THE EVOLUTION OF CMS PAYMENT MODELS

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1 THE EVOLUTION OF CMS PAYMENT MODELS December 3, 2015 Dayton Benway, Principal AGENDA Legislative Background Payment Model Categories Life Cycle The Models LEGISLATIVE BACKGROUND Medicare Modernization Act 2003 Section 3021 of the Affordable Care Act Congressional Oversight and Funding 1

2 PAYMENT MODEL CATEGORIES Accountable Care Episode-Based Payments Primary Care Transformation Medicare and CHIP Medicare and Medicaid Enrollees Accelerate Development and Testing of New Payment System and Service Delivery Model Speed Adoption of Best Practices PAYMENT MODEL CATEGORIES Accountable Care Accountable Care Organizations and similar care models are designed to incentivize health care providers to become accountable for a patient population and to invest in infrastructure and redesigned care processes that provide for coordinated care, and high quality and efficient service delivery. Episode-Based Payments Under these models, health care providers are held accountable for the cost and quality of care beneficiaries receive during an episode of care, which usually begins with a triggering health care event (such as a hospitalization or chemotherapy administration) and extends for a limited period of time thereafter. PAYMENT MODEL CATEGORIES Primary Care Transformation Primary care providers are a key point of contact for patients health care needs. Strengthening and increasing access to primary care is critical to promoting health and reducing overall health care costs. Advanced primary care practices also called medical homes utilize a team-based approach, while emphasizing prevention, health information technology, care coordination, and shared decision making among patients and their providers. Medicaid and CHIP Medicaid and the Children s Health Insurance Program (CHIP) are administered by the states but are jointly funded by the federal government and states. Initiatives in this category are administered by the participating states. 2

3 PAYMENT MODEL CATEGORIES Medicare and Medicaid The Medicare and Medicaid programs were designed with distinct purposes. Individuals enrolled in both Medicare and Medicaid (the dual eligibles ) account for a disproportionate share of the programs expenditures. A fully integrated, personcentered system of care that ensures that all their needs are met could better serve this population in a high quality, cost effective manner. Accelerate Development and Testing of New Payment System and Service Delivery Model Many innovations necessary to improve the health care system come from local communities and health care leaders from across the country. By partnering with these stakeholders, CMS can help accelerate the testing of models that may be the next breakthrough tomorrow. PAYMENT MODEL CATEGORIES Speed Adoption of Best Practices Recent studies indicate that it takes nearly 17 years on average before best practices - backed by research - are incorporated into widespread clinical practice and even then the application of the knowledge is very uneven. The Innovation Center is partnering with a broad range of health care providers, federal agencies, professional societies and other experts and stakeholders to test new models for disseminating evidence-based best practices and significantly increasing the speed of adoption. LIFE CYCLE Under Development Accepting Letters of Intent Accepting Applications Application Under Review Participants Announced Announced No Longer Active Not Applicable 3

4 Applications under review ACO Investment Model - Pre-payment system intended to support existing ACOs in the shared savings program. Expected to encourage new ACOs to form in rural areas. Next Generation ACO Model Allows participants to accept a higher level of risk and reward than current ACO models. Think Pioneer and shared savings program on steroids. Announced Comprehensive ESRD Care Test a new service delivery and payment model that hopes to reduce cost and improve care through patient centered approach. Medicare ESRD spending is approximately $8.6B (5.6%) annually. 13 participants have been announced. Ongoing Advanced Payment ACO Model - The Advance Payment Model is designed to deliver advanced payments on shared savings to physician-based and rural providers who have joined together to provide coordinated high quality care to their Medicare patients. 35 participants have been active since Medicare Health Care Quality Demonstration Designed to improve healthcare systems ability to improve patient safety and quality of care, increase efficiency, and reduce variation in medical practice that can reduce quality and increase costs. 4 participants have been active since On-Going continued Nursing Home Value-Based Purchasing Demonstration Nursing homes in the demonstration (Arizona, New York, and Wisconsin) will be measured on quality performance in four areas. Nursing homes that score in the top 20% and homes that rank in the top 20% of improvement will be eligible to receive a portion of the shared savings for their respective state. There are currently 182 nursing homes (Arizona 41, New York 79, and Wisconsin 62) in the demonstration which began in

5 On-Going continued Private, For-Profit Demo Project for the Program of All-Inclusive Care for the Elderly (PACE) The focus of this demonstration is to compare cost, quality, and access to care for services provided by for-profit vs. nonprofit PACE providers. There are 6 PACE providers (all in Pennsylvania) participating in this program which started in 2007 and will conclude in In total 1,088 beneficiaries are part of this demonstration. On September 30 th a study was made public that discusses the quality of care and access findings thus far in the demonstration. On-going continued Pioneer ACO Designed for hospitals and systems with experience operating as an ACO. Intended to help these groups move from the shared savings models to a population-based payment model. First two years are a shared savings model with higher risk/reward for the ACO. Year three will give the ACO the option to move a material portion of the payments to a populationbased model. o Population-based payment is a per-beneficiary per month payment amount intended to replace some or all of the ACO s fee-for-service (FFS) payments with a prospective monthly payment. Pioneer ACOs are notified prospectively which patients will be included in the cost and quality performance metrics. On-going; Pioneer ACO continued Typically, Pioneer ACOs will have a minimum of 15,000 beneficiaries (unless located in a rural area, in which case they are to have a minimum of 5,000 beneficiaries). In order to be assigned, a beneficiary must be enrolled in traditional Medicare (fee-forservice). Medicare Advantage plan beneficiaries are not eligible. Beneficiaries will maintain the full benefits available under traditional Medicare, as well as the right to receive services from any healthcare provider accepting Medicare patients. Pioneer ACOs receive a waiver of the three day SNF rule if certain criteria are met. Allows patients to be admitted to a Pioneer affiliated SNF either directly, or after an inpatient stay of less than three days. 5

6 On-going; Pioneer ACO continued Eligible ACO participants include: ACO professionals in a group practice environment A qualified network of ACO professional practices A partnership or joint venture between hospitals and ACO professionals A hospital that employs ACO professionals FQHC Meaningful use has been achieved by more than 50% of the Pioneer ACO systems. On-going; Pioneer ACO continued Participants from New England for 2015 include: Maine Beacon Health (Eastern Maine Healthcare System) New Hampshire Dartmouth Hitchcock Massachusetts Beth Israel Deaconess Physician Organization, Partners HealthCare, Steward Health Care System, Atrius Health, Mount Auburn Cambridge Independent Practice Association On-going; Pioneer ACO continued Based on CMS reports highlights from rd year of the model include: 20 Pioneer ACOs participated $120 million in savings generated Over 622,000 beneficiaries covered Of the 20 participants, 15 generated savings and 11 qualified for $82 million in shared savings Of the 5 participants, who experienced losses 3 saw losses that exceeded the minimum threshold and paid $9 million in shared losses to CMS. Quality performance scores have increased from 71.8% in year 1 to 87.2% in year 3. Most notable improvements in medication reconciliation, screening for depression, follow-up plan, and qualification for meaningful use incentive payments. 6

7 Rural Community Hospital Demonstration The objective is to evaluate cost based reimbursement for small rural hospitals with more than 25 beds and less than 51 beds. Began in 2004 with 13 hospitals across 8 states. The original demonstration was scheduled for a 5 year period and was extended for another 5 years in 2010 with the Affordable Care Act. Demonstration concludes in December Today there are 23 participants in 20 states including Maine. Cost based reimbursement for inpatient services in the base year cost report. Thereafter, payments will be the lower of the reasonable cost or the prior year payment inflated by the IPPS update factor. No Longer Active Physician Group Practice Demonstration The predecessor to the shared savings program. Concluded in 2012 and had 6 participants. Pioneer ACO vs. Next Generation ACO Pioneer ACO 3 year contract period. 5 payment options share saving and losses up to 60-75%. Must exceed the minimum savings rate to share savings. Next Generation ACO 3 year contract period. 2 payment options share savings and losses up to 100%. Savings and losses on first dollar above/below benchmark. 7

8 Pioneer ACO vs. Next Generation ACO Pioneer ACO Minimum savings rate based on 3 year baseline of blended 50/50 national percentage and national flat dollar growth. Adjusted for regional pricing Risk adjusted Next Generation ACO Benchmark calculated based on 1 year baseline trended regionally for pricing, risk, and discount for quality and efficiency metrics. Pioneer ACO vs. Next Generation ACO Pioneer ACO Includes Medicare enrolled providers/suppliers with unique TIN/NPI identifications. Next Generation ACO Includes Medicare enrolled providers/suppliers with unique TIN/NPI identifications. Also includes preferred providers that are Medicare enrolled and offer enhancements to beneficiaries. Starts in 2017 Pioneer ACO vs. Next Generation ACO Pioneer ACO Beneficiaries assigned prospectively through claims. Most Claims paid with traditional Medicare fee schedule. If population based payments are made the fee schedule payment is reduced and a monthly per-beneficiary payment is made. Next Generation ACO Four payment options Traditional fee schedule Traditional fee schedule plus monthly perbeneficiary amount that is later reconciled against shared savings or losses. Population based payment (Pioneer model) Capitation and ACO pays all involved providers. 8

9 Pioneer ACO vs. Next Generation ACO Pioneer ACO Next Generation ACO Enhancements for ACO Waiver of nursing home 3 day stay rule Enhancements for ACO Waiver of nursing home 3 day stay rule Telehealth original site expansion Post discharge home visits Pioneer ACO vs. Next Generation ACO Pioneer ACO Next Generation ACO Quality scores determine savings and losses. Required quarterly reports Monthly expense reports Claims and claim line feeds Quality scores determine only the quality component of the benchmark discount. No EHR measurement Expected all Next Generation ACOs meet meaningful use Required quarterly reports Monthly expense reports Claims and claim line feeds Rural Community Hospital Demo PACE Nursing Home VBP Medicare Health Care Quality Pioneer ACO Physician Group Practice Demo Advanced Payment ACO Comprehensive ESRD Care ACO Investment Next Generation ACO 9

10 Under Development Specialty Practitioner Payment Model Opportunities Consideration of models of care that will focus on specific diseases, patient populations, and specialty practitioners in the outpatient setting to incentivize improved care, better health, and lower costs. Applications Under Review Oncology Care Model - Practices will agree to payment arrangements that include financial and performance accountability for episodes of care surrounding chemotherapy administration to cancer patients. Announced Comprehensive Care for Joint Replacement - Bundled payment and quality measurement for an episode of care associated with hip and knee replacements to encourage hospitals, physicians, and post-acute care providers to improve the quality and coordination of care from hospitalization through recovery. 67 MSAs participating with 2 in Connecticut. Bundled Payments Intended to provide greater coordination of care across health care settings while improving outcomes and lowering costs. Payments are made on the episode of care rather than the individual services provided. Providers are rewarded for quality instead of quantity. Four models of bundled payments were developed: o Retrospective Acute Care Hospital Stay Only o Retrospective Acute and Post Acute Care Episode o Retrospective Post Acute Care Only o Prospective Acute Care Hospital Stay Only 10

11 On-Going; Bundled Payments continued Retrospective Acute Care Hospital Stay Only - The episode of care is the inpatient stay in the acute care hospital. CMS pays the hospital a discounted amount based on the payment rates established under IPPS used in the traditional Medicare program. CMS continues to pay physicians separately for their services under the fee schedule. o This model is currently in phase 2 with 11 participants (all in New Jersey). o Began in o Applies to all DRGs unless specifically excluded by the participant. o High rate of participant turnover attributed to the risk associated with the discounted IPPS payment. o 150 page report issued in July 2015 detailing progress with this model. On-Going; Bundled Payments continued Retrospective Acute and Post Acute Care Episode - Actual expenditures are reconciled against a target price for an episode of care. Under this payment model, Medicare continues to make fee-for-service payments to providers. The total expenditures for a beneficiary s episode is later reconciled against a bundled payment amount (the target price) determined by CMS. A payment or recoupment amount is then made by Medicare reflecting the aggregate performance compared to the target price. The episode of care includes a Medicare beneficiary s inpatient stay in the acute care hospital, post-acute care and all related services during the episode of care, which ends either 30, 60, or 90 days after hospital discharge. On-Going; Bundled Payments continued Retrospective Acute and Post Acute Care Episode continued 395 hospital participants. 245 physician practice participants. Maine Heart Center is the only Maine participant. Began in Currently in Phase 2. 11

12 On-Going; Bundled Payment continued Retrospective Post Acute Care Only Same concept as the last model, but only covers post acute care services. Triggered by an inpatient stay. The post-acute care services included in the episode of care must begin within 30 days of discharge from the inpatient stay and end 30, 60, or 90 days after the initiation of the episode of care. 919 total participants none from Maine. Began in Currently in Phase 2. On-Going; Bundled Payments continued Prospective Acute Care Hospital Stay Only - CMS makes a single, prospective bundled payment to the hospital that encompasses all services provided by the hospital, physicians, and other facilities during the episode of care (the entire inpatient stay). Physicians and other practitioners submit no-pay claims to Medicare and are paid by the hospital out of the bundled payment. Related readmissions for 30 days after hospital discharge are included in the bundled payment amount. Participants can select up to 48 different clinical condition episodes to test in the model. On-Going; Bundled Payments continued Prospective Acute Care Hospital Stay Only continued 10 participants none in Maine Began in Currently in Phase 2. 12

13 No Longer Active Medicare Acute Care Episode (ACE) Demonstration Assessed the effects of bundling Part A & B payments into one episodic payment. Medicare Hospital Gainsharing Demonstration - Emphasizes partnerships between hospitals and physicians intended to improve utilization of inpatient services. Physician Hospital Collaboration Demonstration Evaluate the long term benefits of physician/hospital collaboration on inpatient stays and readmissions. PRIMARY CARE TRANSFORMATION Under Development Advanced Primary Care Initiatives - Advanced primary care is based on principles of the Patient Centered Medical Home and builds on the care delivery models employed in other CMS model tests, including the Comprehensive Primary Care Initiative. Announced Transforming Clinical Practices Initiative - Designed to support more than 140,000 clinician practices over the next four years in sharing, adapting and further developing their comprehensive quality improvement strategies. PRIMARY CARE TRANSFORMATION Comprehensive Primary Care This initiative is a four-year multi-payer model designed to strengthen primary care. The focus is population-based care management fees and shared savings opportunities to participating primary care practices to support the provision of a core set of five Comprehensive primary care functions. Risk-stratified Care Management Access and Continuity Planned Care for Chronic Conditions and Preventive Care Patient and Caregiver Engagement Coordination of Care across the Medical Neighborhood 13

14 PRIMARY CARE TRANSFORMATION On-Going; Comprehensive Primary Care continued Participating practices receive two types of financial support for services provided to their fee-for-service Medicare beneficiaries: A monthly non-visit based care management fee. The opportunity to share in any net savings to the Medicare program. Seven regions (none in New England) with 2,600 providers serving more than 410,000 Medicare beneficiaries. 95% of the participating practices use an electronic EHR to monitor clinical quality in real time. 100% offer 24/7 access to a provider who can view the electronic EHR. 20% of practices are located in rural areas. PRIMARY CARE TRANSFORMATION Graduate Nurse Education Demonstration CMS will reimburse up to 5 hospitals with advanced practice registered nursing training programs. Independence at Home Demonstration Testing support for primary care in the home setting for beneficiaries with multiple chronic conditions. Multiple Payer Advanced Primary Care Practice CMS is partnering with Medicaid and other payers. program pays a monthly care management fee for beneficiaries receiving primary care from advanced primary care practices. The care management fee is intended to cover care coordination, improved access, patient education and other services to support chronically ill patients. Maine began participating in 2012 and is one of 5 states in the demonstration. PRIMARY CARE TRANSFORMATION No Longer Active FQHC Advanced Primary Care Practice Demonstration Frontier Extended Stay Clinic Demonstration Medicare Coordinated Care Demonstration Medicaid Emergency Psychiatric Demonstration 14

15 INITIATIVES FOCUSED ON THE MEDICAID AND CHIP POPULATION Announced Medicaid Innovation Accelerator Program Medicaid Incentives for the Prevention of Chronic Diseases Model Strong Start for Mothers and Newborns Initiative: Effort to Reduce Early Elective Deliveries Strong Start for Mothers and Newborns Initiative: Enhanced Prenatal Care Model INITIATIVES FOCUSED ON THE MEDICARE-MEDICAID ENROLLEES Applications Under Review Financial Alignment Initiative for Medicare-Medicaid Enrollees Announced Frontier Community Health Integration Project Demonstration Initiative to Reduce Avoidable Hospitalization Among Nursing Facility Residents INITIATIVES TO ACCELERATE THE DEVELOPMENT AND TESTING OF NEW PAYMENT AND SERVICE DELIVERY MODELS Under Development Health Plan Innovation Initiative Home Health Value-Based Purchasing Model Accepting Applications Medicare Intravenous Immune Globulin Demonstration Announced Part D Enhancement Medication Therapy Management Model State Innovation Models Initiative: Model Design Awards State Innovation Models Initiative: Model Test Awards 15

16 INITIATIVES TO ACCELERATE THE DEVELOPMENT AND TESTING OF NEW PAYMENT AND SERVICE DELIVERY MODELS Announced continued Maryland All-Payer Model Medicare Advantage Value-Based Insurance Design Model Medicare Care Choices Model Health Care Innovation Awards Medicare Demonstrations No Longer Active State Innovation Models Initiative: Model Pre-Test Awards INITIATIVES TO SPEED THE ADOPTION OF BEST PRACTICES Under Development Beneficiary Engagement Model Opportunities Accepting Letters of Intent Million Hearts: Cardiovascular Disease Risk Reduction Model Announced Health Care Payment Learning and Action Network INITIATIVES TO SPEED THE ADOPTION OF BEST PRACTICES Community-Based Care Transition Program Million Hearts Partnership for Patients No Longer Active Innovation Advisors Program Medicare Imaging Demonstration 16

17 QUESTIONS HAVE QUESTIONS ONCE YOU ARE BACK AT YOUR DESK? Dayton Benway Principal Baker Newman Noyes