HFMA: Preparing for New Bundled Payments Part 2

Last week we covered the first four elements for structuring cardiac payment bundles. These included establishing clear and achievable goals, focusing on inpatient costs and reducing care variations, being guided by data and focusing on medication management and compliance.

 

The remaining three elements are:

 

Reorganize to manage post-acute spending. Effective cost management requires a decrease in readmissions. This makes robust care management a must for the organization.

 

Following patients through their hospital stay is not enough. Someone also must make sure they’re getting to follow-up appointments and that the care they receive at skilled nursing facilities or through home health providers meets the quality standards of the hospital.  (“How Providers Should Prepare for New Bundled Payments,” HFMA Leadership +, June 13, 2017)

 

For the subset of patients who are readmitted to the hospital, it’s necessary to understand exactly why and to closely track all skilled nursing and home health discharges, the quality of care that patients receive while being treated by another provider and their length of stay. (“How Providers Should Prepare for New Bundled Payments,” HFMA Leadership +, June 13, 2017)

 

Establish a strong post-acute provider network. Managing post-acute spending requires a performance network of providers who meet your quality and length of stay expectations.

 

To discourage unnecessary emergency room care, patients should have immediate access to clinics. Sometimes patients go to the emergency room because they can’t get a timey appointment with their physicians.

 

One expert noted that successful providers have set up immediate-access clinics that allow same-day appointments for patients who can be treated for follow-up issues by advanced practice providers or physicians. Another model has heart failure clinics monitor patients in an office setting before they’re sent home, and mobile paramedics traveling to patients’ homes to evaluate them on the spot or direct them to the most appropriate site rather than automatically taking them to the emergency room.

 

Gain stakeholder buy-in. Irrespective of data and efficient process design, the bundled payment program probably won’t succeed without the buy-in of clinical staff.

 

For any alternative payment model, physician leadership and initiative define success, according to Marian Jennings and Seth Edwards, iProtean experts. Physicians “embrace the new world of payment and care delivery; they lead the charge and bring their colleagues along with them; and they are actively involved as co-equals and partners with the executives of the health system.” (Financial Risks and Strategic Implications of APMs, iProtean, June 2017)

 

 

 

Coming later this week: the advanced Finance Course, Financial Risks & Strategic Implications of APMs, featuring Marian Jennings and Seth Edwards. In this course, Marian and Seth discuss the financial risks of ACOs and bundled payments, the strategic risks of not participating in an alternative payment model, clear trends and the characteristics of organizations that have successfully implemented one or more alternative payment models.

 

 

For a complete list of iProtean courses, click here.

 

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HFMA: Preparing for Cardiac Bundled Payments Part 1

Approximately 2,440 hospitals will participate in the bundled payment program for cardiac care beginning in January 2018. Health systems around the country have identified essential steps for structuring cardiac bundle programs to optimize performance, according to a recent report from the Healthcare Financial Management Association.

 

Of the 2,440 hospitals that will participate, 1,120 in 98 markets will be held financially accountable for the cost and quality of all care for a 90-day episode of care for acute myocardial infarction (AMI) and coronary artery bypass graft (CABG). About 1,320 hospitals in 45 geographic areas will participate in a separate model for cardiac rehabilitation.

 

HFMA identified seven key elements for structuring cardiac payment bundles. We present the first four here. The remainder will be in next week’s newsletter/blog.

 

Establish clear and achievable goals: Providers should enter cardiac bundled payments with a clear purpose; for example to solve a clinical problem such a high readmission rate or lengths of stay. Neither of these can guarantee a particular financial outcome. If the provider wants a high financial return, bundled payment is probably not where the organization will find that return.

 

Focus on inpatient costs and reducing care variation: Cardiac bundles typically have much lower post-acute spending compared to joint replacement bundles. Hospitalization accounts for about half of all spending to treat AMI and about 75 percent to treat CABG. So providers should focus on understanding inpatient spending patterns, reducing costs and improving quality by reducing readmissions and unnecessary variations in care.

 

Let data be the guide: Providers should analyze where performance varies from a benchmark standard. This type analysis requires a “robust way” of measuring compliance with standards and best practices, along with an honest evaluation of the organization’s ability to build the infrastructure to accurately track data needed to understand the relationship between an activity and its outcome.

 

Focus on medication management and compliance: Providers should focus on whether physicians are prescribing the appropriate medications and that patients are complying with their medication regime. A good practice is to have physician’s assistants or nurse practitioners prepare patients before discharge. Patients who have undergone heart surgery get a phone call from a nurse to make sure they’re on track with their medications.

 

(Source: “How Providers Should Prepare for New Bundled Payments,” HFMA Leadership +, June 13, 2017)

 

In next week’s newsletter/blog, we will continue with three additional elements providers should consider when preparing for cardiac bundled payments.

 

 

Coming soon: the advanced Finance Course, Financial Risks & Strategic Implications of APMs, featuring Marian Jennings and Seth Edwards. In this course, Marian and Seth discuss the risks of participating in ACOs and bundled payments, and also the risks of not participating in these alternative payment models. They also cover the characteristics of organizations that have successfully implemented alternative payment models.

 

For a complete list of iProtean courses, click here.

 

For more information about iProtean, click here.

 

Moody’s: NFP Hospitals Should Focus on Risk Management

The ability to implement effective strategies to minimize risk will become increasingly important in determining not-for-profit and public hospitals’ credit strength in the changing landscape. These hospitals are focused on risk management to avoid pitfalls and capitalize on new opportunities in anticipation of momentous changes, not the least of which is the fate of the Affordable Care Act (ACA), said authors of a new report from Moody’s Investors Service. (“Risk Management Crucial to Success Amid Changing Healthcare Landscape,” Not-for-Profit and Public Healthcare – US, Moody’s Weekly Credit Outlook, May 26, 2017)

 

Key areas of risk management include information technology (IT) and cybersecurity, clinical quality and brand protection, balance sheet health and reimbursement.

 

  • New IT systems bring benefits but also potential hazards. While electronic medical record (EMR) systems can help with customer service and patient outcomes, risk management associated with IT includes controlling costs and guarding against cyberattacks.

 

  • Maintaining high clinical quality will increasingly impact financial performance and reduce the risk of brand impairment. The relationship between quality of care and operating margins is increasingly linked. According to data from CMS, organizations with better patient outcomes produce stronger operational margins.

 

“In 2015, hospitals with above-average value-based purchasing (VBP) scores produced a median operating cash flow margin of 11.7 percent, compared to 8.6 percent for organizations with below-average VBP scores. The patient experience, which accounts for up to 30 percent of the VBP score, has a similar correlation,”

The perception of poor quality or management can have a lasting negative impact on an organization’s brand and patient demand, and adversely affect profitability. Organizations with better patient outcomes produce stronger operational margins.

 

  • A strong balance sheet is integral to an organization’s ability to weather major change. Higher cash balances give organizations the ability to withstand downturns, invest in critical projects, protect against riskier debt structures, and undertake more aggressive investment allocation in pursuit of greater returns.

 

  • Hospitals face increased financial risks with the shift towards pay-for-performance reimbursement models. With reimbursement becoming more directly tied to patient outcomes – a goal of the ACA – hospitals will increasingly need to strengthen their ability to manage the risks. The risks lie with changing reimbursement models involving both traditional insurers and the growing number of hospital-owned plans.

(“Risk Management Crucial to Success Amid Changing Healthcare Landscape,” Not-for-Profit and Public Healthcare – US, Moody’s Weekly Credit Outlook, May 26, 2017)

 

The Impact of Health Reform

 

The fate of the ACA and the AHCA poses risks to hospitals, said a lead author, vice president and senior credit officer with Moody’s.

 

“It’s hard to plan around unknowns and the future of both laws is presently uncertain. The risk is that large areas of reimbursement will change and regardless of how they change, they create risk,” the Moody’s executive said in an interview. “Both laws speak to the possibility of significant reductions in government-based funding, which will impact hospitals pretty significantly.” (“Risk Management Takes on Increasing Importance,” HFMA Weekly News, June 9, 2017)

 

A healthcare expert noted that irrespective of congressional action on health reform, it is certain that the current administration will pump more money into fraud and claims enforcement. Having worked for the Office of the Inspector General, he noted that submitted medical claims have gotten many hospitals in trouble with regulators and government contractors.

 

“The [corporate integrity agreements] that come with settlement agreements are sometimes even more costly than the penalties,” he said. “Yet, we see these two risk areas receiving the least amount of attention in hospital risk analysis. Every hospital should have an arrangements database as part of its risk analysis process and those reviews should be done regularly.”

 

Successfully Managing Risk

 

Hospitals should:

 

  • Select the best risk management techniques
  • Establish strong risk management and patient safety programs
  • Improve the integrity and quality of documentation efforts
  • Proactively review charts
  • Improve training and education of providers
  • Identify and analyze loss exposures, using alternative risk techniques
  • Implement strong service recovery programs
  • Have a disclosure of adverse events program while proactively managing potentially compensable events
  • Have strategies to communicate well with patients and families when something does occur
  • Provide data based on enterprise risk management analysis to engage key stakeholders in the organization
  • Have a formalized procedure for making thoughtful decisions throughout the system
  • Require consideration of protecting the assets of the organization
  • Focus on creating value
  • Monitor and improve the risk management program

(“Risk Management Takes on Increasing Importance,” HFMA Weekly News, June 9, 2017)

 

iProtean subscribers, the advanced Mission & Strategy course, When the Dust Settles, featuring Marian Jennings and Dan Grauman, is in your library. Marian and Dan discuss the complexities of moving to a value-based healthcare organization, key features necessary to ensure the board and leadership stay ahead of the curve, the importance of thoughtful and thorough assessment of options available to the organization, the risks inherent in new investments and changes in board recruitment and development.

 

Coming soon: the advanced Finance Course, Financial Risks & Strategic Implications of APMs, featuring Marian Jennings and Seth Edwards. In this course, Ms. Jennings discusses the importance of social determinants of health in a population health management strategy.

 

 

For a complete list of iProtean courses, click here.

 

 

For more information about iProtean, click here.

AHCA Medicaid Rollback Concerns Provider-Sponsored Plans

Under the House’s updated version of the American Health Care Act (AHCA), provider-sponsored plans expect decreased federal funding resulting in many of the people they cover becoming uninsured, and also hospital closures.

 

For example, one CEO of a provider-sponsored plan said recently at a not-for-profit healthcare investor conference, “The AHCA scares the hell out of me.” (“Provider-Sponsored Health Plans Brace for AHCA,” HFMA Weekly, May 26, 2017)

 

Another delivery system executive said, “Taking money out of health care the way they are talking about taking it out, given some of the issues we’re facing, is going to have consequences. While I don’t disagree that we’re going to be there to take care of people, there may be fewer hospitals, there may be fewer doctors in some areas because health systems are going to have to react.”

 

The 31 states that expanded Medicaid eligibility under the Affordable Care Act probably will feel the biggest financial impact. Debt analysts have said the AHCA will make them more hesitant to invest in not-for-profit hospitals in these states and in states that use large provider taxes to fund Medicaid coverage. (“House-Passed AHCA to Leave 23 Million More Uninsured: CBO,” HFMA Weekly, May 26, 2017)

 

One healthcare executive urged insurers and providers to increase their integration and collaboration to “bring about a better value proposition, better quality, more affordability and better access to care for people who need it. Because of all the uncertainty that is out there right now from a legislative and from a regulatory perspective, there’s one thing I’m pretty confident in saying: There’s not going to be a whole lot more money coming into the system to pay for this stuff.” (“Provider-Sponsored Health Plans Brace for AHCA,” HFMA Weekly, May 26, 2017)

 

Criteria for Success

 

The executives noted several important keys to success with provider-sponsored health plans under the AHCA:

  • Cautiously expanding participation in the plan
  • Striving for at least 400,000 total covered lives in all plan types combined
  • For those considering launching health plans, conducting a brutal assessment of whether the organization is focused on population health or whether it is still geared toward driving volume to its hospitals
  • Investing the needed capital and expertise

 

 

iProtean subscribers, the advanced Mission & Strategy course, When the Dust Settles, featuring Marian Jennings and Dan Grauman, is in your library. Marian and Dan discuss the complexities of moving to a value-based healthcare organization, key features necessary to ensure the board and leadership stay ahead of the curve, the importance of thoughtful and thorough assessment of options available to the organization, the risks inherent in new investments and changes in board recruitment and development.

 

Coming soon: the advanced Finance Course, Financial Risks & Strategic Implications of APMs, featuring Marian Jennings and Seth Edwards. In this course, Ms. Jennings discusses the importance of social determinants of health in a population health management strategy.

 

 

For a complete list of iProtean courses, click here.

 

 

For more information about iProtean, click here.