Administering Physician Claims with Bundled Payments€¦ · 21/06/2016 · Why it’s time for commercial bundled payments Once hospitals become comfortable with Medicare (CJR)

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Administering Physician Claims with Bundled Payments

Transitioning away from fee-for-service (FFS)

to value-based payments.

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“The purpose of CMMI is to test innovative payment and service delivery models to reduce program expenditures while preserving or enhancing the

quality of care furnished to individuals under such titles”

Two criteria for expansion of models authorized by Section 1115A of Social Security Act:

Reduce spending without reducing quality

Improve quality with increasing spending

If an expansion model meets one of these two criteria and other statutory prerequisites, the statue allows the Secretary to expand the duration and scope of a model through rulemaking.

CMMI -Centers for Medicare & Medicaid Innovation

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Fee for Service – No Link to Value

Fee for Service – Link to Quality

Alternative Payment Models Built on

Fee-for-Service Architecture

Population – Based Payment

Framework for Payment Reform4 Categories

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Linking FFS to Quality and Alternative Payment Models

Historical Performance Goals

2011 2014

70%

All Medicare FFS FFS linked to Quality Alternative Payment Models

>80%

20%

85%

30%

90%

50%

2016 2018

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Current as of May 2016

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Model 1 Retrospective The episode of care is defined as the inpatient stay

in the acute care hospital. Medicare pays the hospital a flat discounted amount. Medicare continues to pay the physician fees separately for their services.

Model 2 Retrospective The episode of care is defined as the inpatient stay

in an acute care hospital plus the post-acute care and all related services up to 90 days after hospital discharge. Actual expenditures are reconciled against a target price for the episode of care. Medicare continues to make fee for service payments. The total expenditures for the episode is later reconciled against a bundle payment amount (the target price) determined by CMS. An additional payment is made if a savings is generated (under target price), or a recoupment amount is generated from the provider to CMS if the total expenditures exceeded the target price.

Bundled Payment Care Initiative Model Overview

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Model 3 Retrospective The episode of care is triggered by an acute care hospital stay but begins at initiation of post-acute care services with a skilled nursing facility, inpatient rehab facility, long-term care facility or home health agency. Actual expenditures are reconciled against a target price for the episode of care. Medicare continues to make fee for service payments. The total expenditures for the episode is later reconciled against a bundle payment amount (the target price) determined by CMS. An additional payment is made if a savings is generated (under target price), or a recoupment amount is generated from the provider to CMS if the total expenditures exceeded the target price.

Bundled Payment Care Initiative Models Overview

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Model 4 Prospective CMS makes a single, prospectively determined bundled payment to the hospital that encompasses all services furnished by the hospital, physicians, and other practitioners during the episode of care. Physicians submit their FFS claims to CMS as usual but are not paid by CMS. Physicians are paid by the hospital out of the bundled payment. Any readmission to any hospital for up to 30 days is considered part of the episode with no additional reimbursement due. Quarterly reconciliation of each episode is performed for each episode.

Bundled Payment Care Initiative Models Overview

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Gainsharing Opportunities

Physicians and hospitals have requirements to document health quality outcomes as well as patient satisfaction

Hospitals can share up to 50% of savings achieved under target price per episode

Physicians and hospitals are incentivized to change their practice patterns to achieve industry quality benchmarks

Hospitals achieving cost savings in operation costs and achieving reduced length of stays

Hospitals sharing costing information with physicians

Physicians considering costs for the first time

Driving more involvement in patient care post discharge due to 30-90 day risk exposure – reducing readmissions and achieving higher quality outcomes

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Why it’s time for commercial bundled payments

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What are “bundled payments”?

Pricing “middle ground” between fee-for-service and capitation

Payment based on expected costs for clinically-defined episodes

Provides a single payment for an episode of care determined by hospital’s own evidential pricing

Application of bundled price must lead to quality improvement, reduced cost or both

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Bundled payment models can reduce spending on an episode of care

Patients are looking for quality and lower cost

Providers are looking for administrative ease and market share

Plan sponsors are looking for lower cost and consistency

Providers are ready to participate

Many are now mandated to participate in Medicare’s CJR program (mid-sized Metropolitan Statistical Areas)

Bundled payment models will stimulate quality improvement and push forward alternative payment methods

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CMS’ Mandated Metropolitan Statistical Areas

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Single bundled payment requires cooperative accountability for health outcomes from all health care providers involved

Drives hospital to evaluate quality and cost of services

Encourages realignment and redesign of health care services

Incentivizes providers to take responsibility for cost and quality of services they perform in bundle

“As goes Medicare, so goes health care”

CMS’s goal: 50% of payments from alternative payment models by 2018

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Orthopedic Surgeons

$19,127

$1,651

$1,000

$8,935

Skilled Nursing

Long Term Acute Care

Home Health

Anchor Cost

$18,845

$2,282

$2,005

$4,628

$29,726

$22,466

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Large employers in your communities are already experimenting with some form of bundled payment models

Lowe’s

Walmart

Local hospitals (some subject to CJR) don’t have resources to evaluate, verify or monitor bundle payments

Hospitals want to rid themselves of PPO network contracts too

Simple billing, simple profit

Reduce cost and improve quality

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Once hospitals become comfortable with Medicare (CJR) bundled payments, they will be more likely to move all services in that particular episode to a commercial bundled payment arrangement

All size hospitals will need a way to manage and offer the bundled payment concept to employers

Volume is important

Providers participating in bundled payment models get actionable data to improve performance and quality

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TPAs are uniquely positioned to bring BP model to self-funded employers

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Hospital

Easier to work with plan sponsor than Medicare

o Hospitals that work with commercial bundles can finalize model and contracts within 6 – 9 months

Hospital and plan can negotiate more collaborative open-ended bundles appropriate to employer’s / community’s population

o Cardiac

o Orthopedic

o Sepsis

o Transplants

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Claims

TPAs have vast experience collecting, parsing and reporting on claims data

TPAs understand and can evaluate claims data

o Data analytics companies currently handling bundled payment claims data provide data transmission services but don’t necessarily understand the components of a claim

o TPAs can evaluate and advise on the hospital’s experience and assist in future bundle modifications

TPAs offer the flexibility to allow a hospital to experiment with different bundle payment models

There is no “one size fits all” commercial model

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TPAs are uniquely positioned to bring BP model to employers

Patient

Increases quality of care

Reduces length of stay and readmissions

Realigns inpatient and post-acute care

Plan Sponsor

Reduces the costs of claims per bundle adopted

Stabilizes plan costs over time

Works with TPAs that manage the bundles and TPAs that have outsourced the BP model management

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TPAs are uniquely positioned to bring BP model to employers

One hospital in Madison, Wisconsin piloted an early version of CJR and achieved the following results in less than 4 years:

11% reduction in episode costs

50% reduction in 90-day readmissions

Reduced discharge to SNF or inpatient rehabilitation from 65% to 35%

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In commercial bundled payments, TPAs are NOT…

Hospital Consultants

Ø TPAs will not be the entity that consults with the hospital to determine which bundles a hospital should implement

Financial Advisors

Ø TPAs will not be the entity that designs provider incentives

Corporate Attorneys

Ø TPAs do not draft contractual arrangements or propose political or strategic alliances between a hospital and its physicians

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In commercial bundled payments, TPAs ARE…

Data Management and Analysis Experts

Claims analysis for bundle determinations, episode reconciliation and readmission tracking

Bundled Payment Claims Managers

Claims qualifying, aggregating, editing and routing

Risk Adjusters

Fee-for-service calculations and payment distribution

Administrative Entity

Reports, documentation and filings

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How does a TPA get started?

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Find out if you have hospital clients or access to hospitals in your markets that are subject to the CJR mandate

Surprising how many hospitals don’t know about CJR or think they have it managed

In either scenario above, become the Expert

Even hospitals that are currently working with Medicare bundles don’t really understand how they work

Align yourself with a hospital consultant

Many hospital consultants don’t understand bundle payment either

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Start examining your own claims data bases

In commercial settings, Medicare bundles are only guidelines, not mandates

Use de-identified claims data to identify potential episodes and bundles, for example

o Length of stay

o Duration of services

o Differences in current daily rates for post-acute care

What systems and services do you currently provide your clients that can be translated to bundled payments

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Provide data tools to report claims – analysis and dashboards

Discuss direct contracts with hospitals

Explore possible exclusive arrangements

Educate employers on the value of bundled payment contracts with hospitals

Another form of referenced based pricing

Form employer “user” group

Marketing options

Bring data analytics companies and hospitals together

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Questions?

Documents

Administering Physician Claims with Bundled Payments€¦ · 21/06/2016 · Why it’s time for commercial bundled payments Once hospitals become comfortable with Medicare (CJR)