2 - Provider Reimbursement Flashcards
key learnings from disease management programs that ACOs should apply to be successful
- need high quality data analytics, as close to real-time as possible
- medical records need to have analytical sophistication and workflow capabilities. ACOs emphasize EMRs but often just a repository
- systems need to be aggregated before they can usefully support the ACO
- importance of economics
–changing patient behavior in a way that produces measurable financial outcome is long and difficult task
–programs need to be focused on patients who represent greatest opportunity for cost reduction - the importance of planning and understanding the opportunity
structure of medicare ACOs
- ACO is a network. either physician practice based or hospital based. shares responsibility for providing care to patients.
- two models for gainshare
a) one sided: 50/50 gains
b) two sided: ACO more gain share, at risk for loss - must meet requirements to share savings
a) quality standards
b) savings surpass hurdle rate: 2-4%. higher for smaller ACOs - ACO must manage all medical health care needs of at least 5K medicare beneficiaries for at least 3 years
- patients do not enroll. they are attributed based on plurality of care
ways in which provider group based ACOs are expected to generate savings
- implementing care coordination
- reducing need for tests via access to integrated medical records and consistent management by the physician
- developing a network of efficient providers for referrals and limiting the use of less efficient and more expensive providers
- focusing on quality, which will result in fewer unnecessary services. emphasizing preventive services
- redirecting care to cost efficient providers
- reducing duplication of services and unnecessary care
- preventing medical errors
criteria for a beneficiary to be assigned to a participating ACO
- record of medicare enrollment
- at least one month of Part A and Part B enrollment, no A or B only months
- no group/private health plan enrollment
- may be assigned to only one medicare shared savings initiative
- beneficiary must live in the US or territories
- beneficiary must have a primary care service with a physician at the ACO
- beneficiary must receive the largest share of their primary care services from the participating ACO
steps in the process for CMS to assign beneficiaries to an ACO
- at least one primary care service from a pcp and more primary care services from the ACO than other ACO
or - no primary care provider -> received primary care service from specialty care provider, more services from ACO than other ACO
calculation of average per capita expenditure for ACOs
- separate for ESRD, disabled, aged/dual, aged/non-dual
- defined as total parts A and B FFS payments from any provider for eligible months
- 3 months runout, CF applied by CMS
- average per capita expenditure = sum(claims * exposure) / sum(exposure)
risk adjustment approaches for updating benchmarks for the performance years for medicare ACOs
- newly assigned beneficiaries: ACO prospective CMS-HCC risk score recalcuated to adjust for changes in severity and case mix
- continuously assigned beneficiaries: risk ratio of HCC score to benchmark year 3 by enrollment type -> wtd avg. if > 1, demographic scores used. if < 1, HCC used
formulas for ACO’s initial and adjusted benchmark costs for performance year 1
C0 =
(1/3)CB1(1+tB1)(1+tB2)(RB3/RB1) +
(1/3)CB2(1+tB2)(RB3/RB2) +
(1/3)CB3
[originally .6 / .3 / .1]
updated benchmark
C’PY1 = C0 * RPY1 / RB3
add absolute increase in National Part A and B PMPY
Methodology for calculating ACO shared savings payments, one-sided model
- calculate C’PYi
- get actual costs
- savings = C’PYi - actual costs
- savings rate: 50% for one-sided
- shared savings rate = max sharing rate * quality performance score [avg of categories]
shared savings = savings * ssr
-capped at 10% in one sided model
-must achieve minimum savings rate
criteria to be considered an Advanced Alternative Payment Model (APM)
- involves more than nominal risk of financial loss
- includes a quality measure component
- has the majority of participants using certified EHR technology
- examples include: two-sided risk ACOs, medical homes expanded by CMS’s innovation center
ACO Tracks / gain/loss rates (as of 2018)
Track 1: one sided. 50% of gains, max 10% of benchmark
Track 1+: two sided. 50% of gains up to 10%. 30% of loss up to 4% benchmark OR 8% of ffs revenue
Track 2: two sided. 60% gains up to 15%. loss between 40% and 60% up to 5% or 10%
Track 3: two sided. 75% gains up to 20%. 40-75% loss up to 15%
description of the unintended incentive in ACO payment models
- benchmarks to be recalculated on 3 year period, 60% weight on recent year
- incentivizes increased spending in recent year
- removes incentive to create savings in that year
- may result in higher than FFS spending
proposed strategies for improving incentives in ACO payment models
- change benchmark weights to be equal
- introduce yardstick competition
–use local benchmark or other Medicare providers
—introduces competition
elements of network management
- articulate the goals of the network
- comply with applicable regulations
- ensure quality standards met
- manage cost
- manage risk
- evaluate the network on an on-going basis
goals of a provider network for each major stakeholder
administrator:
1. grow / remain financially stable
2. meet needs of specific population
3. preserve market share
4. provide negotiation leverage thru size
employer:
1. offer employees a benefit suite that may include network options
2. balance trade off between cost of broader network and employee satisfaction with benefits
3. limit provider disruption
consumer:
1. minimize total cost of coverage (payroll contrib + cost share)
2. existing physicians in network
3. local network with good reputation
4. administration of plan’s benefits smooth, no surprises
provider:
1. earn fair and predictable income
2. spend as little time as posible on administrative functions
three primary domains of network adequacy
- provider composition
- geographical access
- consumer protections from participating providers
–no balance billing
–no member hold harmless
steps in selecting and applying a quality measure
- establish validity of measure with lit review/analysis
- assign measure to domain (goal of measure)
- identify algorithm for determining if measure has been met
– structural [qualifications, staffing]
– process [administration of care]
– outcomes [mortality rates] - update systems, work streams, documentation
levers available to administrators to help control costs
- limiting benefits deemed not medically necessary
- managing the disease burden
- utilization management
- encouraging provider efficiency
—portfolio method or TCOC method - reimbursement methodology
categories of reimbursement methods
- FFS: fee sched, discount, DRG, per diem
- FFS with link to quality and value - activities based, not results based
- APM built on FFS
– results based
– episodic
– risk bonus/penalty - population based
– TCOC based
– capitation, global budgets, percent of premium
advantages and disadvantages of tiered network health plans (TNHP)
advantages
–TNHP design savings: lower cost share, lower net claim cost, lower premium
–better health: quality care
–significant cost differential: drive members to preferred provider
disadvantages
–markets with limited provider competition
–service vs product: hard to compare care quality
–sometimes cost differential is negligible
–state requirements: network adequacy
anticompetitive and transparency laws, significant cost differentials, high quality care, sufficient network size mitigate weaknesses
distinct steps to tiering providers
- limit preferred providers to those meeting a quality standard
- for providers passing that quality standard, draw a line at a low-cost percentile, or choose the lowest cost provider in a designated region
components of the TNHP pricing formula
- claims under control: N% - % of incurred claims under control of non-pref providers
- cost differential: P% = 1 - (avg pref cost / avg non pref cost)
- member liability differential: M% = 1 - (AV non-pref / AV pref)
- shift = % dollars switching
TNHP savings = N% * [M% + shift * (P% - M%)]
–equilibrium when M% = P% - incurred claims cost same despite member choice
ways in which bundled payments have been used
- by providers to attract more business, including from self-pay patients and medical tourism
- by providers to engage physicians (surgeons specifically)
- by providers to gain cooperation of physicians to reduce hospital cost
- by payers to reduce payments
- by payers to encourage patients to use lower-cost or higher-quality providers
considerations in contracting for bundled payments
- defining the episode: trigger date, end date, included services
- evaluating catastrophic risk: outlier analysis/stop loss analysis
- financial stability for low case loads
- determining provider allocation of funds (with incentives for quality care in mind)
- distinguishing case severity
- quality outcome requirements
- administrative complexity of supporting the contract
- risk sharing alternatives
- potential for increased utilization (dont incent increased util to get larger share)
