Living With Bundled Payments The End of the Beginning, or the - - PowerPoint PPT Presentation

Living With Bundled Payments

The End of the Beginning, or the Beginning of the End? Joshua Jacobs, JD, MBA

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Topics For Our Discussion

• An Overview of the CMS Innovation Center and

the Bundled Payments for Care Improvement (BPCI) Initiative

• The Windsor Bundled Payment Experience – From

Conceptualization to Operationalization

• Strategies for Succeeding in a BPCI World
• How Far Can the Bundle Revolution Go?

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Source: Washington Post

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The CMS Innovation Center

§3021 of the Affordable Care Act

• Focused on:
• Testing new payment and service delivery models
• Evaluating results and advancing best practices
• Engaging a broad range of stakeholders to develop additional models for testing

7 Categories of Innovation 1. Accountable Care 2. Episode-Based Payment Initiatives 3. Primary Care Transformation 4. Medicaid and CHIP 5. Medicare-Medicaid Enrollees 6. Accelerate the Development and Testing of New Payment and Service Models 7. Speed the Adoption of Best Practices

Overview

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Source: Health Care Advisory Board interviews and analysis.

Continuum of Medicare Risk Models

Bundled Payments Shared Savings Shared Risk Full Risk

• Hospital VBP Program
• Hospital Readmissions

Reduction Program

• HAC Reduction

Program

• Merit-Based Incentive

Payment System

• MSSP Track 1

(50% sharing)

• MSSP Track 2

(60% sharing)

• MSSP Track 3

(up to 75% sharing)

• Next-Generation

ACO (80-85% sharing)

• Next-Generation

ACO (optional full performance risk)

• Medicare

Advantage (provider- sponsored) Pay-for- Performance

• Bundled Payments

for Care Improvement Initiative (BPCI) Increasing Financial Risk

Continuum of Medicare Risk Models

Overview

Payment Targets Demonstrate Commitment to FFS1 Alternatives

CMS Sets Targets for Value-Based Payments

20% 30% 50% 2015 2016 2018

Aggressive Targets for Transition to Risk Percent of Medicare Payments Tied to Risk Models

80% 85% 90% 2015 2016 2018

FFS Increasingly Tied to Value Percent of Medicare Payments Tied to Quality

Medicare Shared Savings Program Patient-Centered Medical Home Bundled Payments for Care Improvement Initiative Examples of Qualifying Risk Models Hospital-Acquired Condition Reduction Program Hospital Readmissions Reduction Program Hospital Value-Based Purchasing Program Merit-Based Incentive Payment System Examples of Quality/ Value Programs

Overview

BPCI Participation Continues to Fluctuate

450 342 2,110 1574

Q4 2013 Q1 2014 Q3 2014 Q3 2015 Q1 2016

6,000+

26% 51% 18%

Acute Care Hospitals Physician Practices PAC Providers2

1) Bundled Payments for Care Improvement Initiative. 2) Includes SNFs, HHA, Inpatient Rehabilitation Facilities, and Long-term Acute Care Hospitals. 3) Does not add to 100% because Awardees not initiating episodes in BCPI are not included. Source: CMS, “Bundled Payments for Care Improvement (BPCI) Initiative: General Information,” February 2016; The Lewin Group, “CMS Bundled Payments for Care Improvement (BPCI) Initiative Models 2-4: Year 1 Evaluation & Monitoring Annual Report,” January 2015; Health Care Advisory Board interviews and analysis.

Total Number of BPCI1 Participants As of January 2016 Types of Organizations Participating in BPCI3 Episode Initiators as of January 2016

Overview What happened?

CMMI1 Program Requires Orthopedic Bundling in 67 Select Markets

1) Center for Medicare and Medicaid Innovation. 2) Critical Access Hospitals. 3) Bundled Payments for Care Improvement Initiative.

Orthopedic Bundling Now Mandatory

Key Program Features

Mandatory in 67 markets No application process; CAHs1 and BPCI2 Phase II participants exempt Retrospective bundle CMS will pay each provider separately, conduct annual reconciliation process Comprehensive episode Includes all related Part A and Part B services for 90 days post-discharge

The Comprehensive Care for Joint Replacement (CJR) Model

Focus on joints Average expenditure varies from $16,500 to $33,000 by geography

Program Timeline

July 2015 Program announced; comment period through September 8th April 2016 First performance year begins; no episode discount for first year 2017-2020 Downside risk incorporated; 1% discount in 2017, 2% for 2018 onward

$153M

Estimated savings to Medicare over the 5 years of the model

Source: Centers for Medicare and Medicaid Services; Advisory Board interviews and analysis.

Overview

Proposed Cardiac Bundles

200,000 beneficiaries $6 Billion in cost 50% spend variation

Program Timeline

Overview

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Windsor’s Journey to Bundled Payments

December 2013

• Learning more about Bundled Payments – discover a convening organization.
• Contact said convener – no real response

Early February 2014

• Convener’s representatives reach out to us because one of our SNFs is in their Model

2 market. Late February 2014

• Hospital and convener host information session for SNFs

March 2014

• Executive meeting at Convener’s offices – Open Enrollment ends in 4 weeks!

Real-World Experience

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Windsor’s Journey to Bundled Payments

April 2014

• Enroll with 3 different organizations:
• Convener #1
• Convener #2
• As our own Episode Initiator

July 31, 2014

• CMS Announces Pricing Data delay until October

August 2014

• Get Preliminary Pricing Data from Convener

October 2014

• Negotiate with conveners & select our partner

Real-World Experience

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Windsor’s Journey to Bundled Payments

Late October 2014

• CMS Announces Additional Pricing Delay Until Mid-November – This Dooms the

Looming Start Date of January 1, 2015

• Program start delayed until April 1, 2015

November 2014

• Technology Integrations

December 2014

• CMS (finally) send the pricing data

January 2015

• Not enough time to make Bundle Selection – CMS Offers new April 13 selection

deadline for a July 1 program start date

Real-World Experience Looming Deadline – January 26 to Select Bundles for April 1 Start

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Windsor’s Journey to Bundled Payments

April 2015

• Bundle Selection! 88 Episode Categories across 8 SNFs.

Real-World Experience

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Windsor’s Journey to Bundled Payments

Late April 2015

• Whoops. CMS announces they made another error. We now have an option to add

bundles for an October 1 star. Double-check our selections again prior to May 1. Decide on ‘placeholder’ bundles for now, and more to follow. July 1, 2015

• Program launches with 8 ‘placeholder’ bundles.

October 1, 2015

• Launch with 88 bundles

Real-World Experience

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Windsor’s Experience With BPCI

External Challenges

• Dependency on Anchor Diagnosis information
• Other key participants in an Episode don’t share our risk
• Trumping Rules

Internal Challenges – the C-suite Real-World Experience

What we said What they were thinking Bundled payments are the future! Why be the guinea pig? We are going to take on risk for our

• utcomes!

What was wrong with Fee For Service? CMS is incentivizing us! After they take a 3% haircut? We’ll get paid more if we empty our beds faster! Your going to dry up our revenue stream? CMS will send us a retrospective bonus! Ha!

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Operational Challenges

Success in Bundled Payments depends largely on 2 factors:

• 1. Few Hospital Readmissions
• 2. Low Length of Stay

Less Significant Factors Include:

• Part B Billing
• Home Health Costs
• Medical Equipment Costs

Real-World Experience

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Operational Challenges

Who is in a Bundle?

• Hospital Anchor DRG is determinative
• If you are only bundling selected patients, knowing the Anchor

DRG is very important

• However, getting accurate information is harder than it looks

The other Trump

• Your risk-program may interfere with goals of key decision makers

at your referral partners

Real-World Experience

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Changes for BPCI

Discharge Planning Begins on Admission Treating in-Place is a Huge Priority Better Collaboration with Home Care Technology Integrations Making Sure Team Members Understand the Financial Consequences of Decisions

Real-World Experience

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Real-World Experience

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Expansion of Bundled Payments

CMS Has Made Their Intentions Very Clear

• Risk-based payments are already exceeding targets
• Proposed Expansion to Cardiac Procedures
• The data being collected by all of the voluntary BPCI programs will

be used to build the framework for additional mandatory programs in any of the 48 DRGs. This is true even though the evidence for cost savings under a bundled regime is not very convincing.

What’s Next?

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Bundled Payments - Winners

There Will Be Big Winners

• Hospitals and medical groups who ‘own’ the bundle
• Care management companies
• Post-Acute providers that can demonstrate very low cost
• Post-Acute providers that do care management well
• Physicians that don’t generate large Part B billings
• Outpatient surgery centers
• Anything that can do it for less

What’s Next?

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Bundled Payments - Losers

There Will Also be Losers

• Safety-Net Hospitals (they always lose, don’t they?)
• Hospitals – physicians may skip the hospital entirely
• Post-Acute Providers
• SNF
• Home Care
• Physicians that cost more than their peers
• Anyone that threatens the pie by costing more to the risk-bearing

entity

What’s Next?

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Thinking About Bundles Strategically

• A 90-day episode is hard to manage! Position yourself as the

solution

• Know your costs, outcomes, and share your $$ value proposition in

a simple way

• Try to find a way to join in the risk. Align your incentives
• Specialize
• Don’t wait for the Bundling entity to figure out a way to do it without

you.

What’s Next?

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Questions?

jjacobs@windsorhc.com

Want to go deeper?

For a great article of the strategic implications to our healthcare system of Bundled Payments, I highly recommend Michael Porter’s article in the July-August Issue of the Harvard Business Review – “How to Pay for Healthcare”

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