Living With Bundled Payments The End of the Beginning, or the Beginning of the End? Joshua Jacobs, JD, MBA
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Topics For Our Discussion • An Overview of the CMS Innovation Center and the Bundled Payments for Care Improvement (BPCI) Initiative • The Windsor Bundled Payment Experience – From Conceptualization to Operationalization • Strategies for Succeeding in a BPCI World • How Far Can the Bundle Revolution Go? 3
4 Source: Washington Post
Overview The CMS Innovation Center §3021 of the Affordable Care Act • Focused on: • Testing new payment and service delivery models • Evaluating results and advancing best practices • Engaging a broad range of stakeholders to develop additional models for testing 7 Categories of Innovation 1. Accountable Care 2. Episode-Based Payment Initiatives 3. Primary Care Transformation 4. Medicaid and CHIP 5. Medicare-Medicaid Enrollees 6. Accelerate the Development and Testing of New Payment and Service Models 7. Speed the Adoption of Best Practices 5
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Overview Continuum of Medicare Risk Models Continuum of Medicare Risk Models Pay-for- Bundled Shared Full Shared Savings Performance Payments Risk Risk • Hospital VBP Program • Bundled Payments • MSSP Track 1 • MSSP Track 2 • Next-Generation for Care (50% sharing) (60% sharing) ACO (optional • Hospital Readmissions Improvement full performance risk) Reduction Program • MSSP Track 3 Initiative (BPCI) (up to 75% sharing) • Medicare • HAC Reduction Advantage (provider- Program • Next-Generation sponsored) ACO (80-85% • Merit-Based Incentive sharing) Payment System Increasing Financial Risk Source: Health Care Advisory Board interviews and analysis.
Overview CMS Sets Targets for Value-Based Payments Payment Targets Demonstrate Commitment to FFS 1 Alternatives Aggressive Targets for Transition to Risk FFS Increasingly Tied to Value Percent of Medicare Payments Tied to Risk Models Percent of Medicare Payments Tied to Quality 50% 90% 85% 30% 20% 80% 2015 2016 2018 2015 2016 2018 Hospital-Acquired Condition Medicare Shared Reduction Program Examples of Qualifying Savings Program Examples of Quality/ Hospital Value-Based Risk Models Value Programs Purchasing Program Bundled Payments for Care Improvement Initiative Hospital Readmissions Reduction Program Patient-Centered Medical Home Merit-Based Incentive Payment System 1) Fee-for-Service. Source: HHS, “Progress Towards Achieving Better Care, Smarter Spending, Healthier People,” available at: http://www.hhs.gov/, accessed February 2015; Health Care Advisory Board interviews and analysis.
Overview BPCI Participation Continues to Fluctuate Types of Organizations Participating in BPCI 3 Total Number of BPCI 1 Participants Episode Initiators as of January 2016 As of January 2016 PAC Physician Practices Providers 2 6,000+ 18% 51% 2,110 1574 26% 450 342 Acute Care Hospitals Q4 2013 Q1 2014 Q3 2014 Q3 2015 Q1 2016 What happened? 1) Bundled Payments for Care Improvement Initiative. 2) Includes SNFs, HHA, Inpatient Rehabilitation Facilities, and Long-term Acute Care Hospitals. 3) Does not add to 100% because Awardees not initiating episodes in BCPI are not included. Source: CMS, “Bundled Payments for Care Improvement (BPCI) Initiative: General Information,” February 2016; The Lewin Group, “CMS Bundled Payments for Care Improvement (BPCI) Initiative Models 2-4: Year 1 Evaluation & Monitoring Annual Report,” January 2015; Health Care Advisory Board interviews and analysis.
Overview Orthopedic Bundling Now Mandatory CMMI 1 Program Requires Orthopedic Bundling in 67 Select Markets The Comprehensive Care for Joint Replacement (CJR) Model Key Program Features Program Timeline July 2015 Program announced; comment period through September 8th Focus on joints Comprehensive episode Average expenditure varies Includes all related Part A April 2016 from $16,500 to $33,000 by and Part B services for 90 First performance year begins; no geography days post-discharge episode discount for first year 2017-2020 Downside risk incorporated; 1% discount in 2017, 2% for 2018 onward Mandatory in 67 markets Retrospective bundle $153M No application process; CMS will pay each provider CAHs 1 and BPCI 2 Phase II separately, conduct annual participants exempt reconciliation process Estimated savings to Medicare over the 5 years of the model 1) Center for Medicare and Medicaid Innovation. 2) Critical Access Hospitals. 3) Bundled Payments for Care Improvement Initiative. Source: Centers for Medicare and Medicaid Services; Advisory Board interviews and analysis.
Overview Proposed Cardiac Bundles 200,000 beneficiaries $6 Billion in cost 50% spend variation Program Timeline 12
Real-World Experience Windsor’s Journey to Bundled Payments December 2013 • Learning more about Bundled Payments – discover a convening organization. • Contact said convener – no real response Early February 2014 • Convener’s representatives reach out to us because one of our SNFs is in their Model 2 market. Late February 2014 • Hospital and convener host information session for SNFs March 2014 • Executive meeting at Convener’s offices – Open Enrollment ends in 4 weeks! 13
Real-World Experience Windsor’s Journey to Bundled Payments April 2014 • Enroll with 3 different organizations: • Convener #1 • Convener #2 • As our own Episode Initiator July 31, 2014 • CMS Announces Pricing Data delay until October August 2014 • Get Preliminary Pricing Data from Convener October 2014 • Negotiate with conveners & select our partner 14
Real-World Experience Windsor’s Journey to Bundled Payments Late October 2014 • CMS Announces Additional Pricing Delay Until Mid-November – This Dooms the Looming Start Date of January 1, 2015 • Program start delayed until April 1, 2015 November 2014 • Technology Integrations December 2014 Looming Deadline – January 26 to Select Bundles for April 1 Start • CMS (finally) send the pricing data January 2015 • Not enough time to make Bundle Selection – CMS Offers new April 13 selection deadline for a July 1 program start date 15
Real-World Experience Windsor’s Journey to Bundled Payments April 2015 • Bundle Selection! 88 Episode Categories across 8 SNFs. 16
Real-World Experience Windsor’s Journey to Bundled Payments Late April 2015 • Whoops. CMS announces they made another error. We now have an option to add bundles for an October 1 star. Double-check our selections again prior to May 1. Decide on ‘placeholder’ bundles for now, and more to follow. July 1, 2015 • Program launches with 8 ‘placeholder’ bundles. October 1, 2015 • Launch with 88 bundles 17
Real-World Experience Windsor’s Experience With BPCI External Challenges • Dependency on Anchor Diagnosis information • Other key participants in an Episode don’t share our risk • Trumping Rules Internal Challenges – the C-suite What we said What they were thinking Bundled payments are the future! Why be the guinea pig? We are going to take on risk for our What was wrong with Fee For Service? outcomes! CMS is incentivizing us! After they take a 3% haircut? We’ll get paid more if we empty our beds Your going to dry up our revenue stream? faster! CMS will send us a retrospective bonus! Ha! 18
Real-World Experience Operational Challenges Success in Bundled Payments depends largely on 2 factors: 1. Few Hospital Readmissions 2. Low Length of Stay Less Significant Factors Include: • Part B Billing • Home Health Costs • Medical Equipment Costs 19
Real-World Experience Operational Challenges Who is in a Bundle? • Hospital Anchor DRG is determinative • If you are only bundling selected patients, knowing the Anchor DRG is very important • However, getting accurate information is harder than it looks The other Trump • Your risk-program may interfere with goals of key decision makers at your referral partners 20
Real-World Experience Changes for BPCI Discharge Planning Begins on Admission Treating in-Place is a Huge Priority Better Collaboration with Home Care Technology Integrations Making Sure Team Members Understand the Financial Consequences of Decisions 21
Real-World Experience 22
What’s Next? Expansion of Bundled Payments CMS Has Made Their Intentions Very Clear • Risk-based payments are already exceeding targets • Proposed Expansion to Cardiac Procedures • The data being collected by all of the voluntary BPCI programs will be used to build the framework for additional mandatory programs in any of the 48 DRGs. This is true even though the evidence for cost savings under a bundled regime is not very convincing. 23
What’s Next? Bundled Payments - Winners There Will Be Big Winners • Hospitals and medical groups who ‘own’ the bundle • Care management companies • Post-Acute providers that can demonstrate very low cost • Post-Acute providers that do care management well • Physicians that don’t generate large Part B billings • Outpatient surgery centers • Anything that can do it for less 24
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