(IMPACT) Act of 2014

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THE BUSINESS CASE FOR LOWER HOSPITAL READMISSION RATES James Michel Washington DC Oct 5th 2014

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Why Readmissions? Why Now? Hospital readmissions represent a huge opportunity for potential savings to the Medicare program • Hospital Readmissions Reduction Program (HRRP) •

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Sec. 3025 of the ACA Began October 1, 2012 FY 2015 IPPS Final Rule solidified increase in penalty to 3% effective Oct. 1, 2014 CMS expanding this model to other provider types

Rapid ACO and MCO expansion and heightened urgency to link payment to outcomes

Use of Long Term Care Services Home 35%2 20%1

Hospital

SNF 23%1

ER 1. 2. 3. 4.

Mor et al., 2010 MedPAC 2010 Commonwealth 2011 Jencks NEJM 2009

19%4

Assisted Living Nursing Home Death

20%3

Why Hospitals Care about You • CMS has implemented a payment penalty to hospitals

with high 30-day readmission rates for discharges with diagnosis of • CHF • Pneumonia • Myocardial infarction

• Hospitals participating in ACO or Bundle payment demos

can only achieve savings by reducing rehospitalization rates • Partnering with LTC providers • Referring to low readmission providers • Admitting patients directly from ER and clinics

Hospital Readmissions: The Business Case • Hospitals, ACOs, MCOs all care about SNF readmission • Decreases stress and workload for nurses associated

with transfer & admission paperwork • SGR fix contained SNF VBP rehospitalization 2% withhold SNF Part A payments • Will soon be publicly reported on nursing home compare

ACO/MCOs Use of Measures • Network development and narrowing • Discharge referrals • Quality monitoring • Payment incentives/disincentives

Linking Payment to Quality • Withholds • Bonus payment • Higher base rates • Shared savings/losses

SNF VBP LEGISLATION 2014

SNF Rehospitalization linked to payment • SGR fix contained legislation that links SNF

rehospitalization to SNF Medicare Part A payments • Uses a withhold approach • 2% “mathematical” withhold to create incentive pool • Incentive pool is 50-70% of the withhold

• Incentive pool is “returned” to facilities based on their

rehospitalization performance score • Performance score is based on rehospitalization rate OR degree of

improvement from prior year(s) • Top performers most or all of their withhold and possibly more • Middle performers will receive some of their withhold • Bottom performers receive less than their withhold or nothing • First adjustment to a SNF’s market basket will be in Oct 2018 (FY 19)

SNF Rehospitalization Program in Brief

SNF National Rehospitalization 2013 Q4 National Average 17.3%

At risk for • 2% payment penalty; • Dropped from MCO/ACO Networks

IMPACT ACT OF 2014

PAC Reform Legislation The Improving Post-Acute Care Transformation (IMPACT) Act of 2014 Legislation has four parts : 1. Incorporate standardized assessment 2. Public reporting of common quality measures 3. Provide quality measures to consumers when transitioning to a PAC provider 4. HHS and MedPAC to conduct several

“IMPACT ACT OF 2014” Part 1 • Incorporate standardized assessment questions (e.g.

CARE tool) into existing assessment tools across PAC providers (LTCH, IRF, SNF, & HH) and acute care hospitals for • Pressure ulcers • Functional status • Cognitive status • Special Services

• Collect data at admission and discharge • Implement by October 1, 2018 • Applies also to acute care hospitals

“IMPACT ACT OF 2014” Part 2 • Develop & Publicly report quality measures across

settings • Rehospitalizations & hospitalizations • Hospitalizations after discharge from PAC provider • Discharge to community • Pressure ulcers • Medication reconciliation • Incidence of major falls • Patient preferences • Efficiency measure(s): Avg Total Medicare Spend per Beneficiary • Plus any other measures Secretary wants

• Measures must be approved by National Quality Forum • Public reporting starting in Oct 2018

“IMPACT ACT OF 2014” Part 3 & 4 • Hospitals and PAC providers need to provide quality and

efficiency measures to beneficiaries to help them with their decision making • Modify conditions of participation to incorporate QMs into the

discharge planning process

• Payment penalty of 2% for failure to collect and report

data • Requires several studies and reports • MedPAC and HHS develop plan to link quality to payment and

issue proposals for PAC payment reform • Review Risk adjustment methodologies • Review use of socio-economic status in risk adjustment

STATUS OF ACO PROGRAM

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Accountable Care Organizations • The ACA established the ACO model within the Medicare •

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program A voluntary program where providers can join together to manage and coordinate care for a population of patients, and accept responsibility for the quality and cost of that care ACOs are centered around primary care Compromise between Democrats & Republicans Medicare ACOs regulated by the Medicare Shared Savings Program (MSSP) rules: 42 CFR Part 425 Currently 357 Medicare ACOs providing care to millions of Medicare beneficiaries

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Accountable Care Organizations • ACOs are held accountable for total Medicare spending

for a defined population compared to historical spending • If ACOs are able to reduce spending by certain thresholds, they can split the difference with CMS (shared savings) – upside-only risk • Few ACOs also must pay back CMS if they increase spending (shared losses) – downside risk • ACOs are held accountable for performance on a range of quality and outcomes measures

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Medicare ACO Models

Medicare Shared Savings Program

Pioneer ACO Model

• Program started January 1, 2012; contracts last a minimum of three years • MSSP establishes financial accountability for quality and total cost of care for attributed population of beneficiaries • Physician groups and hospitals eligible to participate, but primary care physicians must be included in any ACO group • Participating ACOs must serve at least 5,000 Medicare beneficiaries • Bonus potential to depend on Medicare cost savings, quality metrics • Two options available: one with no downside risk until year three, the second with downside risk in all three years

• Accelerated pathway to ACO formation designed for organizations able to assume utilization risk immediately • Participating providers must serve at least 15,000 Medicare beneficiaries • Offers higher risk, higher reward model; providers can obtain rewards ranging from 5075% of Medicare savings achieved • Providers can choose retrospective or prospective patient assignment methodology • Quality measures to match those in final rule for Medicare Shared Savings Program • Deadline to apply was in August 2011; CMS selected 32 Pioneer ACOs in 2012.

Source: The Advisory Board Company.

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Where They Are Medicare Shared Savings and Pioneer ACOs in the United States January 2014

Source: The Advisory Board Company.

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ACOs by Provider Sponsor ACO Trend by Sponsoring Entity

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Major ACO Trends • Hospitals aggressively buying physicians to form ACOs • ACOs placing tremendous pressure on SNF utilization

reductions (LOS) • Developing narrow PAC provider networks, often using blunt techniques • Encourage patients to choose owned / affiliated facilities • Some internal development of PAC capabilities (building/buying)

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What ACOs Are Looking for in PAC • ACOs are looking at specific measures to try and evaluate

SNF performance: • Readmission rates • Length of stay • Return to community (potentially) • Patient satisfaction (potentially)

• ACOs want providers who: • Can coordinate care for patients in the PAC setting • Can easily share and accept data • Can provide full spectrum of PAC services

Key Challenges • Over 300 ACOs throughout the country and no two look

the same • No national performance/network standards yet • ACOs at varying states of readiness to include PAC

• Narrow Networks means there will be winners and losers • ACOs don’t always seek input from PAC providers in

establishing network/performance criteria • Providers feel pressured to partner with ACOs to gain competitive edge often without knowing how to protect themselves • Clinical judgment conflicts

Key Opportunities • ACOs need engaged PAC providers (especially SNFs) to

really see the benefits of shared savings program • Some ACOs will use SNFs as an alternative to more expensive hospital inpatient care • Potential for regulatory relief for SNFs • 3-day stay requirement waiver in Pioneer ACO program • MedPAC proposes expanding 3-day stay waiver to shared savings

ACOs if they accept downside risk • As payment models change, existing FFS regulatory structure will disappear

• ACOs not going away anytime soon

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