Managing Episode PerformancePatient Placement Matters More than Ever Before

September 2015

2

Agenda

1. Overview of CMS’s accelerated movement toward Value-Based Purchasing• The Game Changer: Mandated CCJRs

2. Operational Imperatives to Managing Episodes

3. Developing an aligned Skilled Nursing Network • Case Study of Beacon Health System

4. Questions/Discussion

Care Transformational Forces Unleashed

The rewards and penalties are accelerating and motivating health systems and post acute providers to manage “episodes” of care.

o CMS targeting at least 50% of all claims included in BPCI, ACO or like structures by 2018.

o New Episode Bundles being introduced, e.g. Oncology over 6 month risk period.

o Mandatory Participation of Comprehensive Care for Joint Replacement (CCJR) Payment Model expected to be effective January 2016 to impact 900 hospitals – A Game Changer.

No Turning Back

Page 3

4

The Future Has Been Planned – Moving to DRGs for BundlesAll Providers Need to Prepare for Model 5

5

• Mandatory Participation of Comprehensive Care for Joint Replacement (CCJR) Payment Modelo MSA Affected: 75 geographic areas, excl. BPCI M1, M2, M4

participants• Episode: Lower Extremity Joint Replacement (LEJR)

o Primarily single-joint total hip and total knee replacement procedureso MS-DRG 469: Major joint replacement or reattachment of lower

extremity with Major Complications or Comorbidities (MCC); oro MS-DRG 470: Major joint replacement or reattachment of lower

extremity without MCC. • Effective Date: January 1, 2016• Terms: 5 years

The Game Changer: CCJR*

* Subject to change pending Final Rule.

6

Managing the Cost and Quality of a Care Episode• The Success Equation

7

“What really drives the differences in Medicare fee-for-service spending … is what happens to a patient

after he or she leaves the hospital”

Jonathan BlumFormer Director of Centers for Medicare and Medicaid Services

8

9

The Significance of Post Acute and Readmissions

MJR CHF All BPCI Episodes0%

20%

40%

60%

80%

100%

53%

34%44%

4%

21%12%

33%25% 28%

10%20% 17%

Anchor Spend Readmission SpendPAC Spend All Other

MJR CHF All BPCI Episodes

$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$13,899

$7,503 $10,333

$947

$4,705 $2,744

$8,638

$5,645 $6,624

$2,519

$4,407 $3,954

$26,002

$22,261 $23,655

Anchor Spend Readmission SpendPAC Spend All OtherTotal

Medicare Average Spend/90 Day Episode

Medicare Average % of total Spend/90 Day Episode

1Medicare episodes for 48 BPCI episode families; PAC includes SNF, IRF, HH, and LTAC, 2013

Patient Placement Matters More Than Ever Before

ROI on Coordinated Care Transitions: • Reduced IP Length of stay/Higher Medicare

profitability• Lower “Episode” cost for success under bundled

arrangements and VBP metrics, brought about by:o Pressure on SNFs to lower LOS and offset with

more referrals to remain viable. o More SNF patients moving to Home Healtho Reducing costly readmissions and penalties

• Increased revenue to owned PAC assets (e.g., Home Health)

• PAC strategic relationships which will be foundational to success under payment transformation (Medicare, Medicaid, private payor bundles)

The Institute of Medicine concluded that variation in post-acute care spending is the single largest factor behind geographic

variation in Medicare spending per beneficiary, and substantial

savings may be achievable by directing patients to more cost-effective settings — home care rather than institutional care

when appropriate, and higher-quality, more efficient facilities

when institutional care is required.

10

Building Episode Management Competencies – The Success Equation

Imperatives to Managing

Episodes

Performance-Based Contracts:• Outcomes• Care Cost-Efficiency• Collaboration• Care Model Adoption

• Physician-Driven• Evidence-based• 90-Day Span (Acute/PAC)

• Risk Stratification• PAC and Home Follow-up• Interventions

• New accountability• Patient Placement

Protocols• Retooled discharge

script

11

Care Transitions and PAC Performance Improvement - Assessment

1

Episode PerformanceAnalytics

• Quantitative understanding of baseline episode performance and components?

• Insights on the greatest opportunities to improve episode cost efficiency?

2

PAC Network

• Highest performing PAC providers identified? What criteria was used?

• Providers under an Aligned/ Performance contract?

• Readmission Mitigation Programs?

• Ongoing performance management structures?

3

Care Transition Effectiveness

• Culture, processes and standards to support “right time, right place”?

• Protocols followed for bundles/ACO cohorts?

• PAC Network Connectivity and Information Exchange?

4

Care Model Design

• Care models/ evidence-based practices spanning acute through post-acute for current at risk episodes (ACO/Bundles)?

• PACs following protocols toward reduced variation and performance monitored?

5

Optimization of Owned Post-Acute

Assets

• Optimized revenue capture?

• Outmigration mitigation programs?

• Superior Performance (the carrot vs. the stick)?

• Home Health• SNF• IP Rehab

Components: Will develop a plan to build on what you have ….

12

Case Study: Beacon Health SystemBuilding a High-Functioning PAC Network

The “Carrots and Sticks” ApproachThe Lessons Learned

13

All Started with Episode Analytics

PerformanceVarianceOpportunities

14

Episode Components

15

• What percentage of our episode costs are spent on post acute and readmissions? • Where are the greatest opportunities to reduce cost of an episode?

Memorial Hospital South Bend – 2013 % of Total Payments, 90 Day Fixed Episodes

Index Admit; 38%

SNF; 24%

Professional; 12%

Readmission; 11%

Outpatient; 4%

HHA; 3%Readmit Professional; 2%

IP Rehab; 2%LTC; 1% DME; 1%

16

Patient Episode Payment Variation Congestive Heart Failure

Memorial Hospital South BendEpisode Family: Congestive Heart Failure - DRGs 291-293

Biggest opportunity to reduce episode spend in CHF is lowering readmission rates and reducing SNF LOS.

17

Patient Episode Payment Variation Stroke

Memorial Hospital South BendEpisode Group: Stroke - DRGs 061-066

46% of MHSB’s stroke episodes utilized SNF or IP Rehab (or both) within 90 days of discharge from

MHSB, accounting for 50% of stroke episode spending overall ($2.16 M)

18

Patient Episode Payment VariationMajor Joint Replacement

Memorial Hospital South BendPayments per Episode by Claim Source

Episode Family: Major Joint Replacement - DRG 469 & 470

Greater than average utilization of HHA for MJR episodes at MHSB

Optimize transitions to Home Health Versus SNF

• Episodes utilizing Home Health as the first PAC setting cost Medicare half than what it costs when SNF is used for recovery post discharge. Is there an opportunity to care for higher acuity patients safely via use of highest quality home health providers?

MJR Pneumonia UTI Sepsis COPD

$35,111$30,481 $31,103

$36,675

$30,272

$17,836$15,045

$10,483

$22,875

$17,376

Avg. Episode Cost by First PAC Setting

Total episode costs for the same DRGs were almost $17,000 higher

when SNF was the first post-anchor setting compared to HHA.

Profile Individual SNF Performance in Each Market

20

• We needed to know the answers to these critical questions?o How many SNFs do you discharge to today, and who are your top volume 10 SNF destinations?o Do your physician/case management referral patterns reflect the quality and cost efficiency of those

providers?

*Source: Based on analysis of 100% Medicare Standard Analytic Files

SNF ProviderEpisodes to SNF Payments to SNF Readmissions

ALOSTotal % to Total Avg % of Total Total Readmit Rate

National Benchmark1 $15,294 16.6 % 29.8

Indiana Benchmark1 $17,700 16.6 % 35.0

SNF 1 158 11.2% $20,737 12.6% 32 20.3% 48.9

SNF 2 154 10.9% $20,309 12.0% 36 23.4% 41.1

SNF 3 109 7.7% $13,483 5.6% 7 6.4% 31.9

SNF 4 85 6.0% $17,223 5.6% 14 16.5% 34.9

SNF 5 78 5.5% $16,693 5.0% 13 16.7% 33.5

SNF 6 74 5.2% $15,841 4.5% 13 17.6% 33.1

SNF 7 71 5.0% $18,540 5.1% 12 16.9% 44.0

All Other Average 684 48.4% $18,849 49.5% 141 20.6% 39.3

Total when SNF is the 1st PAC 1,331 $19,550 268 20.1% 43.1

2013-Q2 2014 Memorial Hospital South Bend Episodes where SNF is the 1st PAC

$0

$7,000

$14,000

$21,000

$28,000

$35,000

$1

7,8

45

$1

4,2

42

$1

5,9

98

$1

1,2

17

$2

7,2

24

$2

8,3

94

$1

3,1

00

$1

4,9

24

$1

6,7

55

$2

0,6

00

$1

8,1

97

$2

0,3

21 $

28

,69

3

$1

9,3

56

$1

6,9

02

$1

9,3

41

$1

2,4

56

$9

,27

2 $1

5,7

30 $2

2,3

73

$1

1,5

19

$1

6,7

48

$1

3,0

38

$1

3,2

54

$1

3,6

76

21

• Same DRGs but significant variation. Business practices drive variation more than clinical need.

Avg. Episode Payment to SNF Providers Highest Volume DRGs and Highest Total Volume SNF Providers

SNF Cost-Efficiency Variance by Episode

Revenue and Patient Relationships Going to Competitors

22

HH ProviderEpisodes to HH Payments to HH Direct Readmissions

Total % to Total Total Payments Avg Total Direct Readmit Rate

State Average* $2,931 19.9%National Average* $2,851 16.1%Hospital Owned HH 606 51% $1,809,898 $2,987 102 17%Hospital Owned HH 86 7% $222,698 $2,590 18 21%HH 1 152 13% $437,211 $2,876 20 13%HH 2 51 4% $134,675 $2,641 18 35%HH 3 47 4% $174,707 $3,717 4 9%HH 4 31 3% $88,614 $2,859 6 19%HH 5 28 2% $111,628 $3,987 5 18%42 providers with less than 25 episodes 177 15% 550715.73 $3,185 36 20%

Grand Total 1,178 100% $3,530,147 $3,038 209 18%

2013 Memorial Hospital South Bend Hospital Referrals to Home Health

• How much Home Health business goes to competitors post discharge?• How much Home Health business goes to competitors when they leave the SNF?• Are discharge planning processes set up to support utilization of our owned PAC assets?

Moving From Assessment to Implementation

23

Post Acute Network Development Approach

24

1. Convened Post Acute Summit to announce initiative to select PAC community

2. Identified PAC partners (cost-efficiency/quality/collaborative IQ)

3. Gained agreement on PAC conditions of participation and Scorecard Measures

4. Worked toward execution of performance-based Alignment Agreements (with teeth).

5. Developed Care Models for high volume/at risk episodes and enforce adoption by PAC partners (the “new” relationship).

6. Educated and gained Case Management buy-in to adjust discharge planning consultation and patient choice letter/script

7. Implemented PAC Network ongoing performance measurement, feedback mechanisms and management structure

8. Implementing IT solutions/connectivity for automated exchange of patient information

9. Developing the ROI and implement evidence-based readmission mitigation programs and LOS monitoring (NP rounding, telemedicine solutions)

10. Monitoring economic value of shifting referral patterns and elevated quality (BPCI, ACO, Patient retention metrics)

The Roadmap

The Early Returns

1. Bundled Care Model development drove standardization and collaboration between Beacon hospitals

2. Care Model development increased care standardization and reduced variation among post-acute care providers

3. Improved patient discharge placement – Right Time. Right Place.

4. Increased utilization of Home Care5. Non-aligned providers working to improve

performance

Assess

Design

Implement

25

Lessons Learned

1. Communication during process is essential

2. Have key stakeholders in process

3. Data, Data, Data

4. Develop and adhere to agreed-upon selection criteria and process

5. Be prepared for shift in physician interest

6. Supporting infrastructure is essential

7. Insure Executive support in place for inevitable reaction from those adversely impacted

by the change

Assess

Design

Implement

26

Questions?

27