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1 Show Them They Can’t Live Without You: Using Cost and Utilization Data to Market to Payers Scott Wetzler, PhD Stacey Blase, PhD Montefiore Medical Center Tuesday, November 15, 2016

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Show Them They Can’t Live Without You:Using Cost and Utilization Data to Market to Payers

Scott Wetzler, PhD

Stacey Blase, PhD

Montefiore Medical Center

Tuesday, November 15, 2016

CMS Change Package: Primary and Secondary Drivers

Patient and Family-Centered Care Design

1.1 Patient & family engagement 1.2 Team-based relationships 1.3 Population management 1.4 Practice as a community partner1.5 Coordinated care delivery 1.6 Organized, evidence-based care1.7 Enhanced access

Continuous, Data-Driven Quality Improvement

2.1 Engaged and committed leadership 2.2 QI strategy supporting a culture of quality and safety 2.3 Transparent measurement and monitoring2.4 Optimal use of HIT

Sustainable Business Operations

3.1 Strategic use of practice revenue 3.2 Staff vitality and joy in work 3.3 Capability to analyze and document value 3.4 Efficiency of operation

3

Medicare Risk Levels

Category 1:

Fee-for-service (FFS) with no link of payment to

quality

Category 2:

FFS with a link of payment to quality

Category 3:

Advanced Payment Models built on FFS architecture

Category 4:

Population-Based Payment (Full Risk)

NYS Medicaid Risk Levels

N/A Level 0: Does not count toward 80-90% state goals Level 1: Upside only arrangements, built on FFS architecture

(retrospective reconciliation)

Level 2: Up and downside arrangement, built on FFS

architecture (retrospective reconciliation)

Level 3: Per Member, Per Month (PMPM)

payments (capitation/prospective bundled

payments)

Compensation Continuum

Small % of financial risk:

Fee-for-service

Small % of financial risk: Performance-based

contracting

Moderate % of financial risk:

Case rate/ bundled/ episodic payments; Shared savings

Large % of financial risk: Shared risk

Large % of financial risk:

Capitation; Capitation plus performance based

contracting

TCPI “Phases of Transformation” (Care Transitions Network framework)

Phase 1: Setting Aims

Phase2: Establishing a Baseline

Phase 2: Establishing a Baseline

Phase 3: Benchmarking Progress

Phase 3: Benchmarking Progress

Phase 4: Sustain Change

Phase 5: Preparedness for VBP arrangements

TCPI Change Package Concepts

1.1.3 Collaborate with patients & families

1.3.3 Stratify risk

1.4.4 Use community resources

2.1.2 Develop roadmap

2.2.1 Use and organized QI approach

2.2.2 Build QI capacity

2.3.1 Use data transparently

3.1.1 Use sound business practices

1.1.2 Listen to patient & family voice

1.2.2 Clarify team roles

1.5.2 Establish medical neighborhoods

1.6.3 Implement evidence-based protocols

1.7.1 Provide 24/7 access

2.2.2 Build QI capacity

3.4.1 Streamline work

1.1.2 Listen to patient & family voice

1.1.3 Collaborate with patients and families

1.3.3 Stratify risk

1.4.4 Use community resources

1.5.2 Establish medical neighborhood roles

1.6.3 Implement evidence-based protocols

1.6.5 Reduce unnecessary tests

2.4.1 Innovate for access

3.2.3 Cultivate joy

3.3.4 Document value

3.4.1 Streamline work

3.3.3 Develop financial acumen

3.3.4 Document value

DSRIP Year

2016: Focus on Infrastructure Development > Focus

on System/Clinical Development

2017: Focus on System/Clinical Development 2018: Focus on System/Clinical Development >Focus on Project

Outcomes/

Sustainability

2019: Focus on Project Outcomes/Sustainability

President and CEO

University Behavioral Associates

Scott Wetzler, PhD

Attending Psychologist

Montefiore Medical Center

Stacey Blase, PhD

4

Learning Objectives

At the end of this session, organizations will be able to:

1. Interpret financial costing and utilization data to make a case for value

2. Complete a costing exercise

3. Develop a data driven plan to market to community partners and payers

5

Overview & Roadmap

1. Background on value-based purchasing models

2. Sample overall healthcare costs and intermediate steps

3. Costing demonstrations for example interventions

4. Summary on negotiating for risk contracting

6

Models of Value-Based Reimbursement

7

Pay for Performance

Bundled Payment

Patient Centered Medical Home

Shared Savings

Shared Risk

Full Risk

From Shared Savings toward Assuming Risk

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Options Level 0 VBP Level 1 VBP Level 2 VBP Level 3 VBP

Total Care for General Population

FFS with bonus and/or withhold based on quality scores

FFS with upside-only shared savings when quality scores are sufficient

FFS with risk sharing (upside when outcome scores sufficient; downside reduced when quality scores are high)

Global capitation (with quality-based component)

Integrated Primary Care

FFS (plus PMPM subsidy) with bonus and/or withhold based on quality scores

FFS (plus PMPM subsidy) with upside- only shared savings based on total cost of care (savings available when quality scores are sufficient)

FFS (plus PMPM subsidy) with risk sharing based on total cost of care (upside available when outcome scores sufficient; downside reduced when quality scores are high)

PMPM capitated payment for primary care services (with quality-based component)

Bundles FFS with bonus and/or withhold based on quality scores

FFS with upside-only shared savings based on bundle of care (savings available when quality scores are sufficient)

FFS with risk sharing based on bundle of care (upside available when outcome scores sufficient; downside reduced when quality scores are high)

Prospective bundled payment (with quality-based component)

Total Care for Subpopulation

FFS with bonus and/or withhold based on quality scores

FFS with upside-only shared savings based on subpopulation capitation(savings available when quality scores are sufficient)

FFS with risk sharing based on subpopulation capitation(upside available when outcome scores sufficient; downside reduced when quality scores are high)

PMPM capitated payment for Total Care for Subpopulation (with quality-based component)

Total Healthcare Costs by Population

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Outpatient12%

Emergency1%

Inpatient19%

Other3%

Inpatient21%

Emergency1%

Clinic + Physician

6%

Other14%

Pharmacy23%

Healthcare Costs (NYC HARP, 2012)

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$28,118 per patient per year!

Behavioral HealthServices

33% TotalHealthcare Costs

Medical HealthServices

67% Total Healthcare Costs

Data book for Behavioral Health Carve-in and Health and Recovery Plans (HARPS). State of New York. January 21, 2014.

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Member Months 1,015,883 CY 2011 Member Months 991,337 CY 2012

Behavioral Health Service Group Util/1,000 PMPM % Total Behavioral Health Service Group Util/1,000 PMPM % Total

Inpatient Psych 5164 288.02$ 13% Inpatient Psych 5012 289.20$ 12%

Inpatient D&A + Detox 2548 128.51$ 6% Inpatient D&A + Detox 3017 141.24$ 6%

Emergency Room + CPEP 895 13.22$ 1% Emergency Room + CPEP 996 14.92$ 1%

Outpatient Psych 13608 156.16$ 7% Outpatient Psych 12417 139.99$ 6%

Outpatient D&A 10591 105.53$ 5% Outpatient D&A 11578 105.61$ 5%

Other 3678 72.24$ 3% Other 3471 74.80$ 3%

Behavioral Health Total 36,484 $763.68 34% Behavioral Health Total 36,491 $765.76 33%

% ENC (Behavioral Health) 13% % ENC (Behavioral Health) 22%

% FFS (Behavioral Health) 87% % FFS (Behavioral Health) 78%

Acute Care Service Group Acute Care Service Group

Inpatient Acute 3256 474.59$ 21% Inpatient Acute 3733 497.63$ 21%

Emergency Room 317 32.33$ 1% Emergency Room 415 42.43$ 2%

Ambulatory Surgery 603 17.08$ 1% Ambulatory Surgery 750 22.52$ 1%

Clinic 2784 27.86$ 1% Clinic 2807 27.52$ 1%

Primary Care 5803 40.90$ 2% Primary Care 8004 57.56$ 2%

Physician Specialist 5583 54.24$ 2% Physician Specialist 7297 76.64$ 3%

Outpatient Other 40991 268.64$ 12% Outpatient Other 47396 312.00$ 13%

Nursing Facility 2409 42.63$ 2% Nursing Facility 3578 70.12$ 3%

Pharmacy 52279 500.33$ 23% Pharmacy 59333 470.98$ 20%

Medical Health Total 114,025 1,458.60$ 66% Medical Health Total 133,313 1,577.40$ 67%

% ENC (Medical Health) 39% % ENC (Medical Health) 72%

% FFS (Medical Health) 61% % FFS (Medical Health) 28%

All Services Total $2,222.28 100% All Services Total $2,343.16 100%

% ENC (Total Healthcare) 30% % ENC (Total Healthcare) 56%

% FFS (Total Healthcare) 70% % FFS (Total Healthcare) 44%

NYC HARP NYC HARP

1367

932

38 43

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Member Months 11,220,903 CY 2011 Member Months 11,511,393 CY 2012

Behavioral Health Service Group Util/1,000 PMPM % Total Behavioral Health Service Group Util/1,000 PMPM % Total

Inpatient Psych 2.66$ 12% Inpatient Psych 3.36$ 14%

Inpatient D&A + Detox 27 1.33$ 6% Inpatient D&A + Detox 33 1.45$ 6%

Emergency Room + CPEP 28 0.39$ 2% Emergency Room + CPEP 31 0.41$ 2%

Outpatient Psych 6.00$ 27% Outpatient Psych 942 6.56$ 28%

Outpatient D&A 11.89$ 53% Outpatient D&A 1377 11.38$ 48%

Other 23 0.23$ 1% Other 28 0.31$ 1%

Behavioral Health Total 2,415 $22.50 100% Behavioral Health Total 2,454 $23.47 100%

% ENC (Behavioral Health) 27% % ENC (Behavioral Health) 36%

% FFS (Behavioral Health) 73% % FFS (Behavioral Health) 64%

NYC TANF/SN NYC TANF/SN

Member Months 1,493,578 CY 2011 Member Months 1,515,055 CY 2012

Behavioral Health Service Group Util/1,000 PMPM % Total Behavioral Health Service Group Util/1,000 PMPM % Total

Inpatient Psych 88 4.39$ 10% Inpatient Psych 84 4.24$ 10%

Inpatient D&A + Detox 25 1.20$ 3% Inpatient D&A + Detox 30 1.34$ 3%

Emergency Room + CPEP 31 0.43$ 1% Emergency Room + CPEP 33 0.45$ 1%

Outpatient Psych 1123 12.08$ 28% Outpatient Psych 1102 11.44$ 27%

Outpatient D&A 2336 24.15$ 55% Outpatient D&A 2611 22.75$ 54%

Other 105 1.43$ 3% Other 123 1.71$ 4%

Behavioral Health Total 3,708 $43.68 100% Behavioral Health Total 3,983 $41.93 100%

% ENC (Behavioral Health) 8% % ENC (Behavioral Health) 11%

% FFS (Behavioral Health) 92% % FFS (Behavioral Health) 89%

NYC SSI NYC SSI

Data book for Behavioral Health Carve-in and Health and Recovery Plans (HARPS). State of New York. January 21, 2014.

Intermediate Steps Toward Full Risk: Options

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(1) Bundled Payment

Provides a single payment for all services for a specified condition that is based on the costs of adhering to clinical standards of care, risk stratification, and complication allowances

What’s in it for you?

• You benefit from savings generated by improving efficiency within episodes

• Even if you reduce the number of annual outpatient visits, limited opportunity for benefit (and concern that savings achieved might lead to poor outcomes)

• Risk of having to provide more service for each episode

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(1) Bundled Payment Example

Negotiated Payment Model

• Bundle: outpatient psychiatric care for patients with Bipolar Disorder

• Bundle Amount: $1500 annually per patient

Calculations for Savings

• Unit cost per outpatient visit = $135

• Must offer ≤ 11 visits per year to generate savings ($135*11 = $1485)

• Payment is capped provider loses money if ≥ 12 visits per year

• Decrease to 8 visits per year = $420 in savings per patient

• Relatively small amount of savings considering risk that patient might require increased outpatient care

15

Financial incentives or disincentives tied to measured performance (e.g. reduction in readmissions)

• Provider receives performance-based adjustments to FFS rates, usually bonuses for exceeding benchmarks in a particular metric

• Requires ability to establish clinical quality benchmarks, and to collect, measure, and report results

16

Montefiore

Montefiore

NYC

NYC

0% 10% 20% 30% 40%

<90 days

<30 days

Readmissions

(2) Pay for Performance

(2) Pay for Performance Example

Negotiated Payment Model

• Metric: decrease 30 day readmissions from 24 to 15 (based on 100 patients with Bipolar Disorder referred from psych inpatient)

• Incentive Amount: $50,000

Calculations for Savings

• Unit Cost per inpatient day = $692

• Assuming average LOS on an inpatient unit is 14 days, each admission = $9,694

• 9 saved readmissions = $87,250 savedo In P4P model, you only keep the incentive (a fraction of the savings)o Whoever is taking the risk stands to save the most money

• Achieving $50,000 incentive would be equal to 370 additional visits ($135*370=$49,950), or 3.7 additional visits per patient

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Costing Exercises & Interventions

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What change in utilization is needed to pay for an intervention?

Profit associated with open access will mostly be linked to quality incentives or inpatient cost savings.

Example Intervention 1: Open Access

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Cost

1 FTE Social Worker for Intake Evaluations

Annual Salary ($48,000 + 30% fringe ) $62,400

.2 FTE Psychiatrist for Medication Consults

Annual Salary ($40,000 + 30% fringe ) $52,000

Total Annual Costs $114,400

Associated Revenue

Additional Intake Evaluations

10/week @ 45 weeks/year = 450 intakes $60,750

Additional Medication Consults

7/week @ 45 weeks/year = 315 consults $47,250

Total Annual Revenue $108,000

What change in utilization is needed to pay for an intervention?

Profit associated with LAIs will mostly be linked to quality incentives or inpatient cost savings.

Example Intervention 2: LAIs

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Cost

.5 FTE Nurse for LAI Administration

Annual Salary ($35,000 + 30% fringe ) $45,500

Total Annual Costs $45,500

Associated Revenue

LAI Billing

10/week @ 45 weeks/yearLAI Administration and Education

$26,550

40/week @ 45 weeks/yearInjectable Medication Only

$23,400

Total Annual Revenue $49,950

What change in utilization is needed to pay for an intervention?

Since billing revenue may not exist, any potential profit in diabetes education would have to be associated with reductions in medical costs.

Example Intervention 3: Diabetes Education

21

Cost

1 FTE Diabetes Educator

Annual Salary ($60,000 + 30% fringe ) $78,000

Total Annual Costs $78,000

Associated Revenue

None? $0

Conclusions

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Quality Incentives as a Step toward Risk

• Pay for Performance models are intermediate steps to more advanced forms of value-based care

• Data on quality metrics, associated costs, and overall costs of care may provide basis for taking risk on a population

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Full Risk Contracting• Revenue is guaranteed, only amount of service is unknown (but

predictable)• Full-risk capitation allows provider groups to ascend the

premium stream• Providers are in the best position to determine clinical

opportunities for improving outcomes and achieving savings• Allows providers to develop a budget and clinical operations

based on known revenue

MH outpatient care only

(i.e. bundled payments)

MH inpatient and outpatient care

(i.e. quality incentives)

Total cost of care(i.e. including medical costs

and interventions)

Negotiations for Full Risk Contracting

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3 Years Weighted Baseline

Target Baseline

Performance Adjustments

Stimulus Adjustment

Target Budget

Select VBP Arrangement

Historic Claims Data

Risk Adjustment

Growth Trend

Efficiency Adjustment

Quality Adjustment

Questions?

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Thank you!www.CareTransitionsNetwork.org

[email protected]

The project described was supported by Funding Opportunity Number CMS-1L1-15-003 from the U.S. Department of Health & Human Services, Centers for Medicare & Medicaid Services. Disclaimer: The contents provided are solely the responsibility of the authors and do not necessarily represent the official views of HHS or any of its agencies.