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CJR Final Rule: Policy Changes and Strategies for Bundled Payment Success

Melinda Hancock, Edward Stall,Craig Tolbert, Michael Wolford

Friday, November 20, 2015

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Agenda

1) Overview of CJR Model

2) Policy Changes from Proposed to Final Rules

3) Insights from Big Data

4) Tools for Today / Strategies for Now

5) DHG Healthcare’s A.I.M. Plan of Action

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Major Policies in CJR that did not change

Hospitals are singularly responsible for CJR risk.

IPPS hospitals in CJR selected MSAs are mandated to participate. Non CJR hospitals may not opt-in.

No downside in first performance year.

Applies only to Medicare FFS beneficiaries.

Bundle includes IP stay plus 90-days post-discharge.

Bundles are retrospective, not prospective.

BPCI still “trumps” CJR for risk delegation.

Hospitals may share gains and/or losses with CJR collaborators.

Target prices are re-based every other year.

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Summary of major CJR changes

❶CJR start delayed

to 4/1/16; truncated first

year

❷Moving forward with 67 MSAs; 8 MSAs removed

❸Quality

performance calculations

changed dramatically

❹Hip fractures assigned a

unique target price

❺Stop-loss &

stop-gain limits narrowed

❻More clarification on requirements

when sharing gains/losses with

collaborators

❼CMS actuaries expect greater savings in final rule ($343M vs.

$250M)

❽Availability of data

to hospitals will be expanded

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CJR start delayed to 4/1/16; truncated first year• Start delayed 3

months to 4/1/16• Year 1 includes only 6

months of initiated episodes

• Model still ends in 2020

• Today, CJR is collecting performance on:– Years 1-3 of

TKA/THA Complications

– Years 3-4 Baseline Pricing

– Year 1 HCAHPS Measure

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Zoom-in on 2016 performance year

First gainsharing distribution

from CMS in 2Q 2017.

Download the full 5-year timeline document from www.dhgllp.com/bundledpayments.

Only 2 months of VPRO reporting

Performance Year 1 looks like 9 months, but will only include approximately 6 months of cases. An episode must be initiated after 4/1/16, and the episode,

including 90-day post-discharge period, must conclude on or before 12/31/16.

Baseline has already been established.

Complications still being measured for PY1 through 3/31/16.

HCAHPS still being measured for PY1 through 6/30/16.

First Reconciliation

Report in March 2017.

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Moving forward with 67 MSAs; 8 MSAs removed

• 789 impacted CJR regional hospitals in 67 MSAs

• 67 of 789 (8%) CJR hospitals are already in BPCI for LEJR

• IPPS hospitals in the selected MSAs are requiredto participate in CJR.

• Census Region still determinant of regional pricing.

• Only exceptions are:• BPCI Phase 2 LEJR

hospitals• Non-IPPS hospitals• Maryland hospitals

Removed MSAMandated MSA

Pacific

MountainWest North

Central

West South Central

East North Central

New England

Middle Atlantic

South Atlantic

East South

Central

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67 selected MSAs by average episode payments

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Quality measures changed dramatically (1 of 3)

• Removed 30th/40th

percentile thresholds on all 3 quality measures– Replaced with Composite

Quality Score• Complications (RSCR) and

HCAHPS measures (HMLR) remain– 30-day readmission measure

removed• Voluntary data submission

still present, though benefit is less direct

• sdfs THA/TKA Complications

HCAHPS Survey

≥ 90th 10.00 8.00≥ 80th and < 90th 9.25 7.40≥ 70th and < 80th 8.50 6.80≥ 60th and < 70th 7.75 6.20≥ 50th and < 60th 7.00 5.60≥ 40th and < 50th 6.25 5.00≥ 30th and < 40th 5.50 4.40

< 30th 0.00 0.00

3 Decile Improve. 1.00 0.80

THA/TKA Voluntary PRO and limited risk variable data

Yes 2.00No 0.00

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Quality measures changed dramatically (2 of 3)

1. Plot performance percentile for Complications. Example performance: 65th %ile

2. Plot performance percentile for HCAHPS. Example performance: 25th

%ile3. If improved 3 deciles from previous

year on either measure, add improvement points. Example performance: complications improved from 32nd to 65th %ile.

4. If voluntary data submitted, add voluntary data submission points. Example performance: yes, submitted data

5. Sum the points.

THA/TKA Complications

HCAHPS Survey

≥ 90th 10.00 8.00≥ 80th and < 90th 9.25 7.40≥ 70th and < 80th 8.50 6.80≥ 60th and < 70th 7.75 6.20≥ 50th and < 60th 7.00 5.60≥ 40th and < 50th 6.25 5.00≥ 30th and < 40th 5.50 4.40

< 30th 0.00 0.00

3 Decile Improve.? 1.00 0.80

THA/TKA Voluntary PRO and limited risk variable data

Yes 2.00No 0.00

❶

❹

❸❷

7.75 0.00 1.00 2.00 10.75

❶ ❷ ❸ ❹

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Quality measures changed dramatically (3 of 3)

Composite Quality Score Quality

CategoryReconciliation

Eligible?

Quality Incentive Eligible?

Gains (All Years)

Losses(Year 1)

Losses(Year 2-3)

Losses(Year 4-5)

< 4.00 Below Acceptable No No N/A N/A 2.0% N/A

≥ 4.00 and < 6.00 Acceptable Yes No 3.0% N/A 2.0% 3.0%

≥ 6.00 and ≤ 13.20 Good Yes Yes 2.0% N/A 1.0% 2.0%

>13.20 Excellent Yes Yes 1.5% N/A 0.5% 1.5%

Effective Discount Percentage

Impact of 1% reduction in target price is $20k-$30k per year for a hospital performing 100 CJR

procedures per year.

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Hip fractures assigned a unique target price

• Partial hip replacements are still part of CJR, but will be given its own target prices by MS-DRG

• Hospital will have four concurrent target prices:– MS-DRG 470 w/o fracture– MS-DRG 470 w/ fracture– MS-DRG 469 w/o fracture– MS-DRG 469 w/ fracture

• Hip fracture is identified by ICD-9-CM code as the principal diagnosis on the anchor hospitalization claim

MS-DRG 470 without hip

fracture

MS-DRG 470 with hip fracture

Adjusted Spendper Episode $24,431 $41,361

% of total MS-DRG 470 episodes 88% 12%

90-day Readmission Rate 9.1% 27.5%

Hospital ALOS 3.1 days 6.0 days

% discharged to SNF 35.8% 84.6%

% discharged to Home Health 59.1% 7.8%

Statistics from Sample Hospital, 2011-2013

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Stop-loss & stop-gain limits narrowed

• CJR will phase in stop-gain limits, rather than static 20% stop-gain limits in all 5 years.

• Less potential loss in Years 2 and 3.

• Rural hospital, SCH, MDH, RRC participant have the same stop-gain limits but different stop-loss limits:– 2016: N/A, no downside– 2017: -3%– 2018-2020: -5%

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Clarified gain/loss sharing requirements

• Provided a lot more clarity and specificity on PGP gainsharing– PGPs must have distribution

arrangement with members– Gainsharing funds must not be

placed in PGPs general funds• Hospital must include quality

measures in collaborator selection and distribution method

• CJR Collaborators must be listed on the hospital’s website, updated quarterly

• Gainsharing arrangements must be entered into before care is furnished to CJR beneficiaries

SNF HHA

LTCH IRF

Physician Group

PracticesPhysicians

Non-physician

practitioners

Outpatient therapy

providers

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CJR is profitable for CMS, funded by IPPS hospitals

$12.299 BillionTotal Episode Spending

$343 MillionSavings to Medicare

2.8%Overall CJR Savings to Medicare

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Data availability expanded significantly

• Data will be made available “no less frequently than on a quarterly basis with the goal of making these data available as frequently as on a monthly basis if practicable.”

• Hospitals must request data one time, not recurring.

• Beneficiaries may not opt-out of sharing their data with the CJR hospital.

• Alcohol and drug abuse patient records will not be shared. M

edic

are

CJR

Dat

a

Hospital Claims-Level

Hospital Summary

Census Region Aggregate

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Initial reactions

“Hospitals will still be pressed to put in place the processes and procedures necessary for the program [in spite of the 3-month delay.]”• Richard Pollack, president and CEO of American Hospital Association

“[The American Association of Orthopaedic Surgeons is] very concerned about serious unintended consequences for Medicare beneficiaries and physicians.”• David D. Teuscher, MD, President of American Association of Ortho. Surgeons

“ACOs are facing a plethora of financial challenges under the current CMS rules and this decision only adds to their burdens.”• Clif Gaus, CEO of National Association of ACOs

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Big Data: Hip fracture policy change is significant

Primary Procedure

% of 2011-2013 Episodes

Average Episode Payment

Total knee 58.3% $23,275

Total hip 29.9% $24,280

Partial hip 11.1% $39,272

Total ankle 0.4% $20,166

Admission Type % of 2011-2013 Episodes

Average Episode Payment

Elective 83.1% $23,427

Emergency 9.9% $39,168

Urgent 6.3% $28,414

Trauma 0.3% $38,685

Other 0.4% $25,252

Hip fractures commonly:• Result in partial hip replacement procedures. • Are emergent or trauma admissions.

These tend to be much more expensive episodes of care.Source: DHG Healthcare and Dobson | DaVanzo &

Associates research using CMS Public Use Files 11-13

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Big Data: Readmissions require focused attention

# of Readmissions in Episode

% of 2011-2013 episodes

Average Episode Payment

Incremental Spend % by # of Readmissions

0 90.2% $23,804 N/A

1 8.1% $37,730 159%

2 1.4% $47,674 200%

3 0.3% $51,838 218%

4 or more 0.1% $53,568 225%

Source: DHG Healthcare and Dobson | DaVanzo & Associates research using CMS Public Use Files 11-13

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Big Data: A patient’s care path after discharge matters a lot

Pathway % of Episodes

EpisodicSpending

EstimatedTarget Price

Per Case Profit/(Loss)

Acute – HHA 28% $19,341 $25,000 $5,659

Acute – SNF 19% $27,752 $25,000 ($2,752)

Acute – SNF – HHA 14% $31,879 $25,000 ($6,879)

Acute – HHA – Readmit. 13% $38,696 $25,000 ($13,696)

Acute – Readmit. 10% $26,626 $25,000 ($1,626)

Acute – SNF – SNF – HHA 6% $50,005 $25,000 ($25,005)

Acute – SNF – HHA – Readmit. 5% $48,506 $25,000 ($23,506)

Acute – HHA – Readmit. – HHA 5% $36,545 $25,000 ($11,545)

Source: DHG Healthcare and Dobson | DaVanzo & Associates research using CMS Public Use Files 11-13

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Tools for Today: Episode Metrics

HOSPITALXYZ

MSA

ABC Census Region

All CCJR

Hospitals

CCJR National

Percentile HOSPITALXYZ

MSA

ABC Census Region

All CCJR

Hospitals

CCJR National

Percentile HOSPITALXYZ

MSA

ABC Census Region

All CCJR

Hospitals

CCJR National

PercentileKEY METRICSAdjusted Spend per Episode $29,275 $28,513 $26,753 $26,382 42 $28,554 $27,986 $25,635 $25,319 38 $45,500 $45,297 $47,472 $46,952 63CV % 36.7% 36.4% 45.1% 44.6% 75 34.7% 34.0% 40.9% 40.1% 68 33.9% 41.9% 39.4% 41.6% 68Episode Count 517 1,249 16,828 288,848 76 495 1,211 15,966 274,649 76 22 38 862 14,199 69Episodes with Readmission 56 131 1,683 30,306 27 49 121 1,467 26,851 28 n n 216 3,455 29% of Episodes w/ Readm. 10.8% 10.5% 10.0% 10.5% 56 9.9% 10.0% 9.2% 9.8% 58 31.8% 26.3% 25.1% 24.3% 32Increm. Cost of Readmit 163% 167% 177% 173% 59 164% 166% 171% 166% 46 113% 135% 149% 154% 91ALOS 4.0 3.8 3.6 3.6 38 3.9 3.7 3.4 3.4 33 6.3 7.9 7.6 7.1 68

TOTAL DRG 470 DRG 469

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Tools for Today: Metric Trending

2011 2012 2013 2011 2012 2013 2011 2012 2013KEY METRICSAdjusted Spend per Episode 28,338$ 30,503$ 29,183$ 27,552$ 29,683$ 28,678$ 45,978$ 53,052$ 38,413$ CV % 37.7% 36.8% 34.9% 36.0% 32.7% 35.2% 26.3% 44.6% 19.1%Episode Count 211 171 135 202 165 128 n n nEpisodes with Readmission 18 27 11 15 25 n n n n% of Episodes with a Readmission 8.5% 15.8% 8.1% 7.4% 15.2% 7.0% 33.3% 33.3% 28.6%Increm Cost of Readmit 175% 156% 157% 180% 153% 164% 98% 144% 99%ALOS 4.0 4.1 3.9 3.9 3.9 3.9 5.9 8.3 5.0

% VOLUME BY DISCHARGE DESTINATIONHHA 26.1% 26.3% 25.2% 26.7% 26.7% 26.6% 11.1% 16.7% 0%SNF 52.1% 59.1% 54.8% 51.5% 58.8% 53.9% 66.7% 66.7% 71.4%IRF 14.2% 10.5% 11.9% 14.4% 10.3% 11.7% 11.1% 16.7% 14.3%Home 7.6% 3.5% 7.4% 7.4% 3.6% 7.8% 11.1% 0.0% 0.0%LTCH 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Acute 0.0% 0.6% 0.7% 0.0% 0.6% 0.0% 0.0% 0.0% 14.3%Other IP 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Hospice 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

TOTAL DRG 470 DRG 469

Incorporating CY2014 data

Splitting out hip fracture and non-hip fracture cases

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Tools for Today: Quality Measures

Quality Measure Your Score Percentile

Quality Performance

Points

Quality Improvement

Points

Quality Composite

ScoreQuality

Category

Eligible for Reconciliation

Payment

Eligible forQuality

Incentive Payment

Effective Discount

Percentage for Reconciliation

PaymentHospital-level RSCR following elective primary THA and/or TKA (NQF #1550) 2.4 93 10.00 0.00 10.00

HCAHPS Survey measure 3.44 60 6.20 0.00 6.20THA/TKA voluntary PRO and limited risk variable data submission NO 0.00 0.00

TOTAL 16.20

Yes 1.50%Excellent Yes

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Tools for Today: Provider Intelligence

First PAC Episode Count

% of Ep. w/ Readm. ALOS First PAC

SpendTotal Episode

Spend Quality Staffing Nursing Staff

Health Insp. Overall

Total SNF 288 12.6% 19.8 $9,375 $31,600

ALPHA SKILLED NURSING-123456 174 12.2% 16.0 $7,819 $31,197 5 4 4 3 5CITY SKILLED NURSING-124567 42 15.0% 21.1 $10,100 $33,355 3 4 3 5 2GOLDEN SKILLED NUR-125678 17 7.1% 16.5 $7,622 $28,221 3 4 4 1 2ALL OTHER (18) 55 14.0% 29.0 $14,461 $36,788

STAR Ratings

Identify the same information for Home Health (HHA), Inpatient Rehab (IRF), and Long-Term Acute Care Hospitals (LTACH)

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Strategies for Now

Develop gainsharing protocols for

orthopedic surgeons

Assess opportunity for internal cost savings (ICS)

Focus heavily on post-acute

Enhance episodic care management

Prepare for ongoing data analysis

throughout CJR implementation

Identify quality performance and

prepare for voluntary PRO reporting

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A Plan of Action: A.I.M.

Analyze the Data

• CJR Fast Start• 2012-14 Data• Strategies• Education

• Understand Precedence

• Analyze Official CJR Data from CMS (early 2016)

Implement the Model

• Gainsharing• Provider Networks• Care Mapping and

Coordination• Risk Factor

Mitigation• Stakeholder CJR

Education

Manage Success

• Quarterly / Monthly Claims Analysis

• Validate Gain/Loss Calculations

• Benchmarking and Best Practices

• Ongoing Advisory Support

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Top 6 Things To Do Tomorrow:

Its go time! Don’t wait.Understand precedence and market involvement in BPCI; these may impact strategies.

Collect relevant data to inform your plans.

Understand orthopedic physician groups and focus on alignment with high-quality practitioners.

Coordinate post-acute network planning.

Email CMMI contact information for 2 employees responsible for official CJR data: cjr@cms.hhs.gov.

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Q&A & Primary CJR Team

Craig Tolbert, PrincipalBirmingham, AL205-212-5355

craig.tolbert@dhgllp.com

Edward Stall, PrincipalGreenville, SC864-312-5515

edward.stall@dhgllp.com

Melinda Hancock, PartnerRichmond, VA804-474-1249

melinda.hancock@dhgllp.com

Michael Wolford, ManagerCleveland, OH330-655-3323

michael.wolford@dhgllp.com