Value Based Payment Models: What are they and strategies for success

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Value Based Payment Models: What

are they and strategies for success

Melinda Hancock

National Chair Elect

(2)

Shaping the Curve

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The Continuum of Risk

3

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Moving Away From FFS…

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Issued on 1/26/15

HHS has set a goal of tying 30 percent of traditional, or fee-for-service,

Medicare payments to quality or value through alternative payment models,

such as Accountable Care Organizations (ACOs) or bundled payment

arrangements by the end of 2016, and tying 50 percent of payments to these

models by the end of 2018. HHS also set a goal of tying 85 percent of all

traditional Medicare payments to quality or value by 2016 and 90 percent by

2018 through programs such as the Hospital Value Based Purchasing and

the Hospital Readmissions Reduction Programs. This is the first time in the

history of the Medicare program that HHS has set explicit goals for

alternative payment models and value-based payments.

To make these goals scalable beyond Medicare, Secretary Burwell also

announced the creation of a Health Care Payment Learning and Action

Network. Through the Learning and Action Network, HHS will work with

private payers, employers, consumers, providers, states and state Medicaid

programs, and other partners to expand alternative payment models into their

programs.

(5)

Category 1: Fee for Service—No Link to

Quality

Category 2: Fee for Service—Link to

Quality

`Category 3: Alternative Payment Models with FFS infrastructure

Category 4: Population-Based Payment

Payments are based on volume of services and not linked to quality or

efficiency

At least a portion of payments vary based on the quality or efficiency of health care delivery

Some payment is linked to the effective management of a population or an episode of care Payments still triggered by delivery of services, but opportunities for shared savings or 2-sided risk

Payment is not directly triggered by service delivery so volume is not linked to payment

Clinicians and

organizations are paid and responsible for the care of a beneficiary for a long period (eg, >1 year)

Limited in Medicare fee-for-service

Majority of Medicare payments now are linked to quality Hospital value-based purchasing Physician Value-Based Modifier Readmissions/Hospital Acquired Condition Reduction Program

Accountable care organizations Medical homes

Bundled payments

Eligible Pioneer accountable care

organizations in years 3-5 Some Medicare Advantage plan payments to clinicians and organizations

Some Medicare-Medicaid (duals) plan payments to clinicians and organizations

Another Way of Looking at This

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SOURCE: Source: Rahul Rajkumar, MD, JD; Patrick H. Conway, MD, MSc; Marilyn Tavenner, RN, MHA CMS-Engaging Mulitple Payers in Payment Reform. JAMA. 2014;311(19(:1967-1968

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Aetna

Value Based Care is emerging as a solution to address rising health care costs,

clinical inefficiency and duplication of services, and to make it easier for people to

get the care they need. In value-based models, doctors and hospitals are paid for

helping keep people healthy and for improving the health of those who have

chronic conditions in an evidence-based, cost-effective way.

This is a departure from the traditional service approach. With

fee-for-service, doctors and hospitals are paid based on the number of health care

services they deliver, such as tests and procedures. Payment generally has little

to do with whether their patients’ health improves

-http://news.aetna.com/value-based-care-better-care-better-health-lower-costs/#sthash.vrCciFOO.dpuf

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Aetna Defines 4 Models

1. Accountable Care Organization

2. Patient Centered Medical Home

3. Pay 4 Performance (FFS Base)

4. Bundled Payments

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United Transition

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United: Value Based Care

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United Metrics

• What metrics are used for UnitedHealthcare’s

value-based initiatives?

–

HEDIS Basic and HEDIS Extended Quality Measures

–

Quality Defects

–

Intermediate Outcomes—HAC/HAI

–

Optimal/Tier 1 Prescription Drugs

–

Efficient Lab Use

–

Risk adjusted ER and Admission Rates

–

Readmission Rates/Avg Lengths of Stay

–

Potentially Avoidable Hospitalizations

–

Total Cost of Care Targets

(11)

Anthem Value Based

Anthem is committing $38 billion in its move away from fee-for-service to

value-based payments. The company, which operates Blue Cross and Blue Shield

plans in 14 states, aims to increase its value-based payments to $65 billion by

late 2018.

• "We're changing the way providers and insurers interact with one another to

lower medical costs," Anthem chief executive officer Joe Swedish told

Forbes. "Currently, we have more than $38 billion in spend tied to

value-based contracts, representing 30% of our commercial claims and

approximately 40,000 providers."

Anthem's move toward value-based payments is part of a trend among private

payers that aims to improve healthcare while reining in costs by rewarding health

outcomes and quality of care, as opposed to treatments and procedures

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CMMI Initiatives

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• Value Based Purchasing

• Readmission Reduction Program

• Hospital Acquired Conditions

• Value Based Payment Modifier

• SNF Value Based Purchasing

Mandatory

• Medicare Shared Savings Program

• Bundled Payment for Care Improvement

• Comprehensive Primary Care Initiative

• Health Care Innovation Grants

• Community Based Care Transitions Program

Voluntary

• ACO Investment Model

• Beneficiary Engagement Model Opportunities

• Medicare IVIG Demonstration

• Comprehensive ESRD Initiative

• Transforming Clinical Practices Initiative

In Process

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Alignment of Strategy and Metrics

Questions to Ask

• How many metrics am I tracking?

• How many metrics are duplicated? Do

they have the same numerator and

denominator? Source?

• Are they aligned with our results and

strategic goals?

• What contracts are coming up for

renewal that should have new metrics or

should be at risk (mgd care, medical

directorships, PMAs, etc.)

(14)

Program shift each year

14

Hospital Mandatory Programs

2013

2014

2015

2016

2017

Value Based Purchasing

1.0%

1.25%

1.5%

1.75%

2.0%

Readmission Reduction Program

1.0%

2.0%

3.0%

Hospital Acquired Conditions

-

1.0%

(15)

(16)

VBP Shifting of Domain Weights

Each year, not only do the domains shift, but

the dollars increase and the metrics change.

Medicare Inpatient % Reimbursement At Risk

(17)

Considerations for Today

Metric

Why

Medicare Spend Per Beneficiary

In 2017 Performance Period now

and worth 25% of 2017 VBP

CLABSI, CAUTI, Cdiff, SSI,

MRSA

Double count for HAC and all in

effect for 2017

Mortality

Back to 25% of 2017 VBP

Influenza Vaccination & Elective

Deliveries prior to 39 weeks

While only 5% of 2017 VBP and in

the current performance period,

they are the main measures for

this domain.

TKA&THA Complication

New for FY 2019 VBP but started

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• System was penalized

$376,003

in FY’15 VBP Program

• Must acknowledge the amount UNEARNED

• Of the programs dollars made available:

–

System did not capitalize on

$6,187,541

Earned Back

Unearned

Available $$

% Earned

CGH

$288,853

$540,406

$829,259

34.83%

$288,853

$0

$829,259

Chesapeake General Performance

VBP FY'13 TOTAL PERFORMANCE

Breakeven Point: $451,333

Earned Back

Unearned

Available $$

% Earned

System

$4,925,357

$6,187,541

$11,112,898

44.32%

$0

$11,112,898

Overall Performance

VBP FY'15 TOTAL PERFORMANCE

(19)

Readmission Reduction Program

• 9% of Current and Future Medicare Reimbursement at Risk

–

3% penalty of Medicare Reimbursement at risk each program year

–

Measured Populations 30 days from DISCHARGE

• AMI, HF, PN, COPD, THA & TKA

• August 2014: CABG Added to FY 2017

• Performance Periods: 3 Year Rolling Program

–

FY’15: July 1, 2010 – June 30, 2013 – 3%

–

FY’16: July 1, 2011 – June 30, 2014 – 3%

–

FY’17: July 1, 2012 – June 30, 2015 – 3%

–

FY’18: July 1, 2013 – June 30, 2016 – 3%

–

FY’19: July 1, 2014 – June 30, 2017 – 3%

Currently participating in 3

performance periods

(20)

How are Readmissions Measured?

• Scoring Index based at 1.0

• Calculate Excess Readmission Ratio

• Excess Readmission Ratio > 1 =

BAD

• Excess Readmission Ratio < 1 = GOOD

Facility

Predicted

Value

(21)

Drilldown on 2015 Readmissions

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Readmissions by Measure – Last 3

Years

25 30 37 15 20 25 54 50 45 33 30 23 5 6 5 2010 - 2011 2011 - 2012 2012 - 2013

AMI COPD HF PN THA / TKA

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Hospital Acquired Conditions

• 12 Hospital Acquired Conditions Identified

–

Divided in to 2 Domains

• If a hospital is in the

BOTTOM QUARTILE

(worst

performing 25% in the country), it will be penalized a

FULL 1%

of Medicare Reimbursement

• Penalties will begin FY’15 (beginning October 1, 2014)

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Hospital Acquired Conditions: FY 2017

First Domain: PSIs

Second Domain: CDC

Pressure Ulcer Rate

CLABSI

Foreign Object Left in Body

CAUTI

Iatrogenic Pneumothorax Rate

SSI Following Colon Surgery (FY 2016)

Postoperative Physiologic and

Metabolic Derangement Rate

SSI Following Abdominal Hysterectomy

(FY 2016)

Postoperative Pulmonary Embolism and

Deep Vein Thrombosis Rate

Methicillin-Resistant Staphylococcus

Aureus (MRSA) Bacteremia (FY 2017)

Accidental Puncture and Laceration

Rate

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Metrics in Play for 2017

0.000 0.200 0.400 0.600 0.800 1.000 1.200 1.400 1.600 1.800 SSI Colon SSI Hyster. MRSA C Diff 0.367 0.864 1.644 0.891 0.488 0.513 1.423 0.661 1.000 1.000 1.000 1.000

Natl Avg State Avg Hospital

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Thoughts from John Glaser, CEO

“Under payment models that reward

efficiency and high-quality care, if a

hospital or health system is losing

money due to inadequate clinical

performance, it cannot afford to wait

one or more months to find out the

problem. Healthcare leaders should

understand how their organizations

are performing today so they can

take corrective action before revenue

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Physician Penalties Arrive

27 SOURCE: Medical Group Management Association (MGMA) 2014

Year/Progra

m

eRX

PQRS

Meaningful

Use

Value

Modifier

MIPS

2012

-1.0%

2013

-1.5%

2014

-2.0%

2015

-1.5%

-1.0%

*

-1.0%

2016

-2.0%

2017

-2.0%

-3.0-5.0%

**

(each year)

-4.0%

2018***

up to -4%

2019***

up to -5%

2020***

up to -7%

2021***

up to -9%

* Penalties will be greater for unsuccessful e-prescribers

** Penalty amount could increase up to 5% depending on meaningful use success rates

***MIPS information is estimate only

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Value Based Payment Modifier

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Medicare

–

Value Based Payment

Modifier



Based on 2013 data

affecting all by 2017



The modifier will be

budget-neutral for Medicare and will

adjust Part B payments

based on the quality and

cost of care delivered.

SOURCE: Proposed 2013 physician fee schedule, Centers for Medicare & Medicaid

Services, Federal Register, July 30

(gpo.gov/fdsys/pkg/FR-2012-07-30/pdf/2012-16814.pdf)

Assessment

Low

Cost

Average

Cost

High

Cost

High Quality

4.0%*

2.0%*

0.0%

Average Quality

2.0%*

0.0%

-2.0%

Low Quality

0.0%

-2.0%

-4.0%

(29)

Bundled Payments

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• There are 4 models to choose from and each one has its unique attributes…

MODEL 1 MODEL 2 MODEL 3 MODEL 4

MODEL NAME Retrospective Acute Care Hospital Stay Only Retrospective Acute Care Hospital Stay plus Post-Acute Care Retrospective Post-Acute Care Only Acute Care Hospital Stay Only SCOPE OF

EPISODES Entire Hospital EpisodesUp to 48

Up to 48 Episodes Up to 48 Episodes SERVICES INCLUDED IN EPISODES All Part A services paid as part of the MSDRG Payment All non-hospice Part A and B services during the initial inpatient stay, post-acute period and readmissions All non-hospice Part A and B services during the post-acute period and readmissions All non-hospice Part A and B services (including the hospital and physician) during initial inpatient stay and readmissions

PAYMENT Retrospective Retrospective Retrospective Prospective

BPCI DISCOUNT 0.5%, and increasing over time 2-3% 3% 3-3.25% NUMBER OF ADMITTED BPCI HEALTHCARE ORGANIZATION S AS OF 7/31/14 19 2,055 4,534 17

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Fundamentals of the Program

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• CMS created 48 Episodes, each with up to 15 individual MS-DRG codes

• Can be categorized into 9 Service Lines; illustrative purposes only

• Model 2, 3, or 4 applicants may select 1-48 Episodes for testing

DHG Category: Vascular Services

• Episode: Major cardiovascular procedure

– MS-DRGs 237 & 238

• Episode: Medical peripheral vascular disorders

– MS-DRGs 299, 300, & 301

• Episode: Other vascular surgery

(31)

(32)

Reasons for BPCI & Episode Selection

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Outpatient Bundling/OCM

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• Summary of additional Bundled Models

Comprehensive APCs

Oncology Care Model

 25 Comprehensive APCs

 Effective 1/1/15

 Mandatory for all OPPS

hospitals

 Up to 6 months of care

 Key to success will be

management of internal cost

structure

 Covers outpatient chemotherapy

care for up to 6 months

 For Oncology physician practices

 Several participation

requirements

 Open to other payers to

participate

 Includes Part A, B and D

(34)

Medicare Shared Savings Program

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Now an annual enrollment process

Another 89 started 1/1/15

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Fundamentals of the MSSP Program

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Explanation Of How MSSP Works And Are Structured.

Health Care Advisory Board, 2012

DESIGN

ELEMENT ONE-SIDED MODEL TWO-SIDED MODEL

Sharing Rate Up to 50% based on quality performance Up to 60% based on quality performance Minimum Savings Rate (MSR) Varies by number of assigned beneficiaries 2% Shared Savings Method

First dollar sharing once MSR is met or exceeded

Maximum Sharing Cap

Total shared savings payments cannot exceed

10% of benchmark

Total shared savings payments cannot exceed

15% of benchmark

Minimum Loss Rate None

ACO repays share of all losses if expenditures are more than 2% higher than

benchmark

Shared Loss Rate None

One minus final sharing rate applied once minimum loss

rate is met; loss rate is capped at 60%

Maximum Loss Cap None

Losses capped at 5%, 7.5%, 10% in years 1, 2, 3,

respectively

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ACO Early Results

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• To date, MSSP and Pioneers have generated $817M

of savings with $372M returned in savings

–

Pioneers: second year was better than first year ($96M

vs $87M). Achieved a 1% lower spending trend overall

for the Medicare population vs FFS. Almost 1/3 of

original participants have left the program

–

MSSP ACOs: Almost 25% of 2012/2013 participants

were able to share savings of over $300M. Another

quarter reduced spending but not enough to share

savings. One ACO overspent by $10M and owed $4M

back.

(37)

And then there were 19…

(38)

ACO Early Quality results

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• Overall higher average performance

–

Pioneer ACOs: all reported quality and mean quality

scores increased 19% and overall improvement on 28 of

33 quality measures. Also reported improved average

performance scores for patient and caregiver experience

for 6/7 measures.

–

MSSP ACOs: improved in 30 out of 33 measures and

overall increase in patient experience over FFS. Also

achieved higher average performance on 17/22 GPRO

measures. 9 MSSPs failed to report quality scores: 4 of

which would have qualified for shared savings

(39)

Challenges to Current Model

39



Fee For Service underlying structure



Reset of Base



Benchmarks



Required two sided transition



Upfront costs (2012 cohort study)



Beneficiary assignment retrospective

(40)

MSSP Proposed Expansion

40

On December 1, CMS proposed a 3

rd

Track

Issue

Track 1: Current

Track 1:

Proposed

Track 2:

Current

Track 2:

Proposed

Track 3:

Proposed

Risk One Sided No change Two Sided No change Two Sided

Transition To Two Sided

1st _{agreement is one}

sided but subsequent are two sided

Remove requirement to transition to two sided

Can go straight into two sided but cant go back to track 1

No change Same as Track 2

Assignmen t

Preliminary prospective

assignment for reports. Retrospective

assignment for

financial reconciliation

No change Same as Track 1 No change Prospective assignment for reports and financial reconciliation Benchmark s

Reset at the start of each agreement period

Seeking alternatives Same as Track 1 Seeking alternatives Same as Track 1 and seeking alternatives Quality Sharing Rate Up to 50% based on quality Up to 50% based on quality for 1st agreement period, reduced 10 % points for each subsequent pd under this model