New Jersey Delivery System Reform Incentive Program Blazing Trails - PowerPoint PPT Presentation

New Jersey Delivery System Reform Incentive Program “ Blazing Trails in Health Reform” July 30, 2015 HFMA Summer Education Session

NJ’s Pathway to DSRIP “Do not go where the path may lead, go instead where there is no path and leave a trail”  Since 2010, eight States have negotiated with CMS to implement a healthcare Delivery System Reform program target to the low income patient  Approved under the Medicaid 1115 Waiver, the DSRIP program incentivizes providers to transform traditional health care delivery systems from high cost/ high utilization programs to achieve lower cost, better quality, better care  NJ Low Income population is approximately 1.4 million – New Jersey Hospitals care for approximately ½ of this population annually 8 P 3 P 7 4 1 5 6 2 P

From an Inpatient Subsidy … Hospital Relief Special Fund NJ Low Income Funding Sources  Enacted in 2003 to help support NJ HRSF--> hospitals providing a disproportion share DSRIP, of inpatient services to low income 18% patients with Behavioral Health, Substance Abuse, HIV, and High Risk Pregnancy GME, 10% Charity, 72%  Distribution Formula based on Inpatient care volume and percentage of charity/ Medicaid FFS patients  No Performance Risk

….To Delivery Reform “It is not the mountain we conquer but ourselves”  To minimize the impact of Federal Upper Payment Limit (UPL) dollars lost due the conversion of Medicaid FFS to Medicaid HMO, NJ reorganized it’s Hospital Special Relief dollars ($166.6 M) to meet the requirements for the Medicaid 1115 Waiver program  DSRIP is the result of CMS granting NJ a five-year demonstration to continue to draw down the $83.3 M in federal matching dollars.  NJ Low Income population is approximately 1.4 million – Through the DSRIP program, New Jersey Hospitals have the opportunity to improve the care for approximately ½ of this population annually.

The New Jersey Difference Participation in NJ DSRIP programs are required in order for hospitals retain its low income subsidy funds Demonstration Total DSRIP Providers Participat Year Funding Eligible ing Providers California 2010-2015 $6.7 B NEW All Public Hospitals 21 Massachusetts 2012-2014 $628 M initial - Designated Safety Net 7 Extended to 2017 NEW Hospitals $690 M phase2 Texas 2010-2016 $11.4 B – NEW Public & Private Hospitals and 300+ and repurposed certain other providers funding New Jersey 2014-2017 $166 M – All Acute Care Hospitals 54 Repurposed Funding New York 2015-2019 $6.4 B – NEW Large Public Hospitals and TBD certain safety net providers Kansas 2015-2017 $ 60 M – Designated large public 2 Repurposed teaching or boarder city Funding children’s hospitals

NJ DSRIP  The program is open to all NJ hospitals  Historical HSRF hospital subsidy amounts were held less 20% in order to develop an incentive pool for non-HSRF hospitals  Subsidy funds range from $14 M to $250,000 per hospital  Regardless of funding amount, DSRIP program requirements the same for all hospitals DSRIP DY4 & 5: 50% dollars at risk DSRIP DY3: 25% dollars at risk DSRIP DY1 & 2: Develop Infrastructure HRSF: Funding Fixed Annually

NJ DSRIP Goals and Program Options Achieved through improved management of chronic diseases  Improve Care/Case Management  Asthma  Improve Discharge Planning  Behavioral Health  Expansion of Primary Care  Cardiac Care  Improve Quality of Care  Chemical Addiction/Substance  Improve Access to Care Abuse  Improve Patient Education  Diabetes  Improve Delivery of Care  HIV/AIDS  Improve Training and Efficiency  Pneumonia  Obesity 3

NJ DSRIP Program Structure “I see my path, but I don’t know where it leads…” • Infrastructure Development Stage 1 • Completion of application and procurement of project Stage 2 • Development of chronic medical condition redesign Fund Payment: and infrastructure DY3: 75% • Piloting and testing of chronic patient care models DY4: 50% DY5: 25% Stage 3 • Quality Improvement Reporting for Hospital- Fund Payment: Specific DSRIP Chronic Disease Management DY3: 15% Project DY4: 35% DY5: 50% Stage 4 • Population Focused Quality Improvement Reporting Fund Payment: • Collection and reporting of 45 “universal” metrics DY3: 10% from every hospital. (CMS removed 12 – April DY4: 15% 29th) DY5: 25%

NJ DSRIP Measures & Pay For Performance Measurement Subsidy Earned based on three types of Sources measures  P4R: Data collection and reporting EMR/ Chart measure results Based  P4P: Performance Measure – Uses a Measures, MMIS 35% “reduction in gap” methodology where Claims payment is earned by documenting an Based, annual reduction of 10% or greater 65%  UPP: Universal Performance Pool – Measures eligible for incentive dollars where performance above benchmark  Incentive pool dollars are determined based on initial incentive pool ‘carve out”, non participating hospitals, and undistributed dollars due to underperformance

DSRIP Documentation of Economic Value In addition to clinical and operational compliance, DSRIP participants must also develop a budget for the project selected and report actual program investment. Per the DOH guidance: DSRIP budgets have the following importance to the project: 1. The budget represents a commitment to the project as funding is essential to carrying out the project objective and outcome achievement. A low budget can be synonymous with low project funding and may be an indication of under committing to the project. 2. The budget becomes part of the financial plan for the project and should include two component parts: a. The hospital investment in the DSRIP project b. Documentation of Economic Value

DSRIP Documentation of Project Investment Direct / Allocated Expenses • Staff Salaries and Benefits (FT/PT or allocated) • Physician • Supplies • Consultants Indirect • Allocated Overhead • Depreciation and Bad Debt • Plant Operations Capital Expenditures • Equipment • Facility • Working Capital Other Expenses • Data collection and analytics • DSRIP Meetings (Learning Collaborative) The DY4 budget requirement is an annual budget equal to or greater than 80% of the hospital DY4 adjusted funding target.

DSRIP Documentation of Economic Value The budgeted economic value of the project measures the economic impact the DSRIP project is expected to have on the overall project population served by the DSRIP project. Hospital/ Reduced Payer Admissions/ Cost Reduction Savings Readmissions in Shorter Utilization LOS Care Process Cost Avoidance Revenue Improvements Reduced Reductions Emergency Room Extrapolation to General Population Program Economic Value In total best practice budgets include economic value of 30%-50% of the adjusted DY4 funding target.

DSRIP Economic Value Calculation Examples  If the expected admission rate reduction is 10% per year on a base of 750 admissions a reduction of 75 admissions per year is expected. If the value of those admissions priced at Medicaid payment rates is $8,600 per admission, the expected economic value is imputed at $645,000 [75 x $8,600].  For the above example, the marginal cost savings associated with the reduction in admissions would be includable in the budget. If the cost per admission were $8,500 and the marginal expense ratio is 40% then the marginal expense savings per admission would be calculated at $3,440, and a total cost savings of $258,000.  For those cased admitted, if average length of stay is reduced by .5 days on a patient population of 675 patients there would be a reduction of 337.5 patient days. If the average Medicaid payment per patient day is $1,400, then the imputed economic value associated with the reduced average length of stay is $472,500. [337.5 x $1,400].  Extrapolation of population improvement on a targeted population.  Research data shows a population of diabetes patients not managed incurs average health care costs of $10,500 per year compared to a managed patient population incurs average costs of $8,700, a savings of $1,800 per year. These savings may include costs not incurred by a hospital, for example pharmaceutical costs. A DSRIP target population of 500 patients would produce imputed cost savings of $900,000 annually to the overall health care system of providers.

St. Joseph’s Regional Medical Center DSRIP Program  Historical HSRF Subsidy was $10.6 M  2 nd largest provider of Charity Care / Medicaid services in the State  3 rd poorest city in the State  With approximately 69,000 or 12% of the low income population attributed to it, St. Joseph’s is one of the largest programs in the state