HOW TO GET PAID: GET READY FOR 2013 PAYMENT CHANGES

HOW TO GET PAID: GET READY FOR 2013PAYMENT CHANGES

RELIANCE CONSULTING GROUP

Presented by:

John P. Schmitt, Ph.D. - RCG Managing Director6-19-12

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“It’s complicated…”

-Anonymous Teenager

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• PART I: What’s coming in Payer Reimbursement?

• PART II: How will it impact your practice?

• PART III: What should be done & how to get ready?

AGENDA

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PART I:WHAT’S COMING IN PAYER

REIMBURSEMENT?

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WHAT’S COMINGTRIPLE AIM GOAL

WHAT’S COMING

“The Centers for Medicare & Medicaid Services (CMS) is committed to achieving the three-part aim of better care for individuals, better health for populations, and reduced expenditures for Medicare, Medicaid, and Children’s Health Insurance Program beneficiaries. One potential mechanism for achieving this goal is for CMS to partner with groups of healthcare providers in an Accountable Care Organization (ACO) who accept joint responsibility for the cost and quality of care outcomes for a specified group of patients. CMS will pursue such partnerships through two complementary efforts- The Medicare Shared Savings Program and initiatives undertaken by the Center for Medicare & Medicaid Innovation (CMMI, Innovation Center) within CMS.”

Source: Pioneer Accountable Care Organization (ACO) Model Request for Application, May 2011

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WHAT’S COMINGPAYMENT REFORM

WHAT’S COMING

Payment Reform Timeline

2010 2011 2012 2015+

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CMH C

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ents

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Phys

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Mea

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se

2013

Volume Based Value Based (No Risk) (Complete Risk)

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• Fee for Service (FFS): Providers are reimbursed for each service performed at pre-negotiated rates or the provider’s billable charges.

• Pay for Performance (P4P): Providers are paid when they meet defined criteria involving quality, efficiency, and other targets related to patient outcomes.

• Accountable Care Organization (ACO): A system comprised of doctors, practices, hospitals and other healthcare providers that create partnerships with the goal of lowering patient costs and focusing on the quality of care delivered.

• Patient Centered Medical Home (PCMH): A delivery model with a population health management focus that uses coordinated care programs, integrated care delivery systems and medical teams led by a primary care physician.

DEFINITIONSPAYMENT SYSTEM DEFINITIONS

WHAT’S COMING

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• Bundled (Episode-based) Payment: Providers are paid a single price for all of the healthcare services needed by patients for an entire episode of care with the amount largely determined by the length of time of the episode and the range of providers and services included.

• Value-based Payment Modifier: Beginning in 2015, HHS will implement a modifier to adjust Medicare Part B payments to certain physicians based on quality and cost of care delivered. All providers will be impacted by the modifier by 2017.

• Global Payment: Providers accept a fixed payment per patient similar to capitation payments.

DEFINITIONSPAYMENT SYSTEM DEFINITIONS

WHAT’S COMING

Source: MGMA Connexion Supplement, May/June 2012, pp 8-13

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COMMERCIAL PAYER NEWSCOMMERCIAL PAYER NEWS

WHAT’S COMING

Commercial Payer Changes• CIGNA expanded its ACO program in 2012 with 10 new initiatives in 7 states: CO, ME, NY, NC, TN, TX, VA

• UHC is changing contracts to include value-based incentives which will affect 70% of its members by 2015

• Aetna launched its first orthopaedic bundled payment pilot in California in 2012

• The Blues are launching payment pilots in various states

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COMMERCIAL PAYER NEWSBUNDLED PAYMENT DEVELOPMENTS

WHAT’S COMING

Blue Cross Announces Bundled Payment Agreements with Leading Orthopedic Groups in Tennessee MAY 22, 2012

BCBS-TN “has reached agreements with four respected orthopedic practices for a new bundled payment system that focuses on patient care, quality and outcomes for total knee and hip replacements.”

Participating Practices:• Vanderbilt Medical Group (Nashville)• Tennessee Orthopaedic Alliance (Nashville)• Campbell Clinic (Memphis)• Knoxville Orthopaedic Center (Knoxville)

“This system is generally considered a new payment methodology, but make no mistake, this is a collaborative tool we can use to improve health outcomes and the patient experience” – Dr. Tom Lundquist, Vice President of Performance Measurement and Improvement of Healthcare Services

Source: www.BCBST.com

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PART II:HOW WILL IT IMPACT YOUR

PRACTICE?

12Source: Medscape Physician Compensation Report: 2012 Results

THE IMPACT ON YOUR PRACTICEPractice Revenue Changes Since 2010

13Source: Medscape Physician Compensation Report: 2012 Results

THE IMPACT ON YOUR PRACTICEPhysician Compensation In 2011

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COMMERCIAL PAYER NEWSMEDICARE COST SHIFTS

THE IMPACT ON YOUR PRACTICE

“According to [MGMA 2011 Survey], total operating cost per full-time equivalent physician has increased by 51% since

2001, while Medicare physician payments have remained relatively stagnant during

that same time period, with a sharp decrease forecasted in 2012. This

widening gap is becoming insurmountable for many physician practices”

-MGMA Comments to CMS on 2012 Medicare Fee Schedule

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COMMERCIAL PAYER NEWSEXAMPLE COST SHIFT IMPACT


5000 10000 15000 20000 25000 30000

Practice Cost Shift: 2001 - 2011

RVU's

% o

f Med

icare

195

185

175

165

155

145

135

125

115

105

100

2001 Cost

2001 Commercial Minimum

2011 Cost

2011 Commercial Minimum

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COMMERCIAL PAYER NEWSPRACTICE FINANCIAL X-RAY


Volume

$Break Even Point (BE)

Revenue (R)

Fixed Cost(FC)

Vari-able Cost(VC)

Total Cost

0

PROFI

T

LOSS

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Volume

$

0

PROFI

T

Net Rev-

enue

2013 Impact: FFS & P4P• Low Downside Risk• Small Reporting Cost

LOSS

VC

FC

R

BE

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FFS & P4P Payment Systems• Solution• Payer contracting (proactive)• Investment (Cost)• Pre-negotiation preparation & analytics• Negotiation process• Return • All marginal (bottom-line) gain• Increased ROI

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Accountable Care Organizations (ACOs)Not later than Jan. 1, 2012, the Secretary shall establish a shared savings program that promotes accountability for a patient population and coordinates items and services under parts A and B, and encourages investment in infrastructure and redesigned care processes for high quality and efficient service delivery. Under such program:

A. Groups of providers of services and suppliers meeting criteria specified by the Secretary may work together to manage and coordinate care for Medicare fee-for-service beneficiaries through an accountable care organization (ACO).

B. ACO’s that meet quality performance standards established by the Secretary are eligible to receive payments for shared savings

• Source: Section 302 Medicare Shared Savings Program

20Volume

$

0

PROFI

T

2013 Impact: ACO & PCMH• ACO: Shared Administrative Cost• PCMH: Infrastructure Cost

LOSS

VC

FC

R

BE



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ACO & PCMH Payment Systems• Solution: • ACO Assessment (reactive)• PCMH Certification (reactive)• Investment (Cost)• ACO: legal, administrative, & time• Care coordination• Return • Shared savings: small & delayed• PCMH Incentive Payments (if available)

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Volume

$

0

PROFI

T

2013 Impact: Bundled Payment & Narrow Networks

LOSS

VC

FC

R

BE

Net

Revenue

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Bundled Payment & Narrow Networks• Solution: • BP Assessment (proactive)• NN Contracting (proactive)• Investment (Cost)• Claims analysis• Cost/Risk management• Return • Patient volume• New revenue

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COMMERCIAL PAYER NEWSBUNDLED PAYMENT OVERVIEW


CMS Bundled Payment: Key Components & Risks• Key Components• Types of Services in Bundle

• Physician Services• IP hospital• Ancillary providers (Therapeutic Services)

• Quality Measures• To be developed by participants• Readmission reductions

• Upside Risks• Professional services included in the episode will be processed

as “no pay’ claims.• The participating providers must accept a single bundled

payment for each episode of care as payment in full• Shared Savings: 60-70% capped at 15% of PMPM savings

• Downside Risks (if any)• Minimum discount to payer e.g. CMS: 3% or more depending on

condition proposed• If spending exceeds the risk threshold, providers must pay CMS

for the excess

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Steps to Implementing Bundled Payments1. Identify conditions for a bundled payment2. Define the providers and services in the

bundle3. Quantify cost savings opportunity4. Define a price point5. Develop clinical pathways6. Develop the metrics to monitor

performance7. Evaluate Performance using analytics8. Continuous correction and improvement

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Top 10 Questions Financial Executives Are Asking1. Should we pursue a bundled payment strategy?2. What’s the upside opportunity? 3. What’s the downside risk?4. How do bundled payments integrate with my physician

practice strategy5. How will bundled target prices be determined?6. Why should I provide Medicare a discount if I’m

already losing money on Medicare patients?7. How will payments be distributed between hospitals

and physicians?8. How will claims be processed (to preclude double

payments)?9. How many payments will be made (e.g. prospective

payment, quality payment, shared savings payment)?10. How do I ensure my organization succeeds under

bundled payments?

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PART III:WHAT SHOULD BE

DONE/HOW TO GET READY?

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COMMERCIAL PAYER NEWSMGMA SURVEY

WHAT SHOULD BE DONE

71.20%

45.20% 41.60%

17.80% 14.20%

Practice Costs Currently Tracked By Practices

Source: MGMA Connexion Supplement, May/June 2012, pg. 14

“I would classify the state of readiness (for future pay-ment models), as illustrated in the graph as dismal.”

– David N. Gans, VP of MGMA-FACPE Innovation and Research

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COMMERCIAL PAYER NEWSFORBES

WHAT SHOULD BE DONE

Source: Forbes Insights 2012, pg. 11

50%

Barriers to Value Based Payment

46%

32%

32%

31%

Difficulty in fully engaging physicians

Complexity and unpredictable impact of VBP contracts

Decrease in profitability during transition

Lack of information management infrastructure

Lack of sufficient economic predictability

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COMMERCIAL PAYER NEWSSUMMARY RECOMMENDATIONS

WHAT SHOULD BE DONE

FFS & P4P: Proactive Payer Contracting1. Low cost to high ROI (FFS)2. Additional marginal revenue (FFS)3. Additional reporting cost (P4P)4. Additional supplemental payments (P4P)

ACO & PCMH: Assessment & Analysis5. Development cost (ACO & PCMH)6. Untested models (Advanced Payment ACO)7. Delayed returns (ACO)8. Payer supplements (PCMH)

BP & NN: Proactive Positioning & Analytic Analyses

9. Emerging pilot opportunities (BP)10. Additional analytic & consulting cost (BP)11. Potential volume (revenue) gain (BP & NN)

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COMMERCIAL PAYER NEWSRESOURCING DECISIONS

HOW TO GET READY

• Determine internal capabilities & resources• Time commitment• Internal expertise • Data resources

• What can be outsourced?• Contracting analytics• Payer negotiations• Payer relationship management

• What must be outsourced?• Legal services• Claims/Actuarial analyses• Integrated organizational negotiations

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“It’s complicated…”

-Anonymous Teenager

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Reliance offers Free Payer Contracting webinars:– Limited to 30 minutes plus Q&A– Tailored around practice-provided data– Scheduled at practice’s convenience

Visit our website:

www.RelianceCG.com

Click on the Webinar Request Form tab


http://www.reliancecg.com/

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For more information about Reliance Consulting Group, visit: www.RelianceCG.com

Or Contact John Schmitt directly: [email protected]


Q & A

http://www.reliancecg.com/

Documents

HOW TO GET PAID: GET READY FOR 2013 PAYMENT CHANGES