UNDERSTANDING & UTILIZING THE FINAL CJR RULE...UNDERSTANDING & UTILIZING THE FINAL CJR RULE Mark Blessing Partner [email protected] January 29, 2016 Zach Remmich Managing Consultant

UNDERSTANDING & UTILIZING THE FINAL CJR RULE

Mark BlessingPartner

[email protected]

January 29, 2016

Zach RemmichManaging [email protected]

Overview

• Introduction to CJR

• Overview

• Proposed Rule v. Final Rule

• CJR Payment & Pricing

• Sharing Arrangements

• Gainsharing and Alignment Payments

• Regulatory Requirements

• Fraud and Abuse Waivers

• Development of Collaborator Agreements

Comprehensive Joint Replacement Overview• Retrospective , two-sided bundled payment model for lower extremity joint

replacement or reattachment of a lower extremity (LEJR)

• Mandatory 5 year program starting April 1, 2016

• IPPS Hospitals in 67 MSAs (~800 hospitals), including rural entities

– Excludes BPCI Model 1, 2 or 4 LEJR participants

• Anchor Hospital takes financial responsibility for Joint Replacement MS-DRGs 469 and 470 – hip fractures included

• Includes all related part A and B spending from initial hospitalization (diagnostics 3-days prior) through 90 days post discharge with exceptions

• All Medicare FFS Beneficiaries excluding Medicare Advantage, ERSD FFS patients and United Workers of America

Final Rule v. Proposed Rule

• First performance start date changed to April 1, 2016

• 67 MSAs instead of 75 MSAs

• Beneficiaries cannot opt out of having their data shared

• Changes in Target Prices:• Separate episode target prices for MS-DRGs 469 and 470

• Separate pricing methodology for hip fracture patients – simple risk stratification

• Transitioned from performance percentile to composite quality score methodology

• More gradual approach to downside risk for stop-loss limits, and now, stop-gain parallels this gradual approach

CJR Payment and Pricing• Hospital target price based on historical, regional blend:

• CMS applies a 3% discount to historical price

• Hospitals can earn back a portion based on composite quality performance:

– NQF THA/TKA complications (50%, 10 points)

– NQF HCAHPS Patient Experience Composite (40%, 8 points),

– Patient Reported Outcomes voluntary submission (10%, 2 points)

– Extra points for 3 decile improvement (THA/TKA = 1.0, HCAHPS = 0.8)

– 20 point Max

– Excellent, Good, Acceptable, Below Acceptable

Target Baseline

Yr 1(CY12-14)

Yr 2(CY12-14)

Yr 3 (CY14-16)

Yr 4 (CY14-16)

Yr 5(CY14-16)

Historical 2/3 2/3 1/3 1/3 N/A

Regional 1/3 1/3 2/3 2/3 3/3

CMS Reconciliation Payment

Episode 1 Spend

Episode2 Spend

$$$ Price Target with 3% discount

ReconciliationPayment

CMSRepayment

• Hospital and providers in CJR program will continue to be paid on FFS basis• Reconciliation Payment – Aggregate target prices > actual episode spending• CMS Repayment: Aggregate target prices < actual episode spending

Stop Gain Stop Loss

Year 1 5% N/A

Year 2 5% 5%

Year 3 10% 10%

Year 4 20% 20%

Year 5 20% 20%

Gains and Losses Cap

Sharing Arrangements

CJR Sharing Arrangements

Overview:• Signed agreements with CJR collaborators

• Hospital - written policies for selecting collaborators, including quality criteria – past performance or forward looking

• Collaborators must contribute to hospital care redesign strategies and furnish services during a CJR episode

• Hospital can share upside and downside risk (Distribution Agreement)

• Compliance with program requirements is necessary to be afforded protection under fraud and abuse waivers

Eligible Participants:• Skilled Nursing Facilities

• Home Health Agencies Long Term Care Hospitals

• IP Rehab Facilities

• Physicians

• Physician Group Practices

– Practice Collaboration Agents

• Non-physician providers

• Providers and suppliers of outpatient therapy services

Gainsharing Criteria and Payments

Sharing Arrangements:• Must meet quality criteria related to care of CMS CJR beneficiaries

• Gainsharing payments may consist of reconciliation payment, internal cost savings or both – “proportionally

• Must include detailed methodology for gain sharing calculation(s) – GAAP and Yellow Book compliant

Gainsharing Restrictions Risk-sharing restrictions

• Hospital can share up to 100% of reconciliation payment

• Payment cannot exceed 50% of Medicare PFS – physicians and PGP

• Hospital must assume at least 50% risk

• 25% CMS repayment cap for collaborators

Regulatory Requirements for Sharing Arrangements

Key regulatory requirements:

• Establish Board or other Governing Body oversight of CJR

• Update Compliance Plan to include oversight of CJR

• Maintain current and historical list of CJR Collaborators – published on participant hospital’s website

• Issue required Beneficiary Notifications (CMS to issue forms)

• Satisfy documentation requirements, E.g.

• Contemporaneous documentation of gainsharing payments

• Compliance requirements

• 10 year record retention

• Set-up process for EFT payments

Fraud and Abuse Waivers

Fraud and Abuse Waivers

• Collaborators and participating hospitals are referral sources – sharing arrangements implicate the fraud and abuse laws (Stark/AKS)

• Fraud and Abuse Waivers jointly issued by OIG and CMS cover

– Waiver for Distribution of Gainsharing Payments and Alignment Payments

– Waiver for Distribution Payments from a PGP to a Practice Collaboration Agent

– Waiver of Patient Engagement Incentives

Note: Significant regulatory requirements related to gainsharing that must be met to be afforded protection of the waivers

Program Waivers

Non-physician and clinical staff permitted to provide home visits to beneficiaries that don’t qualify for home health services under general supervision for CJR related discharges.

In year 2, CMS will waive the SNF 3-day rule if a patient is discharged to a SNF with at least a three star quality rating in 7 of the last 12 months

CMS waives the geographic site requirement for telehealth permitting patients to receive services regardless of location.

TelehealthServices

Post-Discharge Home Visits, “Incident to” Rule”

SNF 3 Day Rule

Development of CJR Collaborator Agreements


Goal: Develop reporting mechanisms and monitor compliance of calculation

Determine specific procedures to perform related to the calculation

Monitor performance of procedures

Identify data anomalies

Share progress with Collaborators

Develop and implement control procedures for calculations

Strategy Engaging Collaborators

Goal: Determine entities to approach as collaborators

Understand Collaborator Agreements

Satisfy written selection criteria requirements

Identify specific collaboration goals

Analyze available information & data to identify and select Collaborators

Identify basic financial sharing methodologies

1 3 42

Goal: Approach potential Collaborators and finalize arrangement parameters

CJR Rule Education, Collaborator Agreements and Parameters of Agreements

Provide scenario analyses based on levels of success

Get collaborators comfortable with data & process

Negotiate terms and parameters of Agreements (Financial & Quality)

Identify related alignment opportunities

Document sharing arrangements with negotiated parameters

Internal Cost Savings Process

Ongoing Support

Goal: Determine specific ICS parameters in Sharing Arrangements

Identify incentive goals – implant cost savings, OR Efficiency etc.

Analyze available data for each goal – Decision Support, EHR

Develop internal cost savings methodologies in compliance with CJR

Select Quality Performance Metrics & analyze potential outcomes

Strategy1

- Request and analyze historical Medicare claims data made available by CMS to identify financial opportunities:

- Identify high and low cost providers- Volume by providers and suppliers

- Understand how providers and suppliers are performing on quality by utilizing internal clinical data and reportable quality measures for benchmarking

- Identify forward-looking quality initiatives: care pathways, discharge protocols, care redesign committee participation

- Assess which potential collaborators will help drive quality and lower costs in order for the hospital to be successful in CJR

- Satisfy written selection criteria requirements



Strategy1


Hospital CMS Internal Cost Savings Generated

Collaborator #1

Repayment:*Hospital >= 50%*Single Collaborator < = 25%

Hospital CMS Reconciliation / Repayment

Hospital & Collaborator agreed upon savings if parameters met

Savings: <= 100%

Total Hospital CJR Gainsharing Distribution Funds $$$

Collaborator #2

Collaborator #3

Collaboration Agent # 1

Collaboration Agent # 2

CollaborationAgent # 3

*PGP may decide to keep all funds or distribute to agents via EFT. Payments cannot be allocated to “general funds,” and distributed to members who did not furnish a service to a CJR beneficiary. Effect on PGP Compensation plan needs to be considered!

*Physicians, Non-Physician Providers and PGPs capped at 50% of PFS MC Allowable amount billed to CJR beneficiaries

*Collaborator must participate in care redesign process

CJR Collaborator Financial Sharing Methodology

Strategy1

(a) Internal Cost Savings Pool Considerations:

- Final rule is silent on specific parameters but cost saving calculations must follow GAAP and Yellow Book regulations

- Quality Criteria must be used when determining the gainsharing payment for each collaborator; however, quality criteria is not required to be part of the calculated amount

- Reliable and easily accessible financial data is key

- Will walk-through an internal cost savings example later in presentation

EXAMPLE

I.

a

a

CJR Collaborator Financial Sharing Methodology

Strategy1

a b c d de e f

(a) Quality threshold related to the delivery of care to CJR Beneficiaries or collaborator participation in care redesign process

(b) Negotiated shared savings percentages – cannot exceed 100%

(c) Negotiated loss sharing percentages – total cannot exceed 50% or be more than 25% for any one collaborator

(d) Quality threshold related to internal cost savings initiatives –can be different for each initiative

(e) Negotiated sharing percentages of internal cost savings initiatives

(f) Actual allowable professional reimbursement level to CJR Beneficiaries

EXAMPLE Continued…

II.

Decision Points:

CJR Collaborator Financial Sharing MethodologyEXAMPLE Continued…

Strategy1

- Represents 50% of allowable reimbursement amount which is maximum cap for distributions to physician-related collaborators

- Amounts must be distributed “actually and proportionally related to the care of beneficiaries in a CJR episode”

III.















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Ongoing Support






Internal Cost Savings MethodologyImplant Supply Cost Savings Example

b

c

d

e

a

(1) Must be supported by a written methodology outlining calculation; cannot reflect “paper savings” or past investment in fixed costs


(a) Inclusion of severity measures & other patient parameters

(b) (i) Rule does not specify baseline cost comparison time period (i.e. 1 yr, 3 yrs)

(ii) Costs for all care or those related to CJR Beneficiaries?

(c) Pooling method for calculation of internal cost savings – Final Rule does not provide guidance

(d) Consideration of the expenses related to achievement of savings –particularly dealing with compensation issues

(e) Represents pool of savings for distribution dependent on quality achievement

Decision Points:

2















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Ongoing Support






Gainsharing Payments & Collaborator Distribution Issues

- “Actually and proportionally related to the care of beneficiaries in a CJR episode”- How is the Collaborators’ share determined?- Quality parameters need to trigger reconciliation and internal cost savings payment distribution

- PGP provisions in CJR Final Rule will require private practice groups to:- Develop internal distribution methodologies, - Document how distributions are disseminated - If PGP does not distribute payments, how are payments allocated to expenses? How are

expenses documented?

- Employed by Hospitals :- Does hospital create agreements for employed providers at the individual or group level?- Savings calculation determined at the individual or group provider level?- Recommend handling employed and private practice provider arrangements in similar manner.

- Alignment Considerations:- Negotiations could encompass or affect other alignment arrangements with providers such as

Management Services Agreement or Medical Directorships

3Engaging

Collaborators















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Ongoing Support






Fair Market Value & Related Concerns

• Holistic Review of Collaborator Relationships for FMV Compliance

– Compensation stacking

– Payment for similar services

– Physician employment agreements

• Program Integrity Analysis

– Internal controls

– Savings verification

– Reporting of results

– Cut-off periods

– Timing of distributions

QUESTIONS?

Documents

UNDERSTANDING & UTILIZING THE FINAL CJR RULE...UNDERSTANDING & UTILIZING THE FINAL CJR RULE Mark Blessing Partner [email protected] January 29, 2016 Zach Remmich Managing Consultant