Opportunity abounds: the compelling facts of the new payment modelG Curt Meyer, FACHE, MAACVPRVP 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 somethingWho do I talk to and what information is needed to make informed decisions

DenialAre You Ready for Healthcare Reform?AngerRemorseEmotional Stages of the UnpreparedDepressionAnxietyAcceptanceConfusion

Where do we goIs this possibly the bridge to nowhere?Home Health Doing Cardiac Rehab

Crossing the CrevasseFEE FOR SERVICE

A business we know and love (and have thrived at) Its all about volumeMaximize price to commercial payers to offset losses on government businessFocus on specialistsVALUE BASED PAYMENT

Brave new worldNew business model Focus on populations and episodes of carePrimary care becomes keyProfits from higher quality care in home settingLongitudinal payments for chronic careBundled payment for implantableJoint contracts with payersFocus on dataClinical Integration Provides the Bridge Between FFS and Value-based Payment

*Clinical Integration is the Bridge

The bridge from volume to value

Bundled Payment: What it Means to UsHomeLTCAssisted LivingNursing Home SNFOutpatient RehabHealth SystemPayment bundling will further encourage health systems keep patients within a narrow networkRehabilitationLTCNursing HomeHome HealthOutpatient CarePatient & Physician

Home Health Doing Cardiac Rehab

Expanded Capabilities of rehab at home

What ACOs are Doing

What is valueLow cost per case with high clinical outcomes and independenceHigh patient satisfactionSignificant discharge status of independence

Measures of success

Do I do anything?Yes!!!! with or without health care reformOutcomes have to be presentedCost per case has to be understood And managedClear 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 costsAbility for predictive modeling of outcomes with fixed costWillingness to be at risk

What do I do When I decide to make a move?Communicate, communicate, communicateCostsOutcomesClinicalHospital readmissions over 90 daysFunctionalPatient Discharge destinationFit into the continuum of care

1980s Telemetry monitoring for higher reimbursement1990s, 36 sessions for higher reimbursementEarly 2000, education exercise and risk management for higher reimbursementPresent day, high outcomes at low costs for better any reimbursementIn cardiac rehab we have been chasing the money for over 30 years

Basics of conversion from fee-for-service to population health managementAnalyze current charges and costs per case in the following areas:Total charges Across all patients served in the last fiscal yearTotal costsSalary wage and benefit costs as a percent of total chargesFixed costs as a percent of total charges

Conversation

Let's do the mathCurrent Volume approach

Value approach

Value based calculationCost/visit $ 79.00 Number of visits/case36 Total cost/case $ 2,844.00

Value based calculationCost/visit $ 79.00 Number of visits/case26 Total cost/case $ 2,054.00

Value based calculationCost/visit $ 76.00 Number of visits/case26Total cost/case $ 1,976.00

Calculate contracting rateCurrent Range: $ 2,844.00 - 1,976.00 No perceived margin under current cost structureNet income to operations only occurs through cost reduction and reduction in utilization

New net income model under value-based purchasing25,000 covered livesCarve-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$164.67 allocated per member per month cost for cardiac rehab in an ACO model (Amount allocated to pay for cardiac rehab)

Impact on Annual BudgetAnnual salary costs $288,288Annual fixed costs $42,000Total operating costs $330,288

2000 referrals per year; Potential revenue:$3,952,000

Summary take-away Don't focus on the numbersFocus on the following concepts:Reducing total costs is the primary means of managing your businessUnderstanding your total costs will better allow you to go "at risk "for a given populationIncreased volume will no longer fix poor financials, decrease costs and managed utilization will be the measure of success

Summary take-away

Summary and takeawaysCardiac 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

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