Apr i l 12, 2019

Bundled Payments

Implications and Opportunities for Neuro/Spine Procedures

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Description: Presentation on the concept of bundled payments as a vehicle for value-based care initiatives. Will include the implications of bundling arrangements for both Medicare and commercial beneficiaries and how to best position neuro and spine episodes of care for success in the changing healthcare landscape.

Objectives: To understand:

• Bundling arrangements• Reasons for engagement• Medicare vs Commercial opportunities• Potential for gains• Complexities of neuro/spine bundles

Jerry Rupp, PhD Chief Innovation Officer

Fusion5

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• Value-Based Care Programs• Bundl ing Arrangements

• Retrospective vs Prospective Bundles• Medicare vs Commercial Bundles• Creation of Bundles

• Benef i t o f Bundles – Compet i t i ve Edge• Why Do It?

• Opportunit ies for Revenue• Opportunity Analysis

• Complex i t ies o f Neuro/Spine Bundles• DRG System• Risk Adjustments• Device Cost Differences• Levels of Fusion

• How to Succeed• Identifying Opportunity• Analyt ics• Actionable Insights

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Fusion5 was founded to help providers achieve success in the shift to value-based care

Fusion5 builds partnerships to maximize Value-Based Care opportunities by simplifying complexity and creating sustainable solutions that enhance the ability to improve outcomes in the evolving healthcare landscape.

April 2018

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Value-based care is here to stay – providers must prepare for and adapt to the evolving landscape

4Q 17 1Q 18 2Q 18 3Q 18 4Q 18

Oct 2018

April 2018

June 2018

Oct 2018

Nov 2017

April 2018

June 2018

Recent Notable Value-Based Care Market Activity Not exhaustive

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Value-Based Care Model Prevalence

MA membership moving to VBC

2017

in current spend tied to VBC models

of payments tied to membership in VBC

models:2020 75%

2018

75%

$65b

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• Value-Based Care Programs• Bundl ing Arrangements

• Retrospective vs Prospective Bundles• Medicare vs Commercial Bundles• Creation of Bundles

• Benef i t o f Bundles – Compet i t i ve Edge• Why Do It?

• Opportunit ies for Revenue• Opportunity Analysis

• Complex i t ies o f Neuro/Spine Bundles• DRG System• Risk Adjustments• Device Cost Differences• Levels of Fusion

• How to Succeed• Identifying Opportunity• Analyt ics• Actionable Insights

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Bundles are being deployed to increase the l ink of care value & quality to payment

Major Alternative Payment Models

Fee-for-services

Financial risk for

providers

Link to value & quality highlow

high

low

• Medical service or procedure is paid by a set fee after the service was delivered

• No link to quality or value

Shared savings

Bundles

Population Health

• Payment according to FFS rules

• If predefined cost containment goals are met, savings bonuses are paid for certain timeframe

• No financial risk if goal is not met

• Fixed payment for certain conditions/ treatment covering all services

• CMS1 is driving rapid growth in bundled payments

• Single payment for one person over a specific time period

• Payment intended to cover all costs and expenses

• Financial risk if medical services or treatment exceeds estimated costs

Current Opportunity

Source: A. T. Kearney

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US Healthcare SpendingWhy Bundled Payment Program Can Help

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Potential impact of bundled payments

“Moving to bundled payments for just six chronic conditions (like diabetes and asthma) and four conditions requiring hospitalization (like heart attack and joint replacements) could shave between 7 percent and 35 percent off the costs associated with avoidable complications by providing higher-quality, more collaborative care.”

• RAND Health, Controlling Healthcare Spending, An Analysis of Options, https://www.rand.org/content/dam/rand/pubs/technical_reports/2009/RAND_TR733.pdf

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The CMS Bundled Payments for Care Improvement (BPCI) program first launched in 2013

BPCI-A Fundamentals – A Retrospective Bundle Design

• The Center for Medicare and Medicaid Innovation (CMMI) developed the BPCI initiative to increase the link of quality and value to care:

–A single “bundled” price is set for the acute and post-acute care associated with an episode

–The episode initiator is accountable for managing episode costs within the “bundled” price

• The BPCI program first launched in 2013 with a 5-year demonstration – based on the program’s success, BPCI-Advanced is set to launch October 2018 for an additional 5-years

Improve Patient & Caregiver

Engagement

Reduce Spending &

Improve Quality

Redesign & Optimize Care

Increase Data-Driven Decision

MakingBPCI

Objectives

Stimulate Provider

Coordination & Collaboration

“BPCI Advanced builds on the earlier success of bundled payment models and is an important step in the move away from free-for-service and towards paying for value”

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BPCI-A has seen strong participation from providers nationwide accounting for >$15B in episode spend

BPCI-A Participant Overview

>$15BMedicare spend

>500Kepisodes

700+ACH sites

580+PGPs

ACH

PGPs

Source: CMS BPCI-A Participant Analytical File; Fusion5 analysis

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CMS issues reimbursement payments when aggregate episode costs fall below target

Example Bundle Program Design

Acute Care Discharge Post-Acute Care

Inpatient Rehab

Skilled Nursing

Home Health OP / PT

Payment Model• Payor sets single “target” payment that

covers physician services, acute care, and all care for a defined period post acute discharge

• Target set below current average cost• Providers are responsible for any costs

incurred over target price

Care Improvement Levers Cost Reduction Levers• Physician alignment• Preferred post acute care network

comprised of cost effective high-quality providers

• Care management / redesign and ongoing patient engagement from episode start to finish

• Cost / quality effective discharge disposition and clinical pathways

• Improved outcomes and coordination in the post-acute setting

• Reduced readmissions and adverse outcomes driven by patient engagement and care management

PAC

$30K

$8K

Bundle Price

$7K

$15K

Current Cost

Acute Care

PhysicianServices

$28K-$2KEpisode Scope

Episode examples: Lower joint or knee replacement, spinal fusion, cardiac valve replacement, bypass

Payor savings per episode

Illustrative

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BPCI-A is just the t ip of the iceberg, commercial bundles are just gett ing startedMarket Activity in Commercial Bundles

Episode Provider Network Typical arrangements

Walmart, Lowe’s, McKesson, Jet Blue

•Joints

•Spine

•Bariatrics

•Virginia Mason (Seattle)•Kaiser Permanente (Irvine)•Johns Hopkins Bayview (Baltimore)•Carolina Neuro & Spine (Charlotte)•Geisinger (Danville, PA)•Northeast Baptist (San Antonio)•Scripps Mercy (San Diego)

• Fixed price paid per episode of care

• 2nd opinion from physician at Center of Excellence

• No co-pay / co-insurance after meeting deductible; some employers waive deductibles

• Trip expenses and lodging covered for patient and companion

United Airlines•Hip, knee replacement, spinal fusion

•Cardiac

•Rush Medical Center (Chicago)•Cleveland Clinic

GE•Hip, knee replacements •Carolinas Medical (Charlotte)

•Northwestern Memorial (Chicago)•Christ Hospital (Cincinnati)•Hospital for Special Surgery (NYC)

•Cardiac - Valve replacement, bypass

•Cleveland Clinic

Not Exhaustive

Looking Forward

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The capabil i t ies F5 developed for BPCI-A are foundational to VBC market opportunit ies broadlyBPCI-A as a Foundational Enabler of Accessing New VBC Markets

Barri

ers

to E

ntry

BPCI

Commercial Bundles

ICS Gainshare

Extended Care Mgmt.

ACOs / MCOs

State Programs

• Transferable capabilities• Flexible Platform• PGP Specialist & ACH Relationships / Access

• Eager Customer Base• Specialist Expertise

Enabling Factors

Garden of Long-Term VBC Opportunities

Looking Forward

BPCI-A Capability Springboard

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Commercial Bundle development may occur within the existing benefits structure or seamlessly carved out Commercial Bundle Engagement Options

Select Medical

Episodes

Carve out program

Within Existing Plan

• $0 deductible• $0 co-pay• Second opinion from specialist physician

• Travel, lodging and meals covered (if needed) for patient and one companion

Sample Patient Incentives• Retrospective bundle• Existing network• FFS billing and existing

claims process• Periodic reconciliation

and savings distribution

• Prospective bundle• Narrow preferred

network• Contracted capped

rates with providers

1

2

Payors can choose to make bundle participation mandatory or optional for beneficiaries

Looking Forward

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Commercial programs attract both tradit ional payers and value-based care organizationsCommercial Bundle Payer Segments

Unions

ACOs

Self-Insured Employers

National Payers

Potential Commercial Bundled Payment Program “Payers”

Looking Forward

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The majority of capabil i t ies needed to develop / deploy commercial bundles are core to BPCI-A ConvenersCommercial Bundle Program Development – Provider Led Entry

Development & Design Payer Engagement Provider Ongoing Operations

Objective• Identify market opportunity and develop the bundled payment product

• Negotiate and contract with a commercial payer

• Manage care to drive quality outcomes at a lower than target cost

Capabilities

• Market & Competitive Landscape Analytics

• Provider Network Development

• Bundled Payment Product Design

• Benefit Design• Financial Risk Assessment

• Negotiation strategy development and execution

• Contracting• Business plan writing and financial forecasting

• Product Pricing• Actuarial Analytics

• BPCI Toolkit = VBC Toolkit (Care Coordination, Care Redesign, Analytics, etc.)

• Marketing• PAC Network management and continuous optimization

• Claims Aggregation, Adjudication & Payment

Capability Development AreaCore BPCI-A Capability Other BPCI-A Capability

Looking Forward

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• Value-Based Care Programs• Bundl ing Arrangements

• Retrospective vs Prospective Bundles• Medicare vs Commercial Bundles• Creation of Bundles

• Benef i t of Bundles – Competi t ive Edge• Why Do It?

• Opportunities for Revenue• Opportunity Analysis

• Complex i t ies o f Neuro/Spine Bundles• DRG System• Risk Adjustments• Device Cost Differences• Levels of Fusion

• How to Succeed• Identifying Opportunity• Analyt ics• Actionable Insights

Address variabi l i ty in episodic costs Identi fy dr ivers of cost Redesign of patient care across care Improve care del ivery, patient outcomes & satisfact ion Create episode savings

Contrarian View The objective of the BPCI initiative was to improve the value of health care, e.g. decreasing cost while

improving outcomes. Our institution was only managing the post acute care expenditures and not the acute hospital expenditures. In spite of our best efforts to contain costs with clinical practice guidelines, patient navigators and a BPCI management team, the expenditures were significantly higher for BPCI patients. Furthermore, the outcomes defined as post acute events were not improved. The variabil ity of surgical procedure complexity included in the 471, 472 and 473 DRGs, cervical spine bundles may not be appropriate.

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How Can Bundled Payments Be Beneficial?

Competitive Edge

Source: Spine Journal Meeting Abstracts: 2016 - Volume 2016 - Issue - p 231

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BPCI Impact on Total Medicare Spend

Source: CMS BPCI Models 2-4: Year 5 Evaluation and Monitoring Annual Report

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BPCI Impact – SNF Payments (representative of PAC costs)

Source: CMS BPCI Models 2-4: Year 5 Evaluation and Monitoring Annual Report

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BPCI Impact – Percent Change from Non-Participation

Source: CMS BPCI Models 2-4: Year 5 Evaluation and Monitoring Annual Report

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Episode cost performance improvement align with key interventionsExample Cost per Episode Trending (Major Jo int o f the Lower Extremity)

2

34

5

1

6

1 Pre BPCI Go-Live

2 BPCI Go-Live (4/15)

3 PGP Care Manager Start (6/15)

4 Protocol Standardization (8/15)

5 First Reconciliation (11/15)

6 BPCI Ongoing OPs

Source: CMS BPCI-A Analytical File; Fusion5 analysis

Avg Weekly Episode Cost10-week Moving Avg.

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• Value-Based Care Programs• Bundl ing Arrangements

• Retrospective vs Prospective Bundles• Medicare vs Commercial Bundles• Creation of Bundles

• Benef i t o f Bundles – Compet i t i ve Edge• Why Do It?

• Opportunit ies for Revenue• Opportunity Analysis

• Complexi t ies of Neuro/Spine Bundles• DRG System• Risk Adjustments• Device Cost Differences• Levels of Fusion

• How to Succeed• Identifying Opportunity• Analyt ics• Actionable Insights

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Can spine bundles perform like other orthopedic bundles?

MS-DRGs

• DRG designation is independent of # levels

• No cost adjustment is attributed after DRG

Risk Adjustment

• Device costs vary greatly• Dependent on manufacturer• Single vs multi-level

Device Cost

• Procedure levels do not alter DRG

• DRG payments unchanged• Add-on payments possible

Levels of Fusion

Complexity of Neuro/Spine

Bundles

• MS-DRGs are poor adjusters of procedural differences

• CMS believes differently

Spine bundles had limited participation in BPCI Classic for these very same reasons. BPCI Advanced and commercial bundle applications seem more promising.

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• Value-Based Care Programs• Bundl ing Arrangements

• Retrospective vs Prospective Bundles• Medicare vs Commercial Bundles• Creation of Bundles

• Benef i t o f Bundles – Compet i t i ve Edge• Why Do It?

• Opportunit ies for Revenue• Opportunity Analysis

• Complex i t ies o f Neuro/Spine Bundles• DRG System• Risk Adjustments• Device Cost Differences• Levels of Fusion

• How to Succeed• Identifying Opportunity• Analytics• Actionable Insights

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Driving Opportunity through Analytics and Expertise

Data Analyt ics Case Management Provider Coordination PAC Network Development Risk Assessment Real-Time Trending Predict ive Model ing

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BPCI-A participants build core VBC capabil i t ies, gain access to new revenue, and improve patient outcomes

• Value-based models are driving a major change in the US healthcare landscape and are expected to account for 50% to 70% of total reimbursements by 2020

• Your organization will be well positioned to expand the BPCI-A success to future govt. and private payor value-based initiatives in episodic care

• Be in control of how your patients receive care across the whole continuum from the acute setting to 90-day post-discharge

• As an episode initiator, your decisions will directly impact the cost and outcomes for each episode in the bundle

• BPCI-A puts significant emphasis on patient outcomes with payments tied to multiple quality measures

• Lowering re-admissions is a major goal to achieve success in the program

Get started on the journey to Value-based care

Take greater control of end-to-end patient care

Improve patient outcomes and satisfaction

• Receive additional payments (NPRA) from CMS for keeping the episode cost of care below the target price

• Highly successful organizations can receive NPRA payments as high as 15% to 20% of total episode costs, the equivalent of 150% to 300% of Medicare

Increase your revenue

Why Participate in BPCI-A? Not exhaustive

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Best opportunit ies achieved by leveraging tools and best practices used by our Convener partners in BPCI-A

Illustrative

Provider Coordination Established PAC Network Gainsharing Contracts

Savings Pool

$Physician

Hospital

Convener

• Fusion5 will coordinate efforts across your network and streamline care processes to ensure smooth program implementation

• Your organization can leverage the top performing PAC network across 40 states that we have already hand picked for BPCIA providers using our proprietary tools

• In addition to setting up NPRA gainsharing arrangements with your partners, we also help you develop Internal Cost Savings (ICS) arrangements applicable to direct costs incurred within facilities

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Be equipped with the analytic tools and actionable insights to maximize savingsEpisode Summary Report: Analytical Facets

• High-level view of overall group performance across all BPCI-A episodes

• Priority savings opportunities / levers to unlock additional savings

• Aggregate performance and opportunity for a selected episode type

• Historic performance monitoring, and future opportunity identification

• Physician and hospital performance comparison

• Physician level summary of PAC utilization and KPI performance versus selected benchmarks

• Comparison of individual physician performance versus aggregate group average

• Episode / Patient level detail for historic and program episodes

• Patient level granularity and insight into cost and PAC utilization outcomes that led to episode performance vs. target

Overall Dashboard Episode Dashboard Episode Summary KPI Summary

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Analytics must synthesize actionable insights from claims data

Episode Summary Report: Use Cases

Performance Monitoring

Opportunity Prioritization

Physician Alignment

Hospital Comparison

Episode Profiling

• Assesses program cost performance vs. target• Evaluates PAC KPI performance vs. benchmark

• Identifies the highest impact KPI savings and episode savings opportunities to inform priority focus areas

• Compares physician performance over multiple metrics across the group

• Compares the cost performance and target pricing across the hospitals in which the group practices

• Enables episode-level visibility into cost, utilization, and LOS metrics

Enable seamless identification of actionable insights derived from performance monitoring and opportunity identification analytics

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Identifying Opportunity

BPCI-Advanced Preliminary Opportunity Analysis Approach

CMS BPCI-A Target Price File

CMS BPCI-A Average Cost File

Historic Episode Claims Data

Historic National Episode Claims Data

Opportunity Analysis

• Savings to the provider based on the provider’s current average cost versus the BPCI-A target pricing

Baseline Savings

• Savings enabled from reducing episodic cost through optimizing PAC utilization Key Performance Indicators (KPIs)

PAC Utilization Savings

Process also applies to Commercial bundle applications

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State-of-the-art technology needed to support providers as they redesign patient care deliveryIT Value Proposition & Department Goals (eFusion)

Deliver a high quality customer experience: Flexible, User Friendly, Secure, InterOperable Network

Platform Development

• Rapid, low-cost development and ongoing improvement to our industry leading VBC care management platform

Customer Service

• Improve Customer experience by creating centers of excellence and using state of the art tools, enabling responsiveness to our customer’s needs

Analytics• Provide an integrated high-performing analytics platform that

enables actionable insights drive improved outcomes for our customers, and market intelligence for our team internally

Security & Infrastructure

• Maintain IT infrastructure and processes that are secure, compliant, and meet regulatory audit requirements

Sustain and improve our systems and platform

Fully integrated Care Mgmt. and Analytics

Ensure regulatory security compliance

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Fusion5 and our provider partners uti l ize a proprietary, integrated, and f lexible care management platformCare Management & Patient Tracking System Snapshot

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Efficient Clinical Workflow & Patient Stratification Tools

Highly Configurable for Bundled Programs & Episodes2

3Customizable Patient Education& Resources Tools

Easily View & Manage Multiple Staffing Models

4

The Pat ient & Populat ion Information You Need, r ight at your Fingert ips

1

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