Post Acute Network Development in the Era of Healthcare Reform RCPA Annual Conference October, 2014...

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Post Acute Network Development in the Era of Healthcare

ReformRCPA Annual Conference

October, 2014Michael J. Soisson, MS, MHA

Senior Vice President, Vibra Healthcare

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AgendaPost Acute Care: Definition

Post Acute Care History and Evolution

Regulatory and Financial Environment

Post Acute Partnerships

Demonstrating Value

Keys to Success

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Post Acute DefinitionLTACH

IRF

HHA

Hospice

CCRCLTC

Asst Living

Indep. Living

Group Home

Home

SNFMedical

Residential

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Post Acute Care (PAC) by the Numbers

PAC

25%20-25% of the total medical

expense for a Medicare

beneficiary. PAC spending, with

annual growth in the last decade

outpacing other service

categories by 50% or more, now

accounts for a significant portion

of overall Medicare expenditures.

$65 Billion

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CMS Believes

• Over-utilization of SNF days

• 25% of SNF admits could go home

• Amount Saved by Medicare annually if patients utilize the appropriate PAC setting

• The rate at which Medicare spending for SNF, LTC, and Home Health grew annually from 2001-2012

Up to 40%

$10 Billion

Over 8%

Post Acute Care (PAC) by the Numbers

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$4.5 billion

$13.1 billion

$8 billion

Medicare’s Annual Post-acute Expenditures: $65 billion

Medicare PAC Spending 2012

Post Acute Care (PAC) by the Numbers

SNF50%

HHA31%

IRF11%

LTACH9%

Percent spending by Medicare on Post Acute

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CMS SpendingIn 2010, 57% of all spending was on 10% of the

enrollees

82% of all spending was on the top 25% of the enrollees

27.3% of the enrollees were in the 75 – 84 age group but this group accounts for 32.1% of the cost.

And Enrollment in Medicare is going to EXPLODE47.4 million enrollees in 201063.9 million by 2020 (35% increase)

And Medicaid grow is projected at 20%

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Financial/ReimbursementHistorical Payment (HCFA – CMS)

TEFRAPPS

This model promotes silos of care

TodayLTACH $40,000/case IRF $14,500/caseSNF $450 per day ($10,000 per case)HHA $2800 per episode of care (60 days)

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Current Regulatory Environment

LTACH Revised Patient admission criteria (2015)

IRF Presumptive compliance change (2015)

SNF Readmission Penalties

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Acute Care Hospitals

Value Based Purchasing (quality metrics)

Readmission Penalties

Penalties for poor outcomes/hospital acquired conditions

Reduced/elimination of DSH payments

Physician shortage and employment wars

Pressure to merge/acquire or be acquired

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Post Acute Need

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Post Acute Partnership Evolution

Phase I Build it and they will come

Phase II Preferred Providers

Phase III Hospital within Hospital

Phase IV Joint Venture Facilities

Phase V Post Acute Networks

Future Shared Risk/Reward

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The Future Is Now

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ACA = ACO338 Medicare Shared Savings ACO’s (end of

2013)

4.9 million assigned beneficiaries in 47 states

In 2014 15.4 Million Medicare enrollees shifted to Medicare Advantage plans20 Million Medicare Enrollees are now in some kind

of “managed” plan

Managed Medicare is very different from managed commercial (healthy) careMedicare patients = managing chronic diseaseChronic disease management = post acute need

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Post Acute Projects (CMS) Bundled Payments

Model 2 Hospital + MD + Post Acute Provider + readmissions

Model 3Post Acute Provider + readmissions

Medicare CARE Tool Common Assessment Tool for Post Acute

IMPACT Legislation Coordination of Standardized Post Acute data Requirement of a Standardized Assessment Tool Define Reporting Provisions and Quality measures Define Post Acute Payment Systems

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STAC Hospital ChoicesDevelop their own Post Acute Continuum and

prepare to go at risk

Partner with Post Acute Providers who would manage the Post Acute Process and go at riskPreferred Provider Agreements Joint Ventures (Shared risk/reward)

Partner with Payer Sponsored ACO’s and let them manage the care

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Post Acute Provider Options

Do Nothing and hope to be included in all equations

Establish Preferred Provider affiliations with STACH and growing local ACO’s

Be proactive and present Post Acute Management to STACHs and ACOs.

Options Bundled Payment (part of Model 2 with STACH) Bundled Payment (Model 3 Just for Post Acute) Case Rate for ALL post acute service including home Capitation for all post acute service

CREATING VALUE WILL BE KEY TO SUCCESS

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PAC Value Calculation

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Post Acute Partnership:Value

Shorten LOS Reduced Costs Improve patient throughput

Reduce Readmissions

Keep patients within the system

Manage chronic disease

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LOS Impact AnalysisLOS ImpactTotal Patients LOS > 6 & GMLOS 1,016Total Excess Days 5,755Variable Cost Per Excess Day $600Total Savings Potential $3,453,000 25% Capture $863,250

New Patient ReplacementTotal Patients LOS > 6 & GMLOS 1,016Total Excess Days 5,755ADC of Excess Days 15.8Replacement Patients 1151Net Rev per Admission $6,500Total New Revenue $7,481,500

Reducing LOS reduces census. Cost savings are on variable cost and requires actual reduction in staff/supplies; etc to achieve savings

New Patient replacement assumes additional patients are available to fill beds that are open due to reduced LOS. (Estimate 1151 new patients (at ALOS of 5 days)

ACOTotal MC & MA Discharges

% Readmitted from PAC

# Readmitted from PAC

$ Saved by Readmission Avoidance of 1% (ACO savings potential)

Total PAC Discharges

# Touched per Month

% MC & MA Discharged from IP to PAC

2560

$24,000 per case, savings $3.8 mil 1% savings

35,90016,000

44%

1334

16%

Reduce Readmission Impact

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Reduced Readmission (STACH Impact)

Medicare Discharges 11,189

Total Medicare Payment $77,204,832

Payment at Risk (3%) $2,316,145

Readmissions previous Year 1,902 (17%)

Readmission Penalty per discharge $1,218

Readmission Savings if reduce 1% $135,744

1% Reduction in readmissions = 1702 v 1902. 112 fewer readmissions @ $1,218 penalty per readmission = $135,744

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Keys to SuccessShared Goals/Shared Philosophy

Clinical Information;- at the patient level

Understanding cost;- at the facility level and at the patient level

Control (or at least a seat at the table) of Acute Care Discharge Planning Process

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TodaySTAC Hospital is paid on per discharge basis

+/- $6,000 per case regardless of LOS (until cost outlier)

Penalized for readmission within 30 days Incentive is to discharge the patient (ANYWHERE)

as quickly as possible while avoiding 30 day readmissionDischarge to home if possible and manage there or

discharge to Post Acute Facilities that can best manage patient and not readmit

Example: If patient can be discharged in 4 days, hospital receives $6,000 payment ($1,500 per day) vs discharged in 6 days or $1,000 per day

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FutureUnder a managed care, per member per month, or in the ACO model

If paid per member per month basis: Incentive is to:

1. Avoid acute care admissions if possible Only critically ill patients will be admitted

2. If admitted, shortest LOS possible (again, avoiding readmissions) and ideally, discharged HOME.

3. If not home, discharge (as quickly as possible) to the Post Acute Bed that is the BEST VALUE

Discharge to facility that will get the patient home and keep them home as quickly and as low cost as possible

Key to success will be MANAGING the Care

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Some Examples for the Future

SNF @ $600 per day and it takes 20 days to get the patient home ($12,000)

Average SNF discharge to home = 35%

Average SNF readmission rate is 30%

IRF @ $13,000 per case (ave for orthopedic case) with ALOS of 12 days

Average IRF discharge to home = 75%

Readmission Rates for IRF nationally are < 10%

Now

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Future (Catastrophic Cases in Acute)

Patients on Vents for longer time or in the ICU, consider:LTCH

ICU cost is $3,000 per day v LTCH at $1,800 per day for a ventilator dependent patient

Goal would be to keep moving patient to lower cost service that will get and keep the patient homeLTCH, IRF, SNF, Home

Example: Ventilator Patient in an ICUService LOS cost/day Total cost

ICU 20 $3,000 $60,000SNF 20 $600 $12,000Total 40 $72,000

Ventilator Patient transitioned from ICUService LOS cost/day Total cost

ICU 6 $3,000 $18,000LTCH 21 $1,800 $37,800IRF 12 $1,000 $12,000Total 39 $67,800

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Post Acute DefinitionLTACH

IRF

HHA

Hospice

CCRCLTC

Asst Living

Indep. Living

Group Home

Home

SNFMedical

Residential

Under ACO will Residential be included?

Ultimately: Case Rate of $___ from STACH D/C to 90 days at Home

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The Future Is Now

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The Future is Now?Bundled Payment for Post Acute Care By

Diagnostic (chronic) condition

Part of a Bundled Payment for Diagnostic Condition with STACH from admission to home

Case Rate for ALL post acute care by Diagnostic Condition

Capitation for all care?

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Questions?

Mike SoissonSVP Vibra Healthcaremsoisson@vibrahealth.com717-798-1278