National Reimbursement Trends

Mike Cheek

Narda Ipakchi

James Michel

National Medicare Trends: Focus on Fee-

for-Service Mike Cheek

Senior Vice President

Reimbursement Policy & Legal Affairs

Member Sharing Questions

In general, what should AHCA/NCAL know about member operating experiences in WI?

What would you like AHCA/NCAL staff to understand about the following:

• Medicare Fee-for-Service

• Medicare Advantage

• Accountable Care Organizations

• Comprehensive Joint Replacement demo

What lessons learned from the WI operating environment might be helpful to other state affiliates and members?

What are your greatest concerns for 2017 and going forward?

Key Learning Objectives

Medicare increasingly is becoming regional and local both in delivery and payment

Quality measurement now is an integral part of reimbursement policy – rates, alone, are a thing of the past

Opportunities exist but innovative thinking is needed

Overview of Medicare in CMSOffice of the

Administrator

CM

Chronic Care Policy

Hospital & Ambulatory

CCSQ

Survey & Certification

Quality Improvement

Coverage & Analysis

CMMI

Patient Care Models

Medicare Demonstration

CPI

Provider Enrollment

Investigations & Audits

OFM

Payment

Quality

Pilots & Demos

Audits

Reimbursement Policy is Yesterday –Measurement Now Equals Payment

Center for Medicare

Office of the Actuary

Center for Clinical Standards and

Quality

Center for Medicare and Medicaid

Innovation

Office of Management and

Budget

Medicare Advantage

Business Unit

Market basket Wage Index

Rehospitalizationand IMPACT Act

Alternative Payment Methods/Delivery Models

Secretary Burwell’s Mandate has been Achieved and More to Come

“We believe these goals can drive transformative change, help us manage and track progress, and create accountability for measurable improvement.”

Secretary Burwell, January 2015

Alternative Payment Models Done -- 30 percent of traditional, or fee-for-service, Medicare

payments to quality or value through alternative payment models by the end of 2016

• On track – 50 percent of payments to these models by the end of 2018

Value-Based Purchasing Done – 85 percent of all traditional Medicare payments to quality or

value by 2016• 90 percent by 2018

Medicare FFS Payment Initiatives Key SNF Impacts

SNF PPS Rates – CMS has work underway to change how SNFs are paid under SNF PPS

SNF Volume & Referral Sources – Hospital and Physician Payment Systems are changing• Hospital and physicians will have powerful incentives to

minimize costs downstream• In future, CMS will share spending post scope of practice

which will influence hospital referral patterns and physician orders

CMS SNF Prospective Payment System Redesign

CMS has New Data Resources and Federal Partnerships

Percent of RU Assessments Between 720-730 Minutes, by State, 2013

WI in 40-50% Range

SNF Public Use File and Elder Justice Task Force

Use state and facility data to assess at risk providers • Medicare Provider Aggregate Table, CY 2013, Microsoft Excel (.xlsx)

• Medicare Provider by RUG Aggregate Table, CY 2013, Microsoft Excel (.xlsx)

• Medicare RUG Aggregate Table, CY 2013, Microsoft Excel (.xlsx)

• Medicare RUG by State Aggregate Table, CY 2013, Microsoft Excel (.xlsx)

• Medicare Therapy Minutes Aggregate Table, CY 2013, Microsoft Excel (.xlsx)

Understand the scope and status of the Elder Justice Task Force operating in the DOJ Northern District of Iowa

• Iowa District operational

CMS Research Approaching Conclusion

Ongoing CMS data analysis Technical Expert Panels (TEPs)

TEP Timeframe Status

Therapy February 2015 Summary Report

Nursing/NTAS December 2015 Follow Up Call – No Date

SNF PPS Redesign TEP I June 2016 Comments Due to CMS 8/15

SNF PPS Redesign TEP II Fall 2016 To Be Scheduled

Efforts to Influence PPS Changes

Therapy • Extensive phase two therapy

component research

Nursing Component/NTAS• Eight member companies

participating in NTAS research

Viability of PPS-Based Data • AHCA research on PPS data

demonstrated poor resource for policy changes

Preparing for Redesign

Request to Board for

$150,000 from reserves in order to respond by August 15 to CMS Redesign concept

More may be needed in response to Fall 2016 TEP

CMS Focus is on Readily Available Changes

Redesign concept based in part upon previous two TEPs

Concept within bounds of statutory language therefore no legislation needed

Based upon current administrative data

Based Upon Five Components

Physical Therapy/Occupational Therapy (PT/OT)

Speech-Language Pathology (SLP)

Non-Therapy Ancillary Services (NTA)

Nursing

Non-Case Mix

Component values determined independently

Significant Shift Away from Existing PPS

RUGs and minutes replaced by mutually-exclusive resident groups based upon resident characteristics and additional adjustments

While technically defined as a per diem, daily payments based upon a percentage of stay of care costs within each resident group

Daily payment likely would decline over course of stay

Payment Model Example (Confidential)

Data Sources Problematic

For PT/OT, SLP and NTA using claims and cost-to-charge ratios

Resident characteristics and related resident groups used for case mix are based on hospital MS-DRGs

Nursing would rely upon 2006-2008 STRIVE data and linkage of claims to cost-to-charge ratios• Uncertain how observed decline in admission function since

STRIVE would be statistically accounted for

Proposed Plan for Response to CMS Redesign Concept

CMS Response• Approach same as SNF PPS Notice of Proposed Rulemaking

• Form Ad Hoc member work group – Reimbursement Cabinet, Data Analytics Subcommittee, Volunteers from Clinical Committee

• Support and data Analysis from Moran and University of Chicago

• Coalition of SNF stakeholders working together on a coalition letter

Possible Congressional Effort

Possible Demo Concept • Legislative

• Comments to CMS

Hospital and Physician Payment Trends & Changing Referral Patterns

What Are CMS’s Priorities?

Priorities

• Implementing MACRA and MIPS

• Working toward helping physicians get ready for alternative payment models

• Requirements for Participation for nursing homes

• IMPACT Act

Measures

• “People talk about there's too many measures, we need to get rid of measures, and that's true. I really view it as being about having the right types of measures.” – Kate Goodrich, M.D., Director CCSQ

CMS is Increasing Accountability with Medicare Spending Per Beneficiary (MSPB) Measures

Inpatient stay(variable based on LOS)

30-days post-inpatient stay

3 days pre-inpatient stay

Measure Timeline

CMS Moving Towards Episode-based Efficiency Measures

Measures Addressing Medical Episodes

1. Gastrointestinal Hemorrhage

2. Kidney/Urinary Tract Infection

3. Cellulitis

Measures Addressing Surgical Episodes

4. Hip Replacement/Revision

5. Knee Replacement/Revision

Hospital MSPB Allows Could Reduce SNF Utilization

Medicare Spending Per Beneficiary (MSPB)

• Assesses Medicare Part A and Part B payments

• Price-standardized to remove the effect of geographic payment differences and add-on payments

• Risk adjusted to account for beneficiary age and severity of illness

• Reported on Hospital Compare with state and national comparisons

• FY 2016 part of VBP; counts for ¼ of total score

Hospital Responses: Target SNF Spending and Volume

• Cleveland Clinic: focus on post-acute care providers/suppliers (30% of cost)

• Partners Healthcare (Boston): SNF highest post-acute cost variation

Docs Will Also Be Incentivized to Reduce PAC

Sunsets Value-based Modifier (Pay for Reporting) at end of 2018

• Initial bonus system shifted to penalty for not reporting

• Attribution rests heavily on primary care

• Physicians receive all A&B costs per attributed patient – includes SNF costs

Establishes MIPS for January 1, 2019 and beyond

• Establishes episodes of care

• Includes resource use measures (30%+), quality (30%), others

• Risk for penalties starts at 4% in 2019 and rises to 9% in mid2020s

• Rulemaking still underway

Creates bonus payment for participating in APMs

• 5% bonus on all professional fees

• Thresholds start at 25% and escalate rapidly to 75%

• If met, exempt from MIPS and its penalties

• Forces alignment with hospital incentives by mid-2020 or sooner

Implications for PACCMS driving change in PAC utilization through APM and VBP measures for hospitals and physicians

• Quality policymakers driving payment changes through penalty system

• PAC spending variation increases pressure on other providers because PAC spend counts against their efficient measures

CMS also driving change through alignment of SNF measures and models with those of other providers

• IMPACT Act SNF MSPB reporting measure could move to VBP

• Becoming more difficult to justify PAC-specific models and measures given CMS focus on uniformity and standardization

Congress supportive of this approach as well

• W&M draft VBP legislation for PAC is example of pressure to accelerate such trends

Key Takeaways

SNFs will need to be responsive to specific hospital and physician market needs and financial risk

Aggressive Passive

• SNFs must address quality, LOS• Identify opportunities for pro-active

engagement• Push toward clinical partnership

• Proactive identification of opportunities

• Identify barriers to hospital success and market-specific interventions

• Evaluate and proactively engage hospitals and physician groups on what they need to succeed

Medicare Advantage:Current Landscape and

Future Outlook

Narda Ipakchi, MBA

Senior Director

Managed Markets

27

Discussion Goals

Review Medicare Advantage (MA) plan structure and design

Understand current/future MA plan market pressures and priorities and potential impacts on providers

Identify opportunities to collaborate with plans or other stakeholders to enhance position in MA environment

Medicare Advantage (MA): Basic Structure

Medicare Advantage Organization (MAO)

Part A

Care Coordination

CMS

Part B

Beneficiary

Administrative Services

Part D

PMPM $$

Negotiated Rate $$

Enrollment in MA Growing at Steady Pace

Source: Kaiser Family Foundation analysis of CMS Enrollment Files

MA

En

rollm

ent(

mill

ion

s)

Nearly One-Third of Medicare Beneficiaries Enrolled in MA

MA Penetration by State, 2016

Source: Kaiser Family Foundation analysis of CMS Enrollment Files

Two Plan Sponsors Comprise Nearly 40 Percent of MA Enrollment

Source: Kaiser Family Foundation analysis of CMS Enrollment Files

MA Penetration Rate (2016)

Wisconsin MA Landscape: 2016

Source: AHCA analysis of CMS Enrollment and Landscape Files

United, 27%

Humana, 18%

Network Health, 15%

Security Health,

11%

Sierra Health, 7%

Dean Health, 6%

Medica, 6% Other, 10%

MA Market Share by Plan, 2016

Operationalizing Medicare Advantage: Provider Challenges

MA plans typically reduce provider reimbursement rates and/or authorized SNF lengths of stay to achieve savings

Diversity of quality and performance measures across plans places a heavy reporting burden on providers

MA plans are under pressure to reduce utilization/costs and improve outcomes

Cost reduction/containment

Improved quality and outcomes (e.g., MA Five Star)

Ability to communicate and collaborate effectively with plan and other providers

Providers must demonstrate their ability to deliver these capabilities through open dialogue, robust quality and outcomes data, and relationships with other providers

Providers Must Demonstrate Value to MA Plans

Changes to MA Plan Payment

36

MA Plan’s Adjusted Bid Rate

MA Plan’s Adjusted Bid

Rate

MA Plan’s Reimbursement

for Enrollee

Individual Enrollee’sRisk Adjustment

Factor (CMS-HCC)

MA Plan’s Reimbursement

for Enrollee

MA Plan’s Reimbursement for

Enrollee

Based on enrollee characteristics: • Diagnoses • Sex • Working aged status • Age • Medicaid status• Disabled status

Based on costs/estimates for treating “average” FFS beneficiary• Part A/B covered

services only (excludes hospice)

• Includes administration/profit

Medicare Advantage Plan Premiums

Hierarchical Condition Categories (HCCs) Explained

CMS risk adjusts payments to account for differences in expected costs• Seeks to reduce “cherry-picking”

Impact of an enrollee’s risk factor is not immediate (plans receive increased premiums in the following year)

CMS requires plans to submit risk adjusted conditions each year (even chronic conditions)• Failure to properly document services and need for additional

services results in the plan and the provider obtaining less than they are owed

Several HCCs

82 year-old male 0.597

Medicaid Eligible 0.166

Diabetes w/ Renal Disease (HCC 15)

0.508

Rheumatoid Arthritis (HCC 38)

0.346

Renal Failure (HCC 131) 0.368

Hemiplegia (HCC 100) 0.437

Disease Interaction 0.102

Risk Adjustment Factor 2.524

Monthly Premium $2,282

Annual Premium $27,382

Some HCCs

82 year-old male 0.597

Medicaid Eligible 0.166

Diabetes (HCC 19) 0.162

Rheumatoid Arthritis 0.346

Renal Failure - Not Coded N/A

Hemiplegia - Not Coded N/A

No Disease Interaction N/A

Risk Adjustment Factor 1.271

Monthly Premium $1,149

Annual Premium $13,789

No HCCs

82 year-old male 0.597

Medicaid Eligible 0.166

Diabetes - Not Coded N/A

Rheumatoid Arthritis - Not Coded

N/A

Renal Failure - Not Coded N/A

Hemiplegia - Not Coded N/A

No Disease Interaction N/A

Risk Adjustment Factor 0.763

Monthly Premium $690

Annual Premium $8,278

Risk Adjustment Factor Example

Source: American Health Lawyers Association: Risk Adjustment: Key Standards, Developments, and Risks in Medicare Advantage and Beyond

Incentives to Identify Diagnoses Increases Risk Scores

MA risk scores were

approximately 9 percent

higher than Medicare FFS

in 2013

Kronick R. and W. Pete Welch. Measuring Coding Intensity in the Medicare Advantage Program.

Medicare & Medicaid Research Review 2014: Volume 4, Number 2

Efforts Underway to Reduce MA Coding Pattern Differences

Annual Coding Intensity

Adjustment

Increased Scrutiny of In-Home Health Risk Assessments

(HRAs)

Risk Adjustment Data Validation

Audits

RADV: Risk Adjustment Data Validation

Annual audits conducted by CMS to verify plan’s risk adjustment payments

CMS currently conducts annual RADV audits on targeted plans and randomly-selected plans

Selected plans must provide required from documentation hospital inpatient/outpatient and physician medical records

According to CMS, errors/omissions in diagnosis data drivers of the 9.5% of the improper payment rate for MA

CMS Plans to Extend RADV Audits

Currently, CMS audits 30 MA contracts (approximately 5%) per payment year

CMS plans to expand audits through contracts with Recovery Audit Contractors (RACs)

RACs would be tasked with conducting risk RADV reviews to:• Identify overpayments and underpayments

• Recoup overpayments

Ultimate goal is to have all MA contracts subject to a RADV audit for each payment year

Administrative Burden

• Pressure on plans to obtain additional documentation

• Increased volume of plan requests for documentation from providers

• However, only documentation from physician offices, hospital inpatient/ outpatient settings is eligible for RADV Audits

• SNFs are explicitly excluded from acceptable provider types

Provider Reimbursement

• Recoupment of overpayments will reduce overall plan payments

• Plan response may impact provider reimbursement and volume

• Rate cuts/freezes

• Reduced LOS

• Narrower networks

Implications for Providers

MA VBID Program

45

Snapshot of the MA Value-Based Insurance Design Model January 1, 2017 launch date and five-year model test period

Tested in: Arizona, Indiana, Iowa, Massachusetts, Pennsylvania, Tennessee, and Oregon

Plan flexibility to design VBID benefit packages for targeted enrollee populations

VBID benefits must be reduced cost-sharing or extra benefits only• No reductions in targeted enrollee benefits or increases in

targeted cost-sharing amounts

Plans Must Meet Eligibility Criteria to Participate MA and MA-PD Plan Benefit Packages offered in

participating states

HMO, HMO-POS & Local PPO plans only• Special Needs Plans are not eligible

Plan has at least 3 Star overall quality rating for CY2015

3 years of operation prior to CY2017

Minimum of 2,000 enrollees in test state

Plan is offered in no more than two states, and 50% of plan’s enrollment resides in test states

Plans Can Select One or More Interventions

Health Conditions

• Diabetes

• Chronic Obstructive Pulmonary Disease (COPD)

• Congestive Heart Failure (CHF)

• Patient with Past Stroke

• Hypertension

• Coronary Artery Disease

• Mood disorders

Interventions

• Reduced Cost Sharing for High-Value Services, Supplies, Drugs

• Reduced Cost Sharing for High-Value Providers

• Reduced Cost Sharing for DiseaseManagement Participation

• Coverage of Extra SupplementalNon-Covered High-Value Benefits

Dual-eligibles are included in demonstration population

Plans are prohibited from communicating participation inpre-enrollment marketing materials/interactions unless explicitly asked

Eligible Populations:

Beneficiary Education and

Communication:

Identification of High-Value

Providers/Services:

CMS has not identified a methodology for plan selection of high-value services and providers

Beneficiary and Provider Considerations

Dual-Eligibles and MA

50

What Are D-SNPs?

Dual-eligible Special Needs Plans (D-SNPs) are a type of MA plan in which enrollment is limited to dual-eligibles only• Grants plans flexibility to provide a model of care that focuses

dual-eligible population needs

Enrollment has grown steadily since 2006 and now exceeds 1.7 million

D-SNPs must have a contract with state Medicaid agency to “provide Medicaid benefits, or arrange for benefits to be provided”

51

CMS Is Increasingly Looking to D-SNPs for Dual-Eligibles

States participating in Financial Alignment Initiative (“Duals Demos”) express widespread challenges

CMS indicates D-SNPs may provide states with an opportunity to better coordinate Medicare and Medicaid services for dual-eligibles• 2017 MA Call Letter

• Medicaid Managed Care Final Rule

How Do D-SNPs Work with States?

MA-Only D-SNP

Contract w/State None Required

Medicaid Benefit

CoverageNone

Contract must include information on plan responsibility to provide/arrange Medicaid

benefits, (e.g. cost-sharing only vs. comprehensive coverage of LTSS)

Medicare/Medicaid

AlignmentNone

Contract must specify how the Medicare and Medicaid benefits are integrated and/or

coordinated (e.g., enrollment, appeals, etc.)

Beneficiaries may enroll in aligned D- SNPs and MMC plans operated by same plan

sponsor

Source: Integrated Care Resource Center. Working with Medicare: Update on State Contracting with D-SNPs. November 2015.

Considerations for Providers

CMS encouragement of D-SNP as vehicle for care delivery may result in increase in MA enrollment

Discussions with state can help inform state/plan contract terms (e.g., unique needs for LTSS)

Providers may need to develop relationships with D-SNPs, even if not contracted for Medicaid benefits

Plans that offer both D-SNP and Medicaid managed care plan may use similar network across offerings

James Michel

Senior Director, Medicare Reimbursement & Policy

AHCA

National Trends in Medicare Alternative

Payment Models

Discussion Review of CMS priorities and goals related to shifting

Medicare spending from FFS to value-based models

Compare and contrast alternative payment models• ACO programs

o Medicare Shared Savings Program (MSSP) ACOs

o Pioneer ACOs

o Next Generation ACOs

• Bundling programso Bundled Payments for Care Improvement (BPCI) Initiative

o Comprehensive Care for Joint Replacement (CJR) Model

Q&A

CMS Targets to Shift Payments

85% 90%

50%30%

AlternativePaymentModels

AlternativePaymentModels

FFS Linkedto Quality

FFS Linkedto Quality

All Medicare FFS All Medicare FFS

2016 Goals 2018 Goals

CMS Hits First Goal Early

85%

30%

AlternativePaymentModels

FFS Linkedto Quality

All Medicare FFS

2016 Goals

?

CMS announced that as of January 1, 2016, the Office of the Actuary estimates that more than 30% of Medicare FFS payments are linked to an alternative payment model

APMs include:

• MSSP ACO

• Pioneer ACO

• Next Generation ACO

• BPCI

• Comprehensive Primary Care Model

• Medicare Advanced Primary Care Program

• Comprehensive ESRD Care Model and ESRD PPS

• Maryland All-Payer Model

• Medicare Care Choices Model

Alternative Payment Models

Groups of providers who voluntarily agree to be held finically accountable for the total Medicare spending on a defined population of patients for one year

Groups of providers who voluntarily agree to be held financially accountable for the total Medicare spending on a single patient over a single episode of care

Accountable Care Organizations

BundledPayments

Alternative Payment Models -Financial

Shared savings approach where any savings or losses are split with CMS

Savings/loss potential capped at some percentage of spending

ACOs may choose from 1 of 3 “tracks” which determine the level of financial risk:

• Track 1: one-sided risk model

• Track 2: low two-sided risk model

• Track 3: high two-sided risk model

Provider fully responsible for savings/losses per episode

Total bonus/loss potential capped at some percentage of total spending to account for high-cost outliers within episode category

Providers have some variable options:• Clinical conditions

• Episode length

Accountable Care Organizations

BundledPayments

Alternative Payment Models -Quality

Defined quality program where ACOs must meet specific performance thresholds on 33 quality measures falling into 4 domains:

• Patient/caregiver experience (8)

• Care coordination/patient safety (10)

• At-risk population (7)

• Preventive care (8)

Quality requirements and programs vary by bundled payment model

Accountable Care Organizations

BundledPayments

Alternative Payment Models

Medicare Shared Savings Program (MSSP) ACOs

Pioneer ACOs

Next Generation ACOs

Bundled Payment for Care Improvement (BPCI) Initiative

Comprehensive Care for Joint Replacement (CJR) Initiative

Accountable Care Organizations

BundledPayments

Alternative Payment ModelsProgram Demonstration? Voluntary

MSSP ACO

Pioneer ACO

Next Generation ACO

BPCI

CJR

Demonstrations implemented by CMMI

Demonstrations are not required to undergo rulemaking

Demonstrations are typically voluntary, though more mandatory programs likely

CJR the first example of CMS requiring providers to be reimbursed under an episodic methodology

More mandatory programs likely (e.g., cardiac episode)

Medicare Shared Savings Program ACOs

MSSP ACO Program Statistics

434 # of MSSP ACOs

MSSP ACOs by Risk Track2016

412 22

6

16

No DownsideRisk

DownsideRisk

Track 2

Track 3

Top 10 ACO Markets

# ACOs

% Benes

Boston 37 20%

New York 59 14%

Philadelphia 59 15%

Atlanta 109 11%

Chicago 82 16%

Dallas 54 11%

Kansas City 30 18%

Denver 12 9%

San Francisco 45 7%

Seattle 7 7%

Sources: CMS Data Library, accessed at http://data.cms.gov; Leavitt Partners, Medicare ACOs Announced: What Happened and Why It Matters, January 20, 2016.

MSSP ACO Program StatisticsHeat Map of MSSP ACO Activity

January, 2016

Source: CMS Data Library, accessed at http://data.cms.gov.

MSSP ACO Results

$465 M Total savings to Medicare Trust Fund

0 Number of ACOs Who Owed CMS Losses

82% Percent of quality measures on which ACOs improved

ACOs in Year 1 ACOs in Year 2 ACOs in Year 3

MSSP Performance Year 3 Results (2014) % of MSSP ACOs Achieving Savingsby Performance Year*

19%

27%

37%

Source: CMS Data Library, accessed at http://data.cms.gov.

*ACOs tend to perform better financially the longer they are in the program

MSSP Attrition & Financial Performance

Contract Status of ACOs with Positive Financial Results

Contract Status of ACOs with NoPositive Financial Results

Source: Tu, T., Caughey, W., Leavitt Partners, MSSP ACOs: Financial Savings and the Appetite for More. Research Brief, February 2016.

Pioneer ACO Model

Pioneer ACO Model

Where Pioneer ACOs Are

As of January 2016, 9 of the original 32 Pioneer ACOs remain in the program

Pioneer ACO Program Distinctions

Ongoing CMMI demonstration currently in 5th year

Higher levels of shared savings/risk possible than in MSSP

May experiment with alternative payment arrangements, such as reduced fee arrangements with SNFs

May access certain payment waivers, such as telehealth and SNF 3-day requirement waivers

Source: Center for Medicare and Medicaid Innovation: http://innovation.cms.gov.

Pioneer ACO Results$120 M

Pioneer ACO total savings to Medicare in 2014

$9 MTotal payments made to CMS by 3 Pioneers who had losses

11

6

3

Earned Bonus

Payments

Broke Even

Paid CMS

Losses

Pioneer ACO Financial Performance, Year 3 (2014)

n = 20

87.1 %Average quality composite score among Pioneer ACOs

Source: Center for Medicare and Medicaid Innovation: http://innovation.cms.gov.

Pioneer ACO Impacts on SNF

40%Reduction in Pioneer ACO

utilization of SNF services in the first performance year

17%Reduction in Pioneer ACO

utilization of SNF services in the second performance year

Key ACO Strategies

Aggressive management of narrow preferred PAC provider networks

Buying or starting PAC lines of business, primarily home health

Manage down SNF LOS

Shift SNF to home health

Shift hospital ED to SNF

Shift to outpatient$0.46Pioneer ACO increase in per capita Medicare spending on

Home Health, second year Source: Center for Medicare and Medicaid Innovation: http://innovation.cms.gov.

Pioneer ACO Impacts on SNF

Key ACO Strategies

Buying or starting PAC lines of business, primarily home health

Shift SNF to home health

Shift to outpatient

Risk to be included, may lose significant referral volume

Increased overall costs due to higher front-end costs

Increased acuity of SNF patients require increased resources

Pioneer ACO Program Attrition

2012 2013 2014 2015 2016

Number of Pioneer ACOs32

9

Reasons for Drop-Out

Start-up and maintenance costs were higher than anticipated

Took financial loss

Dropped into lower-risk ACO model (MSSP)

Entered Next Generation ACO model

Source: Center for Medicare and Medicaid Innovation: http://innovation.cms.gov.

Next Generation ACO Model

Next Generation ACO Model

Center for Medicare & Medicaid Innovation (CMMI) announced the new demonstration model last year

Model builds upon the Pioneer ACO model and will be used to test even more program changes to determine what might be applied to the broader MSSP ACO population

Provides even more payment program waivers and other benefit enhancements that apply to skilled nursing providers

Creates new categories of aligned providers to ACOs, each with different opportunities – implications for SNF providers

Next Generation ACO Model

Where Next Gen ACOs AreNext Gen ACO Program Distinctions

Newest CMMI ACO demonstration model

22 NGACOs announced for January 2016 start date

Built upon Pioneer model

Many program enhancements:• Greater level of risk/reward

potential

• Beneficiary engagement tools

• Stable and predictable benchmarks

• Program waivers (SNF 3-day)

• Flexible payment arrangements

Source: Center for Medicare and Medicaid Innovation: http://innovation.cms.gov.

Flexible Payment Arrangements

Mechanism 1: Normal FFS Payment + Monthly Infrastructure Payment

ACO

Preferred Providers

Next Generation Participants

All Other Medicare Providers

PBPM

Claim submission

Claim payment

Flexible Payment Arrangements

Mechanism 2: Population-Based Payments (PBP)

ACO

Preferred Providers

Next Generation Participants

All Other Medicare Providers

PBPM

Claim submission

Claim payment

Partial claim payment

Flexible Payment Arrangements

Mechanism 3: All-Inclusive Population-Based Payments (AIPBP)

ACO

Preferred Providers

Next Generation Participants

All Other Medicare Providers

PBPM

Claim submission

Claim payment

Partial claim payment

Flexible Payment Arrangements

Mechanisms 2 & 3

AIPBP provider must sign a “Fee Reduction Agreement,” which is an agreement between the provider and CMS stating that CMS will withhold claim payments and instead pay a predetermined amount to the ACO in monthly payments

AIPBP Provider and ACO negotiate agreement establishing program and payment terms:

• Methodology of payment (e.g., per diem vs. episodic)

• Rate/amount of payment (negotiated rates)

• Consensus on clinical protocols and pathways

• Expectations/criteria around quality performance to “earn back” withhold

Provider Categories & Implications

Alignment Quality Reporting Through

ACO

Eligible for ACO

Shared Savings

PBP AIPBP Coordinated

Care Reward

Telehealth SNF 3-day Rule

Post-Discharge

Home Visit

Participant

Preferred Provider

NGACO Model offers more options for SNF engagement

Increasing use of SNF 3-day stay waiver

Trend toward population-based payment and provider-to-provider rate negotiations

Implications for Skilled Nursing

Providers

Bundled Payment for Care Improvement (BPCI) Initiative

Bundled Payments for Care Improvement (BPCI) Initiative

Three-year demonstration program administered by CMMI, currently in Year 2

Tests 4 models of acute and post-acute care bundled payment• Model 1: Acute care only

• Model 2: Acute + post-acute

• Model 3: Post-acute only

• Model 4: Acute care only (prospective payment)

48 defined clinical episodes available for testing

Officially ended Phase 1 “trial” period in October 2015 – all BPCI providers are now in risk-bearing Phase 2

BPCI Participants

Targeting Opportunities for Savings

IndexAdmission

Physician SubsequentAdmissions

SNF Outpatient Hospice HHA Total

$12,700

$1,680

$3,160

$4,660 $579 $47

$1,930 $24,770

Episode Costs for Major Joint Replacement of the Lower Extremity (2013)90 Days after Index Admission

Source: Analysis of CMS Claims Data, 2013.

BPCI Results – Year 1

Model 2 Model 3

66%Percent of BPCI patients

discharged to institutional PAC* before program start

47%Percent of BPCI patients

discharged to institutional PAC* after program start

* SNF, IRF, LTCHSource: BPCI Evaluation Report, Year 1. The Lewin Group, February 2015.

$12,082

$7,465

Average SNF payment 90 days post-discharge for non-BPCI

patients

Average SNF payment 90 days post-discharge for BPCI patients

Provider Experience in BPCIOpportunities Challenges

Fortify relationships with care partners

Care redesign / collaboration on protocols and pathways

Shared savings

3-Day waiver (Model 2)

Early adopter / seat at the table

Access to data when not an episode initiator

Low volume / inability to adequately scale risk

Identifying patients in the bundle

Hospital dictation of rules (Model 2)

SNF avoidance and utilization management

BPCI Initiative – What’s Next?

Evaluation Report #2 expected in Q1 2016• First significant, conclusive results

BPCI is a closed demonstration – very likely there will be no future opportunity to engage

Secretary may expand any BPCI model nationally if evaluation shows a reduction in the cost growth rate and an improvement in quality

Future of bundling will look more like CJR than BPCI

Comprehensive Care for Joint Replacement (CJR) Initiative

Comprehensive Joint Replacement (CJR) Initiative

Five-year, mandatory bundled payment program for providers who operate in one of 67 MSAs

Runs April 1, 2016 – December 31, 2020

90-day episode spending targets for lower-extremity joint replacement (LEJR) procedures, primarily total hips and knees• MS-DRG 469

• MS-DRG 470

The hospital is the at-risk entity under CJR; no downside risk until Year 2

Hospitals may share up to 50% of financial risk with CJR “collaborators,” which include SNFs

Program waivers and alternative financing options begin in Year 2 (January 1, 2017)

CJR Design

Target prices based on 3-year historical spending of the hospital at first, transitioning to regional trend by year 4

Built-in limits to savings and loss potential

BPCI takes precedence

Rule encourages hospitals to gain-share with “collaborators,” including SNFs

CCJR waives:

SNF 3-day rule starting in Year 2 for SNFs with 3 or more stars on Nursing Home Compare (Five-Star)

Limits on physician home visits

Geographic site requirement and originating site requirement for telehealth reimbursement

Comprehensive Joint Replacement (CJR) Initiative

SNF Medicare Revenue Exposure to CJR(based on analysis of 2013 claims data)

CJR Program Overview

Source: AHCA internal analysis.

CJR Composite Quality Score

Percentile THA/TKA Complications

HCAHPS Survey PRO Data (Reporting Only)

>90th 10 8 2

>80th and <90th 9.25 7.4 “

>70th and <80th 8.5 6.8 “

>60th and <70th 7.75 6.2 “

>50th and <60th 7 5.6 “

>40th and <50th 6.25 5 “

>30th and <40th 5.5 4.4 “

<30th 0 0 “

CJR Composite Quality ScoreQuality Composite

Score RangeQuality Category Eligible for

Reconciliation Payment

Effective Discount % for

Reconciliation Payment

Effective Discount % for Repayment

Amount

>13.2 Excellent Yes 1.5% PY1: N/A*PY2-3: 0.5%PY4-5: 1.5%

>6 and <13.2 Good Yes 2% PY1: N/APY2-3: 1%PY4-5: 2%

>4 and <6 Acceptable Yes 3% PY1: N/APY2-3: 2%PY4-5: 3%

<4 Below Acceptable No 3% PY1: N/APY2-3: 2%PY4-5: 3%

CJR 3-Day Stay Waiver

Blanket waiver –providers will not have to “apply” to access the waiver

SNFs may access the waiver if they have been rated 3 stars or higher for at least 7 of the preceding 12 months

CMS will publish a “master list” of eligible SNFs updated at some time interval (e.g., quarterly)

CMS will issue sub-regulatory guidance to providers with more specific information about how to use the waiver

Represents broadest effort yet to test a waiver of the 3-day stay requirement

Broader Implications of CJR

Sets precedent as first mandatory bundled payment program

CMS preference for “hospital-controlled” bundled payments• CMS language in final rule: ““We may consider, through future

rulemaking, other episode of care models in which PGPs or PAC providers are financially responsible for the costs of care”

May expect to see another mandatory bundled payment program modeled after CJR, perhaps focused on cardiac episodes

AHCA CJR Data Resource

By MSA:

• Hospital volume

• Average episode spend by provider/service type

• Volumes to different PAC settings

• Readmission rates

• SNF average LOS

By Hospital:

• Volumes

• PAC referral patterns

• Readmission rates

Reports Will IncludeReport Sample

Shows distribution of spending over

episode by provider/service type

Reports will be available in 3-5 weeks

Outlook2017 and Onward

Over Time Less Payment Will be Traditional Medicare

• 2020 PROJECTION

Medicare Advantage

Other

Value-Based Purchasing

Traditional

2015 PROJECTION

Duals demos

1%

ACOs14%

Duals Demos

1%

ACOs16%

Value-Based Purchasing

76%

Bundled Payments

24%*

Bundled Payments

9%

Unaffected Spending

42%

Value-Based Purchasing

48%

FFS Spending Impacted by

Payment Reforms

Distribution of Medicare

Enrollment

FFS Spending Impacted by

Payment Reforms

Distribution of Medicare

Enrollment

Medicare Advantage

31%

Medicare Advantage

34%

Traditional Fee-for-Service

49%

Traditional Fee-for-Service

54%

* Includes hospital, PAC and clinical condition bundles.Source: Avalere Health

Number of Older Adults in Wisconsin by 2040*

23,676 26,273 32,598 40,415 46,331 49,337

31,800 32,587 34,993

40,731

51,955 65,411

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2016 2020 2025 2030 2035 2040

75-84 85 & Older

Number

of

License

d SNF

Beds:

33,677

*Data analysis by AHCA/NCAL Research Department

**The SCAN Foundation. DataBrief No.20: Seniors with Chronic Conditions and Functional Impairment.

Demand is defined as

significant deficits in

Activities of Daily Living

(ADL) and/or

Instrumental Activities

of Daily (IADLs).

Nationally research

indicates the

prevalence of disability

among older adults has

declined and that

chronic illness does not

necessarily lead to the

need for post acute and

long term care.**

Factors Impacting NF Demand and Suggested Areas for State Affiliate Research Before Assuming Demographics are a Solution

Understand Your State Specific Demographics• Resources: AHCA/NCAL State of the States Database; Administration on Aging AgED Database; State Departments of Economic Development and Planning as well as Departments of

Health also Track Such Data

Learn About Family Caregiver Capacity

• Resources: AARP State LTSS Scorecard (click on your state); Value of Family Caregiving – AARP

Assess HCBS Capacity Resources: Aging and Disability Resource Centers (ADRC – state transition and diversion program offices); State Medicaid HCBS Program Options; Implications of Medicaid Eligibility

Assess Nursing Center Capacity

• Resources: State Medicaid and Licensure and Certification Agency Data

Understand Delivery System Requirements

• Resources: State Medicaid HCBS Program Options; CMS Medicaid Managed Care LTSS Materials (final rule, interpretative guidance); State-Plan Contracts (contact your state for copies)

Carefully Review Investor Research

AHCA/NCAL Reimbursement Team

Name & Title Lead Area(s) Background

Mike Cheek, SVP for Reimbursement Policy and Legal Affairs

All Reimbursement Policy The Lewin Group, Avalere Health, State Medicaid LTC Director, National Association of Medicaid Directors

Dianne De La Mare, JD, MST, VP for Legal Affairs

Managed Care and ACO Contracting

Masters in Speech Therapy, JD

Caroline Haarmann, MPH, Senior Director, Medicaid Policy

State Health Systems Change, Medicaid Payment Policy

MACPAC (Congressional Medicaid Advisory Commission), District of Columbia Medicaid Agency, Thomason Reuters Data Analytics

Lilly Hummel, JD, Senior Director,NCAL

Medicare and Medicaid Payment Policy

Avalere Health, U.S. General Accountability Office

Narda Ipakchi, MBA, Senior Director, Managed Markets

Medicare and Medicaid Managed Care, Duals Integration

Avalere Health, Manatt Health

James Michel, Senior Director,Medicare Policy

ACOs, Bundling, HealthInformation Technology

The Advisory Board, Booz Allen Hamilton

AHCA/NCAL Member Resources To-Date & More to Come

Medicaid Managed Care Contracting Guide and Antitrust Guidance • State Affiliate Program Advocacy Overview and Recommended

Statutory Protections• State Affiliate Guide on Influencing State Contracting with Plans• Member Contracting Guide • State Affiliate Managed Care Technical Assistance Resource Center

Medicare Advantage Took Kit• Module 1 – Primer on Medicare Advantage Regulatory Structure• Module 2 – Plan Reimbursement and Implications for Providers • Module 3 – Contracting Guide for Members

AHCA/NCAL Member Resources To-Date and More to Come

Accountable Care Organizations • Primer on ACOs• ACO Contracting Tools

State of the States • State-by-State Medicaid Payment Systems, Provider Tax and State Plan Links• Demographic Information• Medicare Advantage and ACO Activity • Duals Demo Activity

Weekly eNewsletter – Reimbursement & Legal Week in Review

CJR Resource Center

Managed Care Technical Assistance Resource Center