Taking Control of Your Managed Care Destiny AJAS 2017 April 3, - PowerPoint PPT Presentation

Taking Control of Your Managed Care Destiny AJAS 2017 April 3, 2017

All Roads Lead to Managed Care • Medicare Advantage • Special Needs Plans • Dual Demos • Medicaid Managed LTC • Medicare FFS – ACOs – Bundling – PPS Reform – Value-Based Purchasing / IMPACT Act – Unified PAC Assessment & Payment

Old World New World “Quality Networks” & Care Silos Preferred Providers Episodic Costing, Distinct Provider Analytics, & Payments Assumption of RISK Incentives for ACOs, Bundling & Enhancing Value-Based Utilization Purchasing Limited Care Integration Coordination & Among Providers Transitions PAC Value No Analysis; Quality/Financial Link Re-H Penalties

PAC is “Hot” • As such a small part of the total Medicare spend, why is there so much attention on post-acute / SNF care? – Our profit margins are very high relative to other sectors – We have a payment system that does not align well with cost (predictive power) – We have the most cost variability of any sector – Patient placement has been arbitrary with little correlation to outcomes (patient choice) – The system is ripe for “ Rationalization ”

The Future of LTC? • My thoughts (global market trends): – Healthcare will remain a “local business” – Divestiture from large national chains as they experience management challenges and struggle under highly leveraged transactions – Many facilities, especially new players, will suffer under highly leveraged purchases – Strong “Regional” operators – Acceleration of “Boutique” post -acute care

The Future of LTC? • My thoughts (operational issues): – Significant impact of healthcare reform in some markets, but little impact in others, especially rural – Risk slowly introduced to LTC providers as payment systems transition • Management and Scale required to succeed??? – Move toward outsourcing therapy and billing – Advancements in Analytics and Care Management technology – Ongoing rate pressure from Government spending constraints – Major PPS reform followed by adoption of Unified PAC

APM Impact on SNFs • http://kff.org/report-section/payment-and- delivery-system-reform-in-medicare-report/ • ACOs and Bundles reduce SNF admissions and LOS – In first 2 years, SNF spending decreased by > 20% for ACO population – Average H LOS for BCPI patients dropped from 3.58 days to 2.96 days – Hospital readmissions decreased at the 30, 60 & 90-day benchmarks – Average Medicare costs for each bundled episode of care decreased from $34,249 (year 1) to $27,541 (year 3) – BCPI Model 2 (hospitals + post-acute) episodes had lower PAC spending than non-BPCI episodes • Reduction attributable to decrease in use of SNF services and hospital readmission while Home Health increased • Discharges to rehab facilities fell from 44% to 28%

Quality Defined? • “Composite Quality Score” – 5-Star / Quality Measures – All cause readmission rate – Post-discharge readmission rate – Delta of functional ability upon admit and discharge – Patient satisfaction survey – Episodic cost

Risk • Statistics and Risk are about understanding how numbers, especially large numbers, behave • How are SNFs assuming Risk? – FFS: ISNP, BCPI, ACOs, Quality – Managed Care: Episodic, Capitation, Quality • Risk Checklist: – Scale, Tolerance, Data, ROI

Tremendous Variation in the Cost of Care • Large cost variations in Medicare and Private per capita expenses throughout the country • Limited to no quality correlation • Impacts public program spending and private insurance rates, representing among the biggest threats to the country’s fiscal health and global competitiveness • Post-acute care has the highest variability – Largely due to availability of venue options (supply), provider incentives and patient choice • New APMs are in part designed to reduce variability and unnecessary spending

Medicare v. Private Healthcare Costs http://www.nytimes.com/interactive/2015/12/15/up shot/the-best-places-for-better-cheaper-health-care- arent-what-experts-thought.html?_r=1

Mapping Medicare Disparities https://data.cms.gov/mapping-medicare-disparities

The Current PPS is Broken • Quantity v. Quality • Utilization v. Diagnosis • Heavily audited • Market forces putting downward pressure on utilization • PPS “refinements” have not addressed key short-comings: – MDS 3.0 / RUG-IV, Individual Therapy, Therapy Caps, etc.

Medicare FFS SNF Utilization Changes % Change Volume Measure 2008 2010 2012 2013 2014 2008 - 2014 Admissions / 1,000 Beneficiaries 73 72 68 67 66 -9.6% Days / 1,000 Beneficiaries 1,977 1,938 1,861 1,835 1,808 -8.5% Covered Days / Admission 27.0 27.1 27.4 27.6 27.6 2.2% Why?? • ACOs • Bundling • Growth of Observation Stays

But There is Good News

Medicare PPS Payment Reform • Possible implementation 10/1/18??? • 5 payment domains; 4 of which are clinically driven (PT/OT, ST, NTA, Nursing, Overhead) • Rate combinations: 100k?, 200k? • Not driven by therapy utilization • Day weight adjustment • Budget neutral – “winners” and “losers” • Will have broad operations impact, most notably on the provision of therapy and medical acuities

Medicare Benchmarking • Start thinking “Episodic” – National “Episodic” cost (based on “Standardized” Medicare rates) = $10,919 • https://www.cms.gov/Research-Statistics-Data-and- Systems/Statistics-Trends-and-Reports/Medicare- Provider-Charge-Data/SNF.html – 2.5M stays in 2013 (21% were multiple admissions per beneficiary) – CMS breaks down data by provider for individual facility benchmarking to peer group

SNF Average Standardized Payment per Stay National average = $10,919 Highest average: IN = $12,406, TX = 12,064, CA = $11,862 Lowest average: ND = $8,154, ME = $8,959, AK = $8,854

Claim Analytics Massachusetts General Hospital (MGH) (#) (%) Avg. Episodic SNF Referrals Referrals ALOS Rate Cost 5 Star Re-Hosp (%) Spaulding (North End) 323 8.0% 18 $542.57 $9,766 * 22.9% Leonard Florence Center 222 5.5% 23 $660.39 $15,189 *** 24.2% Lighthouse Nursing 165 4.1% 30 $638.63 $19,159 **** 22.5% Eastpointe Rehabilitation 142 3.5% 55 $626.53 $34,459 **** 14.3% Chelsea Center 103 2.6% 33 $577.92 $19,071 * 25.6% Brudnick Center 91 2.3% 22 $609.78 $13,415 **** 23.7% Chelsea Jewish 69 1.7% 34 $631.36 $21,466 ***** 24.5% Aberjona Nursing 64 1.6% 26 $692.97 $18,017 **** 24.5% Courtyard Nursing 61 1.5% 40 $601.97 $24,079 *** 23.6% Don Orione 60 1.5% 64 $498.88 $31,928 ** 16.3% 20

Cost By Diagnosis Aftercare of Joint Replacement Skilled Nursing Facility Medicare Payments Total Claims $ Per Claim TCU at Spaulding Hospital North Shore $246,037 42 $5,858 Newbridge on the Charles $293,974 32 $9,187 Brudnick Center $92,410 21 $4,400 Sherrill House $94,994 19 $5,000 Erickson Living Linden Ponds $99,221 18 $5,512 Woodbriar of Wilmington $66,285 17 $3,899 Marina Bay Nursing $76,497 15 $5,100 Alliance Health of Mass $62,855 13 $4,835 HealthSouth New England $55,890 13 $4,299 EPOCH Senior Health Care of Weston $40,875 11 $3,716 21

The ZHSG “Backfill” Equation • As “quality” improves, LOS will go down and admissions should increase Old New Diff. Rate Loss ALOS 27 22 x Admits/Year 240 240 = Days/Year 6,480 5,280 1,200 $500 $600,000 BACKFILL FFS or Episodic Difference 1,200 Loss $600,000 / ALOS 22 ERA $9,000 = New Admits Need 55 = New Admits Need 67

Medicare Advantage • De-facto Medicare Reform? • Enrollment continues to rise and accelerate – Health systems aggressively entering the market – All SNF utilization indicators are lower than FFS • Site of service, admits/1,000, rate, LOS, collection time • SNFs often grossly mismanaging the revenue cycle for this population resulting in significant lost revenue

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MA vs. FFS PAYMENT FFS MA SNF % $452 $383 18.0% Diversicare Ensign Group $566 $418 35.4% Kindred $570 $450 26.7% Genesis $502 $488 12.1% MA MA FFS (100% RUG Rate) (Levels) $500 $500 $350 Per Diem Rate 14 45 45 Receipt of Payment (days) ALOS (days) 27 14 14 Revenue (per admit) $13,500 $7,000 $4,900 26

MA Management is Fragmented Contract Review, Levels, ADMISSIONS Rates, Contract Exclusions, Clinical Criteria CASE MANAGEMENT? MCO Admissions MDS CASE MANAGEMENT Nursing DISCHARGE SOCIAL MEDICAL NURSING REHAB BILLING MDS PHARMACY ADMISSIONS Rehab PLANNING SERVICES RECORDS Social Services Medical Records Billing MCO Discharge Planning

MA Pitfalls • Old rate structures • No follow up on incorrectly paid claims (contract/billed/paid rate mismatch) • Individual therapy minutes (often in excess of level) • Failure to receive timely prior authorization • No case management on Rate Exclusions • Poor management of acuity change between auths • Denials “gone wild” and not appealed • No follow up on Part B payments • Not submitting “Utilization Claims” • Failure to manage co-pay/bad debt