Healthcare Financial Management Association

Bundled Services Contracting

(A trip down memory lane!)

April 20, 2012

A Little Bit of History

•Old days in Maryland (Circa 1990’s)-Lot of Cardiac-Lot of Orthopedic (knee/hip)-Transplant-Lot of other risk

Some More History

•Outside Maryland-Has been out there a long time-DRG (sort of) since 1982-Case rates, per diems-All types of risk!

What’s Happening In Maryland Today?• A little bit of this, and a little bit of that

–Some Cardiac–Some Orthopedic–Transplant

•Current players–Hopkins–MedStar–UMMC

Why Do We Do It?

•Required by our friends, the payers

•Competitive advantage

•It’s the future! (?)

SO- What Do You Need To Think About?•Physician alignment

•Ability to replicate consistent results/outcomes

•Operations

•What to bundle

•Pricing

Physician Alignment•CRITICAL!•Buy in, cooperation, input- CRITICAL!

•

•Ongoing data/feedback- CRITICAL!

Consistent Results

•Outcomes

•Length-of-stay

•Readmissions

•Etc.

•Evidence-based medicine

Nasty Old Operations!

•Contracting participating providers–Who?

•Surgeons, Anesthesia, Pathology, PT…•Hospital•Home health

(More on this later)–LOA/contracts: $’s (limited $’s) and rules

Nasty Old Operations!

•Contract compliance–Rules of the road–Authorizations–Patient ID/notification–Registration (who is paying claims?)–Case Management

Nasty Old Operations!

•Billing–Are you the payer?–How do you get/process the claims?–Monitoring what’s in and what’s out

•Collecting–Tracking AR

•Reimbursement–If you are the payer, how do you do that?–If you are not the payer, how do you do that?

More Things To Think About

•Exception reporting (ProvenCare®)

•Contract performance

•Regulatory reporting (Maryland)

•Financial accounting

Two Approaches •You are the payer

–Claims in and out–Reimbursements in and out–What services are in and out–Build it or rent it

•Rely upon the payer–Claims go direct–Rely on payer to bundle

•Things you must do–Pricing–Reporting–Negotiate rates: payers and providers

What to Bundle?

•Surgical/interventional procedures most common -Cardiac (surgery/interventional cardiology) -Orthopedic (joint/spine) - Bariatric•Inpatient or Outpatient•Things you can predict!•Can do medical cases too•You get the idea

Pricing- Things To Consider

•Volumes•Hi-cost items (Implants, Drugs, Etc.)•New technology•Catastrophic cases•What services are included (scope of service)?

-Pre, Post, how far out?-Cost = Physician + Hospital + ?????(more on this soon)

Excellent Resource

•Center for Healthcare Quality & Payment Reform

•Transitioning to Episode-based Paymenthttp://www.chqpr.org/downloads/TransitioningtoEpisodes.pdf

PCPSurgeon

Other Specialist

PCPSurgeon

Other Specialist

PCPSurgeon

Other Specialist

PCPSurgeon

Other Specialist

Imaging Imaging Implant, etc.

Imaging Imaging

Drugs Drugs Drugs Drugs

HOSPITAL STAFF

HOME CAREPCP CARE MGR

HOSPITAL STAFF

HOSPITAL DRG

REHAB FACILITYLONG-TERM CARE

HOSPITAL DRG

Potential Elements of an Episode Payment for Major Acute Care,

Including Components Already Paid on an Episode/Case Rate Basis

Length of Time

PHYSICIANS

DEVICES

DRUGS

NON-MD STAFF

FACILITY

Provider and Services

Reference:Center for HealthCare Quality & Payment Reform.Http://www.chapr.org/

Pre-Admission Hospitalization Post-Acute Care

Readmission

Pricing

•Identify sample population–DRG–CPT/ICD procedure code–Like patients

•Pull data by phase of care•Understand variation•Identify carve outs, exclusions, bill aboves•Don’t forget- physician, home health,…..

Regulatory Approval

•In Maryland hospitals can participate in bundled contracts

•HSCRC oversight

•Need a legal entity to contract

•Hospitals must file Alternative Rate Application- Must receive HSCRC approval!

•Ongoing Regulatory Reporting/Renewals

Moving Ahead to the Past?

•ACO

•Bundled pricing

•???

Thank you!

Questions ?Mike Wertz

Senior Director Payer Relations & ContractingTelephone 410-328-1723Email: mwertz@umm.edu

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4/20/2012

Matt OrthDirector Managed Care Analytics

MedStar Health410-772-6825

matt.orth@medstar.net

Medicare Bundling Initiative

Healthcare Financial Management Association

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More formally known as:

CMS Center for Medicare and Medicaid Innovation

Bundled Payments for Care Improvement Initiative

aka

CMMI BPCI

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What’s in a Bundle?

Model One - Inpatient facility only

Model Two – All inpatient services plus xx days post-discharge; everything except Part D drugs and hospice

Model Three – Post-acute discharge services only (defined by acute hospital discharge MSDRG)

Model Four – All inpatient services acute stay only (includes 30 days post-discharge acute readmissions)

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Model One - Percentage discount from IPPS MSDRG payment

Models Two & Three – All claims/payment per usual Medicare processes/rates; retroactive reconciliation to target rate (based on discounted 2009 Medicare payments)

Model Four – True case-rate payment to hospital which then pays physicians

How to Pay a Bundle

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We got a boatload of data from CMS

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Data from CMS•Hospital Referral Clusters

•Patient residence zip

•Includes ALL Medicare claims paid for these beneficiaries at all providers for 2008 and 2009

•Multiple Files (Hospital, physician, IRF, SNF, HHA, DME…)

• Don’t try this at home….

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Data Issues• The longer the episode, the less the data

• Home Health Billing…oops

• DME…oops

• Scrambled Physician data…. OP data, oops

• Clean data…oops

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Let’s price this Bundle…..

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The fine print…..I’ve listed the major categories we need to address. After a brief summary, the bullet points indicate questions on the application that apply to his section and a very brief recap of the specific task . Most of these are common to all Models 2-4; variations are indicated. Provider Network BuildingWe have to identify the providers we need and contract with them, establish procedures, etc.

•Describe communications to providers (B9, B10)•How to involve providers with QA/QI Committees (D15 Mod2&3; D13 Mod4)

Care Redesign/case managementWe are expected to redesign care in order to achieve the quality and financial outcomes.

•Redesign of aspects of care; specific steps, readiness (B11-B13)•Ongoing assessment/care improvement during program (B14)•How to get providers involved in care redesign (B10)•How to involve beneficiaries in care redesign (B11)•How will this reduce costs (eg process, forumularies, standardized purchasing, discharge protocols) (C5,C6)•How will this improve quality/pt experience (D1)

FinanceWe have to define the episodes and come up with a target rate reduction (or bundled case rate for Model 4). We can propose a risk adjuster, but need a qualitative justification. For Models 2&3 the logistics are all retrospective, since claims are submitted and paid normally, and reconciled after the fact with the target reduction. For Model 4 it’s a true case rate that we would distro to the hospital and physicians.

•Risk adjuster? (C3)•Describe arrangements (E2)•Logistics of distributing gains (E3)

Gainsharing (B15-20)We need to design and describe how we’re going to share the financial gains (and losses?) with the providers. For Model 2&3 that will involve a retrospective adjustment since claims are submitted and paid normally, then reconciled with the target reduction after the fact. CMS expects quality measures to play a role in this as well as financial performance.

•Logistics of distributing gains (E3)•Describe prior experience with gain-sharing, P4P (B16)•Quality standards for gainsharing (B17-B19) •Eligibility requirements [quality thresholds, QI requirements] for participating in gainsharing (B20, Mod2&3)•Limit gainsharing to no more than 50% of Medicare payment (B19)

FinanceWe have to define the episodes and come up with a target rate reduction (or bundled case rate for Model 4). We can propose a risk adjuster, but need a qualitative justification. For Models 2&3 the logistics are all retrospective, since claims are submitted and paid normally, and reconciled after the fact with the target reduction. For Model 4 it’s a true case rate that we would distro to the hospital and physicians.

•Risk adjuster? (C3)•Describe arrangements (E2)•Logistics of distributing gains (E3)

Gainsharing (B15-20)We need to design and describe how we’re going to share the financial gains (and losses?) with the providers. For Model 2&3 that will involve a retrospective adjustment since claims are submitted and paid normally, then reconciled with the target reduction after the fact. CMS expects quality measures to play a role in this as well as financial performance.

•Logistics of distributing gains (E3)•Describe prior experience with gain-sharing, P4P (B16)•Quality standards for gainsharing (B17-B19) •Eligibility requirements [quality thresholds, QI requirements] for participating in gainsharing (B20, Mod2&3)•Limit gainsharing to no more than 50% of Medicare payment (B19)

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But seriously… some details

• MSDRG definition•Exclusions•Families•How to identify?

• Beneficiary Choice

• Readmissions (related? Part B?)

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More details• Redesign clinical processes

•Metrics•Outcomes•Quality

•Provider Network•Contracts•Gainsharing/incentives

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And more details

• Involvement of providers

• Education/involvement of beneficiaries

• Financial Opportunity•Inpatient or post-discharge?

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Our very good friends at CMS

• Hospital/Physician Relationships/Contracting

• Changing the rules

• Where are the rules?

• Dates• March 15• May 16• June 28• Starts?

• Program Length

• Got Help?

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We’re in Maryland, why do we care?

• HSCRC has promised to do something similar

• How’s that waiver thing doing?

• Is bundling the future?

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Trouble Sleeping?

http://www.innovations.cms.gov/initiatives/bundled-payments/index.html

http://cmmi.airprojects.org/bpci.aspx

http://www.resdac.org/PaymentBundlingInitiative.asp

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Thanks for sticking around after lunch

Matt OrthDirector Managed Care Analytics

MedStar Health410-772-6825

matt.orth@medstar.net