Helping Hospitals Understand and Embrace Bundled Payments Gloria Kupferman, Vice President, DataGen Kelly Price, Director, DataGen Group A 2 HA March 20,

Helping Hospitals Understand and Embrace

Bundled Payments

Gloria Kupferman, Vice President, DataGenKelly Price, Director, DataGen Group

A2HAMarch 20, 2013

Key Lessons• Data is king, be ready to deal with large

amounts of it• Know the game and why you’re playing• Fill all positions on the team• Understand variation, risk and opportunity• There’s a difference between reducing costs at

the provider level and reducing costs for the payer (program costs)

Remember the Payer’s POV

Initial Inpatient

Stay

Readmission

Dr. Hospital

Visit

Dr. Hospital

Visit

Dr. Office Visit

Dr. Office Visit

Dr. Office Visit

Dr. Hospital

Visit

Dr. Hospital

Visit

Inpatient Post-Acute

Stay (Rehab, Psych, LTC, SNF, HH)

Other Part B Services(Hospital Outpatient, Labs, Durable Medical

Equipment, Part B Drugs)

Metrics

• Must support decision-making– Focus on decision-making and application– Avoid interesting but useless information

• Must be understandable• Can’t be static

• Here’s how we analyzed the Medicare BPCI data:

Analytic Decision Drivers

• Volume – i.e. critical mass• Payment variation• Discernible, manageable care

patterns• Benchmark comparisons

$-

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

$9,000,000

0 20 40 60 80 100 120 140 160 180

Tota

l Pay

men

ts

Coefficient of Variation

Total Payments vs Coefficient of Variation by Core DRG for 90-Day Episodes

Identify Episodes of Interest

Episodes of InterestCore DRG Description Volume

Coefficient of Variation

Total Payments

23Intracranial hemorrhage or cerebral infarction

136 80.13 3,137,624$

60Respiratory infections & inflammations

65 104.30 1,744,818$

65Chronic obstructive pulmonary disease

207 83.94 3,317,440$

66 Simple pneumonia & pleurisy 180 105.87 2,610,624$

73Respiratory system diagnosis w ventilator support <96 hours

43 110.23 1,341,852$

79Cardiac defibrillator implant w/o cardiac cath

27 56.78 1,109,432$

86Permanent cardiac pacemaker implant

51 69.16 1,182,165$

88Percutaneous cardiovascular proc w drug-eluting stent

85 70.99 1,567,558$

91 Other vascular procedures 70 70.91 1,225,372$

97Acute myocardial infarction, discharged alive

52 94.50 1,300,436$

99Circulatory disorders except AMI, w card cath

95 118.89 1,553,682$

101 Heart failure & shock 274 97.13 4,671,017$ 104 Peripheral vascular disorders 65 100.22 1,132,814$

108Cardiac arrhythmia & conduction disorders

155 107.89 2,116,235$

110 Syncope & collapse 126 119.54 1,485,878$ 111 Chest pain 124 130.33 1,173,151$

114 62 66.01 2,199,797$

Core DRGs of Interest

Evaluate Payment Variation Within Bundles

Where is the variation?Remember the payer’s POV.Start thinking in terms of potentially preventable costs (to the payer).

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

Tota

l Pay

men

ts p

er E

piso

de

Target Hospital Total Anchor Payments and Total Post Anchor Payments

Anchor Admission Payments Post Anchor Payments Regional Average Regional Outlier Threshold

Cost Composition and Variation Initial Inpatient Stay

What’s happening within the hospital?

Identify outliers and short stays.

Identify variation in physician care.

Are all these patients the same?

$- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000

1025590813

1807140903

1846199801

1863488471

1870169721

1876573221

1892399573

1895668802

1899623121

1907318131

4810789561

4837664211

4875206431

4914461122

4965769712

Epis

ode

ID

Initial Admission Payments by Care TypeIPPS DRG Pymt Physician Outpatient Dur Med Equip

Cost Composition and Variation 90 Days Post Initial Stay

What happens after the patient leaves the hospital?

Identify readmissions.

See hand-offs to post-acute settings.

Find sources of variation.

What is potentially preventable?

Where is the potential for standardization?

$- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000

1025590813

1807140903

1846199801

1863488471

1870169721

1876573221

1892399573

1895668802

1899623121

1907318131

4810789561

4837664211

4875206431

4914461122

4965769712

Epis

ode

ID

Post-Initial Payments by Care TypeReadmission Physician Rehab

Outpatient Outpatient in Readmit Home Health

Dur Med Equip Dur Med Equip in Readmit Skilled Nursing Facility

Physician Claims by Specialty

What physician specialties are predominant?

Who do we need to align with?

How do services vary? Why?

Do the patterns make sense?

Is the variation due to lack of coordination?

$0 $1,000 $2,000 $3,000 $4,000 $5,000

1025590813

1807140903

1846199801

1863488471

1870169721

1876573221

1892399573

1895668802

1899623121

1907318131

4810789561

4837664211

4875206431

4914461122

4965769712

Pricing ComparisonsWhat do my neighbors look like?

Are the volumes in other hospitals high enough to be reliable?

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

Aver

age

Paym

ents

per

Epi

sode

Episode Averages for All Hospitals Within Region

Comparison Hospital Volume<10 Comparison Hospital Volume >10 <50 Compraison Hospital Volume>50

Target Hospital Volume = 15 Regional Average Outlier threshold

Pricing ComparisonsWhat components do I need to include in my price?

How does my price compare to benchmark?

Where am I different and why?

# of Episodes

Average Benchmark

Episode Price

Average # Claims Per

Episode

Average Benchmark

Payment per Claim

Average Benchmark

Payment per Episode

# of Episodes

Average Benchmark

Episode Price

Average # Claims Per

Episode

Average Benchmark

Payment per Claim

Average Benchmark

Payment per Episode

Initial Admission 354 $31,480 $12,047 $12,047 9,576 $32,598 $11,586 $11,586

Readmission 0.19 $7,982 $1,488 0.33 $7,481 $2,468

Inpatient Rehab 0.60 $10,110 $6,026 0.34 $11,107 $3,789

Home Health Care 0.87 $3,084 $2,684 0.67 $2,949 $1,978

SNF 0.45 $6,700 $3,047 0.99 $6,654 $6,570

LTCH 0.01 $31,772 $269 0.00 $29,975 $106

Physician Inpatient 20.63 $149 $3,080 25.97 $129 $3,357

Physician Non Inpatient 58.72 $40 $2,349 52.98 $39 $2,049

OPD Inpatient 0.01 $241 $2 0.08 $195 $16

OPD Non Inpatient 1.52 $207 $315 1.73 $288 $500

DME Inpatient 0.29 $45 $13 0.22 $67 $14

DME Non-Inpatient 2.45 $65 $159 2.18 $75 $165

Hospital Referral Region

First Post-Anchor Site of Care

$0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000

Readmission

IRF

LTCH

SNF

HHA

No Institutional Care

Post-Anchor Payment

Regional Variation

Manhattan Newark-White Plains

Readmission 38% 45%HHA 31% 17%SNF 28% 35%Inpatient Rehab 2% 1%

AMI

Manhattan Newark-White Plains

Readmission 14% 11%HHA 14% 50%SNF 41% 1%Inpatient Rehab 32% 23%

Major Joint – Lower Extremity

Readmissions Drive Costs

# Episodes Total Episode

Price # Episodes Total Episode

Price ACUTE MYOCARDIAL INFARCTION, DISCHARGED ALIVE W MCC 289 $24,637 305 $50,569

Without readmits Episodes with a readmission

# Episodes Total Episode

Price # Episodes Total Episode

Price MAJOR JOINT REPLACEMENT OR REATTACHMENT OF LOWER EXTREMITY W/O MCC 1,531 $32,817 530 $41,943

Without readmits Episodes with a readmission

Readmissions Drive Costs

Readmission DRG

DescriptionDays from Anchor

DischargeReadmission

Dollars

Readmission Dollars % of Total

Episode Price

Total Episode

Price

251PERC CARDIOVASC PROC W/O CORONARY ARTERY STENT W/O MCC

74 $8,917 40.2% $22,157

313 CHEST PAIN 22 $2,954 19.2% $15,400812 RED BLOOD CELL DISORDERS W/O MCC 83 $4,242 17.7% $23,965

287CIRCULATORY DISORDERS EXCEPT AMI, W CARD CATH W/O MCC

25 $5,701 30.2% $18,881

247PERC CARDIOVASC PROC W DRUG-ELUTING STENT W/O MCC

25 $10,635 44.8% $23,756

251PERC CARDIOVASC PROC W/O CORONARY ARTERY STENT W/O MCC

70 $8,917 40.8% $21,835

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Hospital Readmissions Regional Readmissions

Distribution of Readmissions: Hospital (n= 6) Region (n=38)

30-90 Days

15-29 Days

8-14 Days

1-7 Days

Total CountSimple pneumonia and respiratory infections 239,157 Major joint replacement of the lower extremity 227,387 Chronic obstructive pulmonary disease, bronchitis, asthma 215,562 Congestive heart failure 168,243 Sepsis 152,902 Cardiac arrhythmia 121,665 Esophagitis, gastroenteritis and other digestive disorders 120,370 Urinary tract infection 119,282 Stroke 104,418 Renal failure 98,276 Gastrointestinal hemorrhage 91,852 Percutaneous coronary intervention 91,463 Other respiratory 86,778 Medical non-infectious orthopedic 82,606 Nutritional and metabolic disorders 80,962 Cellulitis 71,813 Hip & femur procedures except major joint 64,807 Syncope & collapse 62,679 Acute myocardial infarction 57,093 Chest pain 55,116 Major bowel procedure 54,294 Red blood cell disorders 48,290 Gastrointestinal obstruction 46,628 Transient ischemia 39,464 Pacemaker 37,641 Other vascular surgery 36,369 Medical peripheral vascular disorders 36,013 Diabetes 35,842 Spinal fusion (non-cervical) 35,809 Coronary artery bypass graft 28,964 Back & neck except spinal fusion 28,143 Major cardiovascular procedure 23,674 Lower extremity and humerus procedure exept hip, foot, femur 23,617 Cardiac valve 22,906 Cervical spinal fusion 20,220 Fractures of the femur and hip or pelvis 19,852 Revision of the hip or knee 19,163 Major joint replacement of the upper extremity 18,044 Atherosclerosis 16,726 Cardiac defibrillator 14,061 Amputation 12,653 Removal of orthopedic devices 5,769 Double joint replacement of the lower extremity 5,515 Other knee procedures 5,206 Pacemaker device replacement or revision 4,455 Combined anterior posterior spinal fusion 3,990 Complex non-cervical spinal fusion 3,070 AICD generator or lead 1,588

Where is the volume. . .

Episode Category Total count from episode totals fileSimple pneumonia and respiratory infections 239,726 Major joint replacement of the lower extremity 227,555 Chronic obstructive pulmonary disease, bronchitis, asthma 216,070 Congestive heart failure 168,811 Sepsis 153,307 Cardiac arrhythmia 121,934 Esophagitis, gastroenteritis and other digestive disorders 120,570 Urinary tract infection 119,667 Stroke 104,648 Renal failure 98,585


Where is the volume. . .

Episode Category Total count from episode totals fileSimple pneumonia and respiratory infections 239,726 Major joint replacement of the lower extremity 227,555 Chronic obstructive pulmonary disease, bronchitis, asthma 216,070 Congestive heart failure 168,811 Sepsis 153,307 Cardiac arrhythmia 121,934 Esophagitis, gastroenteritis and other digestive disorders 120,570 Urinary tract infection 119,667 Stroke 104,648 Renal failure 98,585

Episode Category Total count from episode totals fileTotal dollars from episode totals file

Major joint replacement of the lower extremity 227,555 6,482,019,352 Simple pneumonia and respiratory infections 239,726 5,593,890,331 Sepsis 153,307 5,133,428,557 Congestive heart failure 168,811 4,272,114,613 Chronic obstructive pulmonary disease, bronchitis, asthma 216,070 4,188,074,871 Stroke 104,648 3,458,555,300 Hip & femur procedures except major joint 64,870 3,019,637,592 Urinary tract infection 119,667 2,886,143,337 Other respiratory 87,062 2,859,854,067 Renal failure 98,585 2,562,273,347


Episode Category Total Count% Still in active care at

end of periodAmputation 12,653 47%Hip & femur procedures except major joint 64,807 41%Lower extremity and humerus procedure exept hip, foot, femur 23,617 36%Coronary artery bypass graft 28,964 36%Cardiac valve 22,906 36%Fractures of the femur and hip or pelvis 19,852 33%Medical non-infectious orthopedic 82,606 31%Stroke 104,418 30%Urinary tract infection 119,282 29%Removal of orthopedic devices 5,769 28%

Are we done yet?

Lessons Learned From the Data Analytics

• Payment variation– Medical vs surgical DRGs– Payment variation is due to post-acute care

and readmissions• Episode length selection

– Depends on the diagnosis• Hospital portion of the discount• Quantifying the impact/effect of exclusions

Effective Hospital Discount

Total Payment $7,643,138 3% Discount $229,294 Hospital payment $3,794,889 Effective hospital discount 6.04%

Episode Length Risk

Full Episode 31-90 Day Episode Period

Discounts and Episode LengthJoint Replacement Total Discount3% of 30 days $209,103 2% of 90 days $152,863 Difference $56,241

Chest Pain Total Discount

3% of 30 days $13,087

2% of 90 days $12,606

Difference $481

Additional Lessons Learned• Data may not support intuition• Understand what data matters• Don’t over-analyze (until you have to)• Have a multi-disciplinary team together first

– Physician leadership is a key advantage– Clinical interpretation of the data facilitates decision-

making• Real program savings come from changing utilization

and care patterns both within and outside the facility

Leveraging the Experience• Analytics/metrics can be applied to:

– Commercial contracts– Other innovative payment arrangements

• New payment arrangements are an opportunity to cover costs for lost volume (e.g. readmissions)

• If you are not part of the process, you will be caught downstream of the savings

• Beware of the halo effect

Unanswered Questions

• Who will succeed? • What will drive success?• How will success stories be shared?• How reproducible is success?

Contact InformationGloria Kupferman

Vice President, National Information ProductsDataGen, a HANYS Solutions Company

[email protected]

www.datagen.info

Kelly PriceDirector, DataGen Group

DataGen, a HANYS Solutions [email protected]

518-431-7629www.datagen.info


Episode Category Total CountAverage 90 Day Total

Complex non-cervical spinal fusion 3,070 $69,428Combined anterior posterior spinal fusion 3,990 $66,866Cardiac valve 22,906 $59,892Amputation 12,653 $48,445Hip & femur procedures except major joint 64,807 $46,549Coronary artery bypass graft 28,964 $45,276Cardiac defibrillator 14,061 $44,364Major cardiovascular procedure 23,674 $38,983Spinal fusion (non-cervical) 35,809 $38,673Double joint replacement of the lower extremity 5,515 $38,389

Episode Category Total CountAverage 90 Day Total

Chest pain 55,116 $13,580Transient ischemia 39,464 $16,043Syncope & collapse 62,679 $17,211Esophagitis, gastroenteritis and other digestive disorders 120,370 $17,408Atherosclerosis 16,726 $17,573Cardiac arrhythmia 121,665 $18,062Gastrointestinal obstruction 46,628 $18,191Back & neck except spinal fusion 28,143 $18,738Chronic obstructive pulmonary disease, bronchitis, asthma 215,562 $19,383Gastrointestinal hemorrhage 91,852 $20,437

Where are the average dollars. . .

Documents

Helping Hospitals Understand and Embrace Bundled Payments Gloria Kupferman, Vice President, DataGen Kelly Price, Director, DataGen Group A 2 HA March 20,