Opportunity abounds: the compelling facts of the new

payment modelG Curt Meyer, FACHE, MAACVPR

VP of outpatient services Mary Free Bed rehabilitation Hospital

Restoring hope and freedom through rehabilitation

Part two....So now what?

• Do I do anything?• When do I make a move?• What do I do when I decide to do something• Who do I talk to and what information is

needed to make informed decisions

Denial

Are You Ready for Healthcare Reform?

Anger

Remorse

Emotional Stages of the Unprepared

DepressionAnxiety

Acceptance

Confusion

Where do we go

Is this possibly the bridge to nowhere?

Home Health Doing Cardiac Rehab

Crossing the Crevasse

FEE FOR SERVICE

•A business we know and love (and have thrived at) •It’s all about volume•Maximize price to commercial payers to offset losses on government business•Focus on specialists

VALUE BASED PAYMENT

Brave new worldNew business model – Focus on populations and episodes of carePrimary care becomes keyProfits from higher quality care in home settingLongitudinal payments for chronic careBundled payment for implantableJoint contracts with payersFocus on data

Clinical Integration Provides the Bridge Between FFS and Value-based Payment

6

Clinical Integration is the Bridge

The bridge from volume to value

Bundled Payment: What it Means to Us

Home

LTCAssisted Living

Nursing Home SNF

Outpatient Rehab

Health System

Payment bundling will further encourage health systems keep patients within a narrow network

Rehabilitation

LTC

Nursing Home

Home Health

Outpatient Care

Patient & Physician

Home Health Doing Cardiac Rehab

Expanded Capabilities of rehab at home

What ACOs are Doing

What is value

• Low cost per case with high clinical outcomes and independence

• High patient satisfaction• Significant discharge

status of independence

Measures of success

Do I do anything?

• Yes!!!! with or without health care reform– Outcomes have to be presented– Cost per case has to be understood And managed– Clear understanding of where cardiac and pulmonary

rehabilitation fit into the post-acute continuum must be communicated frequently

When do I make a move?

• When you know the infrastructure that you have to work with…..– Information technology inclusive of medical

record, finance and human resource costs– Ability for predictive modeling of outcomes with

fixed cost– Willingness to be at risk

What do I do When I decide to make a move?

• Communicate, communicate, communicate– Costs– Outcomes

• Clinical– Hospital readmissions over 90

days

• Functional

– Patient Discharge destination– Fit into the continuum of care

•1980’s Telemetry monitoring for higher reimbursement•1990s, 36 sessions for higher reimbursement•Early 2000, education exercise and risk management for higher reimbursement•Present day, high outcomes at low costs for better any reimbursement

In cardiac rehab we have been chasing the money for over 30 years

Basics of conversion from fee-for-service to population health management

• Analyze current charges and costs per case in the following areas:– Total charges Across all patients served in the last

fiscal year– Total costs– Salary wage and benefit costs as a percent of total

charges– Fixed costs as a percent of total charges

Conversation

Let's do the mathCurrent Volume approach

Current Outpatient cardiac rehab

Charge/visit 130.00$ Deduction from charges (46.80)$ Net revenue 83.20$

Salary CostsRN 28.00$ Exercise physiologist 20.00$ receptionist 14.00$ benefits 17.00$ Total SWB costs 79.00$ Net income before fixed costs 4.20$

Value approachValue based calculationCost/visit $ 79.00

Number of visits/case 36 Total cost/case $ 2,844.00

Value based calculationCost/visit $ 79.00

Number of visits/case 26 Total cost/case $ 2,054.00

Value based calculation

Cost/visit $ 76.00 Number of visits/case 26Total cost/case $ 1,976.00

Calculate contracting rate

• Current Range: $ 2,844.00 - 1,976.00 • No perceived margin under current cost

structure• Net income to operations only occurs through

cost reduction and reduction in utilization

New net income model under value-based purchasing

• 25,000 covered lives• Carve-out of $1976 per enrollee ( 8% of 25,000 lives)• 24,000 patient months at risk • $3,952,000 to cover population Prone to heart

disease• $164.67 allocated per member per month cost for

cardiac rehab in an ACO model (Amount allocated to pay for cardiac rehab)

Impact on Annual Budget

• Annual salary costs $288,288• Annual fixed costs $42,000• Total operating costs $330,288

• 2000 referrals per year; Potential revenue:$3,952,000

Summary take-away

• Don't focus on the numbers• Focus on the following concepts:

– Reducing total costs is the primary means of managing your business

– Understanding your total costs will better allow you to go "at risk "for a given population

– Increased volume will no longer fix poor financials, decrease costs and managed utilization will be the measure of success

Summary take-away Bundled payment model exposure for 30, 60 and 90 days

Event Onset

Day one through

threeDays three through

five 5 to 30 days 30 to 60 days 60 to 90 days

Acute MIInpatient hospitalizationDischarge homeOutpatient or postacute care follow-up Cardiac and pulmonary rehabilitation outpatient

Exposure to rehospitalization

Summary and takeaways

• Cardiac rehabilitation has a primary role of preventing re-hospitalization and managing the health status of those served.

• We should consider providing our services in a variety of settings, beyond traditional outpatient hospital settings to home health and skilled nursing

Questions or for further information