Pay-for-Performance (P4P) and the Shifting Reimbursement Paradigm

Transcription

1 Pay-for-Performance (P4P) and the Shifting Reimbursement Paradigm 1

2 Speakers Daniel J. Hettich James Landman, PhD Keith Fontenot King & Spalding LLP Washington, DC Healthcare Financial Management Association Westchester, IL Hooper, Lundy & Bookman, PC Washington, DC 2

3 The Road to P4P Evolution of Medicare as a Purchaser Cost reimbursement rewards more services but capped at reasonable costs Prospective payment Flat fee; incentives for efficiency but still rewards volume And now.... 3

4 Pay for Performance (P4P) A majority of Medicare fee-for-service payments already have a link to quality or value. Our goal is to have 85% of all Medicare fee-for-service payments tied to quality or value by 2016, and 90% by Sylvia Burwell, New England Journal of Medicine (January 26, 2015) 4

5 What Should Be the Goal for Value- Based Payment? Observed: Very uneven movement toward value across markets today few provider organizations are anywhere near the tipping point CMS: 90% of traditional FFS Medicare payments tied to quality or value and 50% of payments tied to alternative payment models (APMs) by 2018 Healthcare Transformation Task Force: 75% of member organizations businesses operating under value-based payment arrangements by 2020 Catalyst for Payment Reform: 20% of payments proven to improve value by 2020

6 Comprehensive Care for Joint Replacement (CJR): CMS s Bundled Payments for Hip and Knee 6 On April 1, 2016 (not Jan. 1, 2016 as proposed), bundled payments for one of the most common Medicare procedures, hip and knee replacement surgeries, will become mandatory for hospitals in 67 metropolitan statistical areas (not 75 as proposed) under the Comprehensive Care for Joint Replacement ( CJR ) program Hospitals in those geographic regions performing at least 400 eligible LEJR cases between July 2013 and June 2014 would be required to participate in the proposed fiveyear model. CMS received over 400 comments on its proposed rule.

7 CMS s Bundled Payments for Hip and Knee Hospital performing the LEJR accountable for the episode of care, which would begin at the time of surgery and end 90 days later. Every year during the five performance years of the CCJR Model, Medicare episode prices would be set for LEJR procedures at each participating hospital. Only hospitals held financially accountable yet CMS stated that hospital payment makes up only about 50% of the total 90-day episode of care payment 7

8 CMS s Bundled Payments for Hip and Knee Normal payments (PPS, etc.) throughout the year but true-up at the end of the year. Bonus/Penalty = the difference between the target price and actual episode spending, up to a specified cap. First year, only upside. Penalties phase-in over years 2-5. CMS anticipates net gain to program. Large variation in the quality and cost of care for hip and knee replacements 8

9 CMS s Bundled Payments for Hip and Knee In addition to keeping their 90-day costs per episode down, hospitals will also need to meet 3 quality performance measures to receive reconciliation payments: Hospital-Level Risk-Standardized Complication Rate Following Procedure; Hospital-Level 30-day, All-Cause Risk-Standardized Readmission Rate (Following Procedure; and Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey results. 9

10 CJR the Start, Then What? First step. Phase 2: the Secretary may, through rulemaking, expand (including implementation on a nationwide basis) Section 1115A 400k beneficiaries a year, $7b hospital, $6b post acute. Hospitals look to economize in PAC. More alliances. CMS will look to expand concept CABG next? How much opportunity overall? Hips and knees costs range from $16k to $33k nationally, small number of expensive cases. Quality measure issue; more stop loss for smaller. Bundles may have limited impact on volume. Beneficiary steering via copays etc.? More robust education? 10

11 CJR Proposed Rule: HFMA s Concerns Timing: Until you have the data and can analyze it, you don t know where your opportunities are, and you don t know who to partner with. Bundle pricing Access to data: Post-acute care blind spots Timeliness Exclusion of data related to substance abuse Beneficiary opt outs on data sharing Volume Thresholds Risk adjustment (including socio-economic factors) Administrative complexity Uneven distribution of risk across providers; little opportunity for hospitals to share downside risk with other providers

12 Other CJR Questions Impact of bundled payments on the total cost of care: Provide price certainty, but little impact on utilization Limited number of procedures that can be bundled? Industry consolidation If hospitals/health systems are identified as sole risk bearers, pressures to vertically integrate?

13 ACA Accelerates Shifts to P4P 13

14 Next Phase in Policy/Payment Historical Fee For Service Payment Structure Promoted volume over value. Medicare established on traditional BCBS payment structure 1983 IPPS; 1990s brought more. Movement towards quality & performance metrics 2003 MMA began reporting and incentivizing quality, now a component of all payment systems Movement towards Alternative Payment Models (APMs) & Episode- Based Payment ACA, MACRA. 14

15 Next Phase in Policy/Payment (cont) Changes in physician reimbursement will reinforce and accelerate the transition from pay-for-volume to pay-forquality. Hospitals that employ physicians or own practices will need to adapt. The disparate measures in hospital area are ripe for some consolidation/harmonization. Proliferation of metrics and weighting. Permanent MB reductions narrow options more value based payment, etc. likely. Quality measure development may require governance changes. Dynamics of VBID and narrow networks. Expect to see more VBID, including beneficiary incentives, in MA and potentially exchanges. 15

16 VBP -- Concept of Program Set aside a pool from existing Medicare PPS dollars Funded through reductions in base operating DRG per discharge payment reductions 1.5% in FY2015 up to 2% in FY2017 & forward Redistribute the pool among PPS hospitals based on their performance on certain quality measures as compared to other hospitals as compared to each hospital s prior performance Over $1 billion per year redistributed Rather than establishing a floor, performance is comparative so creates a race to the top 16

17 How Will Hospitals Be Evaluated? Improvement vs. Achievement 17 Source: CMS

18 What Is Being Measured? Quality Measures divided into differently weighted buckets or domains Domains re-structured for 2017: The clinical process domain completely eliminated for

19 Value-Based Purchasing-2017 Measures 19

20 Threshold v. Benchmark 20 Source: CMS

21 VBP IQR Crystal Ball? New VBP Measures Coming Soon? A measure results must be posted on IQR 1-year prior to incorporation into VBP program New measures for 2016 IQR program include Stroke and COPD 30-day mortality rates (COPD already part of Readmission program) New measures for 2017 IQR program include 1) episode of care payment measures for pneumonia and heart failure, and 2) mortality measures for Coronary artery bybass graft (CABG) (CABG already part of Readmission program) 21

22 VBP IQR Crystal Ball? CMS added seven new measures to the 2018 IQR Program Four episode-based payment measures: Kidney/UTI; Cellulitis; Gastrointestinal Hemorrhage; primary elective THA/TKA (90-day claims-based) (CJR déjà vu?) Two excess days measures: Excess Days in Acute Care after Hospitalization for Acute Myocardial Infarction (claims-based); and Excess Days in Acute Care after Hospitalization for Heart Failure (claims-based) 22

23 Hospital-Acquired Condition (HAC) Reduction Program Hospitals in the top 25% nationally for incidents of certain hospital-acquired conditions will have their PPS payments reduced by 1% beginning with 2015 discharges. Amount of payment is determined after the application of the payment adjustment under the Hospital Readmissions Reduction Program and the VBP program. 23

24 HAC -- Measures and Domain Two domains: Domain 1, Agency for Healthcare Research and Quality's (AHRQ) PSI-90 composite measure Domain 2, CDC chart-abstracted hospital acquired infection (HAI) measures Originally, Domain 1 weighted at 35% and Domain 2 at 65%. For FY 2017, Domain 1 weighted 15% and Domain 2 (infection) 85% For 2018, med/surg wards added to ICU locations for the CLABSI and CAUTI infection measures If a hospital s Total HAC score is in the top 25% of nation, 1% payment cut. 24

25 VBP and HACs: HFMA s Concerns Continuing concern over dearth of socio-economic factors used in risk adjustment and impact on safety net hospitals s Overlapping measures between VBP and HAC present double jeopardy concerns HCAHPS weighting: Variations by acuity level and geographical region Uncertain correlation between patient satisfaction and quality of outcomes/patient safety Efficiency metric: penalizing hospitals for spending they do not fully control? HPSA correlation? SNF quality correlation?

26 IT S NOT JUST HOSPITALS: MIPS AS THE SGR FIX 26

27 MIPS, the SGR Fix Medicare Access and CHIP Reauthorization Act of 2015 ( MACRA ), Pub. L (signed Apr. 16, 2015) repealed SGR cuts with fixed MPFS rate increases through 2019 For the period there will be modest annual rate increases of 0.5%. As of 2020, no annual increase Instead, physicians may have the possibility to increase payments either by participating in the Merit-based Incentive Payment (MIPS) program or the Alternative Payment Model (APM) program but also risk penalties 27

28 Alternative Payment Models (APMs) An APM generally requires participation in an entity that assumes meaningful financial risk, uses electronic health records, and uses quality measures such as ACOs and bundled payments Physicians who participate in APMs will receive a 5% bonus annually during Criteria become more stringent over time: % or more of a physician s Medicare revenue must come through an APM entity 2021 and % Medicare threshold or 25% from Medicare APM entities and 50% from non-medicare APM entities and later -- 75% Medicare threshold or 75% from a combination of Medicare and non-medicare APM sources 28

29 MIPS Summary Instead of APMs, physicians can participate in the Merit-Based Incentive Payment System (MIPS) MIPS Summary Sunsets current Meaningful Use, Value- Based Modifier, and Physician Quality Reporting System (PQRS) penalties at the end of 2018, rolling requirements into a single program Adjusts Medicare payments based on performance on a single budget-neutral payment beginning in 2019 Applies to physicians, NPs, clinical nurse specialists, physician assistants, and certified RN anesthetists MIPS Performance Category Weights Includes improvement incentives for quality and resource use categories 1) Resource Use measures would be weighted less during first two years of MIPS program, reaching 30 percent in the third year of the program. Quality measures would be weighted more than 30 percent during the first two years to make up the difference. Source: The Medicare Access and CHIP Reauthorization Act of 2015; Advisory Board analysis. 29

30 MACRA: MIPS Each physician will be assigned a composite MIPS score based on the four components on a scale of CMS will establish a performance threshold, which will be the mean or median of the scores for all MIPS physicians during the prior period. Physicians who score at the threshold have no MIPS adjustment, above the threshold, bonuses; and below the threshold, penalties Generally, bonuses and penalties will be capped at 4% in 2019, increasing in steps to 9% by 2022 and beyond. Results will be published and patients can vote with their feet! 30

31 MACRA: MIPS Bonuses and penalties must offset to achieve budget neutrality (except for $500 mill. exceptional performance bonus pool). $500 million is reserved for exceptional performance such that MIPS will not be a zero sum game but there will be winners and losers since payment reductions will fund payment increases. Each year is a fresh start 31

32 MACRA Headlines and Issues SGR repealed with stable (virtually flat) payment updates through next ten years. Transitions Medicare payment away from a volumebased system toward payment for value of services. Headlines focused on stable updates the bigger story is what happens next and the administrative role in implementation. Implications well beyond physicians. Approval of APM through process yet to be determined or through CMMI development. APMs will include some level of quality & performance measurement. 32

33 Issues Is MIPS a death spiral? Budget neutrality, linearity playing field tilted to APMs. Enormous delegation of authority. Some boundaries, but too complex to legislate. Technology isn t there yet on many of these issues: the availability of alternative payment models is fairly limited. Capacity of CMS in time of limited resources and ambitious time-frames. Are the deadlines/expectations realistic? MACRA implications for other payors, MA. What is an APM? MA count? Managed Care? If providers move to APMs, does medical home become the easy out for many? 33

34 Summary of Two Tracks Post SGR Providers Must Choose Enhanced FFS1 or Accountable Care Options 1. Fee for service. 2. Positive adjustments for professionals with scores above the benchmark may be scaled by a factor of up to 3 times the negative adjustment limit to ensure budget neutrality. In addition, top performers may earn additional adjustments of up to 10 percent. 3. APM participants who are close to but fall short of APM bonus requirements will not qualify for bonus but can report MIPS measures and receive incentives or can decline to participate in MIPS. Source: The Medicare Access and CHIP Reauthorization Act of 2015; Advisory Board analysis. 34

35 Compliance Pitfalls The Patient Inducement Statute: Arrangements whereby [a provider] offers beneficiaries a non-covered item or service free of charge implicate the fraud and abuse laws and must be closely scrutinized. OIG Adv. Op at 5 (Nov. 1, 2006) Incentive to Limit Services: [O]ne Quality Target requires a prophylactic antibiotic to be administered prior to select surgeries and to be discontinued within specified times. If adherence to this standard results in physicians discontinuing prophylactic antibiotics sooner than would be their practice in the absence of the Proposed Arrangement, then a limitation of items or services would occur and Civil Monetary Penalties may attach. See OIG Adv. Op

36 MACRA Helps Out MACRA, however, introduced common-sense exception to inducements to physicians ( 512): Eliminates civil monetary penalties (CMPs) for inducements to physicians to limit services that are not medically necessary Applies to payments made on or after Apr. 16, 2015 N.B. AKS and Stark still apply Requires HHS OIG to report to Congress by April 16, 2016 on options to permit gainsharing arrangements between physicians and hospitals that improve care while reducing waste and increasing efficiency 36

37 Improved Alignment, But Much to Be Resolved Potential for easier alignment of physician & health system goals around value-based payment and care delivery Devil will be in details: Are there meaningful quality metrics across specialties Do APMs offer adequate opportunities for all clinicians? What do incentives to participate in APMs mean for independent/small physician practices?

38 Evolve or Become Extinct? As the paradigm for healthcare reimbursement shifts, the paradigm for healthcare delivery must also shift. It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change. Charles Darwin 38