/10/2015. Perspective. Payer Common Themes. MACRA Payment Reform. MIPS or APM? Summary

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1 Looking Ahead: Value Based Reimbursement Considerations for the Medical Practice Kentucky MGMA Doral Jacobsen Senior Manager DHG Healthcare Kathy Rhodes Manager DHG Healthcare 1 Agenda Perspective Payer Common Themes MACRA Payment Reform MIPS or APM? Summary 2 Perspective 3 1

2 Our Transformational Point of View 4 4 Shaping the Curve 5 5 Payer Common Themes 6 2

3 Tiers 9/10/2015 Payer Common Themes Triple Aim High performing narrow networks Patient Liability Increasing Increasing transparency & cost focus Focus on quality measures Provider profiling Value based payment methodologies rolling out Government Payers Major Commercial Carries Employers Your Organization 7 7 Triple Aim Manage Population Health Ideal Care System Reduce Per Capita Cost Enhance the Experience of Care Source: Don Berwick Narrow Networks High Performing Networks Employers Specific Networks Tailored Networks Products Sub Networks High Value Networks Narrow 32% Broad 30% Ultranarrow 38% Narrow and ultra-narrow network plans are prevalent in the public marketplace. Chart shows Distribution of Individual Exchange Narrow Networks by Network Breadth, 2014 (from the AHA Trendwatch Report, June 2014)

4 Not So Narrow Networks Panels Make Buying and Arranging Decisions Specialists and Hospitals Referrals No narrow networks are used PCPs refer where they believe they will get the best result Many panels are convinced of the efficacy of referring to lower cost Specialists and Hospitals 38,500 PROVIDERS OF ALL OTHER TYPES KEY High Cost Providers Medium Cost Providers 4,052 PCPs* Low Cost Providers Carefirst 2014 PCMH Program Performance Report July 30, 2015, MD 10 Increasing Patient Liability 11 Patient Costs $1 out of every $4 comes directly from patients tive-on-patient-payments-mgma-connexion-april-2010.pdf 12 4

5 LetsTalkCost.com Transparency BCBS Example in NC Quality Metrics

6 Level of Financial Risk 9/10/2015 Profiling NEW MATH VALUE=QUALITY/COST Quality = Evidence Based Metrics How many times did you meet the measure? 100% 92% How many times your peers met the measure? 107% Cost = Episode of Care 100% 97% 103% You Peers Variance Index Professional $100 $ % Surgery $95 $ % Facility $200 $ % Pharmacy $25 $ % Total $420 $ % 107% / 103% = 104% Practice performs 4% better than peers. 16 How do you stack up? PROVIDER Provider A Provider B UHC QUALITY ** Quality and Cost Efficiency Criteria Met ** Quality and Cost Efficiency Criteria Met CIGNA UHC CARE EFFICIENCY DESIGNATION ** Quality and Cost Efficiency Criteria Met ** Quality and Cost Efficiency Criteria Met Not listed on Website Not enough information to evaluate. BCBS TIER BCBS TIER Provider C * Quality Criteria Met Not Met Effective Not enough Provider D data to evaluate. * Cost Efficiency Criteria Met Not enough information to evaluate Value Based Contracting Value-based payment models align with a provider s risk readiness. Capitation + PBC Shared Savings Shared Risk Capitation Accountable Care Programs Centers of Excellence Bundled/Episode Payments Performance-based Programs Performance- Based Contracts Fee for Service SOURCE: UHC Degree of Provider Integration

7 MACRA - Payment Reform 19 Timeline PLACEHOLDER Value Modifier Medicare Value Modifier Based on historical data affecting all by 2017 The modifier will be budget-neutral 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)

8 2015 VM Performance Performance of groups 100+ EPs if all groups were subject to quality-tiering VM Legend # of TINs Cost Quality Adjustment 0 Low High 2.0% 9 Low Average 1.0% 22 Average High 1.0% 2 Low Low 0.0% 1 High High 0.0% 450 Average Average 0.0% 35 Average Low -0.5% 10 High Average -0.5% 20 High Low -1.0% Insufficient Data % Category % Not subject to Value Modifier % 1278 TOTAL 22 What Ifs If your TIN received $1,000,000 in Medicare Payments, here is what could have happened: Assessment Low Cost Average Cost High Cost High Quality $97,800 $48, % Average Quality $48, % -$5,000 Low Quality 0.0% -$5,000 -$10, QRUR Report SOURCE: CMS presentation to MGMA Sept

9 Timeline for Phasing in the VM JANUARY 1 VM applied to physicians in groups of 100 EPs SPRING 2015 Retrieve 2014 Mid-Year QRUR JANUARY 1 VM applied to physicians in groups of 10 EPs SPRING 2016 Retrieve 2015 Mid-Year QRUR JANUARY 1 VM applied to physician solo practitioners and physicians in groups of 2 EPs SPRING 2017 Retrieve 2016 Mid-Year QRUR JANUARY 1 VM applied to physicians, PAs, NPs, CNSs, and CRNAs in groups of 2 EPs and those who are solo practitioners (if finalized as proposed) PQRS GPRO Registration Period 4/1/15 6/30/ PQRS GPRO Registration Period Spring 6/30/16 FALL 2015 Retrieve 2014 Annual QRUR that includes 2016 VM adjustment information (All groups and solo practitioners) FALL 2016 Retrieve 2015 Annual QRUR that includes 2017 VM adjustment information (All groups and solo practitioners) FALL 2017 Retrieve 2016 Annual QRUR that includes 2018 VM adjustment information (All groups and solo practitioners) 25 CMS Reform Timeline 2026 and Impact Year Beyond Performance Period TBD TBD TBD TBD TBD TBD TBD TBD Value Modifier Penalties 1.5% 2% 4% 4% Meaningful Use Penalties 1% 2% 3% 3-4% Transitioned to MIPS PQRS Penalties 2% 2% 2% 2% Alternative Payment Model Merit-Based Payment Model No MIPS Risk; 5% lump sum payment Penalties 4% 5% 7% 9% 9% 9% 9% 9% Fee Schedule Updates (all) 0.50% 0.50% 0.50% 0.50% 0.50% 0% Increase Fee Schedule Updates (MIPS) 0.25% Fee Schedule Updates (APM) 0.75% 26 Medicare Access & CHIP Reauthorization (MACRA) MACRA created the Merit-Based Incentive Payment System (MIPS) and incentive payments for participation in eligible alternative payment models (APMs) beginning in 2019 Ends PQRS in 2018 Meaningful Use will fall under MIPS Value Based Payment Modifier will fall under MIPS 27 9

10 Rewarding Value over Volume 28 MIPS or APM? 29 Fork in the Road MIPS APM 30 10

11 MIPS MIPS intends to unify PQRS, Meaningful Use, and the Value Based Payment Modifier Four categories: Quality Resource Use Meaningful Use Clinical Practice Improvement Activities Eligible professionals expanding Some Exclusions Scores reported on Physician Compare by category Physician Compare CATEGORIES YEAR 1 (2019) YEAR 2 (2020) YEAR 3 (2021) Quality 50% 45% 30% Resource Use 10% 15% 30% Clinical Practice Improvement Activities Meaningful Use of EHR 15% 15% 15% 25% 25% 25% Note: CMS may revise 31 MIPS: Quality 50% 30% VM Quality Measures PQRS Key focus areas include at least: Clinical care Safety Care Coordination Patient and caregiver experience Population health and prevention HHS will establish list of quality measures each November 1 st before 1 st performance year Draft quality measure plan must be published by January 1, 2016 and finalized by May 1, MIPS: Resource Use 10% 30% VM Cost Measures Total Per Capita Costs for All Attributed Beneficiaries measure Total Per Capita Costs for Beneficiaries with Specific Conditions: diabetes coronary artery disease chronic obstructive pulmonary disease heart failure Medicare Spending per Beneficiary (MSPB) 33 11

12 MIPS: Meaningful Use 25% Meaningful Use Current meaningful use requirements, demonstrated by use of a certified EHR, will continue to apply. Professionals who report quality measures through certified EHR systems for the MIPS quality category will be deemed to meet the meaningful use clinical quality measure component CMS final rules may need to define how individual MU performance is rolled up to the group level Incentives not impacted by MIPS Stage 3, proposed to begin in 2017, only measured under MIPS 34 MIPS: Clinical Practice Improvement Activities 15% New program Improving clinical practice or care delivery likely to result in better outcomes Activities will be established by HHS Under MACRA, the activities must include: Expanded practice access Population management Care coordination Beneficiary engagement Patient safety and practice assessment Participation in alternative payment models 35 Patient Centered Medical Home $ $ All Primary Care Practices, Total General Operating Cost and Total Medical Revenue After Operating Cost Per Patient $83.98 $78.43 Total General Operating Cost Total Medical Revenue After Operating Cost Source: MGMA Data Dive 2014 PCMH Practices Non-PCMH Practices

13 MIPS Adjustment Factor Scoring More Penalties than awards Threshold = 50 More awards than penalties - 4% - 3% - 2% - 1% 0 + 1x + 2x + 3x 37 APMs APM s are require providers to take on more than nominal financial risk Must represent 25% of Medicare reimbursement Includes programs created by the CMS CMMI: Advance Payment (ACO) Model Medicare Shared Savings Program ACOs Health Care Quality Demonstration Program All CMS Innovation Center initiatives except Health Care Innovation awards Patient Centered Medical Homes (PCMH) Additional financial incentive of 5% Medicare reimbursement lump sum 38 APMs Additional financial incentive of 5% Medicare reimbursement lump sum APM entity must require that participants use certified EHR technology Includes $20M per year of technical support funding for smaller practices from 2016 through 2020 to help them participate in APMs 39 13

14 APMs 40 Case Study MIPS or APM? 36 Provider multispecialty group, 6 mid-level providers 54% Medicare Payer Mix, 21,000 Medicare Beneficiaries Current Medicare revenue of $10,241, Case Study MIPS or APM % lump sum, no downside risk +9% -9% 42 14

15 Case Study MIPS or APM Higher Risk = Higher Reward 43 Case Study MIPS or APM $5.4M $3.2M -$5.4M 44 Case Study MIPS or APM The variance between high performing practices and low performing practices will be 40% within seven years $16.4M 45 15

16 Forward MIPS practices still have 9% of their Medicare revenue at risk MIPS: Fee Schedule increases of 0.25% year over year APM: Fee Schedule increases of 0.75% year over year Fee Schedule Impact Fee Schedule Impact 48 16

17 Summary through 2026 APM Worst Case: $0 Best Case: $3.2 M Fee Schedule Increase of $1.2 M MIPS reporting requirements waived MIPS Worst Case: -$5.46M Maximum 9% Opportunity: $5.46M Exceptional Performance: $16.4 M Fee Schedule Increase of $395, Take Home Action Steps Ascertain Physician engagement level - this is a foundational step Analyze and understand your QRUR reports Explore existing and eligible APM programs that can apply to your physician enterprise Understand your position from a technology perspective to handle these value-based programs Identify the strengths and weaknesses with your existing care management program Determine your capability to effectively manage these new revenue streams Assess organizational cultural readiness for value-based methodologies Leverage Medicare value-based experience to inform your strategy and posture your future relationship with commercial payers 50 Questions Doral Jacobsen Senior Manager, DHG Healthcare D Doral.Davis-Jacobsen@dhgllp.com Kathy Rhodes Manager, DHG Healthcare D Kathy.Rhodes@dhgllp.com 51 17