1. Healthcare Financial Management Association Bundled Services Contracting (A trip down memory lane!) April 20, 2012

2. A Little Bit of History Old days in Maryland (Circa 1990’s) -Lot of Cardiac -Lot of Orthopedic (knee/hip) -Transplant -Lot of other risk

3. Some More History Outside Maryland -Has been out there a long time -DRG (sort of) since 1982 -Case rates, per diems -All types of risk!

4. What’s Happening In Maryland Today? A little bit of this, and a little bit of that –Some Cardiac –Some Orthopedic –Transplant Current players –Hopkins –MedStar –UMMC

5. Why Do We Do It? Required by our friends, the payers Competitive advantage It’s the future! (?)

6. SO - What Do You Need To Think About? Physician alignment Ability to replicate consistent results/outcomes Operations What to bundle Pricing

7. Physician Alignment CRITICAL ! Buy in, cooperation, input- CRITICAL ! Ongoing data/feedback- CRITICAL !

8. Consistent Results Outcomes Length-of-stay Readmissions Etc. Evidence-based medicine

9. Nasty Old Operations! Contracting participating providers –Who? Surgeons, Anesthesia, Pathology, PT… Hospital Home health (More on this later) –LOA/contracts: $ ’s (limited $’s) and rules

10. Nasty Old Operations! Contract compliance –Rules of the road –Authorizations –Patient ID/notification –Registration (who is paying claims?) –Case Management

11. Nasty Old Operations! Billing –Are you the payer? –How do you get/process the claims? –Monitoring what’s in and what’s out Collecting –Tracking AR Reimbursement –If you are the payer, how do you do that? –If you are not the payer, how do you do that?

12. More Things To Think About Exception reporting (ProvenCare ® ) Contract performance Regulatory reporting (Maryland) Financial accounting

13. Two Approaches You are the payer –Claims in and out –Reimbursements in and out –What services are in and out –Build it or rent it Rely upon the payer –Claims go direct –Rely on payer to bundle Things you must do –Pricing –Reporting –Negotiate rates: payers and providers

14. What to Bundle? Surgical/interventional procedures most common -Cardiac (surgery/interventional cardiology) -Orthopedic (joint/spine) - Bariatric Inpatient or Outpatient Things you can predict! Can do medical cases too You get the idea

15. Pricing- Things To Consider Volumes Hi-cost items (Implants, Drugs, Etc.) New technology Catastrophic cases What services are included (scope of service)? -Pre, Post, how far out? -Cost = Physician + Hospital + ????? (more on this soon)

16. Excellent Resource Center for Healthcare Quality & Payment Reform Transitioning to Episode-based Payment http://www.chqpr.org/downloads/TransitioningtoEpisodes.pdf

17. PCP Surgeon Other Specialist PCP Surgeon Other Specialist PCP Surgeon Other Specialist PCP Surgeon Other Specialist ImagingImaging Implant, etc. Imaging Drugs HOSPITAL STAFF HOME CARE PCP CARE MGR HOSPITAL STAFF HOSPITAL DRG REHAB FACILITY LONG-TERM CARE HOSPITAL DRG Potential Elements of an Episode Payment for Major Acute Care, Including Components Already Paid on an Episode/Case Rate Basis Length of Time PHYSICIANS DEVICES DRUGS NON-MD STAFF FACILITY Provider and Services Reference: Center for HealthCare Quality & Payment Reform. Http://www.chapr.org/ Pre-Admission HospitalizationPost-Acute Care Readmission

18. Pricing Identify sample population –DRG –CPT/ICD procedure code –Like patients Pull data by phase of care Understand variation Identify carve outs, exclusions, bill aboves Don’t forget- physician, home health,…..

19. Regulatory Approval In Maryland hospitals can participate in bundled contracts HSCRC oversight Need a legal entity to contract Hospitals must file Alternative Rate Application- Must receive HSCRC approval! Ongoing Regulatory Reporting/Renewals

20. Moving Ahead to the Past? ACO Bundled pricing ???

21. Thank you! Questions ? Mike Wertz Senior Director Payer Relations & Contracting Telephone 410-328-1723 Email: mwertz@umm.edu

22. 22 4/20/2012 Matt Orth Director Managed Care Analytics MedStar Health 410-772-6825 matt.orth@medstar.net Medicare Bundling Initiative Healthcare Financial Management Association

23. 23 More formally known as: CMS Center for Medicare and Medicaid Innovation Bundled Payments for Care Improvement Initiative aka CMMI BPCI

24. 24 What’s in a Bundle? Model One - Inpatient facility only Model Two – All inpatient services plus xx days post- discharge; everything except Part D drugs and hospice Model Three – Post-acute discharge services only (defined by acute hospital discharge MSDRG) Model Four – All inpatient services acute stay only (includes 30 days post-discharge acute readmissions)

25. 25 Model One - Percentage discount from IPPS MSDRG payment Models Two & Three – All claims/payment per usual Medicare processes/rates; retroactive reconciliation to target rate (based on discounted 2009 Medicare payments) Model Four – True case-rate payment to hospital which then pays physicians How to Pay a Bundle

26. 26 We got a boatload of data from CMS

27. 27 Data from CMS Hospital Referral Clusters Patient residence zip Includes ALL Medicare claims paid for these beneficiaries at all providers for 2008 and 2009 Multiple Files (Hospital, physician, IRF, SNF, HHA, DME…) Don’t try this at home….

28. 28 Data Issues The longer the episode, the less the data Home Health Billing…oops DME…oops Scrambled Physician data…. OP data, oops Clean data…oops

29. 29 Let’s price this Bundle…..

30. 30 The fine print….. I’ve listed the major categories we need to address. After a brief summary, the bullet points indicate questions on the application that apply to his section and a very brief recap of the specific task. Most of these are common to all Models 2-4; variations are indicated. Provider Network Building We have to identify the providers we need and contract with them, establish procedures, etc. Describe communications to providers (B9, B10) How to involve providers with QA/QI Committees (D15 Mod2&3; D13 Mod4) Care Redesign/case management We are expected to redesign care in order to achieve the quality and financial outcomes. Redesign of aspects of care; specific steps, readiness (B11-B13) Ongoing assessment/care improvement during program (B14) How to get providers involved in care redesign (B10) How to involve beneficiaries in care redesign (B11) How will this reduce costs (eg process, forumularies, standardized purchasing, discharge protocols) (C5,C6) How will this improve quality/pt experience (D1) Finance We have to define the episodes and come up with a target rate reduction (or bundled case rate for Model 4). We can propose a risk adjuster, but need a qualitative justification. F or Models 2&3 the logistics are all retrospective, since claims are submitted and paid normally, and reconciled after the fact with the target reduction. For Model 4 it’s a true case rate that we would distro to the hospital and physicians. Risk adjuster? (C3) Describe arrangements (E2) Logistics of distributing gains (E3) Gainsharing (B15-20) We need to design and describe how we’re going to share the financial gains (and losses?) with the providers. For Model 2&3 that will involve a retrospective adjustment since c laims are submitted and paid normally, then reconciled with the target reduction after the fact. CMS expects quality measures to play a role in this as well as financial performance. Logistics of distributing gains (E3) Describe prior experience with gain-sharing, P4P (B16) Quality standards for gainsharing (B17-B19) Eligibility requirements [quality thresholds, QI requirements] for participating in gainsharing (B20, Mod2&3) Limit gainsharing to no more than 50% of Medicare payment (B19) Finance We have to define the episodes and come up with a target rate reduction (or bundled case rate for Model 4). We can propose a risk adjuster, but need a qualitative justification. F or Models 2&3 the logistics are all retrospective, since claims are submitted and paid normally, and reconciled after the fact with the target reduction. For Model 4 it’s a true case rate that we would distro to the hospital and physicians. Risk adjuster? (C3) Describe arrangements (E2) Logistics of distributing gains (E3) Gainsharing (B15-20) We need to design and describe how we’re going to share the financial gains (and losses?) with the providers. For Model 2&3 that will involve a retrospective adjustment since c laims are submitted and paid normally, then reconciled with the target reduction after the fact. CMS expects quality measures to play a role in this as well as financial performance. Logistics of distributing gains (E3) Describe prior experience with gain-sharing, P4P (B16) Quality standards for gainsharing (B17-B19) Eligibility requirements [quality thresholds, QI requirements] for participating in gainsharing (B20, Mod2&3) Limit gainsharing to no more than 50% of Medicare payment (B19)

31. 31 But seriously… some details MSDRG definition Exclusions Families How to identify? Beneficiary Choice Readmissions (related? Part B?)

32. 32 More details Redesign clinical processes Metrics Outcomes Quality Provider Network Contracts Gainsharing/incentives

33. 33 And more details Involvement of providers Education/involvement of beneficiaries Financial Opportunity Inpatient or post-discharge?

34. 34 Our very good friends at CMS Hospital/Physician Relationships/Contracting Changing the rules Where are the rules? Dates March 15 May 16 June 28 Starts? Program Length Got Help?

35. 35 We’re in Maryland, why do we care? HSCRC has promised to do something similar How’s that waiver thing doing? Is bundling the future?

36. 36 Trouble Sleeping? http://www.innovations.cms.gov/initiatives/bundle d-payments/index.html http://cmmi.airprojects.org/bpci.aspx http://www.resdac.org/PaymentBundlingInitiative. asp

37. 37 Thanks for sticking around after lunch Matt Orth Director Managed Care Analytics MedStar Health 410-772-6825 matt.orth@medstar.net