1 Payment Reform Update and Risk Readiness 2 Landmarks in the - - PDF document

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Medicare’s New Pathway for ACOs

Eric Rogers, Director BKD

Health Care Performance Advisory Services

Morie Mehyou, MBA, CPA (Inactive)

Baptist Health UAMS Accountable Care Alliance

HFMA Arkansas Chapter Meeting

April 11, 2019

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Payment Reform Update and Risk Readiness Landmarks in the “Pathways to Success” Final Rule Baptist Health UAMS Accountable Care Alliance

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Financial Implications

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Payment Reform Update and Risk Readiness

3 Incentive Bonus Penalties Episodic Care ACO Capitation Full Risk Direct to Employer

Hospital executives agree that the current FFS reimbursement model is changing and preparation is needed to survive the transition to value- based care, however, the timing and method of preparation vary greatly from provider to provider

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CMS MSSP Experience Past 5 Years

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Savings Patterns Number Percent No savings 57 15% 4 years of losses then savings 53 14% 3 years of losses then savings 87 23% 2 years of losses then savings 55 15% 1 years of losses then savings 55 15% 5 years of savings 39 10% Other patterns 30 8% 376 100%

Major Payer Perspectives

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Major Payer Perspectives

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• Strategic planning
• Assigning workgroup and accountable executive(s)
• Leveraging data
• Engaging physicians
• Building post-acute networks
• Focusing on quality and care coordination
• Participating in a voluntary CMS program
• Bundles
• ACO
• CPC+
• Engaging large employers and MA plans
• Starting a provider owned health plan

How are hospitals preparing for the transition?

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Landmarks in the “Pathways to Success” Final Rule

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Basic Track Enhanced Track A B C D E

Up to 40% sharing rate based on quality, not to exceed 10% benchmark Up to 40% sharing rate based on quality, not to exceed 10% benchmark Up to 50% sharing rate based on quality, not to exceed 10% benchmark Up to 50% sharing rate based on quality, not to exceed 10% benchmark Up to 50% sharing rate based on quality, not to exceed 10% benchmark Up to 75% sharing rate based on quality, not to exceed 20% of benchmark Upside only Upside only 1st dollar losses at 30%, not to exceed 2% of revenue capped at 1% of benchmark 1st dollar losses at 30%, not to exceed 4% of revenue capped at 2% of benchmark 1st dollar losses at 30%, not to exceed 8% of revenue capped at 4% of benchmark in 2019 and 2020* 1st dollar losses at 40–75%, not to exceed 15% of benchmark MIPS APM MIPS APM MIPS APM MIPS APM Advanced APM Advanced APM

Baptist Health UAMS Accountable Care Alliance - Pathways to Success Options

Options Agreement Period Track Selection Decision Time Table Benchmark base 34,000 x $10,800 (2019 Estimate) MSR/MLR Max Saving Rate Max Loss RateGain Max RateLoss Max Rate Gain Limit Loss Limit Option 1 - Do Nothing to renew agreement Current Agreement 1-1-2018 to 12-31, 2020 Continue with current agreement until December 31, 2020 July 1, 2019 367,200,000 1% 50%

• 30%

10%

• 4%

36,720,000 (14,688,000) Option 2 - Sign up for 5 year agreement Pathways to Success Enhanced starting 1-1-2021 Current Agreement 1-1-2018 to December 31, 2020 New 5 years agreement 1-1-2021 - 12-31-2025 Enhanced Track (no other option will be available if we waited past July 1 2019 July 1, 2020 367,200,000 1% 75%

• 40%

20%

• 15%

73,440,000 (55,080,000) Option 3 - Renew for 5 years - Pathways to Success Track "E" starting 1-1-2020 (Available only during open enrollment in 2019) Current Agreement 1-1-2018 to December 31, 2019 New 5 years agreement 1-1-2020 - 12-31-2024 Basic - Level "E" (this option is

• nly available if we make a

decision after open enrollment 7- 1-2019 July 1, 2019 367,200,000 1% 50%

• 30%

10%

• 4%

36,720,000 (14,688,000) YEAR 2019 2020 2021 2022 2023 2024 2025 MONTH M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D Option 1

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1 YEAR REMAINING EXISTING CONTRACT Option 2

X

SAVINGS RATE OF 75% - LOSS RATE 40% = MAX SAVINGS 73M / MAX LOSS 55M EVERY YEAR FOR 5 YEARS Option 3

X

SAVINGS RATE OF 50% - LOSS RATE 30% = MAX SAVINGS 36M / MAX LOSS 15M EVERY YEAR FOR 5 YEARS X Decision point to make to continue with ACO

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Benchmark Expenditures and Risk Adjustment Methodologies

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• CMS will maintain the overall approach to establishing and rebasing

benchmarks based on expenditures from three benchmark years leading up to an agreement period using four beneficiary categories

• In this rule CMS finalizes a policy to incorporate regional expenditures

into benchmarks sooner, beginning with initial agreement periods for agreement periods beginning on July 1, 2019, and in subsequent

• years. Regional Adjustment rates:
• First agreement period 15-35 percent
• Second agreement period 25-50 percent
• Third agreement period 35-50 percent
• Fourth and subsequent periods 50 percent
• HCCs

Patient Attribution

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• Voluntary alignment
• E&M and other HCPCS

codes

• Newly and continuously

assigned

• 4 Beneficiary Categories
• ESRD
• Disabled
• Aged, Dual Eligible
• Aged, Non-Dual

Eligible

• SNF three-day waiver
• Post-acute network
• Telehealth
• Physicians
• MIPS/A-APM
• Beneficiary incentives

Waivers & Benefits

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2018 to 2019 Attribution Changes by Age Group

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1,540 2,518 1,425 591 6,074 4,134 10,201 7,172 2,904 24,411 2,427 5,062 2,226 837 10,552 5,674 12,719 8,597 3,495 30,485 6,561 15,263 9,398 3,741 34,963 <65 65-75 76-85 > 85 TOTAL Dropped in 2019 In 2018 and 2019 New in 2019 2018 NET 2019 NET

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25.35% 16.93% 23.00% 18.61% 18.77% 41.46% 41.79% 47.97% 41.72% 43.65% 23.46% 29.38% 21.10% 28.20% 26.88% 9.73% 11.90% 7.93% 11.46% 10.70% 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00% Dropped in 2019 In 2018 and 2019 New in 2019 2018 NET 2019 NET

ATTRIBUTION DISTRIBUTION BY AGE CATEGORY COMPARE 2018 TO 2019

<65 65-75 76-85 > 85

Comparing 2018 to 2019, Increase in 65-75 Age Group And Decrease in over 76+ YR Groups. Need to Focus on Accurate Documentation to ensure Accurate HCC Scores

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Background

• Traditional Medicare Patients
• Started January 1 2018 for 3 years contract

with CMS

• Joint effort by BH and UAMS to:
• Reduce exposure to risk
• Learn more about how to operate under a

risk model with selected set of population (Traditional Medicare patients)

• Share ACO operation cost
• Find other opportunities in improving patient

care and operation efficiency

• Baptist Health (BH) is a faith based healthcare

system and the largest health care provider in the state of Arkansas

• University of Arkansas for Medical Sciences

(UAMS) is the only academic health sciences university in the state of Arkansas

• Locations and access points throughout the

state of Arkansas

• Combined over 18,000 employees
• 35,000 Medicare lives with benchmark of

$10,761

• At Risk Track 1+ with 1% MSR/MLR With No

SNF waiver – 1st year 2018

• Qualify for Alternative Payment Model (APM)
• Provide better coordinated care for Arkansans
• Share learning experience in value based

models using claims data and decision support tools

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Who we are Where we are from What we do Why we do it

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2018 Summary

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Contract duration Three years (Jan 2018 – Dec 2020) MSR/LSR 1% ( estimate 3.5M) Base Benchmark per patient 10,761 Shared Saving / Loss rate 50% / 30% Number of lives 32,401 Maximum saving / Loss 10% / 4% of actual spend Estimated benchmark spend for 2018 333M Financial goal for 2018 Reduce spend by more than 1%

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Shared Savings Economic Model “….. But if less is more, how you're keeping score?....”

Eddie Vedder, Society

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ACO Financial Data Sources

Monthly CCLF Files

• Lots of claim level details
• Require a robust and highly technical IT platform to

manage data

• Generally about 30 – 90 days lag from date of service
• CCLF Files do not have all services and expenditures

associated with attributed lives – Missing:

• Substance Abuse spend
• Spend relating to those that opted out of sharing their data
• Non-Claims payment (change in 2019)
• CCLF Files do not account for:
• Truncation
• Run-out claims

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ACO Financial Data Sources

CMS Quarterly Performance Reports

• Contain comprehensive summaries of activities
• Summary reports take into consideration several

key expenditures that are not provided in the CCLF monthly files

• Substance abuse spend
• Patients that Declined data sharing spend
• Truncation
• Run-out spend
• Data is presented as summaries and ratios
• Reports arrive much later after quarter end
• Difficult to reconcile to monthly CCLF files

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Why compare both sets of data sources?

• Get a better understanding how data is used
• Building a financial model that can be used earlier in the

year before any CMS quarterly reports are issued

• Start the process in March or April
• Provide meaningful reports to the Board and other

stakeholders

• Assist in making determination to terminate contract

within optimal time avoiding costly continuation of a bad contract

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Building the Model

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Thank You!