost 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 of covered services $ 840 Cost per member per month $ 70 This example highlights the importance of understanding patient utilization of services! The analysis would be further enhanced if utilization and cost were analyzed on a per procedure basis (use of a cost-based charge structure)! 32

34 P A R T I A L C A P I T A T I O N A R R A N G E M E N T S Complex Cost PMPM Calculation Per Procedure per Patient Basis: Service Description Patient Utilization Unit Cost (per procedure RVU) Annual Cost per Patient Primary Care: Office Visits 3.00 $ 150 $ 450 Immunizations Medical Nutrition Behavioral Health Care: Individual psychotherapy Group psychotherapy PCMH Services: Case management Total Direct Care 820 Administration/HIT 20% of direct 164 TOTAL $984 In this example, the cost PMPM for this patient is $82! 33

35 C A R E M A N A G E M E N T P A Y M E N T S 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? 34

36 P A R T I A L C A P I T A T I O N A R R A N G E M E N T S Financial success under a capitation payment model is grounded in understanding: Cost Per Member Per Month (PMPM) which is driven by -» Cost per unit (visit or procedure)» Utilization of services» Health condition of the patient Managing panel size for all direct care staff 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 Quality measures required to improve health outcomes and access incentive payments 35

37 S U C C E S S I N T H E P A R T I A L C A P I T A T I O N P A Y M E N T M O D E L As Centers move away from fee-for-service payment arrangements to partial capitation, the driver of successes expand Proper coding of services provided required for appropriate risk-stratification 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 Improving quality metrics and accessing incentive payments 36

38 G L O B A L P A Y M E N T S / B U D G E T S Sample Construct of a Global Payment/Budget: Differs based on Health Condition of Patient 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 If actual claims experience is less than $6,000, the provider shares in the surplus; if actual exceeds $6,000, the provider may be at risk! 37

39 G L O B A L P A Y M E N T S / B U D G E T S Understand the attribution algorithm and manage member/enrollee rosters 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 Research high utilizers of services Analyze high cost providers (unit cost) Further analyze by health condition Quality measures! 38

40 U S I N G T H I R D - P A R T Y C L A I M S D A T A 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 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 39

41 G L O B A L P A Y M E N T S / B U D G E T S Financial success under a global payment/budget arrangement requires: Ability to manage and report on third party claims data Efficient and effective electronic health records at provider organizations Health information exchange systems are in-place Quality partners have been identified and arrangements executed Informatics and data reporting systems in-place to manage all services provided to the patient Benchmarks and expected utilization patterns evaluated; ability to generate a surplus (actuary?) 40

42 H E A L T H C E N T E R S U C C E S S I N V B P A R R A N G E M E N T S 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 42

43 C H A N G I N G R O L E O F T H E C F O & F I N A N C E F U N C T I O N 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 outhouse 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 43

44 C H A N G I N G R O L E O F T H E C F O & F I N A N C E F U N C T I O N 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 44

45 T R A N S I T I O N I N G F R O M T O D A Y T O T O M O R R O W Proper coding for services provided Monitor/improve provider productivity Provision of services in a costefficient manner Manage and improve quality metrics Manage/monitor patient utilization in-house Manage/monitor the total cost of care New skill requirements, communication & technology TODAY TOMORROW 45

46 N E E D F O R B U S I N E S S I N T E L L I G E N C E To be financially successful, health centers will need to manage financial operations by merging information from disparate systems Electronic Health Record Third Party Claims Data General Ledger Practice Management System Keys to Success: High Quality Low Cost Payroll System 46

47 D A S H B O A R D S M O N I T O R C O S T E F F I C I E N C I E S Dashboards required to identify the drivers of cost with the goal of reducing the Center s cost per visit Provider Productivity Scorecard Visits per FTE Visits per Hour RVUs per FTE RVUs per Visit Cost Analysis Average salary levels Support staff ratios Cost per visit by expense item Provider productivity Average cost per RVU 47

48 P R O V I D E R P R O D U C T I V I T Y S C O R E C A R D Medical Dept. Provider A Provider B Provider C Provider D Provider E Total FTEs (hours paid) # of Clinical Hours 1,640 1,640 1,310 1,640 1,640 7,870 # of Visits 5,000 3,000 4,000 4,500 3,500 20,000 # of Work RVUs 10,000 12,000 10,200 11,800 7,000 51,000 Productivity Metrics: Visits per FTE 5,000 3,000 4,000 4,500 3,500 4,000 Visits per Hour Work RVUs per FTE 10,000 12,000 10,200 11,800 7,000 10,200 Work RVUs per Visit Consider: Analyzing E&M coding distribution by provider vs. benchmarks Visits by patient for providers, stratified by patient health status 48

49 C O S T A N A L Y S I S D A S H B O A R D S COST ANALYSIS Per visit Total Actual Per Patient Per Visit Per RVU Total Benchmark Per Patient Per Visit Provider $1,090,000 $ $990,000 $ Direct-Care Support 1,200, ,080, Patient Services Support 875, , Enabling/Ancillaries 100, OTPS/Fringe benefits 650, , Overhead 785, , Total Expenses $4,700,000 $ $ $58.75 $4,500,000 $ $ $50.00 Support Staff Ratios: Direct-Care Patient Services Productivity Levels: Medical 4,000 4,200 Dental 2,500 2,500 Behavioral Health 2,000 1,500 Per RVU 49

50 D A S H B O A R D M A N A G I N G P A T I E N T U T I L I Z A T I O N Managing the cost per patient is driven the monitoring/understanding/impacting both cost efficiencies and patient utilization Drill-down on Patient Utilization and Outcomes Reporting elements: Units per patient Average panel size Health outcome (red yellow green) Reporting categories: By department/provider By health condition (chronic/episodic) By site By payer 50

51 P A T I E N T U T I L I Z A T I O N / O U T C O M E S D A S H B O A R D S ACTUAL # of Patients Average Panel Size # of Visits # of Visits per Patient # of RVUs RVUs per Patient Outcomes Medical 6,000 1,250 20, , Exceeds Dental 2, , , Below Behavioral Health , , Exceeds TOTAL 7,200 32, ,000 Exceeds BENCHMARK # of Patients Average Panel Size Versus # of Visits # of Visits per Patient # of RVUs RVUs per Patient Outcomes Medical 7,000 1,750 21, , Meets Dental 1, , , Meets Behavioral Health , , Meets TOTAL 7,500 30, ,000 Meets 51

52 P A T I E N T U T I L I Z A T I O N / O U T C O M E S D A S H B O A R D S How does utilization compare by actuarial class of patients? Actuarial Class # of Patients # of Visits # of Visits per Patient # of RVUs RVUs per Patient Outcomes M/F (0-2 years) 2,000 5, , Meets M/F (3-16 years) 1,000 3, , Exceeds M (17-26 years) 1,200 4, , Exceeds F (17-26 years) 800 4, , Below M/F (27+ years) 1,000 3, , Below Medical Totals 6,000 20, , Exceeds Consider analyzing by health condition as well! 52

53 P A T I E N T U T I L I Z A T I O N / O U T C O M E S D A S H B O A R D S Who are the high utilizers of services? M (17-26 years) # of Visits # of RVUs RVUs per Visit Outcomes Patient A Below Patient B Exceeds Patient C Below Patient D Meets Patient E Meets Patient F Exceeds Others Totals 4,000 10, Exceeds Consider analyzing patients with similar health conditions to identify outliers! 53

54 Q U E S T I O N S 54

55 C O N T A C T I N F O R M A T I O N Peter R. Epp, CPA, Partner Co-Managing Director, Healthcare Industry Practice CohnReznick Peter.Epp@CohnReznick.com 55