1.800.360.0603

GE Healthcare Camden Group Insights Blog

Anticipate Cardiac Episode Payment Models and Get a Head Start on Quality

Posted by Matthew Smith on Sep 20, 2016 2:30:16 PM

By Barbara Letts, Senior Manager, GE Healthcare Camden Group

cep.jpgAs we introduced in recent posts, bundled payment programs are not only here to stay but there are more to come. CMS is targeting 90 percent of Medicare payments to be tied to quality or value, and 50 percent of Medicare payments tied to alternative payment models (“APMs”) by 2018. Bundled payments expansion will be a significant contributor.

CMS will likely expand the Comprehensive Care for Joint Replacement (“CJR”), and the recently proposed cardiac bundles called Episode Payment Models (“EPMs”) for heart attacks and bypass surgeries. All mandated and voluntary bundled payments programs are tied to a quality requirement as a condition for payment.

Examples of Programs Tied to Quality or Value

  • Hospital Value-Based Purchasing     
  • Hospital Readmissions Reduction Program
  • Hospital-Acquired Condition Reduction Program       
  • Merit-Based Incentive Payment System

Examples of Programs Tied to APMs

  • Medicare Shared Savings Program   
  • Patient Centered Medical Home
  • Bundled Payments for Care Improvement   
  • Oncology Care Model

Similar to CJR, two factors determine whether your organization will succeed (i.e., receive a reconciliation payment from CMS) under the newly proposed cardiac EPMs.


cost_quality.png

Quality performance will also be factored into the episode target price calculation. A hospital with “Good” or “Excellent” quality scores would receive a higher target price as a result of reduced discounts and therefore improve their chances to save. The quality scores are composed of the following measures:


Heart_Attack.pngComplications

  • 30-day, all-cause, risk-standardized mortality post-AMI
  • Excess days in acute care after AMI
  • Voluntary hybrid 30-day, all-cause, risk-standardized mortality eMeasure data submission
Patient Satisfaction
  • Hospital Consumer Assessment of Healthcare Providers and Systems (“HCAHPS”) score
CMS is considering replacing the current 30-day mortality measure with the Hybrid AMI Mortality measure. The hybrid measure includes the same current 30-day mortality measure as one component using claims data but also includess clinical status information composed of five core elements: age, heart rate, systolic blood pressure, troponin, and creatinine. Currently, CMS uses the AMI mortality measures for payment determination in accordance with the Hospital Value-Based Purchasing Program.

Outcomes.pngOutcomes
  • 30-day, all-cause, risk-standardized mortality post-CABG
Patient Satisfaction
  • HCAHPS score

CMS plans to add the new CABG mortality measure to the Hospital Inpatient Quality Reporting Program in fiscal year 2017. HCAHPS are not specific to DRGs and reflects elements of care such as communication, pain management, discharge/transition information, cleanliness, and quietness. Additionally, there will be two variations for heart attacks: medical treatment (management) and revascularization (PCI) so there would be two different target prices.

Get Ahead of the Curve: Voluntary Reporting

One of the pain points we’ve seen with clients under CJR is the reporting process for voluntary submission of data. For organizations that have not prepared for bundled payments, it can be a sizeable learning curve just to understand the basic elements and concepts. The Medicare acronyms alone could get you in a tizzy. In regard to quality, if your HCAHPS scores are low and your mortality rates are average, you should consider voluntary reporting of clinical data to ensure acceptable quality scores at a minimum or you will be at risk for no payments even if you demonstrate reduced Medicare cost.

If there is one recommendation we would emphasize, it would be to get ahead of the curve with voluntary reporting. First, understand where you are today in regard to these measures (already being reported). Then, if there is risk of receiving a below-acceptable composite score, adopt a best practice process today for reporting and submitting clinical status information to Medicare whether this is something you develop in-house or contract with a vendor.

Other considerations iclude adopting these measures in other agreements or programs that have a quality requirement. For example, you may have a cardiology physician’s professional services agreement or employment agreement with a quality incentive bonus. Start tying them to other measures that you know are coming your way, and are mandated. This allows for consistency and further aligns incentive payments to other initiatives that have a financial impact on your organization.

Additional recommended reading related to cardiac EPMs:

Cardiac Care Bundled Payments

LettsB.jpgMs. Letts is a senior manager with GE Healthcare Camden Group and specializes in financial advisory services for the healthcare industry. She has developed complex financial models for various types of healthcare entities including children’s hospitals, large public hospitals, academic medical centers, community providers, medical foundations, clinically-integrated networks, and hospitals in turnaround situations. She may be reached at barbara.letts@ge.com.

 

 

Topics: Bundled Payments, Barbara Letts, CJR, Cardiac Episode Payment Model

Three Prep Tips for Hospitals Preparing for CMS’ CJR Model

Posted by Matthew Smith on May 24, 2016 11:00:29 AM

Via Managed Healthcare Executive

Hips-and-Knees.jpgApril 1 marked the start of the CMS Comprehensive Care for Joint Replacement ("CJR") model, which the government agency hopes will support better and more efficient care for its beneficiaries undergoing hip and knee replacement surgeries, the most common surgeries among Medicare patients.

According to CMS, the rate of complications such as infections or implant failures can be more than three times as high at some facilities than at others—and that leads to hospital readmissions.

In 2014, there were more than 400,000 hip and knee replacement procedures, which cost $7 billion in hospitalizations alone. The cost to the government agency was an average of $16,500 to $33,000 for surgery, hospitalization, and recovery across geographic areas in this time period.

With the CJR model, participating hospitals are held financially responsible for the quality and cost of the surgical procedure, which starts when the patient is admitted and ends 90 days after their discharge from the hospital.

Prep tip 1: Focus on post-acute recovery decision-making

The biggest opportunity for hospitals and health systems involved in the CJR model is in the post-acute recovery space, says Andrew McNerney, consulting manager with GE Healthcare Camden Group.

To continue reading this article on the Managed Healthcare Executive website, please click the button below. You will be directed immediately to the full article (no form required).

CJR, Bundled Payments


mcnerney.jpgMr. McNerney is a manager with GE Healthcare Camden Group. His primary area of focus is bundled payments strategy, design, and implementation. Mr. McNerney also specializes in system and service line strategic planning and new business development for a variety of healthcare organizations. He may be reached at andrew.mcnerney@ge.com

 

 

Topics: Bundled Payments, CMS, CJR, Andy McNerney

HFMA Forum Networking Webinar: Bundled Payment Models-- CJR and More

Posted by Matthew Smith on May 5, 2016 11:08:28 AM

webinar, bundled paymentsPlease join GE Healthcare Camden Group's Kelly Tiberio and Novato Community Hospital's Brian Alexander for this Forum-exclusive webinar as they share their perspectives about the challenges healthcare organizations face when implementing bundled payment programs--specifically related to orthopedic episodes. Practical tips and lessons learned will be shared. Critical areas covered during the webinar include the following:

  • The importance of physician champions and strategies for their engagement
  • Considerations for physician incentive design
  • A sample physician-level performance dashboard
  • Accountability for program compliance and continual performance improvement

Participants will be able to ask questions and discuss bundled payment challenges and approaches specific to their own facilities. 

Please note: This webinar is only available for HFMA Forum subscribers. Learn more about the Forums—and join.

Date and Time

May 17 — 10:00 a.m. – 11:00 a.m., CDT

Discussion Leaders

Brian Alexander
Chief Administrative Officer
 
Kelly Tiberio
Manager
GE Healthcare Camden Group
 
Bundled Payment, CJR, Webinar

Recommended For:

HFMA Forum members interested in bundled payment models, including CFOs, revenue cycle leaders, and managed care directors 

Field of Study: Specialized Knowledge and Applications
Delivery Method: Group Internet
Level: Intermediate
Prerequisites: A basic understanding of bundled payment models     
CPEs: 1.0  

Price:

HFMA Forum members: Free

Non-Forum subscribers: N/A| This virtual networking webinar is only available to HFMA Forum subscribers. HFMA has four Forums: CFO, Revenue Cycle, Payment & Reimbursement, and Legal & Regulatory. This webinar is open to subscribers to all four Forums. Learn more about the Forums—and subscribe.  

Forum subscribers can now earn 1 CPE credit by attending Forum virtual networking webinars. The webinar presentation and audio will be available on the Forum website after the webinar. However, CPE credits are only awarded to Forum members who attend the live webinar on May 17.  

Topics: Bundled Payments, Webinar, CJR, Kelly Tiberio

The Math Behind CJR: The Top 10 Calculations You Should Be Considering

Posted by Matthew Smith on Mar 23, 2016 3:14:44 PM

By Kelly Tiberio, Manager, and Barbara Letts, Senior Manager, GE HealthCare Camden Group.

blackboard.jpgIn a time when healthcare organizations can shop around for risk-based contracts, the Comprehensive Care for Joint Replacement (“CJR”) mandate creates uncertainty that has hospital C-suite executives cautious if not uncomfortable. “Calculated risk” isn’t an option in the CJR mandate; on the contrary, CJR creates a new paradigm of widespread accountability for the cost of episodic care that the country hasn’t seen before. In less than three weeks, nearly 800 acute care hospitals will begin their mandatory participation in the CJR mandate. While CMS has delayed risk to begin in performance year 2 of the program, the preparation for going at-risk starting January 1, 2017 should start now.

In evaluating their potential upside opportunity and downside risk as hand-picked participants in this program, healthcare executives would be wise to consider the various calculations they can—and should—be making to best understand their organizations’ probability of financial success in CJR. Consider these 10 practical calculations as your hospital or health system embarks upon the new CJR reality.

For illustration purposes, the calculations in this table use a $25,000 baseline price (before the CMS discount is applied) for a lower extremity joint replacement (“LEJR”).  Read about each calculation below the table.

(Click here for a larger image)

Sample_CJR_Calculations.png

Calculation #1: The first question every healthcare executive asks about CJR is: how is this going to impact our bottom line? While the exact answer can only be reached through analysis using baseline data and CMS target pricing, what we know today is that CJR hospitals have until December 31, 2016 to figure out how to minimize their risk exposure in performance years 2 through 5 of the program. Year 4 is when the maximum CJR risk begins (capped at 20 percent). The “repayment amount” is what participant hospitals will owe CMS should they exceed their target price.

Calculation #2: Luckily, the converse scenario to downside risk is upside opportunity. Starting in CJR performance year 1, hospitals can be eligible to receive a reconciliation payment from CMS if their actual performance year episode costs are lower than the CMS target price. But first, hospitals have to achieve a quality threshold in order to reap the savings. The “upside” requires participants to meet a minimum composite quality score, explained in #5 below. Similar to maximum downside risk, maximum upside opportunity is capped at 20 percent in Years 4 and 5.

Calculation #3: Collaborators in CJR consist of providers who are directly involved in the patient care of a hospital’s CJR beneficiaries. A hospital may consider a multi-pronged approach to gain- and risk-sharing in order to incentivize all parties involved to better coordinate care, improve outcomes, and manage episode costs. Physicians are only one type of potential collaborator, but a highly influential stakeholder group in the game. Gainsharing payments to physicians must not exceed 50 percent of a physician’s Physician Fee Schedule payments in a performance year (in the example above, the Medicare FFS payment is $1,500). This is shown as a negative from the hospital’s perspective, as this would be considered an expense of the program. While the maximum calculation is based on the aggregate amount of services the physician bills, including multiple visits and other services after the patient is discharged, in the above sample, we have limited the calculation to just surgery – the one constant we can expect and is by far the largest proportion of the aggregate amount

Calculation #4: Just as reward can be shared with collaborators, so can risk. However, the hospital has to retain at least 50 percent of the repayment obligation to CMS. The remaining 50 percent of risk can be distributed among multiple collaborators, with no single collaborator at risk for more than 25 percent of the repayment amount. “Alignment payments” from collaborators to the hospital can be as equally incentivizing as gainsharing payments in CJR: in a risk-share scenario, everyone has skin in the game.

Calculation #5: Remember Calculation #2? CMS has intentionally linked reconciliation payments to quality performance in CJR. So, if your hospital achieves a windfall of $15,000 because it beat the target price but has not met the minimum quality threshold, there will be no reconciliation payment received from CMS (i.e., money will be left on the table). The quality strategy and methodology behind CJR is complex and involves two required measures and one voluntary measure. Fortunately, CMS will be managing the quality and cost reconciliation process on behalf of participant hospitals each year. But beware: don’t wait for CMS to tell you how your hospital is faring. Get ahead of your performance monitoring and understand where your weaknesses are.

Calculation #6: Quality incentive payments are “payback” mechanisms that CMS has created to effectively reduce the 3 percent CMS discount taken off the top across all five performance years of CJR. In other words, the better your composite quality score, the higher your potential reconciliation payment from CMS and the lower your repayment amount to CMS. While the maximum 1.5 percent discount reduction may not seem like much of a gift, it adds up when you have 100 or more episodes as illustrated in the example below. CMS will get its 3 percent discount immediately because it is factored into the target price. However, during reconciliation, the quality incentive payment will be applied to the final reconciliation or repayment amount.

Calculation #7: The total episode costs in an inpatient stay plus 90-days post-acute care can add up quickly. CMS credits many of the achievements of the Bundled Payments for Care Improvement program on the reduction of unnecessary post-acute care: reducing SNF utilization, as well as other high-cost post-acute providers, reducing readmissions, and shifting that utilization to clinically appropriate care settings. Evaluating your hospital’s utilization patterns against national and best practice benchmarks is a valuable exercise in understanding where savings can be achieved.

Calculation #8: There are two categories of savings that can be accrued in CJR: internal cost savings (ICS) and positive reconciliation payments from CMS. The ICS methodology is generated, calculated, and owned by the CJR hospital. These funds do not pass through or come from CMS at any time. Hospitals are, however, obligated to report on gain share payments that may have been paid out as a result of ICS generated. (Note: gain share payments to CJR collaborators can only be made once annually, and the payment must combine both ICS and/or positive reconciliation payments into a single payment.) ICS is often generated through a number of channels, such as care redesign that impacts length-of-stay and standardization of implant costs. There is no one-size-fits-all methodology for achieving ICS, and much of the work depends on the hospital’s existing care models, physician alignment initiatives, and clinical infrastructure.

Calculation #9: The adage “it costs money to make money” rings true in CJR. In building your hospital’s CJR program budget, don’t forget that you will need to invest in resources to be successful. Unless your organization is a regional Center of Excellence for joint replacements and is already well below the CMS target price, you probably have work to do. And more importantly, you need resources to actually do the work. Nurse navigators are a proven investment in episodic care because they follow your CJR patients throughout the entire episode, especially as it relates to post-acute care where many patients may fall off a hospital’s radar. Additionally, investments in data analytics software/vendor support and adaptation of existing IT infrastructure are common program costs in bundled payment programs.

Calculation #10: Last but not least, the halo effect. In performance year 5, your hospital will be a well-oiled machine for LEJRs (we hope). You will have invested, redesigned, improved over and over again, and you will have probably failed somewhere along the way, too. That failure becomes a little less daunting when you consider the competency and organizational muscle your hospital will have developed between now and 2020. Why? Because now you’ve done it, you’ve learned how to truly engage your clinical staff, your post-acute partners, your community, and most importantly, your patients. You can replicate all those efforts by expanding your muscle to other clinical episodes and to other payers in your market. Because the end goal in CJR is leveling the cost landscape (picture a bulldozer driven by CMS) and increasing the quality game, your patients and your network will know your hospital is best-in-class. This assumes, however, that you are performing better than your competitors. Remember that since CJR affects an entire market, you must compete not only against CMS’s target price, but against your competitors doing a better job in achieving savings and quality scores. Your CJR experience will also pave the way for other value-based care initiatives and service line strategies your organization may be planning now or on the horizon.

Bundled Payments, CJR


TiberioK.jpgMs. Tiberio is a manager with GE Healthcare Camden Group and has worked on a variety of projects involving the diverse, operational, and strategic needs of nonprofit and healthcare organizations. Her areas of focus include bundled payments and other healthcare and payment reform initiatives under the Center for Medicare & Medicaid Innovation. She may be reached at kelly.tiberio@ge.com.

 

 

LettsB.jpgMs. Letts is a senior manager with GE Healthcare Camden Group and specializes in financial advisory services for the healthcare industry. She has developed complex financial models for various types of healthcare entities including children’s hospitals, large public hospitals, academic medical centers, community providers, medical foundations, clinically-integrated networks, and hospitals in turnaround situations. She may be reached at barbara.letts@ge.com.

 

 

Topics: Bundled Payments, CMS, Barbara Letts, CJR, Kelly Tiberio

Q&A: Selecting Post-Acute Organizations for Joint Replacement Bundles

Posted by Matthew Smith on Mar 21, 2016 1:27:08 PM

By Andy Edeburn, MA, Vice President, GE Healthcare Camden Group

Q&A, Bundled Payments, Post-Acute CareWith mandatory bundles for joint replacement looming, many hospitals have worked through their financial impact analyses and sorted out their physician relationships. But it sounds like many have yet to develop a strategy for post-acute partners, especially selection tied to quality outcomes and post-acute clinical skill.

The comprehensive care for joint replacement ("CJR") initiative involves a 90-day episode of care, and the hospital component will typically involve only three or four of those days. Depending on the market, hospitals will likely need to consider both home health agencies and skilled nursing facilities as important players in their post-hospital continuum.

Hospitals often have a range of questions about picking post-acute providers. Here are some of the common questions that have crossed our inbox in the last few weeks.

Q: My hospital has reviewed our recent discharge data and determined that a lot of our post-acute discharges go to five providers. Can we just keep it simple and say these five are our partner group and leave it at that?

A: You could, but historical volume doesn’t always equal quality. In a lot of instances, it equals convenience. As you explore potential partners, there are three key things to consider:

  • Quality performance
  • Geography
  • Medical staff

There are ample options for learning about post-acute provider quality via state and federal resources – a fuller discussion is presented in the following question. Your hospital should look for providers in at least the top quartile of quality and seek out those who perform better than state and national averages. Second, consider the geographic distribution of post-acute providers in your service area. Discharging patients will want an option that is close to home or covers their community. Thus, balancing quality and geography is an important equation. Finally, you’ll want to make sure that your post-acute partners have consistent medical staff coverage that aligns with your patient needs. Skilled nursing facilities and home health agencies are required to have a physician as a medical director, but that physician oftentimes not directly involved in patient care nor following patients on a regular basis. Post-acute organizations can employ a range of physician models, some with open or closed staff models, or some using a “SNFist” – similar to a hospitalist but in a skilled nursing facility. You’re looking for post-acute partners with at least 30 hours per week of coverage, involving some combination of physicians and advance practice clinicians.

Q: What sort of resources can I access and what kinds of data should I review when it comes to selecting post-acute providers?

A: There are a number of resources readily available with information about post-acute organizations, especially skilled nursing facilities and home health agencies. Medicare’s beneficiary-facing website (www.medicare.gov) offers a range of information via its nursing home and home health compare tools. While much of this data is retrospective in nature, it can provide a good baseline around historical quality. It’s important to note, however, that a lot of the data regarding skilled nursing facilities is focused on aspects of long-term care and not on short-term, post hospital care. Other data that may be more pertinent to bundled payment is available via commercial data vendors or actuaries. If you’ve already completed any analysis about your organization’s costs and opportunity related to CJR, it’s likely that you should have some sense about who the high volume post-acute providers are, how long they keep patients with respect to benchmarks and how often they readmit patients. When considering post-acute providers for your discharges, post-acute length-of-stay is often the largest determinant of cost and should be an important data point for you. Readmission rates are also important.

Q: We’ve figured out which providers will be our network partners. Now we want them to follow our clinical protocols and perform. What’s the best way to get them on board?

A: While it’s probably easiest to just dictate terms and expectations, you’ll catch more flies with honey than with vinegar. One of the best ways to engage with post-acute providers is to acknowledge that they’re an essential part of your episode. Treating them like a true partner will get you halfway there. Beyond that, you should build the right infrastructure for ongoing dialog, education and problem solving. A dedicated workgroup or committee involving acute, post-acute and physician participants is essential. If you want post-acute providers to follow your protocols, sit down and work through the protocols together. Seek input from the post-acute organization about how their work meshes most appropriately with yours. Sort out how you will handle patient transfers, exchange data and report data. Meet regularly to address issues, share learnings and maintain the dialog. Most importantly, designate a resource in your organization to lead this effort. You’ll be happier for clearly-defined accountability, and the post-acute providers will always know who to call when they have questions.

Q: We obviously want to keep track of these patients after they’ve left post-acute. What’s the best way to do that?

A: For providers already down a value-based or population health road, keeping track of patients should flow automatically to your care management model. Absent this resource, you’ll want to create some kind of ad hoc approach that defines clear accountability and process for post-hospital/post post-acute follow through. You should consider some of the models around phone-based care management as a potential resource. Patient activation will play a key role – educating the patient about self-management or how to access support as needed. Post-acute providers can take on some of these function or assist, if you can create the right incentive for them take it on. One important requirement of CJR involves patient-reported outcomes. From an infrastructure perspective, your effort to gather this quality data from patients should ideally integrate with your patient monitoring efforts.

Q: We’re thinking about moving past a contractual arrangement with post-acute providers and are interested in exploring direct ownership or operation of post-acute. What do we need to know?

A: First and foremost, owning and operating post-acute carries as many challenges and pitfalls as any other healthcare business. How complicated can it be? Fairly complicated. Each post-acute setting currently retains its own unique payment system and regulatory framework. In some states, there are barriers to developing new post-acute settings; in other states, there are limitations about how you can move an existing provider from one geography to another. That said, there is a general spectrum of how hospitals and health systems can approach post-acute relationships, ranging from joint operating arrangements and networks through joint ventures and sole ownership. Each invites various pros and cons, and the right answer can be very organization and market-specific.


Andy_Edeburn.pngMr. Edeburn is a vice president with GE Healthcare Camden Group, with more than 20 years of healthcare consulting experience, specializing in acute, primary, post-acute, and senior care services. He is a nationally recognized expert on post-acute care. His areas of expertise include strategic planning, acute/post-acute integration, provider network development, and managed care. Mr. Edeburn is a frequent speaker on a range of topics including healthcare reform readiness, strategic planning, acute and post-acute integration, and change management. He may be reached at andrew.edeburn@ge.com.

 

Topics: Bundled Payments, Post-Acute Care, Andy Edeburn, Skilled Nursing Facility, CJR, SNF, SNFist

Webinar: The Next Generation of Bundled Payments

Posted by Matthew Smith on Feb 2, 2016 10:52:16 AM

webinar_Clouds_icon-resized-600.jpgPlease join GE Healthcare Camden Group's Kelly Tiberio and Barbara Letts this Thursday, February 4th at 2 PM Eastern for a real-time look at bundled payments and a discussion on how to succeed today and in the future in this arena, in the Healthcare Web Summit event frommcol: The Next Generation of Bundled Payments: Charting a Course for Financial Success.

This 60-minute webinar, presented by GE Healthcare Camden Group, examines the current bundled payments environment and what successful organizations are doing to position themselves in the new era of payment reform and value-based care.

Learning Objectives

After attending this webinar, attendees will be able to:

  1. Identify bundled payment trends—especially related to the CMS Comprehensive Joint Replacement (“CJR”) program.
  2. Ascertain key factors impacting success in bundled payment participation
  3. Initiate a plan for success for participating in the CJR program
  4. Distinguish the necessary next steps for short-, mid-, and long-term success
  5. Engage in interactive learning through online question submission, attendee feedback and opportunity for follow up questions, and networking with attendees, faculty and other professionals through dedicated LinkedIn group.

Who Should Attend

Interested attendees would include:

  • C-Suite Executives
  • Medical Directors
  • Transformation, Innovation and Integration Executives and Staff
  • Managed Care Executives and Staff
  • Revenue Cycle Executives and Staff
  • Care Management Executives and Staff
  • Network Management Executives and Staff
  • Provider Relations Executives and Staff
  • Accountable Care Executives and Staff
  • Finance Executives and Staff
  • Planning and Strategic Executives and Staff
  • Business Intelligence Staff
  • Information Technology Executives
  • Other Interested Parties

Attendees represent organizations including:

  • Hospitals and Health Systems
  • Provider Networks
  • Accountable Care Organizations
  • Health Plans
  • Third Party Administrators
  • Employers
  • Government
  • Care Management Organizations
  • Pharmaceutical Organizations
  • Solutions Providers
  • Associations, Institutes and Research Organizations
  • Media

Individual Registration Fee: $195. Post-event materials, with video syncing slides and recorded audio, plus presentation pdf file: $45 for attendees; $260 for non-attendees after the event. To register for this webinar, please click the button below (note: you will be redirected from the GEHC Insights Blog to the home page of Healthcare Web Summit).

Webinar, Bundled Payments, CJR, Financial Success

Topics: Bundled Payments, Barbara Letts, Value-Based Payments, CJR, Kelly Tiberio

CMMI Remains Bullish Regarding Timeline for CJR and Value-Based Payments (and Rightfully So!)

Posted by Matthew Smith on Nov 19, 2015 2:27:19 PM

By Deirdre Baggot, Ph.D., Senior Vice President, GE Healthcare Camden Group

bp.jpgDespite increased pressures to postpone  the start of the Centers for Medicare & Medicaid Services' ("CMS") first mandatory bundled payment, the Center for Medicare and Medicaid Innovation ("CMMI") announced Monday, November 16, that they would, indeed, proceed with the Comprehensive Care for Joint Replacement ("CJR") program. This decision connotes a new level of accountability and commitment to upending the traditional orthodoxies that have governed U.S. healthcare. With CMS’ track record for delaying the tougher policy decisions, we are pleased to see that there is something more than ambition here. We have an obligation to fix the over-testing and over-treating that is pervasive in fee-for-service. It’s not only about creating new value, it’s also about doing the right thing for the American public, and I applaud the team at CMMI.

Patients historically have resisted price competition in the healthcare industry. This was validated in our work testing bundles with the CMS Acute Care Episode (“ACE”) Bundled Payments Demonstration. Prior to going live with the ACE pilot, we conducted focus groups with patients regarding bundles or fixed pricing strategy. Overwhelmingly, the data revealed in 2009 that patients associated lower prices with less care or lower quality care. A number of factors are contributing to a shift in the way patients view price competition. Digital ubiquity, transparency, and smart technologies have enabled patients to see that they weren’t getting more—they were just paying more.

With major joint replacement procedures being the most commonly performed procedure for Medicare beneficiaries, it makes sense that CMMI would begin with this population. We should expect to see continued movement in areas such as CRM (cardiac rhythm devices), and other high-spend areas for Medicare such as chronic conditions and outpatient procedures.

The following questions and answers provide insight into the CMS decision and what it means for providers as the program launch nears.

Q: Is proceeding with the CJR program a positive step at this time?

Yes. Without a doubt. It is evidence that the “New Deal” in U.S. healthcare is taking hold.

Q: When is the CJR program officially launching?

CMS announced that the program would begin April 1, 2016, instead of the originally proposed date of January 1, 2016.

Q: What about providers who worry that they aren't ready for the move to value-based payments?

If providers are asking for more time, I would suggest that they are asking the wrong question. New, smart technologies, digital ubiquity, and transparency are contributing to the transformation we are seeing right before our eyes. Further protracting the move to value-based payments is not good for consumers and not good for the economy. For providers worried that they aren’t “ready” and need more time, they need to remember that there is zero downside risk in year one.

Additionally, we need let go of this notion of being “ready.” Ready for what? Failure tolerance is what is needed. We don’t need perfect (which is good because the U.S. healthcare system is far from perfect. Think failure tolerance. Think about failure as nothing more than a data point and move on with the business of creating new value. The head in the sand approach will result in someone else raising their hand to do it better, faster, and cheaper. And if the question is really about managing demand destruction, I would recommend leaning in and taking it head-on. Yes, we already know that demand destruction will occur, particularly in areas such as diagnostics and therapeutics, IRF and SNF utilization, any area where one cannot justify the value of the services provided against the relative cost. Market advantage means taking this on NOW. Bundles aren’t the end game; they are a low-entry point on the path to managing total cost of care.

Q: With the CJR program moving forward, what would be the next logical programs to launch?

We should expect to see continued movement in areas such as CRM and outpatient procedures such as colonoscopy. Beyond the Medicare population, we are seeing interest in maternity care bundles across several Medicaid programs and recent movement in pediatric orthopedic bundles as well as oncology among commercial payers. Employers remain focused on high-end cardiology, cardiac surgery, bariatrics, orthopedics and spine. The take-away message? Follow the money.

CJR is aligned with Health and Human Services' commitment to reward providers for providing the highest quality of care in the most cost effective setting as compared with fee-for-service, which can reward over-testing and over-treating.

Q: Are the original 75 metropolitan statistical areas ("MSAs") still intact? 

CMMI announced in the final ruling that the number of metropolitan statistical areas ("MSAs") required to participate had been reduced to 67 markets. The reason for this is that while originally CMS had identified 75 MSAs that would be required to participate in this mandated bundle, after applying the Bundled Payment for Care Improvement ("BPCI") exclusions, a handful of markets no longer qualified. Specifically, when counting the number of CJR episodes in a region, they excluded episodes that were at Model 2 lower extremity joint replacement ("LEJR") hospitals as of October 1, 2015 (previously it was July 1, 2015). Additionally, when counting the number of CJR episodes in a region, they did not count episodes that would be accruing to a BPCI participating physician group practice. These two changes meant that the eight MSAs in question no longer met the MSA eligibility criteria, thus they are no longer subject to the mandate. The table of excluded MSAs can be found below and on page 76 of the final rule.

MSAs-1.png

Q: Where can I find a copy of the final rule?

The final rule may be found here: http://cdn2.hubspot.net/hubfs/161605/CCJR_Final_Rule.pdf

CJR Final Rule, GE Healthcare Camden Group


baggot_headshot.pngMs. Baggot is a senior vice president with GE Healthcare Camden Group and is a former CMS Expert Reviewer for BPCI and former lead for CMS Acute Care Episode Demonstration. Ms. Baggot is a frequently invited keynote speaker on payment reform and bundled payments. She has authored more than 20 papers on bundled payments, healthcare reform, and payment transformation, and has been a featured expert on National Public Radio’s Morning Edition, All Things Considered, and Planet Money. She may be reached at dbaggot@thecamdengroup.com or 303-335-7047.

 

Topics: Bundled Payments, Deirdre Baggot, Medicare Reimbursements, CCJR, CJR

Subscribe to Email Updates

Value Model, Health Analytics

Posts by Topic

Follow Me