understand cms’s final rule expanding mandatory bundled ...€¦ · 7 macra rewriting the rules...

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Understand CMS’s Final Rule Expanding

Mandatory Bundled Payments

Kristen Barlow

Senior Consultant

January 13, 2017

Megan Tooley

Practice Manager

Rob Lazerow

Managing Director

©2016 Advisory Board • All Rights Reserved • advisory.com

2 2

Today’s Panel of Experts

Kristen Barlow, JD

Senior Consultant

[email protected]

Megan Tooley

Practice Manager

[email protected]

Rob Lazerow

Managing Director

[email protected]


3 3

Today’s Presentation

Part I of Our Coverage on CMS’ Final Rule

Source: Advisory Board analysis.

Understand CMS’s Final Rule

Expanding Mandatory

Bundled Payments

A comprehensive overview of

CMS’s final rule expanding

bundled payments. Includes a

discussion of major program

components and key differences

between the proposed and final

ruling.

An in-depth review of the

mechanics of CMS’s cardiac

bundled payment model, including

how the bundles will be structured

and what cardiovascular

administrators can do to prepare for

success under bundles.

February 1, 2017 at 1p.m.

The Final Mandatory Cardiac

Bundling Rule: What CV Leaders

Need to Know


I. II.

https://www.advisory.com/research/cardiovascular-roundtable/events/webconferences/2017/the-final-mandatory-cardiac-bundling-rule-what-cv-leaders-need-to-know




4

2

3

1

Road Map


The Changing Payment Landscape

Overview of the Final Rule

Expert Insight for 2017 and Beyond


5 5

Doubling Down on Bundled Payments

CMS Program the Latest Move Away from Volume towards Value

Source: CMS; HHS, “Progress Towards Achieving Better Care, Smarter Spending, Healthier People,”

available at: http://www.hhs.gov, accessed February 2015; Advisory Board interviews and analysis.

1) Oncology Care Model

Major Recent CMS Risk Model Initiatives

April 2016

CJR begins in 67

markets across the

country

July 2016

OCM1, a physician-led

episodic oncology care

demo, begins

December 20, 2016

CMS finalizes three new

EPM bundles for hip and

cardiac episodes

20% 30%

50%

2015 2016 2018

CMS’ Aggressive Targets for

Transition to Risk

Percent of Medicare Payments

Tied to Risk Models


6 6

Putting the EPMs in Context

Just One of Many Avenues for CMS to Pursue Reform

1) OCM is not a true episode payment model, but does

make oncologists responsible for managing the total cost

of care, in return, they receive a performance payment for

reducing costs.

Continuum of Medicare Risk Models

Bundled

Payments

Shared

Savings

Shared

Risk

Full

Risk

• Hospital VBP

Program

• Hospital

Readmissions

Reduction Program

• HAC Reduction

Program

• Merit-Based

Incentive Payment

System

• MSSP Track 1

(50% sharing)

• MSSP Track 1+

(up to 50% sharing)

• MSSP Track 2

(60% sharing)

• MSSP Track 3

(up to 75% sharing)

• Next Generation

ACO Model

(80-85% shared

savings option)

• Next Generation

ACO Model

(full risk option)

• Medicare

Advantage

(provider-sponsored)

Pay-for-

Performance

• Bundled Payments

for Care

Improvement

Initiative (BPCI)

• CJR

• OCM1

• EPMs for SHFFT,

AMI and CABG

Source: CMS, Advisory Board analysis.


7 7

MACRA Rewriting the Rules of Risk

Source: CMS, “CY 2016 Physician Fee Schedule Final Rule,” Oct 30, 2016, available

at: www.federalregister.gov; Health Care Advisory Board interviews and analysis.

Bipartisan Support at Center of MACRA Rollout

This historic law has been a collaborative effort from the start. We are

encouraged by this final rule and CMS’s commitment to ongoing

collaboration with Congress and the health care community.”

Bipartisan Leaders from House Energy and Commerce

Committee and Ways and Means Committee

92-8

Legislation Enjoyed

Bipartisan Support

Senate vote

on MACRA

• Legislation passed in April 2015 repealing the

Sustainable Growth Rate (SGR)

• CMS released final rule in October 2016 stipulating

program to be implemented on Jan 1, 2017

• Created two payment tracks:

– Merit-Based Incentive Payment System (MIPS)

– Advanced Alternative Payment Model (APM)

Legislation in Brief: MACRA1

392-37 House vote

on MACRA

1) Medicare Access and CHIP Reauthorization Act.


8 8

Two New Payment Tracks For Provider Groups

Many Groups Hoping to Avoid MIPS by Qualifying for APM Track

1) Pay-for-Performance.

2) Electronic Health Record.

Source: H.R. 2: Medicare Access and CHIP Reauthorization Act of 2015;

Advisory Board Company interviews and analysis.

For more information about MACRA—including details on the

MIPS and APM tracks—visit www.advisory.com/macra.

Merit-Based Incentive Payment

System (MIPS)

• Consolidates existing P4P1 programs

including Meaningful Use, Physician

Quality Reporting System (PQRS), and

Value-Based Payment Modifier (VBPM)

• Gives providers performance score based

on four categories: quality, resource use,

clinical practice improvement, and EHR2

use

• Adjustments start in 2019 and reach -9%

/ +27% by 2022

Advanced Alternative Payment Model

(APM) Track

• Provides financial incentives (5% annual

bonus in 2019-2024, 0.75% annual

payment increase from 2026 on) and

exemption from MIPS

• Requires that physicians meet increasing

targets for revenue at risk

• Qualifying APMs must involve some

degree of downside risk, quality

measurement that is comparable

to the MIPS, and EHR use requirements

https://www.congress.gov/bill/114th-congress/house-bill/2

http://www.advisory.com/macra


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Before Final Rule, Bundles Not Eligible APMs

Source: CMS, Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM)

Incentive under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models, April

25, 2016; Health Care Advisory Board interviews and analysis.

1) Large Dialysis Organization arrangement

2) Available in 2018.

3) Available in 2018 or 2019.

Medicare Advanced APMs

(contribute to Advanced APM track eligibility)

Other Advanced APMs

(contribute to “Other Payer”

Advanced APM track

eligibility in 2021)

Medicare

Shared Savings

Program Track 1

MSSP

Tracks 2, 3

Next Generation

ACO

Comprehensive Primary

Care Plus (CPC+)

Requirements for Advanced APMs:

• Maximum possible loss must be at least 4% of spending target

• Threshold to trigger losses must be no greater than 4% above target

• Loss sharing rate must be at least 30%

• EHR use, quality requirements

Qualifying Models

Bundled Payments

for Care

Improvement

Comprehensive

Care for Joint

Replacement

Comprehensive ESRD

Care Model1

Oncology Care Model Two-Sided Risk2

Commercial contracts

with sufficient

downside risk

Medicare Advantage

Qualifying Models Qualifying Models

APMs

(Affect MIPS payments; do

not contribute to Advanced

APM track eligibility


10 10

CMS Creates New Paths for APM Qualification

Source: CMS, “Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive under the

Physician Fee Schedule, and Criteria for Physician-Focused Payment Models,” May 9, 2016, available at: https://s3.amazonaws.com/public-

inspection.federalregister.gov/2016-10032.pdf; Advisory Board Company interviews and analysis.

How CJR Currently Stacks Up Against

Advanced APM Criteria

Final Rule Introduces Two-Track Approach Within Mandatory Bundles

Maximum possible loss at

least 4% of spending target

Threshold to trigger losses

no greater than 4%

Loss sharing at least 30%

Quality requirements

comparable to MIPS

Certified EHR use

1) End-stage renal disease.

2) Large dialysis organization.

3) Comprehensive Primary Care Plus.

4) Notice of intent to apply.

5) Letter of intent.

6) Application narrative due May 25, 2016.

Financial

Risk

Criteria

CMS Proposes Changes to Enable

Mandatory Bundles to Satisfy Criteria

Beginning in 2018, hospitals participating in

mandatory bundled payments would be able

to choose one of two tracks:

Track 1 would require

use of certified EHR

Track 2 would not require

use of certified EHR

Eligible

advanced APM

Not eligible

advanced APM

1

2

d


11 11

Unclear Future for CMMI

Source: Price T, “Obamacare Agency Escapes Congressional Oversight”, available at:

www.budget.house.gov; Health Care Advisory Board interviews and analysis.

“The broad powers vested in CMMI,

and the agency’s interpretation of that

authority, have the potential to further

degrade Congress’s lawmaking

authority by shifting decision-making

away from elected officials into the

hands of unelected bureaucrats.”

Representative Tom Price (R-GA)

Chairman of the House Budget Committee

Congress Seeking Control Reviewing CMMI’s Role

Test new payment and service

delivery models

Evaluate results and advance best

practices

Upon validation and proven cost savings,

expand to broader Medicare program

Key CMMI Programs

• Pioneer ACO Model

• Next Generation ACO Model

• Comprehensive ESRD Care Model

• Nursing Home Value-Based Purchasing

Demonstration

• Bundled Payments for Care Improvement Initiative

• Vermont All-Payer ACO Model

• CJR and EPM bundled payment models

• Comprehensive Primary Care Plus

• Oncology Care Model


12 12

Program Timeline Provides Shelter

Providers Likely to Gain More Clarity Before Key Decision Points

Source: cms.gov, Health Care Advisory Board interviews and analysis.

2017 2018 2019 2020 2021

Year 1 starts,

July 1, 2017

Year 2 starts,

Jan 1, 2018

Year 3 starts,

Jan 1, 2019

Year 4 starts,

Jan 1, 2020

Year 5 starts,

Jan 1, 2021

6 Months 12 Months 12 Months 12 Months

SHFFT and Cardiac EPM Performance Periods

Mandatory

downside risk

commences

Voluntary

downside risk

commences

13

2

3

1

Road Map


The Accelerating Shift Toward Value-Based Payments


Expert Insight for 2017 and Beyond


14 14

Central Elements of the Mandatory Bundles

EPMs Largely Follow the Overall Structure of CJR Model Design


Definition Why It’s Important

Episode of

Care

Target Price

Reconciliation

Process

Quality

All care related to selected MS-DRGs

during anchor hospitalization and 90

days post-discharge (all Medicare

Part A and B)

The program holds hospitals

accountable for financial

responsibility for spending across the

entire episode of care for eligible

episodes

CMS spending goal for an episode of

care; a target that is up to 3% lower

(discounted) than historical/regional

spending performance

This is the benchmark that your

episodic spending will be judged

against

Process used to determine difference

between hospital performance

(actual episode spend) and target

price

This is the process CMS uses to

determine if it will make a

reconciliation payment to you, or if

you will owe a repayment

Specific measures that CMS has

defined as important indicators of

quality for EPM episodes of care

Quality performance determines the

discount required and whether your

organization is eligible to receive a

reconciliation payment


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1 2 3


Expansion of CJR to

include hip/femur repair First mandatory bundles for

cardiac episodes

Cardiac rehab incentive

payment system

The final rule adds financial

responsibility for SHFFT1

episodes to hospitals in

existing CJR markets

Hospitals in 98 markets

responsible for cost and quality

outcomes for heart attack and

bypass episodes

CMS establishes a two-tiered

incentive payment system to

increase utilization of cardiac

rehab services

CMS Expands CJR and Launches Two New Models

1) Surgical hip/femur fracture treatment.


16 16

CJR Markets Assume Additional Responsibility

Hospitals Now Take Financial Ownership for Hip/Femur Repair Episode

Expansion of CJR to include hip/femur repair


1) Metropolitan Statistical Area.

Current CJR Program SHFFT EPM

Hospitals within 67

geographically defined MSAs1

Medicare enrollees with

parts A and B, discharged

with LEJR (DRG 469 or

470)

Medicare enrollees with

parts A and B, discharged

with SHFFT (DRG 480-482)

SHFFT by the Numbers

Estimated annual number of

eligible SHFFT episodes in

the 67 eligible MSAs

33,000 Estimated savings from the

SHFFT EPM

$109M Estimated hospitals that will

participate in the SHFFT EPM

860


17 17

Understanding CMS’ Rationale

CMS Signals an Interest in Patients with Chronic Conditions


Most common principle discharge

diagnosis for Medicare FFS

beneficiaries in 2013

8th

Estimated lifetime cost for all hip

fractures in the U.S. in one year

$20B

Hip Fractures by the

Numbers

Mortality rate associated with

hip fractures at one year

33%

People aged 65 years or older

admitted to the hospital in 2010

258,000

Three Key Reasons for

Selecting SHFFT

Cost: CMS spends an average of

$4.7B annually for 90-day SHFFT

episodes

Volumes: Hip fractures are common

in the Medicare patient population

Patient population: Beneficiaries

typically have chronic conditions that

commonly contribute to the initiation of

the episode


18 18

Rewarding Better Quality

SHFFT EPM Quality Measures

1) Total hip arthroplasty/total knee arthroplasty.

Excellent

• Eligible for reconciliation

• 1.5% adjustment to discount factor

Below Acceptable

• Not eligible for reconciliation

• No adjustment to discount factor

Acceptable



Good


• 1% adjustment to discount factor

Quality performance

assessed1 to find

composite quality score,

weighted as follows:

• 50% Complication

Rate

• 40% HCAHPS

• 10% Voluntary

patient-reported

outcomes

Outcomes

Measures patient

satisfaction across various

aspects of care quality

HCAHPS Score

• Risk-standardized

complication rate for

THA/TKA1

• Voluntary

patient-reported

outcomes


19 19

A Focus on PAC Critical for SHFFT Episodes

Post-Acute a Major Cost Driver for Hip/Femur Repair


$346 $628

$2K $3K

$13K

$17K

Rehab OP Physician Readmissions Index Admission Post Acute Care

SHFFT 90-Day Episodic Costs

Medicare, 2015

PAC drives half

of total episodic

costs


20 20

Assessing the Cardiac EPMs

Bypass and Heart Attack Are the First Mandatory Cardiac Bundles

First mandatory bundles for cardiac episodes

Cardiac EPMs

CABG AMI • MS-DRGs 231-236

• All care during index hospitalization

through to 90-days post-discharge

• Hospital would be financially

responsible for cost, quality of the

episode

• MS-DRGs 280-282; 246-251

• All care during index hospitalization

through to 90-days post-discharge

• Hospital would be financially

responsible for cost, quality of the

episode


Cardiac EPMs by the Numbers

Estimated annual number of

eligible AMI episodes

136,000 Estimated savings from the

cardiac EPMs

$50M Estimated annual number of

eligible CABG episodes

42,000


21 21

How Did We Get Here?

CMS Has Been Building to Mandatory Cardiac Bundles for Years

Medicare Participating Heart

Bypass Demo

Acute Care Episode (ACE) Demo

Bundled Payment for Care

Improvement (BPCI)

• 1991-1996

• Seven hospitals

• Tested bundled Part A and B payments

for two CABG DRGs

• 2013 – ongoing

• 4 Models, includes medical and surgical

cardiac episodes

• First year preliminary results available 1

2

3

CMS Evolution to Cardiac Bundling

• 2009-2012

• 3-years, 5 participants

• Bundled Part A and B payments for nine cardiac DRGs

Cardiovascular a Familiar Target for

Quality Measures

• Readmissions Reduction Program

includes AMI, HF

• Hospital-based VBP includes AMI,

HF 30-day mortality rates

• AMI, HF 30-Day payment reporting

• AMI, HF excess days metric



22 22

PCI Included in the AMI EPM

Bundle Encompasses Both Medical and Surgical MS-DRGs

AMI EPM

• Would encompass both medical

treatment of AMI as well as

revascularization via PCI

• Medical episodes likely to be slightly

more than half of the EPM

• Excludes intracardiac procedures

The AMI model is the first Innovation

Center episode payment model that

includes substantially different

clinical care pathways (medical

management and PCI) for a single

clinical condition in one episode in

a model and, as such, represents an

important next step in testing

episode payment models for

clinical conditions which involve a

variety of different approaches to

treatment and management.

-CMS

AMI by the Numbers

Of all beneficiaries discharged with

AMI as principle diagnosis in 2013

2.9% Total annual Medicare spending on AMI

episodes

$4.1B



23 23

Participating Hospitals Selected at Random

CABG and AMI EPMs Implemented Together


Estimated number of hospitals

participating in the CABG and AMI EPMs

1,120

MSAs chosen randomly across the country

98

The list of selected MSAs and participating hospitals is

available at cms.gov

?

https://innovation.cms.gov/initiatives/epm


24 24

Rewarding Better Quality

Cardiac EPM Quality Measures

1) Society of Thoracic Surgeons

Excellent


• 1.5% adjustment to discount factor

Below Acceptable

• Not eligible for reconciliation


Acceptable



Good


• 1% adjustment to discount factor Quality performance

assessed1 to find

composite quality score,

weighted as follows:

• 80% Outcomes

• 20% HCAHPS

Outcomes

Measures patient

satisfaction across various

aspects of care quality

HCAHPS Score

• CABG:

• 30-day mortality

rates

• Voluntary reporting

of the STS1 CABG

score

• AMI

• 30-day mortality

• Excess days


25 25

$32K

$2.7K $4.4K

$1.5K $1.1K

$200

$8K

$6.4K

$4.8K $2.4K

$1.3K $300

$15K

$3.4K $2K $1.7K $1.7K

$200

Index Admission Readmissions Post-Acute Care Physician OP Rehab

CABG AMI AMI with PCI

Assessing Costs At 90 Days After Admission

CABG and AMI EPMs Require Tailored Strategies

1) Post-acute care.

2) Medical treatment of AMI.

CABG, AMI, and AMI with PCI 90 Day Costs

Medicare, 2015

Index admission

remains a large

source of costs at

90 days for CABG

PAC1 an

important

contributor to total

episodic costs



26 26

A Two-Tiered Incentive for Cardiac Rehab

CMS Proposal Rewards Significant Cardiac Rehab Utilization

Cardiac rehab incentive payment system

1) Proposed cardiac rehab HCPCS codes for inclusion: G0422. 93797, 93798 and G0423.

2) While the incentive payment system does not limit the number of payments, exciting regulations

limit the number of covered cardiac sessions to two, one hour sessions per day for a total of 36

sessions over 36 weeks, with an option to extend to an additional 36.

Cardiac Rehab Incentive Payment System1

Normal FFS

Payment

First 11

sessions

Subsequent sessions 2

$25/session $175/session

Chosen by CMS based on

evidence that beneficiaries

have lower mortality rates with

12-23 cardiac rehab sessions

completed

12-Session Threshold An Uncertain Financial Impact

Range of CMS’ estimate of the impact

of the proposal: it could result in

additional spend or significant savings

+29M to -32M

+ incentive payments for services provided

over 90-day period


Hospital receives

incentive payment

27

2

3

1

Road Map


The Accelerating Shift Towards Value-Based Payments

Overview of the Proposal

Assessing the Impact and Next Steps


28 28

What to Expect in 2017 and Beyond

Megan Tooley

Practice Manager

[email protected]

Rob Lazerow

Managing Director

[email protected]

Guidance for Hospital Executives and Cardiovascular Service Line Leaders


29 29

Join Us on February 1 for Part II


Understand CMS’s Final Rule

Expanding Mandatory

Bundled Payments

A comprehensive overview of

CMS’s final rule expanding

bundled payments. Includes a

discussion of major program

components and key differences

between the proposed and final

ruling.

An in-depth review of the

mechanics of CMS’s cardiac

bundled payment model, including

how the bundles will be structured

and what cardiovascular

administrators can do to prepare for

success under bundles.

February 1, 2017 at 1p.m.

The Final Mandatory Cardiac

Bundling Rule: What CV Leaders

Need to Know


I. II.






30 30

How Can We Help You Prepare?

Key Advisory Board Resources

Data and

Analytics

Request a tailored

discussion with our

team, where we can

use our analytics to

identify opportunities

Technologies

Our Dedicated Advisors

will help you harness and

optimize the value of your

current technologies

Executive

Education

Stay tuned for future

webinars,

publications, and best

practice guides on

EPM payments

To set up time with our experts or for more

information, please complete the survey

question at the end of this section, or

email [email protected]

Consulting

Services

We have decades of

experience in

managing costs and

utilization to help you

win under EPM

Spotlight:

Cardiovascular Roundtable

Membership program dedicated to your

CV strategic and operational priorities

New Best Practice Resources:

• The Playbook for CV Episodic Costs

• Reducing Procedural Readmissions


mailto:[email protected]


31 31

Analytical Resources Available

• Organization-specific

data relative to national

benchmarks for

orthopedic and cardiac

complications,

readmissions and

HCAHPS

• Examine Medicare

patient transitions from

acute care to PAC

setting for EPM

patients

• View comparative raw

readmissions rates

between PAC types

and providers

• View episodic

spending allocation at

specific locations and

time intervals following

anchor discharge

• Modify view in

intervals of 5 days (up

to 90) following anchor

hospitalization

The Hospital

Benchmark Generator

Care Transitions

Mapping Tool

Care Coordination

Episode Profiler


https://www.advisory.com/research/health-care-advisory-board/tools/2014/benchmark-generator

https://www.advisory.com/research/health-care-advisory-board/tools/2014/benchmark-generator

https://www.advisory.com/research/post-acute-care-collaborative/members/tools/care-transitions-mapping-tool

https://www.advisory.com/research/post-acute-care-collaborative/members/tools/care-transitions-mapping-tool

https://www.advisory.com/research/financial-leadership-council/tools/2015/joint-replacement-episode-profiler

https://www.advisory.com/research/financial-leadership-council/tools/2015/joint-replacement-episode-profiler


32 32

Additional Tools and Services for Support

ABC Capabilities Span Analytics, Strategy and Execution Partnership


Decision

support

tools

Strategy and

execution

support

services

▪ Identification of largest cost and

quality opportunities

– Variation in device cost, test

utilization, LOS by physician

▪ Identification of revenue risks and

opportunities

– Physician referral patterns

– Splitter analysis and leakage

▪ Identification of largest cost and

quality improvement opportunities

– PAC provider comparisons

– SNF Length of stay variability

– Readmissions analysis

▪ Areas of consulting expertise

– Bundled payment implementation

– Physician alignment strategies

– Standardizing care pathways

▪ Subscription based strategic advisory

services, including

– Discharge and utilization

recommendations

– Facility and market specific data

▪ Integrated workflow platform

Enables coordinated, proactive and

efficient care management across

settings

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