Will Bundled Payment Become Medicare Medicare Bundled Pmt. Heart - - PDF document

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Will Bundled Payment Become Medicare Medicare Bundled Pmt. Heart - - PDF document

Nov 22, 2022 114 likes •205 views

Overview Primer on Medicare bundled payment Early experiences and emerging trends Medicare Bundled Payment: Risks, Opportunities & Future Implications Opportunities for improved efficiency Managing financial risk Robert Mechanic,

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Medicare Bundled Payment: Risks, Opportunities & Future Implications

Robert Mechanic, MBA The Estes Park Institute February 10, 2015

Overview

  • Primer on Medicare bundled payment
  • Early experiences and emerging trends
  • Opportunities for improved efficiency
  • Managing financial risk
  • Selecting bundles
  • Perspectives and discussion

Brandeis University

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Medicare Inpatient DRGs Private Efforts: ProvenCare Prometheus Medicare Acute Care Episode Demo Affordable Care Act 1983 2007 2011 1993 2009 2010 Medicare Heart Bypass Demo Bundled Pmt. for Care Improvement

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A Brief History of Bundled Payment

2014

Will Bundled Payment Become the Next DRG System?

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Bundled Payment

Hospital or Integrated Network

$$$ Single payment to cover costs of episode of care (30, 60, 90 days)

Payer

$ $ $ $ $

Group is responsible for all care within the episode

Shared Accountability

Prospective

  • Target budget for each

episode

  • All providers paid FFS
  • Periodic CMS settlements

– Distribute surplus – Reclaim deficit

  • Health system decides

– Whom to contract with – How to distribute bonuses

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Hospital or Integrated Network

$$$

$ $ $ $ $

Retrospective

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Opportunities to Improve Margins

Primary

  • Reduce supply costs (e.g. implants)
  • Reduce unnecessary consults & testing
  • Reduce errors and complications
  • Reduce post‐acute care costs

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Conditional (dependent on backfill)

  • Reduce readmissions
  • Reduce length of stay

CMS Innovation Center: Bundled Payment Pilot

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90 day look‐forward Index Hospitalization Inpatient Professional Outpatient Professional

Professional services Inpatient Stays

Brandeis University

Readmission SNF

CMMI Bundled Payment Pilot

Model 1

30 ‐ 90 day look‐forward Index Hospitalization Inpatient Professional Outpatient Professional

Professional services Inpatient Stays

Brandeis University

Readmission SNF

CMMI Bundled Payment Pilot

Model 2

30 day look‐forward Index Hospitalization Inpatient Professional Outpatient Professional

Professional services Inpatient Stays

Brandeis University

Readmission SNF

CMMI Bundled Payment Pilot

Model 3

30 day look‐forward Index Hospitalization Inpatient Professional Outpatient Professional

Professional services Inpatient Stays

Brandeis University

Readmission SNF

CMMI Bundled Payment Pilot

Model 4: Prospective Payment

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Choices for Bundlers

  • Select bundles

– 48 bundles (encompassing DRG families) – Covering about 70% of Medicare payments – Must take all patients in selected bundles

  • Exclusions (not optional)

– Readmissions and Part B services – Revised and improved but ….. (328 for 469)

  • Select bundle length (30, 60, 90)
  • Select risk track

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Gainsharing

  • CMS gets first 2% of savings (90‐day episodes)
  • Additional savings can be shared between

facility, physicians, post‐acute providers

– Physician gain share capped at 50% of Medicare – No cap on other providers

  • Useful principals

– Quality gates to ensure clinical performance – Distribute based on contribution and performance

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Financial Model

2009 ‐ 12 Historical Cost Per Episode Target Price 2014

Episode Definitions Winsorization

CMS Discount

$18,200 $18,200

Settlement Actual FFS Cost

$17,300 $900

Update Factor*

* For illustration update = 1%/yr discount = 2% 15

BPCI Experience Year 1

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Initial BPCI Enrollment Was Modest

15 111 89 10

20 40 60 80 100 120

Model 1 Model 2 Model 3 Model 4

Number of Organizations at Risk in 2014

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2014 Model 2 Enrollment Was Limited

56 20 16 11 9 10 20 30 40 50 60 1 2 3 ‐ 8 11 ‐ 18 24 ‐ 48

Hospitals by Number of Episodes Selected

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Number of Episodes Selected in 2014

Source: BPCI participant file (July 24, 2014) downloaded from CMMI website.

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BPCI Experience in 2014

  • Program start delayed from Jan 13 to Jan 14.
  • New round announced ‐ LOI due April 2014
  • Q1 reconciliation files distributed in October

with many of surprises

  • Large bundler push back
  • CMS announces no downside risk for 2014

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BPCI Trend Factors: 2012‐ 2014 (Q2)

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Source: CMS M2 common template file for BPCI reconciliation 2014 Q2.

Applications for 2015

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  • Must commit to “risk” for at least one episode

by April 13

  • May add episodes up to October 1, 2015

Model 2 Model 3 Institutions 1,054 3,280 MD Groups 957 645 Total 2,011 3,925

Source: BPCI participant file (July 24, 2014) downloaded from CMMI website.

Model 2: Conveners for Hospitals

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Source: BPCI participant file (July 24, 2014) downloaded from CMMI website.

Model 2: Conveners for Physicians

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Source: BPCI participant file (July 24, 2014) downloaded from CMMI website.

The Financial Opportunity of Bundled Payment Medicare Spends a Tremendous Amount in the 30 – 90 Days After Patients Are Discharged from the Hospital

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Medicare Post Acute Care Spending

Hospital IP Professional Post‐Acute Hospital OP

2012 Medicare Spending by Type

21%

Source: MedPAC, 2014 Data Book (Charts 1‐1, 8‐2).

Hospital IP Professional Post‐Acute

2008 Medicare Spending for Hospitalization plus 30 Days

34%

Source: RTI Inc, Post‐Acute Care Episodes: Expanded Analytic File, June 2011 p.216.

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$0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 Major Joint CHF COPD Renal Fail. PCI Spinal Fusion

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Average 2013 Medicare Inpatient Payments Select Episodes for Sample Hospital

Source: Brandeis University analysis of Medicare Claims.

$0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 Major Joint CHF COPD Renal Fail. PCI Spinal Fusion Index Admission Post Acute

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  • Avg. 2013 Medicare 90‐Day Episode Price for

Index Stay & Post Acute: Sample Hospital

29% 45% 70% 71% 69% 48%

Source: Brandeis University analysis of Medicare claims data.

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Thinking About Post‐Acute Care There is Significant Variation in Post‐Acute Care Spending Across Hospitals …. …. And Many Opportunities to Reduce Post‐Acute Care Spending

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Average 2009 Post‐Acute Care Spending per Episode for Total Joint Replacement (90 day)

$0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 A B C D E F G H I J K L M N O P Q R

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Source: Brandeis University analysis of Medicare Claims data. Figures adjusted for hospital wage index.

$6,000 $12,000 “St. Minimus” “St. Maximus”

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A Tale of Two Hospitals: Joint Replacement Episode

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Source: Brandeis University analysis of Medicare Claims data. Unadjusted data.

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% Readmission Rate

  • Pct. SNF
  • Pct. Home Health
  • St. Maximus
  • St. Minimus

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A Tale of Two Hospitals: Joint Replacement Episode

Source: Brandeis University analysis of Medicare Claims data.

Opportunities for St. Maximus

  • Expand home health and reduce use of SNF

services where appropriate

  • Put a program in place to monitor patients

following discharge

– Medication reconciliation – Home assessment – Primary care visit within 7 days – Emergency plan for likely events

  • Consider preferred relationships with

collaborative & high value facilities.

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Picking Bundles for BPCI

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Considerations for Bundle Selection

  • Commitment level – learning or major strategy
  • Stability of year to year bundle prices

– Volume – Variation

  • Performance/spending relative to local market
  • Opportunity to reduce wasteful spending
  • Likely ability to effect clinical changes

Spending for Top Clinical Episode: 2009‐12

Source: Claims data from sample hospital.

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Episode Price vs. State Average

Note: Hospital mean and state mean are winsorized and normalized to a common wage index.

**: DRG Spending by Category

$0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000

Inpatient Part B Post Acute

Procedural Bundles Chronic Bundles

Illustrative Spending: Hospital vs. State

Note: All DRG bundle cost comparisons are unadjusted for geographic wage index. * Hospital spending for IRF/LTAC significantly exceeds state average.

Major Spending Categories for Surgical Bundles

Post‐Acute Spend: Hospital vs. State

Note: All DRG bundle cost comparisons are unadjusted for geographic wage index. * Hospital spending for IRF significantly exceeds state average.

Spending per Case for Surgical Bundles

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Spending per Case for Chronic/Medical Bundles

Post‐Acute: Hospital vs. State Episode Price Variance: Risk Track A

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Managing Financial Risk in BPCI

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Brandeis University

Illustration of Risk within a Bundle (or DRG)

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  • 14.0%
  • 12.0%
  • 10.0%
  • 8.0%
  • 6.0%
  • 4.0%
  • 2.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0%

0.2 0.4 0.6 0.8 1 1.2 100 - 250 500 - 750 1250 - 1499

25th 5th 75th 95th Percent Gain/(Loss) by Case Volume*

Impact of Random Variation on Year‐to‐Year Change in Average Episode Cost by Volume: Multiple Episodes

Risk Tracks for Winsorizatoin

  • Hospitals must choose one of three risk tracks:
  • Winzorization thresholds set at the national

level;

  • Hospital are responsible for 20 percent of

payments above the high‐end threshold for a given risk track.

A B C Lower Percentile 1% 5% 5% Upper Percentile 99% 95 % 75%

Winsorization Example: PNE (DRG 194)

$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000 $110,000

99th Percentile = $86,018 95th Percentile = $56,664

Mean = $17,029

75th Percentile = $26,469 Illustrative Case History in Base Period

Target Prices by Risk Track

$10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000

Major Joint Cardiac Valve Spinal Fus. CHF Pnemonia COPD Track A Track B Track C

  • 13% -9% -6% -10% -17% -16%

Percent Change in Target Price from Track A to Track C

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10000 20000 30000 40000 50000 60000 70000

1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81 86 91 96 101 106 111 116 121 126 131 136 141 146 151 156 161 166 171 176 181 186 191 196 201 206 Dollars 30-Day 90-Day

SNF Institutional Payments for CHF: 30 vs. 90 Days

Note: 2013 data for a sample hospital.

Payments per Case Shown from Low to High

Shorter Bundles Reduce Some Concerns

  • Clinically unrelated readmission costs
  • Long SNF stay costs
  • Out of area care costs
  • Inability to keep track of patients over

longer time periods

  • Outlier risk

But Less Savings Opportunity And 3% Discount Required

Discussion

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Questions

Robert Mechanic The Heller School for Social Policy & Management The Health Industry Forum Brandeis University mechanic@brandeis.edu www.healthforum.brandeis.edu

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