Presentation on theme: "Change in the SNF Marketplace"— Presentation transcript:
1 Change in the SNF Marketplace May 2012Anne TumlinsonAvalere Health LLC
2 Agenda Context: budget and reform Immediate future: rate cut environmentNew paradigm: value, quality, riskManaged care and delivery system evolutionStrategic planning imperatives
3 Growing Pressures to Reduce Federal Spending Source: Federal Gross Public Debt. usgovernmentspending.com
4 Deficit Reduction: Policymakers Seek to Slow the Growth in Medicare Post-Acute Spending Source: MedPAC, June 2011 Data Book
5 Immediate Future: Rate Cut Environment Source% Change in PaymentsFY 2012Payment UpdateStatutory (annual)2.7 percentProductivity AdjustmentLegislation (ACA)(1.0 percent)RUG RecalibrationRegulation(12.6 percent)Total(11.1 percent)FY 2013Productivity Adjustment*Medicare SequestrationLegislation (Deficit)(2.0 percent)Bad Debt ReductionLegislation (Doc Fix)Small; phased in to 2015Pending Regulation, Other Legislation Balance of 2012*Estimated productivity adjustment.Note: CMS is required to provide an annual payment update to SNFs to account for changes in the cost of providing care, including labor expenses, so there will be a payment update for FY 2013 as well.
6 Medicare Providers Hit Hardest by Impending Sequestration Healthcare CutsMedicare cuts are limited to 2% for all non-exempt Medicare programs and activitiesConcentrated largely on providers and plan paymentsCongress still needs to address the Sustainable Growth Rate (SGR) to prevent even more significant cuts to Medicare physician reimbursement on March 1, 2012Exchange cost-sharing subsidies will be cut in addition to Medicare spending, which constitute 15 percent of exchange subsidy and related spending2LIS = Low-income subsidyQI = Qualified individualMedicaid, the Children’s Health Insurance Program (CHIP), Part D LIS, catastrophic coverage, and QI program, and exchange premium subsidies (administered as tax credits) exempted from the cuts
7 Potential Legislative Changes to Medicare SNF Payments ProposalProbability (2-Year Timeframe)ImpactMarket basket reductionsHigh, likely to occur through deficit reduction or physician payment fix legislationNegative, 2% reduction in CY13 under sequestration; SNFs likely to fare worse under legislative changes to sequestration, which could shift cuts from the military to Medicare and MedicaidFurther Reduction in Bad DebtHigh, versions of this proposal have been around for years; probable component of an overall deficit reduction plan or physician payment fix legislationNegative, could reduce industry reimbursement by close to 1% per year by phasing-out or eliminating Medicare reimbursements for unpaid deductibles and co-pays owed by beneficiaries or state Medicaid programs (on behalf of dual eligibles)Revise SNF PPS payment system; therapy issuesMedium, recommended by MedPAC, but may be difficult for CMS to develop and Congress to pass given the many significant changes the SNF payment system has undergone in recent yearsLikely negative, would significantly change the way SNFs are paid. May add an outlier payment, a non-therapy ancillary component, and base payments on the patient care need and not the amount of therapy provided. Therapy issue could be a positive.
8 Potential Legislative Changes to Medicare SNF Payments (continued) ProposalProbability (2-Year Timeframe)ImpactRebase SNF paymentsMedium, recommended by MedPAC; but would likely be passed in combination with a revised SNF PPSNegative, MedPAC recommended an initial reduction of 4% to SNF paymentsRecoupment of FY2011 OverpaymentsLow; if it occurs recoupment could be implemented over 2-3 yearsNegative, equates to about a 11% take-back of Medicare industry reimbursement (would not reduce base level for subsequent year increases)SNF hospital excessive readmissions penaltyMedium-High, proposed by President Obama and recommended by MedPAC to penalize SNFs for excess readmissions to hospitalsNegative, up to 3% reduction beginning in FY 2015Co-pays on Medicare stays (for first 20 days)Low, could be part of broader reform but unlikely in the very near-termNegative, could reduce Federal payments to nursing homes by 5%, but net impact would be significantly muted by Medicare beneficiary co-payments
9 State Budgets Are Also Under Pressure State Budget Shortfalls in SFY 2012WAMEMTNDORMNVTNHIDNYSDWIMARIWYMICTIAPANENJNVOHUTINDEILWVMDCACOKSMOVAKYDCNCTNShortfall as % of SFY12 General Fund ExpendituresAZOKNMARSCALGAMSTXNo Shortfall<11%11% - 19%≥20%UnknownAKLAFLHISource: "States Continue to Feel Recession's Impact," Center on Budget and Policy Priorities, March 9, 2011.Available at:SFY = State Fiscal Year
10 Shortfall in Medicaid Payments Increasing Shortfall per Medicaid Resident Day, All States,Source: Eljay, LLC. A Report on Shortfalls in Medicaid Funding for Nursing Home Care. American Health Care Association*Notes: 2011 data are projected. These data show the shortfall between Medicaid reimbursement and allowable Medicaid costs.10
11 Financial Alignment Models that States Are Pursuing Many States are Pursuing Care Coordination Programs for Dual Eligible BeneficiariesWAORNVIDMTWYCOUTAZNMTXOKKSNESDNDMNIAMOARLAMSALGASCNCTNILWIMIINOHPAKYVAFLCANYVTMENHMARIWVDEMDNJAKHICTDCFinancial Alignment Models that States Are PursuingHas not released a proposal (25)Pursuing Capitated Model (18)Pursuing Managed Fee-for-Service Model (5)Pursuing BothModels (3)Source: Avalere tracking as of May 8, 2012.
12 Dual Eligibles’ Care Needs Vary, but Many are Disabled and Medically Complex Dual Eligibles by Age Group, Number of Chronic Conditions, and Functional Impairment, 200911N = 3,279,733 duals age <65, 2,140,048 duals age 65-74, 1,692,792 duals age and 942,033 duals age 85+Source: Avalere analysis of the Medicare Current Beneficiary Survey (MCBS). Functional impairment is defined as receiving at least standby assistance with one of more activities of daily living (ADLs) and/or three or more instrumental activities of daily living (IADLs). Note: Totals may not sum to 100% because duals with functional impairment only are not shown in this chart; among all duals, 1% have functional impairment only.
13 Among Duals, Alzheimer’s/Dementia is Prevalent and Very Costly, Especially Among those with ComorbiditiesPercent with Alzheimer’s/dementia Diagnosis in 2009, by Dual StatusMedicare spent $25,595 per capita on duals with Alzheimer’s/dementia in 2009If the dual eligible also had 3 chronic conditions, Medicare spent $36,941If the dual eligible also had 5 or more chronic conditions, Medicare spent $80,595Source: Avalere analysis of 2009 Medicare claims data.
14 Severe Mental Illness is Also Prevalent Among Dual Eligibles and is Associated with Higher Rates of Rehospitalization23% of duals with severe mental illness were re-hospitalized for any reason in 201017% of duals without severe mental illness were re-hospitalized for any reason in 2010Source: Avalere analysis of 2010 Medicare claims data. Note: Severe Mental Illness is defined by the presence of any claim with a diagnosis of major depression, bipolar/mood disorders, or schizophrenia and other psychoses.
17 Key Reform Provisions and Impact on SNFs Accountable Care OrganizationsBundled PaymentsValue-Based PurchasingACOs can form starting in 2012ACA demonstration will begin in 2013 but CMS has created bundling pilot program that can begin earlierCMS required to submit plan for SNF VBP; missed October 1, 2011 deadline in ACA.Includes physicians and hospitals (PAC providers are optional)Includes varying combinations of physicians, hospitals, and PAC providers, depending on the modelSNF VBP demonstrations are being conducted in 3 states (Arizona, New York and Wisconsin)Accountable for all Part A and B spending for their assigned populationIncludes spending for services provided during an episode of care (e.g., 30, 60, or 90 days) for patients with specified conditionsLikely to include all spending by a specific provider typeACOs are able to share in the savings achieved above a certain thresholdUnclear how providers would share in the savings under the ACA bundling demonstrationLikely that a shared savings pool will be created from reduced provider payments; savings will be distributed by quality or improvementAnticipated Impact:Next 1-2 years - LowNext 3-5 years –LowAnticipated ImpactNext 1-2 Years - LowNext 3-5 Years - Medium-HighNext 1-2 Years – LowNext 3-5 Years – MediumACO: Accountable Care OrganizationPAC: Post Acute CareACA: Affordable Care ActCMMI: Centers for Medicare & Medicaid InnovationVBP: Value-Based Purchasing
18 With the Passage of Health Reform, CMS Is Advancing Value in Medicare Incentive Payments OnlyUpside/Downside RiskPenalties OnlyNonpaymentBaseline/Performance PeriodMeaningful Use (Stimulus Law)1Accountable Care Organizations2National Episodic Bundling Pilot2Readmission Penalties for Low PerformersHospital Acquired Conditions3Hospital Inpatient Quality Reporting Program (P4R)1Hospital Outpatient Quality Reporting Program (P4R)1Hospital Value-Based Purchasing (P4P)4Physician Quality Reporting System (P4R)1Physician Value-Based Modifier20082009201020112012201320142015201620172018Source: Centers for Medicare & Medicaid Services1. Program is voluntary, but penalties are/will be in place for nonparticipants; 2. Program is voluntary; 3. Nonpayment for Hospital Acquired Conditions (HACs) began in 2008; HAC penalties of up to 1% of Inpatient payments begin in Fiscal Year (FY)2015; 4. The Hospital Value-Based Purchasing Program (VBP) begins in FY2013 by affecting payments for discharges occurring on or after October 1, The Baseline period for the program was from July 1, 2009 to March 31, 2010; the Performance period for the FY2013 program payment determination is from July 1, 2011 to March 31, The ACA mandates that the Secretary develop Value-based Purchasing plans for skilled nursing facilities, home health agencies, and ambulatory surgical centers18
19 For the First Time in FY2015, Hospitals Will Be Accountable for Resource Use and Efficiency The measure assesses Medicare Part A and Part B payments for services provided to a Medicare beneficiary during a episode that spans from 3 days prior to an inpatient hospital admission through 30 days after dischargeThis measure is already included in the Inpatient Quality Reporting Program and posted on Hospital CompareIt will be included in the VBP Program in FY2015The score is calculated by dividing the amount Medicare spends per patient for an episode of care initiated at a hospital by the median amount Medicare spent per patient nationallyA score of 1 means that Medicare spends ABOUT THE SAME amount per patient for an episode of care initiated at the hospital as it does per hospital patient nationallyA score that is more than 1 means that Medicare spends MORE per patient for an episode of care initiated at the hospital than it does per hospital patient nationallyA score that is less than 1 means that Medicare spends LESS per patient for an episode of care initiated at the hospital than it does per hospital patient nationally
20 Hospitals Should Carefully Evaluate PAC Discharge Options to Ensure Patients Are Going to High-Value FacilitiesAvalere analyzed PAC utilization in Louisiana and Pennsylvania,and found a relationship between percent of patientssent to PAC facilities and higher costs.Efficiency Scores for Discharges to IRFPercent Discharged to Facility TypeEfficiency ScoreEfficiency Scores for Discharges to LTACHEfficiency Scores for Discharges to HHAPercent Discharged to Facility TypeEfficiency ScoreEfficiency ScorePercent Discharged to Facility Type
21 Hospital Readmissions Reduction Program Avoidable rehospitalizations represent one of the highest-profile issues in both acute and post-acute careBeginning October 1, 2012, Medicare payments to hospitals with higher than expected readmissions for AMI, pneumonia, and heart failure will be reducedIn FY 2015, CMS will expand the program to include an additional four conditions (COPD, CABG, PTCA, and other vascular conditions), to the extent practicableThe maximum payment reduction will be 1 percent in 2013, 2 percent in 2014 and up to 3 percent in 2015 and beyondThe potential size of these penalties should give hospitals a considerable incentive to increase the percentage of discharges going to SNFs that provide higher-quality care (e.g., SNFs with more staff and other resources).AMI: Acute Myocardial InfarctionCOPD: Chronic Obstructive Pulmonary DiseaseCABG: Coronary Artery Bypass GraftPTCA: Percutaneous Transluminal Coronary Angioplasty
22 Care Coordination Today To date, much of the conversation on care coordination and accountable care models has focused on the ambulatory and inpatient settingsAmbulatory specialty careAmbulatory, primary, and chronic careInpatient careCurrent Focus Areas
23 But Accountability Spans the Entire Spectrum of Care Long-term careHome careAmbulatory specialty careAmbulatory, primary, and chronic careAssisted living and residential careHospice and palliative careRehabilitation & skilled nursingInpatient careCurrent Focus AreasFuture Focus Areas
24 SNF Operators Need to Evolve to Survive Old ParadigmSiloed payment systems with different rates by site of carePayments based on service type, intensity and volumeLimited coordination or shared risk among providersNew ParadigmBundled payments across settings for most providers in MedicareSite-neutral paymentPayment influenced by patient outcomeEncourage care coordination and primary careCMS has broad new authority to test payment models.Site-neutral payment, i.e., payment based on patient characteristics not site of service. ICD-10 coding will help support this broader payment scope through increased granularity and uniformity24
25 Period At Risk for Readmissions Policymakers Are Also Contemplating Expanding the Readmissions Policy to Post-Acute Care ProvidersPeriod At Risk for ReadmissionsCurrent - HospitalReadmissions PolicyHospitalStayFuture – ExpandingReadmissions Policyto PAC ProvidersHospitalStay
26 Proposals to Equalize Payments Across Post-Acute Care Providers Are Under Consideration Current Silo-ed Medicare Post-Acute Care Payment System*New Site-Neutral Payment SystemLTACHSNFHHAIRFLong-Term Acute Care HospitalInpatient Rehabilitation FacilityEqualizing PaymentSkilled Nursing FacilityHome Health Agency*Circles Adjusted to Represent the Difference in Payments by Site of CareThe President’s Deficit Reduction package included a proposal to equalize SNF and IRF payments for certain conditions such as hip and knee replacements.
27 Changes Driving Commercial Plan Strategy Health Reform / Fiscal PressurePlansImperative to Control CostsGrowing Interest in IntegrationRegional ConcentrationQuality-Based PaymentsMarket ChangesShifting Costs / Information to ConsumersAdherence/ Clinical Metrics
28 Quality Outcomes Now Drive Health Plan Economics Percent of Beneficiaries in Plans with Specified Quality Score, 2010Plan too new to be measuredInsufficient data to calculate contract scoreSource: Avalere Health analysis of Centers for Medicare & Medicaid Services 2010 Part C Report Card, released November 2009 and enrollment data released April 2010.
29 Data Necessary to Survive in Outcomes World IncentivizesSupportsDelivery SystemHITMeasurementEvidence(e.g. CER)HIT supports quality measure development and CER/evidence baseHIT in practice can deliver decision support tools (informed by CER) and real-time, comprehensive health information exchange – ENABLING better clinical care through more and better information at the point of careQuality measurement/transparency are the foundation for P4P and other payment methods designed to reward higher quality care (INCENTIVIZE)Payment reform – all about incentivizing (VBP, bundling, episode of care, etc)ACOs and PCMH are combination of payment and delivery system reform (more coordination across providers, more information sharing, different way of paying)Payment SystemHIT: Health Information TechnologyCER: Comparative Effectiveness Research29
30 Patient Flow Analyses Allow Providers to Explore Care Patterns After a Discharge Avalere Vantage Care Positioning System ™Hospital A(n=11,691)LTACH(n=194)(2%)IRF(n=255)SNF(n=1,755)(15%)HHA(n=1,363)(12%)Home(n=6,923)(59%)Other(n=1,201)(10%)Patient Flow Analysis/ First Site of Care after Acute AdmissionData pulled from the Avalere Vantage Care Positioning System.The Vantage Care Positioning System includes 2009 Medicare 100 Percent Standard Analytic File (SAF) claims data from the Centers for Medicare and Medicaid Services (CMS).*Other = Long-Term Acute Care Hospitals, Inpatient Rehabilitation Facilities, a different Inpatient Hospital and other Inpatient Hospitals such as Inpatient Psychiatric Facilities.
31 Avalere Vantage Care Positioning System ™ Deeper Level Patient Analyses Allow Providers to Track Patient Referrals and Compare Readmission Rates for Care PartnersAvalere Vantage Care Positioning System ™Number of Cases Discharged to SNFs and Rate of Readmission (non-adjusted) by SNFOther SNFs1,068 cases8,735 Cases Discharged Home or to Other Non-SNF Post-Acute Care SettingsIn 2010, Hospital A discharged patients to 112 different SNFs for post-acute care.Data pulled from the Avalere Vantage Care Positioning System.The Vantage Care Positioning System includes 2009 Medicare 100 Percent Standard Analytic File (SAF) claims data from the Centers for Medicare and Medicaid Services (CMS).
32 Avalere Vantage Care Positioning System ™ Deeper Level Patient Analyses Allow Providers to Track Patient Referrals and Compare Readmission Rates for Care PartnersAvalere Vantage Care Positioning System ™Number of Cases Discharged to HH and Rate of Readmission (non-adjusted) by HHOther HHs 717 cases (15%)9,127 Cases Discharged Home without Home Health or to Other Post-Acute Care SettingsIn 2010, Hospital A discharged patients to 93 different HHs for post-acute care.Data pulled from the Avalere Vantage Care Positioning System.The Vantage Care Positioning System includes 2009 Medicare 100 Percent Standard Analytic File (SAF) claims data from the Centers for Medicare and Medicaid Services (CMS).
33 Keys to SNFs’ Success in the New Environment Prepare for Rate PressuresImprove Performance on Current CMS Outcome MeasuresRehospitalizations, length of stay, Nursing Home Compare measures; potentially bounces, clinical metricsIncrease ability to track and monitor health information, including integration with acute and home settingsPosition for Integrated or Capitated SystemsDevelop relationships and prove value relative to competitors in better integrating care and improving clinical outcomesIncrease knowledge of risk and contracting to avoid incurring bad risk and unmanageable risk.
34 Keys to SNFs’ Success (Continued) Role of SNFs in Medicare and MedicaidWhat is their unique value proposition, relative to hospitals and to other PAC providers?How to capture value for improved outcomes over cost-justification argumentCarefully assess economics of new integration efforts for dualsAgreement on Value Proposition and Outcome MeasuresIndustry needs to reach a consensus on which CMS should be measuring, how data should be collected, and deployed.Coalesce around Reform Proposals