0 ascendient the maryland model – strategic considerations for a fixed payment system september...

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Ascendient

The Maryland Model – Strategic Considerations for a Fixed Payment System

September 30, 2015

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www.nchastrategicpartners.org

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October 8, 2015 Webinar

The Maryland Model – Strategic Considerations for a Fixed Payment System

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Guide for Today’s Discussion

Introductions

History of Maryland Model

Current Model Structure

Initial Progress & Lessons Learned

Implications & Near-term Considerations for NC

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Our Firm:Health and Healthcare Focus

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Our Firm:Locations

National HarborMaryland

Quadrangle Office ParkChapel Hill

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Today’s Presenters

Brian Ackerman, MHA

Principal

National Harbor Office

Daniel Carter, MBA

Principal

Chapel Hill Office

History of the Maryland Model

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History...the Old Model

• Maryland - Only state where hospitals (and insurers) don’t decide how much to charge for care

• Health Services Cost Review Commission – Establishes hospital rates...all payors must pay the same rate

• 26 Percent – The amount Maryland hospitals were above the national average cost per discharge in 1976

• Medicare waiver – Maryland hospitals “waived” from Federal Medicare payment models

• Criteria – Waiver to remain in place as long as: The system remains “all-payor” Inpatient payments per Medicare discharge grow

at a rate less than the nation

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The Old Model...Results

Source: Maryland HSCRC

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The Old Model...Results

Source: Maryland HSCRC

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The Old Model...Limitations for a Future Delivery System

Inpatient Only

Medicare Only

Cost per Unit/ Hospital Stay

Current Model Structure

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Current Waiver...Why it Should Matter to You

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Current Waiver...Shifting Focus

Old ModelWaiver

Modernization

Inpatient Only

Care Focus All Hospital Care

Payor FocusMedicare Only All payers

Metric FocusCost per Unit/ Hospital Stay

Total Cost of Hospital Care

& Quality

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Waiver Modernization: What it Means for Maryland Hospitals

Global Payment Model linked to total hospital revenue received

from all payors

Ceiling (and floor) placed on a hospital’s total revenue based on recent top-line performance

E.g. If your total revenue was $200M last year, it will be

$200M next year...with some slight adjustments

More volume does not create more revenue...only increased expenses and lower margins

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Waiver Modernization:How Hospital Revenue is Calculated

Base Year Revenue

X Adjustments

Allowed Revenue

Global Payment Model

• Population growth

• Quality scores

• Shift to unregulated setting

• Service level changes (e.g. program closure)

• Market share changes

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Waiver Modernization:Terms of Agreement with Medicare

• Must achieve $330M Medicare savings over five years

• Maryland’s all-payer per capita total hospital cost growth limited to 3.58%...10-year CAGR for per capita GDP

• Limit total Medicare spending in Maryland to no more than national growth

• Reduce Maryland readmission rate to national average within five years...currently ranked 49 of 51 in the U.S.

• Reduce hospital-acquired conditions by 30 percent within five years

• If Maryland fails during five-year performance period, hospitals will transition to national Medicare payment systems

Initial Progress & Lessons Learned

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Waiver Modernization:Recent Performance Dashboard

Source: www.mhaonline.org

Medicare savings to-date: Estimated at ~$100M

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Waiver Modernization:Additional Performance Measures

Operating profits

$71M or 15%

Operating margin 1%

# of Hospitals w/ Losses

10 to 7

Hospital Admission

s

4.1%

Potentially Avoidable Admission

s

6.0%ED Visits Flat

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What’s Changed

Increased use & availability of:

• Health coaches

• In-home post-discharge visits

• Social workers in the ED

• Transportation to primary care appts.

• Nurse hotlines

• Bedside prescription delivery

• Subsidized medicationsPriority on partnerships:

• Strengthened collaboration and coordination with primary care and SNFs

• Meaningful health coalitions

• Physician education

• Increased data sharing

Population health focus:

• Additional wellness initiatives

• Expansion of mental health & substance abuse clinics

• Use of predictive analytics

• Additional mobile clinics

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What’s Changed:Focus on Chronic Disease Management

Understanding of most at risk/costly patients In-home visits after discharge, to connect people with

needed support and resources Free or reduced-cost clinics for underserved patients with

chronic diseases (including mental health and substance abuse)

Tele-health monitoring for chronic disease management Increased community health education

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What’s Next for Maryland?

Waiver expansion...to physicians,

unregulated settings, post-acute providers

Implications and Near-Term Considerationsfor North Carolina

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So...What Does it All Mean?

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Reset Your Expectations...Discharges will Continue to Decline

Current Discharges

Population Change

ACSAs PSAs Misc. Conditions Medicare Readmissions

2025 Discharges0

5,000

10,000

15,000

20,000

25,000

Dis

cha

rge

s in

Avg

. N

C M

ark

et

Growth in discharges Decline in discharges

Source: Ascendient “Healthytown” predictive modeling based on DRG-specific data from Truven

20%-

25%

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Reset Your Expectations:Healthytown 2025

A complete copy of the report can be found at:

http://ascendient.com/2015/08/healthytown-usa/

Healthytown, USATransformation of Healthcare Delivery in a Statistically Average American Community

35%ED Visits

86%Primary Care Utilization

46%

Primary Care Physician Demand

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Rethink How/Where You Will Grow

Although uncertainty around future payment methods still remains, we are clearly moving away from a system that rewards volume:

Reduced Re-admissions

Bundled Payment

ACOs or “ACO-like”

organizations

What it Looks Like

Volume Based

Outcome BasedPayment

Method

Key Implication: Most of today’s revenue centers will be tomorrow’s cost

centers

Fee-for-service

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Redefine Traditional Definitions

LEAN within our departments

LEAN-mindset across the community

Efficiency

A nice thought A requirementCollabor-

ation

Of patients/volume

Of covered livesMarket Share

As a consideration As a priorityFlexibility

Past Future

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Learn to Accept Greater Risk...Quickly!

Hospitals & Health Systems

Commercial Payors,Federal & State Payors

Risk

Where to start?1. Begin where you’re already at risk...employees, self-pay2. Leverage pilot programs, where appropriate

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Learn to Accept Greater Risk...CMS Comprehensive Care for Joint

Replacement (CCJR)

• Medicare’s first mandatory bundled payment model• Applies to hip and knee replacement patients• Will hold hospitals accountable for the quality and cost of care

through 90 days post-discharge• Applies to hospitals within 18 NC counties• At conclusion of transition period payment will be regionally

based: Within the South Atlantic, 69% of CCJR hospitals have episode

spending above the regional average*

Sources: *ww.avalere.com; ^Excerpt from Ascendient work plan

Assess Data/ Know Where you Stand

Assess Your Alternatives

Develop Your Narrow Network

Implement & Monitor

Phases of Preparation^

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So...What Should We Be Doing Today?

1. Enhance and expand collaborative efforts across the continuum

2. Know who your most at-risk patients are...establish proactive processes for intervention, follow-up, and monitoring

3. Build flexibility into new provider contracts

4. Start managing the health of those populations for which you are already at risk

5. Build your IT infrastructure:a) Can you track the cost/utilization of a patient across

your system?

b) Can you track the cost/utilization of a patient across your community?

c) Are you collecting information necessary to support future predictive analytics efforts?

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What Hospitals in NC Are Already Doing

• Developing profiles of all providers/facilities within the community and prioritizing those for collaboration

• Establishing structure to develop physician leaders... particularly within primary care

• Developing processes and structure to most fully leverage advanced care practitioners

• Piloting population health management initiatives on employees

• Centralizing services and/or reducing unnecessary duplication across the system

• Developing “Gap” assessment related to the competencies necessary for participation in a clinically integrated network

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And in Conclusion...Always Remember

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Thank You!

Brian Ackerman

brianackerman@ascendient.com

240.776.4752

Daniel Carter

danielcarter@ascendient.com

919.403.3300