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14th Annual Mid-South Critical Access Hospital Conference
August 17-19, 2016
Nashville, Tennessee
CAH Payment Reform:
Defining Value and Sustainability
Matt Anderson Senior Vice President of Policy & Strategy Minnesota Hospital Association
Minnesota’s CAH Landscape
78 Minnesota Critical Access Hospitals • Most CAH Medicare inpatient payments in US
• 44 CAHs are part of one of 17 Health Systems in MN
• 8 CAHs are more than 35 miles from another hospital
• 2 CAH closures in last 10 years
MN CAH trends 2011-14 • Adjusted operating costs/day +22%;
Adjusted net revenue/day +18%
• Inpatient admissions -15%
• Swing bed admissions -4%
• Births -12%
Reasons for Beginning Our Discussion
Proposed cuts to CAH payments program • Eliminate CAH status based on distance
• Across-the-board cuts (e.g., sequestration)
• Site-neutral provider-based clinic payments
• Site-neutral swing bed payments (e.g., OIG report)
• Death by 1,000 regulations o Direct supervision of outpatient therapeutic services
o 96-hour rule
o 2-Midnight rule
Medicare’s drive toward value-based payment methodologies
Potential Impacts on Access for MN’s Residents
* Based on population of areas that make up 85% of CAHs service utilization (MHA data) High to Extreme Performance Risk assumes negative margins and < 1x Debt Service Coverage after impacts considered using 2013 HAR data as base year
Converting to strict enforcement of 35 mile rule
Today
2013 Medicare Costs/Day Variance
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
0 500 1000 1500 2000 2500 3000 3500 4000
Medicare Cost per Day Using Cost Report data
Medicare Days Volume
Reflects data from 62 CAHs that provided electronic file of report.
6
Average $2,917
Median $2,766
Min $1,526
Max $5,106
Std Deviation $732
MHA’s Principles & Recommendations
Advocate for payment models that protect access for residents in rural communities
Evaluate reform proposals against the goals of the Triple Aim
Favor reforms that appropriately account for variation in communities’ needs and capacity
CAH Value Based Purchasing (VBP)
Recommend symmetrical +/-2% incentive
• Inpatient only
• Favored closer alignment with existing VBP program
Range of statewide impacts based on 2013 data
• Financial: +$1.08 million to -$0.77 million
• Percentage: +1.7% to -1.5%
• Individual hospital impacts vary
Limited quality data • Several PPS VBP measures that many CAHs do not
report publicly
• Some PPS VBP measures relate to services CAHs do not provide or do not provide in sufficient volumes
No comparable CAH efficiency data • Proxy: Dartmouth Atlas total costs of care per
Medicare beneficiary
Outcomes will vary with different performance year, different measures
Modeling Caveats & Disclaimers
Penalty up to -2% if hospital’s performance ranks in bottom half of CAHs’ readmission rates
Reward up to +2% if hospital’s performance ranks in top half of CAHs’ readmissions rates
Used all-cause readmissions for modeling to better align with PPS readmissions program, although MHA would prefer CMS to use avoidable/preventable for evaluating hospital performance
Range of statewide impacts based on 2013 data
• Financial: +305,000 to -$355,000
• Percent: +0.39% to -0.9%
CAH Readmissions Proposal: Readmissions with Rewards
Projected Aggregate Impacts on MN’s CAHs (in millions)
($180.00)
($160.00)
($140.00)
($120.00)
($100.00)
($80.00)
($60.00)
($40.00)
($20.00)
$0.00
$20.00
1% CutSwing bedRUGs cap
Lose CAH at 15miles
Lose CAH at 25miles
Lose CAH at 35miles VBP
Readmissionsadjusted
($5.50)
($28.70)
($50)
($145.40)
($169.60)
$1.10 $0
Outreach & Next Steps
Job is not finished. Need to develop . . .
• Reforms for rural communities at risk of losing access to care
• More rural-relevant measures (e.g., NQF and other states’ hospital associations)
Share and collaborate with other stakeholders
Begin discussions with federal policymakers working on rural health policy issues
• Senator Franken introduced legislation calling for testing of VBP and Readmissions programs for rural providers
Thank you! Matt Anderson, J.D. Senior Vice President of Policy & Strategy Minnesota Hospital Association [email protected] (651) 260-9304
14
Sustaining Rural Health Care in Kansas
The Development of Alternative Models
Mid-South CAH Conference
August 17, 2016
Melissa Hungerford
Kansas Hospital Association
Kansas: A Year Later
• 82,277 sq mi, 2.7 million pop • 89 of 105 Counties, 40 frontier • 84 of 127 CAHs • No KanCare Expansion
– Significant Primary Election Results
• Hospitals at risk – Ivantage – 31 – George Pink - 4 – CliftonLarsonAllen – 25% of Kansas
Population at risk
• Fragile inpatient infrastructure – 18 hospitals </= 1 – 15 more </= 2 – 19 more </= 3 – 13 more </= 5 – Others 5+
</=
1 </=
2 </=
3 </=
5
5+
Kansas: A Year Later
• Rural Health Visioning TAG - Year 3 • Strategies for future of rural health
delivery and structure • Current Focus Areas
– Telling The Story – Testing New Models In Kansas – Increasing Value and Impacting
Population Health
A Sustainable Rural Health System
Improve Health
Provide Access
Encourage Collaboration
High Quality
Promote Efficiency and Value
Embrace Technology
Financed Fairly to Address Population Health
Kansas – New Models in Action
• Harper – Merger
• Kansas Heart and Stroke Collaborative (CMMI Grant)
• Kansas Frontier Health Improvement Network (UMHMF)
• HOPD/ER, Independence
• CAH/FQHC, Hoxie
• International Fellowship – Physician Recruiting Strategy, Lakin, Southwest Kansas
• Telemedicine – Avera, Eagle, Others
• New approaches to affiliation
• Accountable Care Organizations (ACO) – Shared Savings models
• National Rural Accountable Care Organization (NRACO)
• KHA Primary Health Center
Exploring a New Choice for Communities:
Primary Health Center
Partner Organization
Primary Health Center Characteristics
• Hospitals: Critical Access Hospitals or rural PPS hospitals • Patients: Up to inpatient admission criteria • Services:
• Traditional ambulatory, clinic services • Urgent, emergency, transport services • Local/regional ancillary and other services • Strong care coordination and disease management • Transitional care (24 hour model only) • Niche or regional services – depending on community need
(behavioral, social) • Staffing:
• RN(s) on site during hours of operation • Physician, APRN, PA on call • Active telemedicine
Primary Health Center Role in Regional System of Care
• Retain Local Governance – Also be strong partner in regional system
• Formal Agreements – Partner Organization
• Outline expectations and mutual benefit
– Clinical Relationships – Local and Regional Service Providers – Operational Efficiencies
Edwards County Hospital, Kinsley
Ellinwood District Hospital, Ellinwood
Fredonia Regional Hospital, Fredonia
Washington County Hospital, Washington
Wilson Medical Center, Neodesha
Paper Test Sites
Paper Test Methodology
• Clinical
– Nurse reviewers
– 3 high volume months
– ER, acute, observation, swingbed
– Assume ambulatory stays the same
• Financial
– Local CPA/auditors
– Standard cost report and CPA/hospital files
– Operational assumptions in conjunction with CEOs/CFOs
9.42 23.07
24.87 42.65
Patient Age - All Cases
19-44
45-64
<18
>6
5 [PERCENTA
GE]
[PERCENTAGE] [PERCENTA
GE]
Patient Transportation (All Sites)
Amb Law Enf Private Car
Paper Test: Clinical Findings
946 Cases
Reviewed
70%
ER
70-75% of
patients could be
served in Primary
Health Center –
more?
Paper Test: Financial Findings
• 2014 Actual Staffing: 40-111
• Staffing in Test Sites
– 12 Hour: 33-67
– 24 Hour: 42-92
• Base Staffing
– 12 Hour: 33
– 24 Hour: 43
• 2014 Actual Costs: $4.3-13.5m
• Normalized costs added: $1.9m
• Estimated Costs in Test Sites
– 12 Hour: $4.0-8.6m
– 24 Hour: $4.4-12.1m
• Base Costs
– 12 Hour: $4.7m
– 24 Hour: $6.1m
PHC Base Budget Assumptions From Test Findings
• PHC Base Costs
– 12 Hour: $4.7m
– 24 Hour: $6.1m
• Includes
– Primary Care ($1.1m – 8 FTEs all staff)
– EMS/Transportation ($550,000 – 6 FTEs all staff)
– Telehealth/Telemedicine ($100,000 – no staff)
– Care Management ($150,00 – 2 FTEs)
– Capital/Debt Service ($500,000)
• “Improving efficiency and preserving access to emergency care in rural areas”
published June 2016 – Cost-based payment models misdirect Medicare $$ and do not incentivize cost control – Higher inpatient payments do not always keep ED doors open – Coinsurance is higher at CAHs – Medicare may achieve greater efficiency and financial stability by subsidizing emergency
services rather than inpatient care
• Option 1: 24/7 emergency department – ED services, ambulance services, and primary care
• Option 2: clinic (FQHC) and affiliated ambulance model – Primary care and ambulance
• PPS rates plus fixed payment (grant)
Moving Forward
• PHC Refinement – Testing Payment Options (TAG Preferences)
1. Global budget-based level monthly payments (Grant) 2. FQHC-like with extended visit payments (Grant) 3. Blended: monthly payments, fee schedule (Grant) 4. Global cost-based approach 5. PPS Fee Schedule (Grant) (MedPAC)
• EMS Regional Plan – Not just emergency!
• Strategies for the Future – Status quo, New Model, Conversion, Affiliation
• Swingbed Services and Payments – Can we show quality and cost value?
Transforming Rural Healthcare in
Illinois
August 17, 2016
31
Illinois’ 87 Small and Rural Hospitals
• 51 Critical Access Hospitals
• 36 Tweeners
• Make up more than 42% of
our state’s hospitals
• Have a $11.1 Billion annual
economic impact
• Are the ANCHOR for their
region’s health-related
services
32
Developing the Framework:
The Path to Transformation
Objectives:
• Preserve and improve access
• Coordinate comprehensive service
delivery
• Ensure adequate workforce
• Preserve and enhance safety net
care
• Foster shared decisions and
personal responsibility of patients
• Align with public health
• Adequately fund access and
transitions
• Modernize state government
• Promote innovation and transparency
33
Rural Transformation Pathways
2015 Implementation Strategies
• IHA Small and Rural Steering
Committee
• 3 Work Groups Formed:
– Quality
– Model Design
– Payment
• 2017 Pilot Project Begins
34
Rural Subgroup Implementation Plan
• Focus on Value Equation-demonstrate high
quality, low cost services. New rural quality
measures.
• Develop new rural models that focus on
emergent and outpatient care.
• Develop a sustainable rural payment
mechanism that incentivizes quality,
addresses low volumes, and supports the
necessary care team in a rural setting.
35
Rural Quality Measures
• Focus:
–Bundled Measures to Address Low-Volume
Categories
–Additional Outpatient and ED Measures
–Added Palliative Care Measure
–Rethink Efficiency Measure
–Elderly Population with Chronic Disease
36
Rural Quality Measures
• Process of Care
• Patient Experience of Care – HCAHPS
– EDCAHPS
– Observation
– Swing Beds
• Outcomes
• Efficiency
37
Rural Models
• Tier One-Basic Core Services (emergent,
primary and outpatient)
• Tier Two-Primary Care Services (adds
behavioral health, rehabilitative and
observation care)
• Tier Three-Comprehensive Care Services
(adds swing beds, inpatient services and
surgery with an option to add OB, ICU,
orthopedics, ophthalmology, urology and
specialty rehab services)
38
New Rural Payment Models Should Include:
• Access payments for primary and emergent care
• Infrastructure payments-data/quality/meaningful
use
• Performance incentives-rural VBP program
• Workforce incentives
• Regional Network Development-bonus payment
• Population Health-chronic disease management
• Behavioral health services
• Capital costs
• Care Coordination payments
39
Rural Payment Transitional Costs:
• Capital Investment (building, IT, equipment)
• Partnership Development Planning
(telemed, regionalization, EMS, etc.)
• Job Training/Retraining Funds (patient
navigators, care coordinators, home health,
palliative care, EMS, etc.)
• Community Literacy and Outreach
• Consulting Services (facility planning, IT,
marketing, delivery model design, etc.)
40
Regulatory Needs:
• Flexibility in Stark Laws-provider incentives
• Expanded use of Mid-levels-relief from
supervisory rules
• 96 average stay in appropriate for PCH model
• Eliminate inpatient requirement for rural hospitals
(state and federal)
• Create new Rural VBP based on rural quality
measures
• Medicare reimbursement for LCPCs
41
Next Steps
• Pilot New Measures
–1/1/17-12/31/17
–Education
• Advocate for changes in model and payment
design.
Questions?
Abby Radcliffe
Director, Small and Rural Hospital
Constituency Section
Illinois Health and Hospital Association
217-541-1178
14th Annual Mid-South Critical Access Hospital Conference
August 17-19, 2016
Nashville, Tennessee