8/2/2016 1 Innovation in Reimbursement LeadingAge New York Financial Managers Conference September 1, 2016 2016 Medicare Trustees Report • Total Medicare expenditures were $648 billion in 2015 – Part A SNF = $29.8B • The estimated depletion date for the HI (Medicare Part A) trust fund is 2028, 2 years earlier than in last year’s report • The fund is not adequately financed over the next 10 years Social Programs Squeezing Other Spending Source: OMB
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8/2/2016
1
Innovation in Reimbursement
LeadingAge New YorkFinancial Managers Conference
September 1, 2016
2016 Medicare Trustees Report
• Total Medicare expenditures were $648 billion in 2015
– Part A SNF = $29.8B
• The estimated depletion date for the HI (Medicare Part A) trust fund is 2028, 2 years earlier than in last year’s report
• The fund is not adequately financed over the next 10 years
• From Moody’s report• Pension + Benefits shortfall total $20.4T:
– State, local, and federal governments are about $7 trillion short in funding coming pension payments (40% of GDP)
– Unfunded liabilities for the Social Security and Medicare programs is estimated at $13.4 trillion (75% of GDP)• Shortfall from the Hospital Insurance component of the Medicare
program amounts $3.2 trillion (18% of GDP)
– As the stand-alone sustainability of these two programs wanes with an aging population, the programs will be the primary drivers behind a sharp widening of federal budget deficits that is expected to occur after the fiscal year 2018
Adjust Payment Updates for Certain Post-Acute Care Providers: $87B cut from 2017 – 2026http://www.hhs.gov/about/budget/fy2017/budget-in-brief/cms/medicare/index.html
• We are such a small part of the big picture so why is all of this attention being paid to post-acute care?– Our profit margins are very high relative to other
sectors
– We have a payment system that does not align well with cost (predictive power)
– We have the most cost variability of any sector
– Patient placement has been arbitrary with little correlation to outcomes (patient choice)
– The system is ripe for “Rationalization”
This is NOT Innovation
• SNF Medicare Payment Changes in Last 5 Years:
– RUG-IV reweighting
– Loss of Concurrent therapy
– Loss of Group therapy
– MMPI
– Therapy caps (reviews and exceptions)
– Sequestration
– ACA Productivity Adjustment
– SGR (eliminated by MACRA 2015)
– Enhanced audits
Exponential changes grow slowly in their early stages. But when they reach a certain
tipping point they take off like a rocket.
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The Future of LTC?
• My predictions (global market trends):
– Healthcare will remain a “local business”
– Divestiture from large national chains as they experience management challenges and struggle under highly leveraged transactions
– Many facilities, especially new players, will suffer under highly leveraged purchases
– Strong “Regional” operators
– Acceleration of “Boutique” post-acute care
The Future of LTC?
• My predictions (operational issues):
– Significant impact of healthcare reform in some markets, but little impact in others, especially rural
– Risk slowly introduced to LTC providers as payment systems transition
• Management and Scale required to succeed
– Move toward outsourcing therapy and billing
– Advancements in Analytics and Care Management technology
– Ongoing rate pressure from Government spending constraints
– Eventual adoption of Unified PAC (benefit to SNF)
Where Are We Going?
• Accountable Care Organizations• Alternative Payment Models: Bundling Demo; CCJR• Medicare & Medicaid Managed Care• Preferred Provider Networks• Push Toward Lower Cost Settings• Special Needs Plans• Quality Measures Tied to Payment
• Provider Risk• Reimbursement Penalties• Uniform PAC Assessment & Payment System • Data Analytics• “Real-time” Care Management Solutions• Care Transitions
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Medicare Alternative Payment Models
2008 2018
Source: HHS
Quality Defined?
• “Composite Quality Score”
–5-Star / Quality Measures
–All cause readmission rate
–Post-discharge readmission rate
–Delta of functional ability upon admit and discharge
–Patient satisfaction survey
–Episodic cost
Risk
• Statistics and Risk are about understanding how numbers, especially large numbers, behave
• Large cost variations in Medicare and Private per capita expenses throughout the country
• Limited to no quality correlation
• Impacts public program spending and private insurance rates, representing among the biggest threats to the country’s fiscal health and global competitiveness
• Post-acute care has the highest variability– Largely due to availability of venue options (supply),
provider incentives and patient choice
• New APMs are in part designed to reduce variability and unnecessary spending
• Most promising method for reducing Medicare spend
• UCSF study found improved discharge directions and communication between patients and providers could prevent up to 27% of readmissions (within 30 days)– http://archinte.jamanetwork.com/article.aspx?articleid=2498846
• Most common factors were ER decision-making, premature discharge, and lack of communication between patients and providers
• Readmitted patients were often non-compliant with post-discharge protocols
• SNF “Care Transition” concerns
Mapping Medicare Disparities
https://data.cms.gov/mapping-medicare-disparities
Mapping Medicare Disparities
https://data.cms.gov/mapping-medicare-disparities
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Mapping Medicare Disparities
https://data.cms.gov/mapping-medicare-disparities
Hospital Medicare Hospital Payments
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
2013 2014 2015 2016 2017
Physician Value-Based PaymentModifier
Payment Adjustment for Hospital-Acquired Conditions
• CMS: 45% of 2005 H admits of LTC were avoidable = for 314K episodes; $2.6B Medicare $
– All 7 sites reported hospitalization reductions
Federal Efforts to Reduce Hospitalizationof LTC Residents
• Phase Two: Adding Payment Reform– To reduce avoidable hospitalizations by funding higher-
intensity treatment in SNF
– 3/24/16: CMS announced cooperative agreements with 6 organizations to expand the initiative to include approximately 250 SNFs starting Fall 2016
• Participating Sites:– Alabama Quality Assurance Foundation (Alabama)
– HealthInsight of Nevada (Nevada)
– Indiana University (Indiana)
– The Curators of the University of Missouri (Missouri)
– Greater New York Hospital Foundation (New York)
– University of Pittsburgh Medical Center (Pennsylvania)
State Efforts to Reduce Hospitalizationof LTC Residents
• NYS Restorative Care Unit Demonstration Program– RCUs provide higher-intensity treatment for residents at risk of
hospitalization utilizing evidence based tools and critical indicator monitoring and education to support advanced care planning and palliative care decisions; and protocols to effect care monitoring practices designed to reduce the likelihood of change in patient status conditions that may require acute care evaluation
– SNF must contract with “eligible applicant” with demonstrated experience in developing a similar type unit
– SNF requirements:
• Administrator with at least two years operational experience;
• minimum of 160 certified beds;
• 3 or more “Stars”
• Operates a discreet RCU with a minimum of 18 beds
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Medicare Advantage
• De-facto Medicare Reform?
• Enrollment continues to rise and accelerate
– Health systems aggressively entering the market
– All SNF utilization indicators are lower than FFS
• Site of service, admits/1,000, rate, LOS, collection time
• SNFs often grossly mismanaging the revenue cycle for this population resulting in significant lost revenue
• 2.1% positive payment update ($800M)– 2.6% MBI less 0.5% MPA
• Four New Quality Measures as required by the IMPACT Act
– Assessment-based measure for the FY 2020 payment determination is the drug regimen review
– 3 claims based measures: Discharge to community; Medicare spending per beneficiary (MSPB); and a SNF potentially preventable 30-day post-discharge readmission measure
• CMS proposes to use a Calendar Year schedule for measure and data submission requirements that includes a period for provider review and correction, with quarterly deadlines of data submission beginning with data reporting for the FY 2019 payment determinations
• Rewards SNFs with incentive payments for quality care
• Starting in the summer of 2016 and then quarterly, SNFs will receive confidential quality feedback reports on their measure performance; 10/1/16, CMS will post on NH Compare
• SNF 30-Day Potentially Preventable Readmission Measure is the all-cause, all-condition risk-adjusted potentially preventable hospital readmission measure
– CMS is seeking public comment on additional proposals related to the SNF VBP requirements including:• Establishing performance standards