Payment Models and Provider Collaboration SYNC: Transforming Healthcare Leadership September 16, 2016

Agenda Overview of Payment Model and Structure Mandatory Programs Across the Continuum Voluntary Programs

Overview of Payment Model Structure

HHS Goals January 2015, directional goals set for advancing payment reform. 2016 2018 Value Based Payments 85% Goal #1 30% of Medicare payments tied to quality or value through alternative payment models by end of 2016 ACO, medical homes, bundled payments, comprehensive primary care initiatives, pioneer ACOs 50% by the end of 2018 Goal #2 85% of all Medicare FFS tied to quality or value Same as goal #1 + hospital value-based purchasing, physician value based modifier, readmission/hospital acquired conditions reduction program by the end of 2016 90% by the end of 2018 Alternative Payment

HCPLAN Framework: January 2016 Source: Alternative Payment Model Framework and Progress Tracking Workgroup, “Alternative Payment Model (APM) Framework”, HCP-LAN. 12 Jan 2016. Web. 31 Jan 2016.

Where Are We Going? Source: Alternative Payment Model Framework and Progress Tracking Workgroup, “Alternative Payment Model (APM) Framework”, HCP-LAN. 12 Jan 2016. Web. 31 Jan 2016.

CMMI Programs

Value Based Purchasing Continuum Emphasis Value Modifier/MIPS Acute Ambulatory Post Acute Accountable Care Organizations Bundled Payments/ EPMs Comprehensive Primary Care (+) Readmission Penalty Value Based Purchasing (Hospital, HH, SNF)

Transparency Focus Physician Compare Star Ratings Patient empowerment State efforts

Mandatory Programs Across the Continuum

Mandatory Payment Reform is Everywhere VBP RRP HAC CJR Cardiac Bundles* PQRS/VM MU MIPS/APM SNF VBP HH VBP * These are in proposed form at this time.

Acute: VBP/RRP/HAC Base of $100,000,000 of Medicare Part A Revenue

Performance Periods

MACRA Known as the “SGR Fix” Created the Quality Payment Program Choice of two paths for each physician practice: APM vs MIPS Most physicians in MIPS path by default Proposed rules have program starting in 2019 with performance period effective 1/1/17 Recently offered flexibility in timing of implementation

What is MIPS? Source: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/MACRA-MIPS-and-APMs/NPRM-QPP-Fact-Sheet.pdf

Neither MIPS Path APM Path Decision Tree for QPP Neither Am I in an APM? Do I meet minimum criteria? No No Yes Yes Is it an Advanced APM? MIPS Path No Yes Do I meet the volume or revenue criteria? No (Option of Partial Qualifying, if not, then MIPS Path) Yes APM Path

MIPS Optimization A sample practice with $25M in Medicare fee schedule payments Does not include the adjustment factor of up to 3X per year

Significant Strategic Implications What should you be doing now by type of entity? How are you performing now on QRUR? How prepared are affiliation as well as employed practices? What are your market dynamics? How does this tie to system wide initiatives?

Skilled Nursing VBP To start in 2019 with 2% of Medicare reimbursement at risk 2014 SGR fix used part of the 2% to pay for the fix so facilities can’t earn it all back Key metrics are readmissions Published on nursinghomecompare

Home Health VBP 5 year pilot in 9 states: Virginia is not one of them 4 domains with shifting metrics At risk reimbursement starts at 4% and goes to 9% in 5 years

Voluntary Programs

ACOs Currently 434 Medicare Shared Savings Programs Other Medicare ACOs: Pioneer ACO, ACO Investment Model, Next Generation ACO Modifications continue to the models Annual classes of ACOs

Financials: MSSP Track 2 Assumes no changes in target or risk adjustments for simplicity

Let’s Do The Math Year 1 Year 2 Year 3 Did the spend exceed the MSR or MLR? Yes No How much savings/loss $3,772,000 ($3,100,000) What is the quality score? 100% 90% What is the share rate? 60% 1-(60%*90%)=.46 Total savings/loss shared $2,263,200 ($1,426,000)

Bundled Payments Prometheus (Provider payment Reform for Outcomes, Margins, Evidence, Transparency, Hassle Reduction, Excellence, Understandability and Sustainability): 21 bundles State Medicaid Programs: Initiated as part of reform efforts: Arkansas, Ohio, Tennessee, and more under planning stages. Commercial Programs Largely cardiac and orthopedic in nature and not pervasive geographically Medicare Programs: Bundled Payment for Care Improvement (BPCI): 48 bundles Comprehensive Care for Joint Replacements (CJR): 1 mandated bundle

Medicare Bundles (finalized) Bundled Payment for Care Improvement (BPCI) Comprehensive Care for Joint Replacement (CJR) # of Providers Participating Over 1500: Across providers 789 Hospitals Voluntary/Mandatory Voluntary Mandatory Diagnoses Covered Up to 48 Choices of Episodes: Currently over 14,000 live Single Episode: Hips/Knees Time Frame 3 years with extension 5 years Price Determination Historical Spending Blend: Historical and Regional What’s next? On July 25, 2016 CMS issued proposed rules for two cardiac bundles and an expansion of the CJR bundle. This is proposed to start on July 1, 2017.

Let’s Do the Math What if the target price is $25,000 for Episode 1 and $30,000 for Episode 2?

New Cardiac & Expanded CJR Bundles/EPMs New Acronym: Episode Payment Model= EPM Proposed Rules issued July 25, 2016 with comment period open for 60 days. Cardiac: AMI (DRGs 280-282 and PCI DRGs 246-251) & CABG (DRGs 231-236 Orthopedic: SHFFT: Surgical hip/femur fracture treatment excluding LEJR (DRGs 480-482) 90 day episodes and 5 year program with first performance year truncated starting 7/1/17 through 12/31/17

EPMs continued… No downside risk the first performance year (7/1/17-12/31/17) Downside risk starts in the 2Q in the second performance year Settlement is retrospective and performed annually Discounts determined similarly to CJR starting at 3% for unacceptable and acceptable quality down to 2% and 1.5% for good and excellent ratings respectively Quality metrics and weights: AMI CABG SHFFT Mort-30 50% 75% Excess Days 20% HCAHPS 25% 40% Complications Voluntary 10%

EPMs Continued… Who is mandated for these EPMs? SHFFT: to expand in the 67 MSAs for CJR AMI and CABG: will be mandated 98 in MSAs out of 294 eligible MSAs (total n= 384) Hospitals are the episode initiators (at risk) 3 years historical information like BPCI and CJR Pricing will phase to regional like CJR: Regions= 9 US Census Divisions

Specialty Models Oncology Care Model 6 month episode Oncology practice based Part A,B and some D 21 participants: April 2016 2nd class planned Shared savings model with target prices based on historical spend by type of cancer Comprehensive ESRD Care Model Annual spend Two types: large dialysis and non large dialysis organizations 2nd class applications due 7/15/16 Shared savings model based on 3 year historical spend

Independence At Home Objective is to test effectiveness of delivering comprehensive primary care services at home specifically to patients with multiple chronic conditions Currently 14 sites involved for 3 year program Tracked spending and quality measures 2nd year results announced 8/9/16

Year 2 Results 6 of the Practices Year 2 Target Year 2 Expenditures Incentive Payment Boston Medical Center $4,148 $4,236 $- Christiana Care Health System $3,911 $4,450 Cleveland Clinic Home Care $3,619 $3,565 Housecall Providers $3,233 $2,393 $1,107,295 Mid Atlantic Consortium $4,076 $3,576 $866,865 Northwell HealthCare $3,276 $2,708 $874,151 All sites improved quality from first performance year. An average of $1,010 per beneficiary for the 10,484 beneficiaries was saved.

Post Acute Networks Formalizing preferred providers by post acute provider type Hold preferred providers accountable based on quality metrics/outcomes Share data on routine basis Partner on streamlined protocols Gain share or put dollars at risk