Changes in Payer Models Why all the new models? Code for Risk Shift Medicare cannot require patients to use a managed care plan Value based and quality purchasing is Medicare’s way of converting FFS to risk Commercial insurers are following the lead

The Big Picture 2016-2020 CMS plans to have 50% of Medicare services provided through quality based programs by 2018 Medicaid will have all services included in the HMO contract by 2018 Private Carriers are narrowing their networks based on quality Government’s resources will be focused on enforcing quality and transparency

Medicare Quality Initiatives Range of programs that run along a risk continuum: Value Based Purchasing Readmission Penalties Bundled Payments ACOs Biggest target Nursing Facility patient days

Medicare Quality based programs

Nursing Home Readmission Penalties Protecting Access to Medicare Act of 2014 (PAMA), included a value-based purchasing program for nursing facilities which establishes an incentive pool for high performing facilities that are preventing unnecessary hospital readmissions Medicare nursing home reimbursement rates will be based partially on their performance scores beginning on October 1, 2018 Nursing facilities with the highest rankings receive the highest incentive payments while those with a zero or low ranking will receive the lowest incentive payments Effectively, the lowest 40 percent of facilities will be reimbursed less than they otherwise would in the absence of this program CMS will withhold 2% of Medicare payments starting October 1, 2018 to fund the incentive pool CMS will then redistribute 50-70% of the withhold back into to facilities by way of incentive payments The balance from 30-50% will be retained as savings to Medicare

Medicare ACO programs Medicare Shared Savings Program - For fee-for-service beneficiaries (30 ACOs in NJ) ACO Investment Model - For Medicare Shared Savings Program ACOs to test pre-paid savings in rural and underserved areas Advance Payment ACO Model - For eligible providers already in or interested in the Medicare Shared Savings Program Comprehensive ESRD Care Initiative - For beneficiaries receiving dialysis services (1 ACO in NJ) Next Generation ACO Model - For ACOs experienced in managing care for populations of patients Pioneer ACO Model - Health care organizations and providers already experienced in coordinating care for patients across care settings

NJ’s 30 Medicare Shared Savings ACOS Advocare Well Network Allegiance ACO Atlantic ACO AtlantiCare Health Solutions, Inc. Barnabas Health Care Network Capital Health Accountable Care Organization, LLC Central Jersey ACO LLC Hackensack Alliance ACO Inspira Care Connect, LLC JFK Health ACO Meridian Accountable Care Organization, LLC NJ Physicians ACO Optimus Healthcare Partners, LLC RWJ Partners LLC VirtuaCare 15 New 2016 Participants

Bundled payments Payment based on Episodes of Care Multiple DRGs are eligible including cardiac care and joint replacement 4 Models currently being tested in NJ: Model 1 – Hospital admission only (8 ) Model 2 – Hospital and Post Acute (10) Model 3 – Post Acute only (24) Model 4 – Hospital admission – Prospective Payment (2)

Comprehensive Care for Joint Replacement Model (CCJR) Began April 2016, hospital participation is mandatory The hospital in which the joint replacement takes place is at risk for quality and costs for the entire episode of care, from surgery through 90 days post-discharge The demonstration program will last for 5years, covering more than 40 New Jersey hospitals and almost 200 post-acute providers in NYC MSA. Downside risk does not begin until year 2

Where the savings are in the bundle

Medicare Advantage

Medicaid Managed Care Managed Long Term Supports and Services (MLTSS) began July 2014 All individuals that become eligible for long-term care are enrolled in an HMO Existing nursing home residents remain in FFS Rates and Any Willing Provider provision extended thru June 2017 HMOs will be permitted to use quality measures to make referrals Experience Medical Day and Personal Care

Medicaid Long Term Care

NJ Medicaid HMOs Total Medicaid HMO Enrollment = 1,636,242

Medicaid Long-Term Care Recipients By Age and Medicare Status

Takeaways Maintain strong quality metrics – reimbursement will be tied to performance Consider vertical integration strategies such as partnering with Home Health and Medical Day Care Participate in Bundled Payment programs to prepare for the shift in risk coming in the next 5 years Insurers will follow on bundled payments

Questions?