PYA Speaks the New Language of Healthcare

Page 1April 25, 2013

Florida Institute of Certified Public Accountants

Learning the New Language of Healthcare

April 25, 2013



What am I Trying to Say?

Everyone knows these…

LOL Laughing out loud

SMH Shaking my head

BRB Be right back

JK Just kidding

BFF Best friends forever

BTW By the way

But what about these?

PQRS Patient Quality Reporting System

PCMH Patient Centered Medical Home

CIN Clinically Integrated Network

VBP Value-Based Purchasing



ACO

CIN

PHOVBP

PQRS

Are We Speaking the Same Language?



But health reform isn’t just changing the industry we work in – it’s changing the language we speak.

Healthcare Has Changed!

Payers

Healthcare Facilities

Specialists

Primary Care Physicians

Patients

Moving from… Moving toward…

Patients

Primary Care Physicians

Healthcare Facilities

Specialists

Payers



U.S. Healthcare Today: High Cost, Questionable Quality

Where is the Value??

$2,729 $2,870 $2,902 $3,470 $3,696

$7,538

Japan Italy Spain Sweden France U.S.A.

Total Health Expenditures per Capita

1 France

2 Italy

7 Spain

10 Japan

23 Sweden

37 U.S.A.

WHO's Ranking of Health by Country

Source: Organization for Economic Co-operation and Development (2010), "OECD Health Data", OECD Health Statistics (database).



Today’s Healthcare:Moving from Volume to Value

• FFS: Fee-for-Service

– The primary method of healthcare reimbursement that incentivizes providers to provide higher volumes of services because payment is solely dependent upon the quantity of services provided, not the quality

– Payments are issued retrospectively

– FFS has been proven to raise healthcare costsbecause it promotes overutilization

• As U.S. healthcare costs associated with FFS skyrocket, significant efforts have been taken to link payment to the quality and efficiency of care provided instead of volume.



Bundled Payments

Partial Capitation

Global Payment

Fee-for- Service

Shared Savings

Reactive Focused Predictive

Visitor

Symptomatic

Acute Needs

Services & Supplies

Unit Based

No Financial Risk

Patient

Episode

Most Common Conditions

Packaged Treatments

Efficiency Based

Partial Financial Risk

Person

Overall Health

Community Health Characteristics

Manage Well-Being

Outcome Based

Full Financial Risk

Evolution of Reimbursement



The Healthcare System of the Past

PatientsPhysicians/Providers Payers

Hospitals & Other Providers

$

Inefficiency

Information

Economics



Hypothetical

Episode 1: Hip Replacement

• Orthopedic surgeon• Surgery

Anesthesia Pathology

• Acute Care• Rehabilitation

PT

Martha is a 67-year-old women who needs a hip replacement.

- payment

- payment- payment- payment

- payment

Develops rash – dermatology consult - payment

Episode 2: Nine months later

• ED• Admitted for pneumonia• Treated by hospitalist• Consulted by cardiologist

- payment- payment

- payment

Episode 3: Six months later – Well Check

• Gaping hole in information• Information from previous two

episodes of care may never reach primary care provider Drug interactions Duplicative testing

- payment

Patient-Centered Medical Home

Primary Care Physician

Specialist

Physician

Physician

IPA

Bundled Payment

+ Coordinated Care

+ $ for Coordinated Care

PHO

Payer

Narrow Network

ACO

Shared Savings

Capitation

The Road to Clinical Integration



What Does “Value” Look Like?

VALUE=

QUALITY COST

EFFICIENCY+ +



What is a “Value-Based Payment” Model?

Value-Based Payment:A payment model which rewards healthcare providers for meeting certain predetermined performance measures related to quality and efficiency

Efficiency: The state or quality of achieving maximum productivity with minimum

wasted effort or expense.Quality: The standard of something as measured against other things of a similar

kind; the degree of excellence of something: “quality of life;” also the

general excellence of standard or level.Value: The regard that something is held to

deserve; the importance or preciousness of something: “Your support is of great

value.”



Value: The Answer to FFS?

VBP: Value-Based Purchasing

CMS reimbursement model shifting away from paying providers based only on volume of services provided

Creates incentives to encourage healthcare providers to render high quality care and lower total costs

Goal is to foster joint clinical and financial accountability



HVBP: Hospital Value-Based Purchasing

CMS initiative that adjusts acute-care hospitals’ payments for the quality of care that they provide to Medicare beneficiaries – quality over volume!

Hospitals’ payments adjusted for how closely they follow best clinical practices and how well the hospital enhances the patients’ experiences of care

When hospitals follow proven best practices, patients receive higher quality care and see better outcomes.

Value: HVBP

“Several industries have transformed themselves with human errors in mind. The airline industry is a favorite example. As a result of air craft design, regulation, the use of checklists, and other systems designs, we are almost guaranteed to reach our final destination safely. According to data collected between 2000 and 2005, the chances of a fatality on a US airline flight was one in 22.8 million.”

– IHI Open School, Not Just Great Ideas: The Surgical Safety Checklist and the ICU Walker.



• Participating hospitals began receiving payments/penalties for quality of care October 1, 2012, the start of FY2013. The incentive payments are based on a hospital’s performance during the period from July 1, 2011 to March 31, 2012.

• HVBP is based on data collected through the Hospital Inpatient Quality Reporting (IQR) Program.

– CMS has adopted 13 of 45 quality measurestracked in the IQR for FY2013.

Value: HVBP



HVBP• Penalties for high readmission rates

– FY12-14 for AMI, heart failure, and pneumonia;expand list in FY15

– Reduce overall inpatient payment by 1%-3%

• Rewards and penalties based on qualitymeasures and patient satisfaction scores

– Begins in FY13, but based on earlier performance

• Penalties for Hospital Acquired Conditions (HACs)/Never Events

– In FY15, top 25% in HACs will have payments reduced by 1%



Value: PVBP

PVBP: Physician Value-Based Purchasing

• Physician feedback program

– Individual reports on resource use and quality of careas compared to peer group

• Physician value-based payment modifier

– Phased in between 2015 and 2017

– 2013 performance determines 2015 modifier

– Budget neutral

– wRVU x conversion factor x VBPM

• Positive number = paid more

• Negative number = paid less



• PQI: Physician Quality Incentives– PQRS: Physician Quality Reporting System

• When created in 2007, initially named the Physician Quality Reporting Initiative (PQRI) and included 74 clinical quality measures for physicians to report via claims data

• Today, PQRS has over 203 quality measures available for reporting, including both clinical and structural, that can be reported through claimsor accepted registries

• Paid for reporting (pay-for-reportingor P4R), not attaining certain scores(pay-for-performance or P4P)

PQI, PQRS, P4R, and P4P!



Physician Quality Reporting System(PQRS)

• Today - 203 quality measures available for reporting

• Paid for reporting (pay-for-reporting or P4R), not attaining certain scores (pay-for-performance or P4P)

• Carrots followed by sticks

– 0.5% bonus for 2012-2014

– 1.5% penalty for 2015

– 2.0% penalty for 2016 and thereafter



Other Forms of PQI

Meaningful Use Incentives/Penalties Stage One objectives and clinical quality measures 1% penalty in 2015 if not MU in 2014; 2% in 2016;

3% in 2017; 4% in 2018 or 2019

Electronic Prescription Incentive Program 1.0% bonus in 2011(unless received EHR bonus) 1.0% penalty in 2012 unless used eRx 10x by 06/30/11 1.5% penalty in 2013 unless used eRx 25x by 12/31/11

MU

eRx



To Achieve Value, Moving Toward Integration and Alignment

More IntegrationLess Integration

More Common

Less Common

Equipment JV

Clinical Co-Management

Medical Directorships

ACO

Real Estate JV

Medical HomeModels

PHO/ Narrow NetworkBundled

Payments

Professional Services Agreement

Physician Employment



Clinical Integration (CI):The Basics

The extent to which healthcare services are coordinated across providers, functions, activities, processes, and operating units so as to maximize the value of services delivered

Includes both horizontal integration (coordination of activities at the same stage of delivery of care) as well as vertical integration (the coordination of services at different stages)



PCMHPCMH: Patient-Centered Medical Home

• Improves primary care through patient-centered care, cooperation among physicians, and coordination and tracking care over time

• Facilitates partnerships among patients, their physicians and the patient’s family members

• Care is facilitated by registries, health information technology (HIT), health information exchange (HIE), etc. to ensure that patients receive the appropriate care at the appropriate time in the appropriate manner

Patient-Centered Medical Home


+ Coordinated Care

+ $ for Coordinated Care



IPA: Independent Practice Association

• Association of medical doctors (primary care physicians and specialists) and other healthcare professionals that have contracted with most PPO, POS, and HMO insurance plans

IPA

Specialist

Physician

Physician




PHO

Primary Care

PhysicianSpecialist

Physician

PHO: Physician Hospital Organization

• Joint venture between hospital(s) and physician group(s)

• Acts as a single agent for managed care contracting

• Aligns interests of hospitals and physicians but allows each to retain autonomy

• Opportunity to act as a vehicle to advance clinical integration network initiatives

Physician



CIN

CIN: Clinically Integrated Network

A network of physicians working in collaboration with a hospital, using a performance management infrastructure to develop and implement initiatives to improve the quality and efficiency of healthcare services

Network negotiates and contracts with payers for improved reimbursement based on quality and efficiency



What Does a CIN Do?

Coordinates continuum of care across affiliated caregivers

Implements evidence-based clinical protocols

Establishes related quality measures and performance standards

Evaluates individual performance and implements improvement plans

Partners with payers to develop contracts that drive definable clinical improvement and efficiencies



Clinical Integration: the Road from FFS to ACO

FFSP4P,

Bundled PaymentPartial/Global

Capitation

Payers

Providers

Hospitals

Payers

CIN(P4P) ACO



ACO: Accountable Care Organization

• Network of physicians and hospitals sharing responsibility for providing care to patients

• Agree to manage all of the healthcare needs of at least 5,000 Medicare beneficiaries for a minimum of three years

“Think of it as buying a television. A TV manufacturer like Sony may contract with many suppliers to build sets. Like Sony does for TVs, an ACO would bring together the different component parts of care for the patient – primary care, specialists, hospitals, home health care, etc. – and ensure that all of the ‘parts work well together.’ The problem today is that patients are getting each part of their health care separately. People want to buy individual circuit boards, not a whole TV. If we can show them that the TV works better, maybe they'll buy it, rather than assembling a patchwork of services themselves.”

– Harold Miller, president and CEO of the Network for Regional Healthcare Improvement

ACO



MSSP

MSSP: Medicare Shared Savings Program

Pursuant to PPACA, the Secretary was directed to implement the Medicare Shared Savings Program (MSSP) by January 1, 2012

Financial incentive for aligned providers to implement specific integration model



MSSP ACO

• Clinically integrated networks that have contracted with CMS to share in whatever money the community saves

– To be eligible for shared savings, must meet minimum performance standards for 33 ACO quality measures

– How do we know if they have “saved?”CMS reviews the historic costs of the patients in the network and uses that as the baseline to determine savings.



MSSP ACO FunctionsWhat Really Matters

Establish and maintain quality assurance and

improvement program.

Promote evidence-based medicine, patient engagement, care

coordination, patient-centeredness.

Compile and report participants’ quality measure scores.

Distribute shared savings and assess shared losses.



Each ACO participant continues to bill fee-for-service independently

Eligibility for and level of shared savings based on performance score

Calculate actual annual Medicare spent for assigned beneficiaries against pre-determined benchmark

Apply formula to determine share of savings (losses)

Calculating Shared Savings/Losses



Episode 1: Hip Replacement

• Orthopedic Surgeon• Surgery

o Anesthesiao Pathology

• Acute Care• Rehabilitation

o PT

BPPBPP: Bundled Payment Program

• A single “bundled” payment covers the entire range of services that are rendered during a single episode of care or over a specified time period and are delivered by two or more healthcare providers

• Example: Martha’s hip replacement

- payment

- payment- payment

- payment

Develops rash – dermatology consult - payment

payment

- payment- payment



Success in Bundling for Episodes of Care

Successful bundling for episode of

care

Decrease Costs• Financial/Gain-

sharing Model

Create Efficiencies

• Re-design Care Model

Improve Care• Quality Focus



Bundle Up! Bundled Payments are Coming

Based on Medicare ACE Demonstration Project –

free range ACO

Single payment for defined group of services within specified episode

of care

Pricing based on discount of payer’s historic total cost

Gain-sharing incentives



Questions?



TermsACO Accountable Care Organization

BPP Bundled Payment Program

CIN Clinical Integrated Network

eRx Electronic Prescription

FFS Fee-for-Service

HACs Hospital Acquired Conditions

HIE Health Information Exchange

HIT Health Information Technology

HVBP Hospital Value-Based Purchasing

IPA Independent Practice Association

IQR Inpatient Quality Reporting

MSSP Medicare Shared Savings Program

MU Meaningful Use

P4P Pay-for-Performance

P4R Pay-for-Reporting

PCMH Patient Centered Medical Home

PHO Physician Hospital Organization

PQI Physician Quality Incentives

PQRS Patient Quality Reporting System

PQRS Physician Quality Reporting System

PVBP Physician Value-Based Purchasing

VBP Value-Based Purchasing



Thank you!

David McMillan

Principal

PYA

[email protected]

865-673-0844

mailto:[email protected]

PYA Speaks the New Language of Healthcare

Health & Medicine