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CPAs & ADVISORS
ADVANCED PAYMENT MODELS: CJR
Eric. M. Rogers MEd. RT(R)
Managing Consultant
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2011 2015 2016 2018
FFS APMs
HHS goal of 30% of traditional FFS Medicare payments through Advanced
Payment Models (APMs) by the end of 2016 and 50% by the end of 2018
THE CHANGING HEALTH CARE MARKET
The changing health care market
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CMMI INNOVATION MODELS
Accountable
Care
BPCI Primary Care
Transition
Medicaid and
CHIP
Acceleration
Models
Speed Adoption
of Best Practices
ACOs Model 1 Advanced Primary
Care Initiative
Reduce Avoidable
Hospitalizations
State Innovation
Models
Beneficiary
Engagement Model
Advanced Payment
ACOs
Model 2 Comprehensive
Primary Care
Initiative
Financial Alignment
Incentive for
Medicare and
Medicaid
Frontier
Community Health
Integration
Community Based
Care Transitions
ACO Investment
Model
Model 3 FQHC Advanced
Primary Care
Practice
Strong Start for
Mothers and
Newborns
Health Care
Innovation Rounds
Health Care Action
and Learning
Network
Next Generation
ACO
Model 4 Graduate Nurse
Education
Medicaid
Prevention of
Chronic Diseases
Health Plan
Innovation Initiative
Innovative Advisors
Program
Pioneer ACO Transforming
Clinical Practice
Medicaid
Emergency
Psychiatric
Demonstration
Million Hearts
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The changing health care market
CJR
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Bundled Payment Popularity
Source: CMMI Website
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1000
Participants in CMMI Payment Models
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2013 BPCI Bundled Payments for Care Improvement
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Bundled Payment
Model 2
Retrospective acute care
hospital stay + post-acute
care
Model 1
Retrospective acute care
hospital stay
Model 3
Retrospective Post-acute
care
Model 4
Acute-care hospital stay
48 episodes
2 phases
MSA SELECTION
67MSAs
67MSAs
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Arkansas Hospitals located in selected CJR MSAs
• CHI St. Vincent Hospital
• National Park Medical Center
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• From 67 MSAs to ALL MSAs
• From hips and knees to:• COPD
• CHF
• AMI
• Pneumonia
PREPARING FOR BUNDLED PAYMENTS
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9
-$11
$35
$71
$120$127
-$200
-$150
-$100
-$50
$0
$50
$100
$150
Hospital Repayments
Medicare Gainsharing
Net Medicare Impact
In M
illio
ns
CJR makes cents to CMS
2016 2017 2018 2019 2020
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PREPARING FOR BUNDLED PAYMENTS
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42 CFR PART 510 [CMS-5516-P]
• 60-day public commenting period on proposal ended Sept 8th
• Numerous comments
• Effective April 1, 2016
• Key Changes� 2% to 3% discount
� New targets for fractures
� 67 MSAs
� 3 month delay
� Stop loss reduced
� Quality measures
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Episodes are triggered by hospitalizations of eligible Medicare
FFS beneficiaries discharged with diagnoses:� MS-DRG 469: Major joint replacement or reattachment of lower extremity
with major complications or comorbidities
� MS-DRG 470: Major joint replacement or reattachment of lower extremity
without major complications or comorbidities
Episodes include:� Hospitalization and 90 days post-discharge
� All Part A and Part B services, with the
exception of certain excluded services that
are clinically unrelated to the episode
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Episode definition: General
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EPISODE DEFINITION: SERVICESIncluded
• Physician services
• IP hospitalization (including readmissions)
• IP Psych Facility
• LTCH
• IRF
• SNF
• Home Health
• Hospital OP services
• Independent OP therapy
• Clinical lab
• DME
• Part B drugs
• Hospice
Excluded• Acute clinical conditions not arising
from existing episode-related chronic
clinical conditions or complications of
the LEJR surgery
• Chronic conditions that are generally
not affected by the LEJR procedure or
post-surgical care
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• Retrospective, two-sided risk model with hospitals
bearing financial responsibility
� Providers and suppliers continue to be paid via Medicare
FFS
� In Year 2, actual episode spending will be compared to
episode target prices
• If in aggregate target prices are greater than spending, hospital
may receive reconciliation payment
• If in aggregate target prices are less than spending, hospitals
would be responsible for making a payment to Medicare
PAYMENT AND PRICING: RISK STRUCTURE
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� CMS intends to establish target prices for each participant
hospital prior to start of each performance period
� Includes 3% discount to serve as Medicare’s savings
� Based on blend of hospital-specific and regional episode
data, transitioning to regional pricing.
� Essentially competing against yourself in the beginning
PAYMENT AND PRICING: TARGET PRICE
2/3 hospital
1/3 regional
Year 1 & 2 1/3 hospital
2/3 regional
Year 3 100%
regional
Year 4 & 5
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$47,928
$52,028 $50,954
$46,189
$51,239 $50,328
$55,448
$47,925 $48,874
$24,858 $27,406
$25,480$23,800
$25,989 $26,345 $27,464
$23,734 $23,425
New England Middle Atlantic East North
Central
West North
Central
South Atlantic East South
Central
West South
Central
Mountain Pacific
DRG 469 DRG 470
REGIONAL HISTORICAL CJR PAYMENTS
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$23,800$22,456 +/- ?
$ Target
$20,000
$21,000
$22,000
$23,000
$24,000
$25,000
$26,000
Regional Average Sample Hospital Target Year 1 & 2
1/3
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TARGET PRICE CALCULATION: DRG 470
2/3
Wage Index
DSH
IME
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UPSIDE AND DOWNSIDE FINANCIAL MODELING
0-20% Stop Loss
5-20% Stop Gain
$9,330,051 Example Reconciliation Target $7,344,781
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9To
tal
Ep
iso
de
s
$63,460
$53,516 (2X SD)
$21,338
Episode #
324 of 359
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Minimum threshold for 2 quality metrics
� Hospital Level Risk Standardized Complication Rate
following elective hip and knee arthroplasty
� HCAHP
� 3 decile improvement
� Voluntary THA/TKA data submission of patient
reported outcomes
PAYMENT AND PRICING: LINK TO QUALITY
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QUALITY POINTS
THA/TKA
Complications
HCAHPS Survey
≥ 90th 10.00 8.00
≥ 80th and < 90th 9.25 7.40
≥ 70th and < 80th 8.50 6.80
≥ 60th and < 70th 7.75 6.20
≥ 50th and < 60th 7.00 5.60
≥ 40th and < 50th 6.25 5.00
≥ 30th and < 40th 5.50 4.40
<30th 0.00 0.00
3 Decile Improvement 1.00 0.80
THA/TKA Voluntary PRO and Limited Risk
Variable Data
Yes 2.00
No 0.00
Total Points
14.1
Poor: < 6.03% discount
Good: 6.0 – 13.22% discount
Excellent: >13.21.5% discount
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• Consistent with applicable law, participating hospitals might
have certain financial arrangements with Collaborators to
support their efforts to improve quality and reduce costs.
• Collaborators may include:
� Physician and non-physician practitioners
� Home health agencies
� SNF
� LTCH
� Physician group practices
� IRF
� Inpatient and Outpatient PTs and OTs
FINANCIAL ARRANGEMENTS: GAINSHARING
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• CJR Collaborators may share in both upside and downside risk associated
with participating in the program
• CJR requires signed written agreements with the Collaborators and (if
applicable) also agents of the CJR Collaborators
� Collaborator Agreement
� Distribution Agreement
• CJR regulations set forth a number of regulatory requirements – be
mindful of these requirements when establishing the program and
drafting the documents/agreements
• Compliance with the program requirements is necessary to be afforded
protection under the fraud and abuse waivers
FINANCIAL ARRANGEMENTS: GAINSHARING
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ALIGNMENT PAYMENTS
Participant Hospitals may include the following in a sharing arrangement (and nothing else):
� Reconciliation Payments: payment from CMS to a CJR hospital when the hospital realizes a positive Net Payment Reconciliation Amount (NPRA)
� Internal Cost Savings: measurable verifiable cost savings realized through care redesign activities associated with services furnished to beneficiaries during a CJR episode
� Alignment Payments: payment from a CJR Collaborator to the a participant hospital whereby the Participant Hospital shares downside risk with CJR Collaborators
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CJR SELECTION CRITERIA
Develop written selection criteria for CJR Collaborators� Selection criteria for CJR Collaborators must relate to the quality of care to
be delivered (it can be prospective or retrospective)
� Examples from CMS include:
• Prior complication rates
• Attending weekly care coordination meeting
• Following specified clinical pathways
• Contacting CJR beneficiaries frequently
� Selection criteria cannot be based, directly or indirectly, on the volume or
value of referrals
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Participant hospitals may assign various percentages of two-
sided risk to collaborators.
� CMS would continue to make reconciliation payments and
recoupments solely with the hospital.
� The hospital would be responsible for paying/recouping
from its collaborators.
CMS will limit the hospital’s sharing of risk to 50% of the total
repayment amount to CMS.
Hospitals can’t share more than 25% of the risk with any one CJR
Collaborator
FINANCIAL ARRANGEMENTS: RISK SHARING
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REQUIREMENTS
• Establish Board or other Governing Body oversight of CJR
• Update Compliance Plan to include oversight of CJR
• Maintain current and historical list of CJR Collaborators –
published on participant hospital’s website
• Issue required Beneficiary Notifications (CMS to issue forms)
• Satisfy documentation requirements, E.g.
� Contemporaneous documentation of gainsharing payments
� Compliance requirements
� 10 year record retention
• Set-up process for EFT payments
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Goal: Develop reporting
mechanisms and monitor
compliance of calculation
Determine specific procedures to
perform related to the
calculation
Monitor performance of
procedures
Identify data anomalies
Share progress with
Collaborators
Develop and implement control
procedures for calculations
Strategy Engaging Collaborators
Goal: Determine entities to
approach as collaborators
Understand Collaborator
Agreements
Satisfy written selection criteria
requirements
Identify specific collaboration
goals
Analyze available information &
data to identify and select
Collaborators
Identify basic financial sharing
methodologies
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Goal: Approach potential
Collaborators and finalized
arrangement parameters
CJR Rule Education, Collaborator
Agreements and Parameters of
Agreements
Provide scenario analyses based
on levels of success
Get collaborators comfortable
with data & process
Negotiate terms and parameters
of Agreements
(Financial & Quality)
Identify related alignment
opportunities
Document sharing arrangements
with negotiated parameters
Internal Cost Savings
ProcessOngoing Support
Goal: Determine specific ICS
parameters in Sharing
Arrangements
Identify incentive goals – implant
cost savings, OR Efficiency etc.
Analyze available data for each
goal – Decision Support, EHR
Develop internal cost savings
methodologies in compliance
with CJR
Select Quality Performance
Metrics & analyze potential
outcomes
Development of CJR Collaborator Agreements
Skilled Nursing Facility
� CJR would waive the SNF 3-day rule for coverage of a SNF stay following the anchor hospitalization
beginning in Year 2
� Patients must be transferred to SNFs rated 3-stars or higher
� Beneficiaries must not be discharged prematurely to SNFs
Home Visits
� CJR would waive the “incident to” rule for physician services
� Allows the licensed clinical staff of a physician to furnish a home visit in the patient’s home
� Permitted only for patients who do not qualify for Medicare coverage of home health services
� Maximum of 9 visits using a new HCPCS code
Telehealth
� Waives the geographic site requirement and the originating site requirement to permit visits
originating in the patient’s home or place of residence
� Cannot be a substitute for in-person home health services
� Must be furnished in accordance with all other Medicare coverage and payment criteria
PROGRAM WAIVERS
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� Data will be shared to evaluate practice patterns, redesign care delivery
pathways and improve care coordination.
� Hospitals can request to obtain beneficiary-level Part A and B claims for the
duration of the episode in summary format, raw claims line feeds, or both.
� Data would be available for the hospital’s baseline period and on a quarterly
basis during the performance period.
� Aggregate regional claims data for MS-DRG 469 and 470 would also be shared
� Hospitals must request data in order to receive it
DATA SHARING
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Beneficiary protection
� Providers and suppliers would be required to notify patients of the
payment model.
� Patient’s access to care would not be impacted by the CJR model.• Copays would not change
• Patient provider relationships would be maintained
• Patients retain entitlement to Medicare covered services
Monitoring
� CMS will monitor compliance with the model requirements
� CMS will monitor potential risks• Increasing profitability by delaying care
• Decreasing costs by avoiding medically indicated care
• Avoiding high cost patients
• Compromised quality or outcomes
OTHER ITEMS
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Case Study
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GOVERNANCE AND OVERSIGHT
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Steering Committee
Prehab
Acute
Transitions
PACIT
Finance
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DATA ANALYTICS
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Patients
Physicians
Post-Acute Providers
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DATA ANALYTICS
1 2
Ris
k S
tra
tifi
cati
on
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Home Health
71%Skilled
Nursing
17%
Other
10%
Hospice
2%
DRG 470
Post Acute Utilization
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CARE PATHWAY VALUATION
$15,226
$9,213
$2,787
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0-60 61-65 66-70 71-75 76-80 81-85 85-90 91-95
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
Pa
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Vo
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Me
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’s E
pis
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e P
aym
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SPENDING BY AGE
DRG 470: TOTAL HIP VS PARTIAL HIP
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USING DATA TO REDESIGN CARE
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13%
20%
67%
PROCEDURE DISTRIBUTION: DRG 470
Partial Hip Total Hip Total Knee
$17,266
$31,934
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PATIENTS
$16,777
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MONITORING PROGRESS
1 2 3 4 5
Monthly progress reports
Key metrics dashboard
Data Custodian
Target price calculation
Reconciliation
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PROJECT MANAGEMENT
Kick-off
Data Analytics Review:
Outcomes Compass
Work Groups Data Review
Collaborator
Identification
Work Group Team Meeting
Acute, Transitions, IT
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct
1Q Reporting
Collaborator
Update
Gainshare
Model
Development
Physician
Workshop
Gainshare
Review
Work Group
Team Meeting
Post Acute
2Q Reporting 4Q Reporting 3Q Reporting
Care Pathway RedesignCare Delivery
EnhancementCare Coordination
Progress
Report
Post-Acute
Workshop
Outcomes Compass Data
Analysis and Review
Value Stream
Mapping
THANK YOU
FOR MORE INFORMATION // For a complete list of our offices
and subsidiaries, visit bkd.com or contact:
Eric M. Rogers M.Ed. RT(R) // Managing Consultant
[email protected] // 417.865.8701
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