bundled payments in healthcare – the next generation live webcast
TRANSCRIPT
Speaker Firms and Organization:
Association of American Medical Colleges
Jessica Walradt, M.S.
Senior Payment Reform Specialist
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Presented By:
March 12, 2015
1
Partner Firms:
Pershing Yoakley & Associates, P.C.
Christopher Wilson
Senior Manager
Association of American
Medical Colleges
March 12, 2015
2
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Partner Firm:
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As a professional corporation with 30 principals, PYA’s team of resources is more than 175 strong and continually growing. PYA’s people
have backgrounds and degrees in nursing, healthcare administration, public health, medicine, economics, finance, management, accounting,
tax, and law. Several have extensive prior experience with other healthcare-related organizations, and have specialized training in clinical
medicine, clinical coding, and regulatory matters.
Because of PYA’s focus on client service and the highly motivating environment in which it operates, PYA has been very successful in
recruiting dedicated and experienced people from national consulting firms and healthcare organizations.
Leveraging the diverse experience and expertise of its people allows PYA to gain a unique perspective on the industry and marketplace. PYA
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compelling reasons for selecting the firm:
• PYA has built one of the largest dedicated healthcare consulting practices in the nation.
• PYA utilizes experienced professionals to achieve superior results in a cost effective and timely manner.
• PYA determines success not by completion of individual projects, but by the ultimate success of its clients.
This, combined with PYA’s unmatched knowledge of the strategies and operational goals being implemented today by healthcare providers
and businesses, makes it the firm of choice.
Partner Firm:
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Association of American
Medical Colleges
Brief Speaker Bios:
Christopher Wilson
Chris Wilson, JD, MPH, works with healthcare organizations to address strategic issues in an evolving market. He uses his unique
combination of consulting and legal experience to design and implement clinical integration initiatives, public policy projects, mergers
and acquisitions, and governance strategies. Chris also provides advisory services in the area of healthcare information technology
and best practices in the delivery and measurement of evidence-based care for providers.
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Jessica Walradt, M.S.
Jessica serves as the AAMC’s Alternative Payment team’s policy content lead. In this role, she supports academic medical centers’
involvement in the Bundled Payments for Care Improvement initiative using data and policy analyses to explain financial trends and
provide strategic advice regarding episode selection and risk mitigation. Jessica also utilizes the lessons from this work to inform
AAMC’s advocacy efforts.
Prior to this, Jessica spent two years as a Health Policy Analyst helping providers to navigate federal ACA regulations and complex
Medicare payment policy issues. She also completed graduate internships with the White House Office of Management and Budget’s
Health Division and Partners HealthCare’s Finance Department.
Jessica holds an M.S. in Health Policy and Management from the Harvard School of Public Health and a B.A. in Political Science from
the University of Richmond.
► For more information about the speakers, you can visit: http://theknowledgegroup.org/event_name/bundled-payments-in-healthcare-the-next-generation-live-webcast/
A bundled payment is a single re-imbursement to a healthcare provider for all clinical services related to a single instance of medical care and away from fees-for-service.
Bundling of payments to healthcare providers will be used more frequently to reduce the cost of healthcare in the United States. Theoretically, bundled payment schemes will improve
the quality of care, reduce un-necessary care, and reduce variation in cost among payers. However, research results are varied. Pilot projects such as Prometheus have been slow to
develop because of the difficulty of agreeing upon which services can be bundled.
Provisions for bundled payments are included in both the Patient Protection and Affordable Care Act (PPACA) and the Affordable Health Care for America Act (AHCAA). The PPACA bill
established a national Medicare program in 2013. The AHCAA bill requires reform of Medicare payments for post-acute services, including the bundled payments.
Healthcare legal counsel face a number of legal and regulatory issues in structuring bundled and gain-sharing payment systems. The legal challenges arise from insurance, state laws,
provider relationships, and fair market value dis-agreements. In the past, these arrangements were found potentially to violate the Anti-Kickback statute and Civil Monetary Penalties
Act.
Our panel of skilled practitioners will review bundled payment schemes and discuss the advantages and disadvantages of the schemes. The panel will discuss operational and
regulatory concerns for healthcare providers, critical provision documentation, the effects of healthcare reform and other recent legislative, regulatory, and enforcement activities. Also
addressed is gain-sharing.
Key Topics include:
• Public and Private Bundled Payment Initiatives & Gain-sharing Arrangements
• Bundled Payments Programs and Current CMS initiatives
• Implementation and Operational Challenges
• Accountable Care Organizations (ACOs) and Bundled Payments
• Medicare Bundled Payments for Care Improvement (BPCI) Initiative
• Bundled Payment Transparency and Risk Arrangements
• Bundled Payment Documentation, Data Analysis, & Reporting
• Legal and Regulatory Compliance Issues
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Featured Speakers:
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SEGMENT 1:
Christopher Wilson
Senior Manager
Pershing Yoakley & Associates, P.C.
SEGMENT 2:
Jessica Walradt, M.S.
Senior Payment Reform Specialist
Association of American Medical Colleges
Introduction
Chris Wilson, JD, MPH, works with healthcare organizations to address strategic issues in an evolving market. He uses his
unique combination of consulting and legal experience to design and implement clinical integration initiatives, public policy
projects, mergers and acquisitions, and governance strategies. Chris also provides advisory services in the area of
healthcare information technology and best practices in the delivery and measurement of evidence-based care for
providers.
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SEGMENT 1:
Christopher Wilson
Senior Manager
Pershing Yoakley & Associates, P.C.
Agenda
• Basics of Bundled Payments
• Example Program:
Medicare Bundled Payment for Care Improvement Model 2
• Gainsharing Example
• Regularity Waiver Example
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SEGMENT 1:
Christopher Wilson
Senior Manager
Pershing Yoakley & Associates, P.C.
Basics of Bundled Payments
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The Basics Bundled Payments
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Admission Discharge End of “Episode” 30/60/90 days post discharge
$
$
$
$
$
Total Cost
of Care (TCC)
Post-Acute / Other
$ = Reimbursement (Not Internal Costs)
Basics of Retrospective Bundled Payments
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$
$
$
$
Historic Episode TCC
Discounted Episode TCC
Actual Episode TCC w/
Net Savings
Actual TCC w/
Net Loss
Discount
$ = Distributed to Providers $ = Repaid by Risk-bearing Entity
Public and Private Payer Activity
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Medicare Bundled Payment
Opportunities:
• Bundled Payments for Care
Improvement (BPCI) Program
• Physician on-ramp toward
alignment and value-based
purchasing
• 48 episodes available
• Claims data for population health
analytics
• Infrastructure to build commercial
contracts
• New outpatient pilot in
development
Commercial Payer / Large
Employer Opportunities:
• Vary by market, payer, and
employer-sponsor
• Favor cardiac, orthopedic,
and spine procedures
• Access to data for
population health
strategies
• Infrastructure to build
tiered or narrow networks
Primary Bundled Payment Opportunities
• Unnecessary/Avoidable Utilization
– Readmissions
– Post-Acute
– Ancillaries
• Lower Cost Care Setting
– SNF v. IRF; HHA v. SNF
– But “strike the right balance”
– Consider Provider-Based Billing Impact
• Internal Variable Costs
– e.g., supply chain, materials management
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Bundled Payment Hospital Economic ROI
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INVESTMENTS RETURN
• Price Discount
• Program Costs
• Foregone Revenue
Possibility
• Net Payment
Reconciliation Amount
• Internal Variable Cost
Reductions
• Hospital
Gainshare
• Spillover Effects
• E.g., reduced LOS
• Market Share Gains
Often Significant Non-Economic, Strategic Returns
High-Level Episode Selection Decision Guide (more to come)
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Economic Opportunity
Strategic Opportunity
Avoid
Cost / Benefit / Learn
Cost / Benefit / Learn
Strongly ConsiderEconomic
Strategic
Economic
Strategic
Economic
Strategic
Economic
Strategic
Engaging Physicians in Bundled Payments
• Establishing Trust Among Parties
• Creating a Business Case for Participation
– “Fair” Gainsharing Model
• Recognizing Unique Challenges of Engaging Physicians
• Identifying Physician Leadership
• Timing Discussions is Critical
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Example Program:
Medicare Bundled Payment for Care
Improvement Model 2
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Medicare Bundled Payments for Care Improvement (“BPCI”)
• First group of applicants were enrolled on January 31,
2013; went live Q4 2013
• Largest voluntary Medicare payment innovation program
• Payment arrangements include financial and performance
accountability for episodes of care
• Enables gainsharing among collaborating providers
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Model 2: Inpatient Stay + Post-discharge Services
• Episodes initiated through “anchor” DRGs
• Episodes include the inpatient stay in the acute care hospital and all services
during the episode
• Episodes end 30/60/90 days after hospital discharge
• Retrospective comparison of target price and actual FFS payments
– Baseline and Target Prices based on provider’s own payments and trended
forward by national trend factor
• Required Discount: 2-3% off historical TCC
• Eligible Beneficiaries: Medicare FFS as Primary insurer
– No End Stage Renal Disease (ESRD)
– No Medicare Advantage
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Model 2: Services (Costs) Included
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– Physician
– Inpatient hospital
– Inpatient hospital
readmission
– Long term care hospital
(LTCH)
– Inpatient Rehab Facility
(IRF)
– Skilled nursing facility
(SNF)
Home health agency (HHA)
– Hospital outpatient
– Independent outpatient
therapy
– Clinical lab
– Durable Medical
Equipment (DME)
– Part B Drugs
Model 2: Risk Tracks
• “Risk Tracks” for Each Episode Selected to Establish Risk
and Inclusion of Outliers
– Bear 100% of risk up to risk track threshold
– Bear 20% of payment above the threshold
• I.e., 20% of episode payments above the threshold are included in reconciliation
calculations
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Risk Track Upper %ile TCC Limit Suggested Focus Notes
A 99th Care Management of High Cost Cases
Higher Target TCC, Higher Discount
B 95th
C 75th Internal Cost Savings
Lower Target TCC, Lower Discount
Implementation Protocol Components
• General Information
• Care Redesign and Implementation Plan
– Model Plan
– Care Redesign Interventions
• Gainsharing
• Fraud and Abuse Waivers
• Beneficiary Incentives
• Payment Waivers
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Gainsharing Example
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What is BPCI Gainsharing?
Gainsharing is an arrangement among BPCI participants that allows the
awardee to distribute to physicians (or non-physician practitioners) a
share of the gains that result from collaborative efforts to improve quality
and efficiency.
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“Typical” Gainsharing Structure
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Physician Group BAwardee
Agreement
Physician Group A
Individual Physician(s)
Participant Agreement + Gainsharing Agreement
Gainsharing Agreement
Gainsharing Agreement
Awardee (e.g., health system, hospital)
Sources of BPCI Gainsharing Payments
Gainsharing payments can come from:
• Internal cost savings (ICS)
• Episode reconciliation payments (NPRA)
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Gainsharing Pool Options
Can be by episode, by
group of episodes, by service
line
BPCI Gainsharing Cap =
50% of Medicare Part B Payments
Gainsharing payments made to individual physicians during a calendar
year are capped at 50% of the total Medicare approved amounts under
the Physician Fee Schedule for services furnished by that physician to
the Awardee’s BPCI Model 2 beneficiaries during the portion of a calendar
year when the physician is identified on the Gainsharing List after
CMS has confirmed the physician’s eligibility to participate in gainsharing.
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BPCI Gainsharing - Design
The Awardee must show:
• How gainsharing supports care re-design
• Methodology—how shared, with whom, frequency
• No limitation of medically necessary care
• Transparent, auditable, voluntary
• Practitioners not required to participate
• Eligibility criteria based on quality standards
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BPCI Gainsharing - Quality
• Minimum quality standards must be maintained or improved
• Awardee must identify:
– Minimum quality thresholds
– Quality monitoring process
– Metrics for improving quality
• Criteria for eligibility/ineligibility
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Regulatory Waiver Example
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BPCI Model 2 BPCI Waivers
• Fraud and Abuse Waivers
– Savings Pool Contribution Waiver
– Incentive Payments Waiver
– Group Practice Gainsharing Waiver
– Patient Engagement In-Kind Incentive Waiver
• Medicare Payment Policy Waivers
--Three-day hospital stay (for SNF) waiver
--Post-Discharge Home Visit
--Telehealth Waiver
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Fraud and Abuse Waivers
Waive application of Stark (as applicable), Anti-Kickback, and Civil Monetary
Penalties laws for the following:
• Savings Pool Contribution Waiver
-Contributions by Episode Initiating Provider (EIP) of internal cost savings
to the BPCI Savings Pool
• Incentive Payments Waiver
-Payments distributed from the BPCI Savings Pool
• Gainsharing Payments Made by Gainsharer Group to Gainsharer Group
Practitioners
• Patient Engagement In-Kind Incentives
-In-kind incentives from Awardee, EIP, or Gainsharer to Beneficiaries
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Fraud and Abuse Waivers
Process/Implementation
• Specific conditions and documentation requirements must be satisfied to
obtain the benefit of each waiver
• If these requirements are met, and the BPCI Agreement does not provide
otherwise, then the waivers will apply
• Waiver period begins on the Effective Date of the BPCI Agreement and ends
on the earlier of: (1) termination date of the BPCI Agreement; (2) expiration of
the last Performance Year + 6 months, or (3) 6 years + 6 months from the
Effective Date of the BPCI Agreement.
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Medicare Payment Policy Waivers
SNF 3-Day Hospital Stay Waiver
Waiver
• Allows beneficiaries to be eligible for Part A SNF services within 30 days of a hospital
discharge without spending 3 days in the hospital.
Implementation
• Awardee submits list of SNF partners with Implementation Protocol
• Majority of listed SNFs must have rating of 3-star or better on Nursing Home Compare
for 7 of 12 months preceding Performance Year
• Beneficiaries are free to choose SNF
• Medicare will monitor for
-medically appropriate transfers
-majority of transfers prior to 3-day inpatient stay go to SNFs with 3 stars or better
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Medicare Payment Policy Waivers
Post-Discharge Home Visit Waiver
Waiver
• Permits general (rather than direct) supervision for certain in-home services
provided to Model 2 beneficiaries who do not qualify for home health services
-Services furnished in the beneficiary’s home
-After discharge from an Episode Initiator during an Episode of Care
-Services furnished by licensed clinical staff in accordance with all
other Medicare requirements, and appropriately billed
-Limited to once per 30 day Episode of Care (two per 60-day, three
per 90-day)
Implementation
• Self-implementing as long as requirements are met
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Medicare Payment Policy Waivers
Telehealth Waiver
Waiver
Medicare waives the geographic requirement for telehealth services. So, during
an Episode of Care, Model 2 Beneficiaries need not be located in a rural HPSA or
non-MSA county in order for Medicare payment to be made for telehealth.
Procedure
Self-implementing so long as all other telehealth billing requirements are met.
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Introduction
Jessica serves as the AAMC’s Alternative Payment team’s policy content lead. In this role, she supports academic medical
centers’ involvement in the Bundled Payments for Care Improvement initiative using data and policy analyses to explain
financial trends and provide strategic advice regarding episode selection and risk mitigation. Jessica also utilizes the lessons
from this work to inform AAMC’s advocacy efforts.
Prior to this, Jessica spent two years as a Health Policy Analyst helping providers to navigate federal ACA regulations and
complex Medicare payment policy issues. She also completed graduate internships with the White House Office of
Management and Budget’s Health Division and Partners HealthCare’s Finance Department.
Jessica holds an M.S. in Health Policy and Management from the Harvard School of Public Health and a B.A. in Political
Science from the University of Richmond.
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SEGMENT 2:
Jessica Walradt, M.S.
Senior Payment Reform Specialist
Association of American Medical Colleges
Strategic Episode Selection in a Bundled
Payment Model
Lessons from BPCI
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SEGMENT 2:
Jessica Walradt, M.S.
Senior Payment Reform Specialist
Association of American Medical Colleges
AAMC as Facilitator Convener
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Advocacy
Policy Analysis
Project Management
Data Analysis
Selecting Episodes• Total of 48 optional episodes
• These episodes represent approximately 70% of all possible episodes by Medicare volume and expenditures
• Participants must give careful consideration to:
• Which conditions to bundle
• The number of conditions to bundle (select from 1 to 48 episodes).
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• Acute myocardial infarction
• AICD generator or lead
• Amputation
• Atherosclerosis
• Back & neck except spinal fusion
• Coronary artery bypass graft
• Cardiac arrhythmia
• Cardiac defibrillator
• Cardiac valve
• Cellulitis
• Cervical spinal fusion
• Chest pain
• Combined anterior posterior
spinal fusion
• Complex non-cervical spinal
fusion
• Congestive heart failure
• Chronic obstructive pulmonary
disease, bronchitis, asthma
• Diabetes
• Double joint replacement of the
lower extremity
• Esophagitis, gastroenteritis and
other digestive disorders
• Fractures of the femur and hip or
pelvis
• Gastrointestinal hemorrhage
• Gastrointestinal obstruction
• Hip & femur procedures except
major joint
• Lower extremity and humerus
procedure except hip, foot, femur
• Major bowel procedure
• Major cardiovascular procedure
• Major joint replacement of the
lower extremity
• Major joint replacement of the
upper extremity
• Medical non-infectious orthopedic
• Medical peripheral vascular
disorders
• Nutritional and metabolic
disorders
• Other knee procedures
• Other respiratory
• Other vascular surgery
• Pacemaker
• Pacemaker device replacement
or revision
• Percutaneous coronary
intervention
• Red blood cell disorders
• Removal of orthopedic devices
• Renal failure
• Revision of the hip or knee
• Sepsis
• Simple pneumonia and
respiratory infections
• Spinal fusion (non-cervical)
• Stroke
• Syncope & collapse
• Transient ischemia
• Urinary tract infection
CMMI BPCI Participants May Choose from 48 Episodes
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Selecting Episodes: Optimal Criteria for Episode SelectionIs there adequate condition prevalence, with sample size sufficient to both predict costs and show the effect of clinical interventions?
• What is the prevalence of the disease condition and volume of cases under consideration?
Is there significant resource consumption because of high expense on a per-episode basis or because of high case volume?
• What is your market comparison for cost, both for the index stay and the post-discharge period?
Do clear, evidence-based care guidelines exist across the continuum?
• Are evidence-based clinical protocols available for the condition across multiple care settings?
• Are there clinical champions to drive care redesign?
Is there adequate variation in Medicare payment to allow for efficiency gains, but not so much variation that the risk of outlier cases outweighs the reward?
Evaluate outlier exposure in each clinical condition under consideration by reviewing the maximum episode case cost at discrete intervals (e.g., 30, 60, and 90 days) post discharge
How do the episodes vary by site of service, utilization pattern, readmission rates, and first post-discharge setting?
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AAMC Participant Episodes at Risk
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Major Joints PCICervical
Spinal Fusion
CABG CHF Stroke
CardiacValves
COPD
How Many Episodes?
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Adequate Volume
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Episode Family Annual Volume
Simple pneumonia and respiratory infections 439
Congestive heart failure 377
Major joint replacement of the lower extremity 350
Cardiac arrhythmia 305
Stroke 271
Chronic obstructive pulmonary disease, bronchitis, asthma 263
Urinary tract infection 238
Renal failure 206
Sepsis 197
Medical non-infectious orthopedic 167
Nutritional and metabolic disorders 164
Other respiratory 155
Cellulitis 154
Hip & femur procedures except major joint 123
Percutaneous coronary intervention 117
Major bowel procedure 105
Red blood cell disorders 98
Syncope & collapse 94
Medical peripheral vascular disorders 92
Pacemaker 75
Diabetes 73
Acute myocardial infarction 66
> 100/year
PCI Annual Volume = 450 Episodes
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2013 CV: 0.71
PCI Annual Volume = 115 Episodes
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2013 CV: 0.85
Examine Payment Trends
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What is Driving the Trend?
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What are the cost drivers?
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What are the Cost Drivers?
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Readmissions
• Readmission rate relative to regional, industry, and national benchmarks
• Examine readmission DRGs
• Can you impact these readmits?
• % of readmissions returning to index hospital
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Overarching Selection Strategies
Strategy 1: Start with surgical bundles.
• Examples:
• Major joint replacement of the lower extremity
• CABG
Strategy 2: Bundle clinically similar episode bundles.
• Examples:
• CHF and cardiac surgical procedures
• COPD and Simple Pneumonia
• Sepsis and UTI
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Other Considerations
• Alignment with other strategic initiatives
• Medicare HRRP
• Physician champion
• Feasibility of gainsharing
• Precedence
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Impact of Precedence on Volume
BPCI precedence rules ensure that a patient is only in one episode at a time. Precedence rules involve the following factors:
• When the Awardee enters the risk phase;
• Type of Model (Model 2 vs. Model 3);
• Episode exclusions; and
• Awardee type (hospital vs. PGP).
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Patient X admitted for MS-DRG Y to Hospital B
Precedence Rule: Episodes initiated by Phase 2 Awardees
with earlier go-live dates trump episodes initiated by
Awardees with later go-live dates.
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*CE- PoP = Clinical Episode Period of Precedence
Hospital AModel 2 Patient X
discharged
Hospital B Model 2
Model 2 BPCI
bundle triggered
by MS-DRG Z
admission of
patient X.
Hospital A entered Phase 2 prior to Hospital B
(e.g. Hospital A CE-PoP* = 1/1/14 while Hospital
B CE-PoP = 1/1/15)
Hospital A
retains
episode.
This happens
regardless of
whether or
not MS-DRG
Y is included
or excluded in
the MS-DRG
Z episode.
Precedence Rule: Within a given model, PGP episode
initiators trump non-PGPs.
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Hospital A
Model 2
Patient X receives
joint replacement at
Hospital A.
Physician in Model 2
PGP B performs the
procedure.
Do Hospital A and
PGP B have the
same CE-PoP?
YES
NO
PGP B claims
episode.
Does Hospital A
have the earlier
CE-PoP?
YES
NO
PGP B claims
episode.
Hospital A
Model 2
Hospital A claims the
episode.
Episode Duration 30, 60 or 90 days post-discharge
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Major Joint Replacement
Episode Duration
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CHF
Risk Track Selection• Winsorization and the application of risk corridors are used to mitigate the
financial risk associated with high cost outlier cases.
• Participants must choose one of three episode-specific risk tracks:
• Awardees are responsible for 20% of payments that fall above the risk track threshold.
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Example: Winsorization and Risk CorridorsTarget Price: $50,000
Risk Track: B
5th Percentile: $15,000
95th Percentile: $75,000
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Episode Payments Winsorized Amount Reconciliation
$10,000 $14,000 +$36,000
$54, 000 $54,000 -$4,000
$47,000 $47,000 +$3,000
$100,000 $80,000 -$30,000
Total +$15,000
What’s Next? • HHS announcement: Drive towards value-based reimbursement
• Oncology bundles
• Capitation
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Continuum of Risk-Based Payment Models
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Bundled payments are one strategy in the progression from fee-for-
service to global capitation. Bundled payments encourage efficiency
and coordinated care.
Provider Risk
Payer Savings
High
Low
HighLow
Fee-for-Service
Pay for Performance
Bundled Payments
Shared Savings Program (ACOs)
Capitation
► You may ask a question at anytime throughout the presentation today. Simply click on the question mark icon located on the floating tool bar on the bottom right side of your screen. Type
your question in the box that appears and click send.
► Questions will be answered in the order they are received.
Q&A:
March 12, 2015
71
SEGMENT 1:
Christopher Wilson
Senior Manager
Pershing Yoakley & Associates, P.C.
(913) 232-5145
SEGMENT 2:
Jessica Walradt, M.S.
Senior Payment Reform Specialist
Association of American Medical Colleges
(202) 862-6067
March 12, 2015
72
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