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

2. A Time for Change

3. 37 1 It’s All in the Numbers 17 Th World Healthcare Performance
%Gross domestic product
# Per Capita Healthcare Cost

4. 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.”

5. 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

6. 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.

7. 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

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

9. 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

10. CMS Proposed MSSP Tracks

11. 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

12. (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

13. A Time for Change