Opportunity abounds: the compelling facts of the new payment model G 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 Depression Anxiety 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 world  New business model – Focus on populations and episodes of care  Primary care becomes key  Profits from higher quality care in home setting  Longitudinal payments for chronic care  Bundled payment for implantable  Joint contracts with payers  Focus 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 LTC Assisted 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 Assess Risks Identifying which beneficiaries need intensive management and monitoring Implement Longitudi nal Care Modeling care management methods Develop Network of Care Providers Continuing care networks

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 math Current Volume approach

Value approach Value based calculation Cost/visit $ Number of visits/case 36 Total cost/case $ 2, Value based calculation Cost/visit $ Number of visits/case 26 Total cost/case $ 2, Value based calculation Cost/visit $ Number of visits/case 26 Total cost/case $ 1,976.00

Calculate contracting rate Current Range: $ 2, , 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 $ 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, 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

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