Alternative Payment Methodologies – Ways to Reduce the Cost of Healthcare William Morgan, MD, Chief Clinical Officer, St. Dominic –Jackson Memorial Hospital

A Time for Change

37 1 It’s All in the Numbers 17 Th World Healthcare Performance %Gross domestic product # Per Capita Healthcare Cost

The Need for Change Secretary of Health and Human Services Alex Azar talks tough to hospitals… “…make no mistake: we will use these tools to drive real change in our system. Simply put, I don’t intend to spend the next several years tinkering with how to build the very best joint-replacement bundle — we want to look at bold measures that will fundamentally reorient how Medicare and Medicaid pay for care …. ….As just one example, we are looking at our efforts regarding Accountable Care Organizations. The program was intended to give providers three years to learn how to accept risk and share savings, but the results have been lackluster.…. ….as costs continue to skyrocket, the current system simply cannot last.”

Health Care Transformation: 2010: Affordable Care Act (ACA) 2015: Medicare Access & Chips Reauthorization Act (MACRA) Merit Based Incentive Payment System (MIPS) MSSP: Accountable Care Organizations (ACOs) 2018 “Basic Track & Enhanced Tracks” 2018: Bundled Payments (BPCI-A) 2019: CMS: Proposed Physician Payment for Outpatient Visits

ACOs: Purpose and Intent Established by the Affordable Care Act (2015) to facilitate coordination and cooperation among providers to improve the quality of care for Medicare Fee-For-Service (FFS) beneficiaries and reduce unnecessary costs. ACOs are groups of Medicare providers that work together to coordinate care for the Medicare fee-for-service patients they serve. The goal is to deliver seamless, high-quality care for these beneficiaries, rather than the fragmented care that often results from a fee-for-service payment system.

The Shared Savings Equation Weighted Average Cost BY1(10%), BY2(30%), BY3(60%) Risk Score Adjustment Regional Expense Growth Rate ACO Expenditure Benchmark Basic Sharing Rate Composite Quality Score Final Sharing Rate The Shared Savings Equation

Performance and Payment Year 1 Performance Year Year 2 Claims Run-Out and Data Analysis Year 3 Payment Adjustment Year

2018 Risk-Sharing Models for ACOs One-Sided Risk Model Current Two-Sided Risk Models Track 1 Track 1+ Track 2 Track 3 82% of ACOs (460/561) 10% of ACOs (55/561) 1% of ACOs (8/561) 7% of ACOs (38/561) Up to 50% maximum sharing of savings Up to 50% maximum sharing of savings, 30% sharing of losses Up to 60% maximum sharing of savings or losses Up to 75% maximum sharing of savings or losses No risk of loss 4% maximum downside 5-10% maximum downside 15% maximum downside Six Year Maximum 2019 and 2020 only, can start in Track 1 in 2019, cannot go back to Track 1 Indefinite, cannot go back to Track 1 or 1+ 4% maximum downside - 8% of personal Part B revenue for MD only ACO Physician ACO risks ~ $50-$150/pt, Hospital ACO risks ~$400/pt ACO risks ~$500-$1000/pt ACO risks ~$1500/pt

CMS Proposed MSSP Tracks

Bundled Payments Care for Improvement-Advanced Clinical Episode Triggers 29 Inpatient Clinical Episodes 3 Outpatient Clinical Episodes Clinical Episode Length Anchor Stay or Procedure + 90 days following discharge or completion Payment From CMS Retrospective reconciliation against FFS benchmark

(established) patient CMS 2019 Physician Fee Schedule: Proposed Rule (Patients Over Paperwork) Service Level Current Payment (established) patient Proposed Payment 1 $22 $24 2 $45 3 $74 $93 4 $109 5 $148 Service Level Current Payment (new patient) Proposed Payment 1 $45 $44 2 $76 3 $110 $135 4 $167 5 $211

A Time for Change