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MAKING THE BUSINESS CASE FOR HOSPITAL RPM / CARE COORDINATION PROGRAMS MATRC Telehealth Summit March 2013.

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Presentation on theme: "MAKING THE BUSINESS CASE FOR HOSPITAL RPM / CARE COORDINATION PROGRAMS MATRC Telehealth Summit March 2013."— Presentation transcript:

1 MAKING THE BUSINESS CASE FOR HOSPITAL RPM / CARE COORDINATION PROGRAMS MATRC Telehealth Summit March 2013

2 Agenda  Who We Are/Our Approach  Remote Patient Monitoring for Care Coordination: Value Drivers  Readmissions and the Value of Avoided Penalties  Costing an RPM/CC Solution  Making the Business Case 1

3 Who We Are 2  Virginia-based Telehealth Services firm providing Care Coordination Services via Remote Patient Monitoring  Lower patient readmissions  Improve outcomes for key patient populations  Position health systems strategically for new environments (ACO, shared risk, etc)  Enhance and better leverage data analytics  Founders are serial entrepreneurs with significant experience in:  Design and operation of secure networks and operation centers for health care and defense  Public/Private Partnerships  Health care market research and analytics  Key Clients  Commonwealth of Virginia  University of Virginia  University of Virginia Medical Center  New College Institute – Southside Telehealth Training Academy and Resource Center (STAR)  Virginia Tobacco Commission – Special Projects

4 Care Coordination Center Primary Care Physician Home Health Nurse Case Manager Heart Failure AMI Pneumonia COPD CABG PTCA Other vascular Over time: Highest-Risk Frequent Readmits Patient Risk Stratification and Selection Coordination w/ Hospital Discharge Transition to Home: “Activation” and Daily Monitoring Key Transition Activities: Hub/device home install Patient training Med reconciliation/PCP appt Connection established with RN monitor Biometric/symptom data Alert intervention Provider Coordination via Clinical Review Software and Reporting Referral to Care Coordination Center Regular reporting Outcomes Reporting: Readmissions Population health Costs Satisfaction Patient targeting/best practices EHR Hospital- based Clinic Our Approach to Hospital-Based RPM 3

5 Evidence for RPM Efficacy 4  Centura Health (Colorado): Centura Health at Home program reduced 30- day readmission rates for patients with target conditions CHF, COPD, and diabetes by 62% in 2010/11 one-year pilot  200 patients enrolled, generating cost savings of $1,000-1,500 total cost per patient  Partners HealthCare (Boston): Connected Cardiac Care Program has consistently reduced CHF-related readmission rates by ~50% and non- related readmission rates by 44%  1,200 patients enrolled since 2006, generating cost savings of more than $10m  (Chronic Disease Management) Veterans Health Administration: Care Coordination/Home Telehealth program decreased total healthcare resource utilization (hospital days of stay) by ~25% for both single/multiple diagnoses across 8 target conditions between 2004-07  Currently more than 70,000 enrollees Commonwealth Fund RPM Case Studies: January 2013 Source: Commonwealth Fund publications 1654-1657, Jan 2013

6 Why RPM for Hospitals? 5  Financial: Lower patient readmissions and avoid penalties (Short- term ROI)  Quality: Improve health outcomes and satisfaction for key patient populations  Efficiency: Enhance and better leverage information and analytics between providers to provide more effective care  Strategic: Position health systems for new environments (ACO, shared risk, etc) Value Drivers

7 Hospital Readmissions Context 6  CMS Hospital Readmission Reduction Program (HRRP) penalties effective as of October 1, 2012  30-day readmission measures for three key conditions (AMI, HF, Pneumonia)  ~70% of U.S. hospitals penalized  Average FY13 penalty: 0.3% of aggregate inpatient payments  CMS penalties expected to grow meaningfully  New conditions added  Penalty caps increased  Higher hurdles for “expected” readmission rates  Other payers expected to follow CMS in assessing penalties

8 Readmissions Penalties in MATRC Region 7  3 MATRC states and D.C. in highest penalty quartile nationally for CMS 30- day readmissions, and all except Delaware in the top half First Quartile (highest penalty rates) Second Quartile Third Quartile Fourth Quartile (lowest penalty rates) Note: Maryland does not participate in HRRP program due to CMS allowance of its state-based program FY13 HRRP Penalty Percentage Map Source: CMS; Kaiser Health News

9 Key Insights for Penalty Estimation 8  Future penalties are being “accrued” based on recent/current lack of action on readmission reduction  No action now = a deeper hole  The penalty “stick” is roughly 5x greater than than Medicare payments for the readmissions themselves  Excess readmissions ratio (actual rate ÷ expected rate) drives penalty  CMS-measured 30-day readmission rates often higher than hospital-measured “raw” rates  Due to “all cause” readmission methodology and readmits to other acute care hospitals  Excess readmission rates characterized as “No Different from the U.S. National Rate” per Hospital Compare (confidence intervals) are still penalized

10 CMS Penalty Formulas 9  Estimated penalties depend on:  Excessive readmissions in each key condition  How “costly” the condition is Hospital’s Actual Rate Hospital’s Expected Rate 1 1.Excessive payments for each condition are calculated as: X Discharges in each condition X Base DRG payment for each condition 2.Calculate the sum of excessive payments for all conditions (currently: AMI, HF, Pneumonia) 4.Penalty rates imposed for each year: FY13: the lower of 1% or the penalty rate FY14: the lower of 2% or the penalty rate FY15: the lower of 3% or the penalty rate 3.Excess readmissions penalty rate Sum of excessive payments Aggregate payments for all discharges Notes: Actual Rate calculated over trailing 3-year period (currently FY2009-11) Actual Rates are “risk-adjusted” Expected Rate = U.S. national rate over same period CMS Medicare Penalty: Calculation Methodology

11 Projected CMS Penalty Calculation: Illustrative Hospital Case (Current) 10  Hospital Facts:  Medium-sized MATRC-region hospital with ~350 beds  Higher 30-day readmit rate than National Rate in all three conditions; AMI a particular problem Excess Readmission Ratio Calculations Projected Penalty Calculations Average Penalty per Patient: $468 ÷ =

12 Projected CMS Penalty Calculation: 10% Decline in “Expected Rate” 11  Key Assumptions:  National Average rate improves and/or CMS imposes more stringent “expected” rate hurdles so that expected rates decline by 10%  Hospital does not take sufficient action to reduce readmissions in key conditions Excess Readmission Ratio Calculations Projected Penalty Calculations Average Penalty per Patient: $1,536 ÷ =

13 Value of Penalty Avoidance Often Underestimated 12  The “Accrual Effect”: penalties being paid now are lower than penalties actually being accrued, if no improvement is made  Penalty estimates with Hospital Compare based on 3-year look back, so penalties paid now based on actions not taken in FY09-11  What hospitals do now has a delayed impact on penalty avoidance but is critical to avoid “deeper hole”  “Expected” Readmissions rate will continue to fall  As other hospitals improve, reducing raw national rate  If CMS unilaterally sets more aggressive target rates  New conditions will be added  Four new conditions (COPD, PTCA, CABG, other vascular) included in FY15 penalty  Assume same 3-year look-back methodology  Penalty caps will be increased each year  1% currently  2% in FY14  3% in FY15

14 “Costing” an RPM/CC Solution: Components 13  Staff-related monitoring costs:  Patient : staff monitor ratios – from 75:1 to 150:1 depending on type of solution, 30-day readmissions vs. chronic disease management  Use of RNs vs. health coaches/social workers  Hours of center operation  Staff-related field costs:  Installation/refurbishment  Depends on population targeted – 30-day readmits vs. chronic disease management (i.e.shorter monitoring periods mean higher amount of patient “churn”)  Depends on region covered (i.e. location of monitoring center relative to patients)  Technology-related costs:  Hardware and software typically bundled, peripherals can vary  Leasing more common than owning  EMR Integration extra  Other costs:  Project management  Integration with key provider departments (case management, clinical, home health)

15 Costing a Turnkey Solution: Illustrative 14  Primary cost drivers are in centralized monitoring and field support staff  Don’t forget PCP and departmental interfaces, as well as program management  Technology only 10-15% of total cost bar  Estimated cost of $700-$1,100 per patient – some scale required 50% of costs in monitoring/ field staff

16 Making the Business Case: MATRC Hospital Illustrative Case 15 Value of avoided penalties (per patient) > Estimated cost of RPM solution (per patient) At 5% lower “expected” 30-day readmit rates”: ~$900 ~$1,500 At 10% lower “expected” 30-day readmit rates: ~ $975

17 Making the Business Case: Positioned for the Future 16  Quality: Improve health outcomes and satisfaction for key patient populations  Efficiency: Enhance and better leverage information and analytics between providers to enhance collaboration and provide more effective care  Strategic: Position health systems for emerging environments (ACO, shared risk, etc)

18 MATRC Telehealth Summit March 2013 455 Second St SE Charlottesville, VA 22902 Kirby Farrell kfarrell@broadaxepartners.com Andy Archer aarcher@broadaxepartners.com


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