KELLY PRICE, SENIOR DIRECTORDATAGEN GROUP

JONATHAN W. PEARCE, CPS, FHFMAPRINCIPAL, SINGLETRACK ANALYTICS.

Evaluating Opportunities in the Medicare Bundled Payment Program

What’s happening?

BPCI open enrollment ended April 18Hospitals will receive data this summerNeed to make decisions by November

SingleTrack/DataGenOver 20 organizations from round 1Data partner to the AAMC convened hospitals and

other "independent" awardees 

Overview

Program RulesBPCI includes 48 episode “families” and 197 DRGsParticipating organizations can participate in any or all

episode familiesWhat criteria and analyses should be used for episode

selection?

Financial Opportunities

Distribution of Episode Cost

Individual Episodes

Attacking High-Cost Cases

Individual Episodes

Moving the Cost Curve Down

Individual Episodes

Reducing Internal Hospital Costs

Part of the strategy for mostAll of the strategy for some

Gainsharing waiver offers greater potential for savings

Length of Stay variation But sometimes an extra day is good downstream

Device costs – not easy to analyze from the administrative data

Total Financial Risk

Intra-Episode Variation

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

$200,000

469 - Major joint replacement or reattachment of lower extremity

w MCC

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

470 - Major joint replacement or reattachment of lower extremity

w/o MCC

Coefficient of Variation = .57 Coefficient of Variation = .27

Episode Risk Decreases with Population Size

Hospital Discount as Percent of Hospital Cost

Episode average=$25,000 Hospital portion=$10,000 2% * $25k=$500 $500/$10,000=5%

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

Baseline

Average Episode Payments by Setting

Index Admit Professional Readmission_ProfessionalReadmission SNF HHAOutpatient DME IP PsychHospice IP Rehab LTC

Hospital Discount as Percent of Hospital Cost

Target is discounted 2-3% of episode cost

Hospital frequently assumes the entire discount

Effective hospital discount depends on the hospital percentage of total episode cost

Savings Opportunity is in Post-Acute Period

It’s NOT here:

Savings Opportunity

Percentage of cost in post-discharge period varies by DRG

Clinical Coordination Opportunities

Understanding the services

Post Acute Cost Trends

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

Qtr 3 2009Qtr 4 2009Qtr 1 2010Qtr 2 2010Qtr 3 2010Qtr 4 2010Qtr 1 2011Qtr 2 2011Qtr 3 2011Qtr 4 2011Qtr 1 2012Qtr 1 2013Qtr 2 2013Qtr 3 2013

SNF

Post Acute Cost TrendsAverage Prorated Payment per Episode

Post Acute Cost Variation by Provider

Provider NameEpisode Count

Total Prorated Payment

Average Prorated Payment Per Episode

SNF 23 $336,005 $14,609Center for Care 73 5 $71,407 $14,281Provider 459 2 $48,852 $24,426Provider 14297 5 $40,643 $8,129Provider 460 2 $33,104 $16,552Provider 14310 2 $30,506 $15,253SNF 14392 1 $26,991 $26,991Hospital 123 2 $23,954 $11,977SNF 14363 1 $21,953 $21,953SNF 14400 1 $20,814 $20,814Hospital 191 2 $17,779 $8,890

Grand Total 23 $336,005 $14,609

Episode Costs by Admitting Physician

Index Admission Attending Episode Count

Total Net Episode Payments

Average Net

Payment Per Episode

Percent of Episodes With At Least One Readmission

High Outlier Count

Physician 39 11 $307,514 $27,956 18 % 0Physician 47 9 $237,022 $26,336 0Physician 112 9 $285,922 $31,769 33 % 0Physician 96 7 $176,502 $25,215 0Physician P 7 $184,565 $26,366 0Physician 88 5 $152,750 $30,550 20 % 0Physician 52 5 $135,484 $27,097 0Physician 42 4 $132,733 $33,183 25 % 0Physician 28 3 $79,553 $26,518 0Physician 5 3 $113,751 $37,917 0Physician Q 2 $66,188 $33,094 0Physician B 2 $59,930 $29,965 0Physician X 2 $106,525 $53,263 50 % 0Physician 25 2 $46,336 $23,168 0Physician 4 2 $62,309 $31,155 0Physician 109 2 $88,545 $44,272 0Physician 55 2 $56,497 $28,248 0Physician 38 2 $49,309 $24,654 0

Path of Care

Analyses of Readmissions

Readmission DRGHospital of readmissionTiming of readmissionPost-acute provider from

whom readmission originated

Reason For ReadmissionReadmission

Count

Average Days from Anchor

Discharge233 - Coronary bypass w cardiac cath w MCC 6 21

293 - Heart failure & shock w/o CC/MCC 2 13394 - Other digestive system diagnoses w CC 1 4641 - Nutritional & misc metabolic disorders w/o MCC 1 78315 - Other circulatory system diagnoses w CC 1 2372 - Major gastrointestinal disorders & peritoneal infections w CC 1 14

234 - Coronary bypass w cardiac cath w/o MCC 5 54856 - Postoperative or post-traumatic infections w O.R. proc w MCC 2 52637 - Diabetes w MCC 1 70292 - Heart failure & shock w CC 1 38606 - Minor skin disorders w MCC 1 59

235 - Coronary bypass w/o cardiac cath w MCC 7 32378 - G.I. hemorrhage w CC 2 21639 - Diabetes w/o CC/MCC 1 34287 - Circulatory disorders except AMI, w card cath w/o MCC 1 66948 - Signs & symptoms w/o MCC 1 6057 - Degenerative nervous system disorders w/o MCC 1 46392 - Esophagitis, gastroent & misc digest disorders w/o MCC 1 33

236 - Coronary bypass w/o cardiac cath w/o MCC 5 33176 - Pulmonary embolism w/o MCC 2 24313 - Chest pain 1 53812 - Red blood cell disorders w/o MCC 1 2251 - Perc cardiovasc proc w/o coronary artery stent w/o MCC 1 61

Grand Total 23 34

Putting It All Together

Is there sufficient cost variation to create opportunities for savings

Are the drivers of variation actionableAre your clinicians sufficiently involved to drive change