S U S TA I N I N G T H E C O M M U N I T Y H E A LT …I N T R O D U C T I O N One of the...

S U S T A I N I N G T H E C O M M U N I T Y H E A L T H

C E N T E R M O D E L :

L e s s o n s F r o m O t h e r S t a t e s

Presented by: Peter R. Epp, CPA

M a y 7 , 2 0 1 5

O V E R V I E W

Introduction

Payment Reform Initiatives

– Medicare

– Medicaid

Overview of Value-Based Purchasing - Keys to Success

– Base Compensation

– Quality Incentive Payments

– Global Payments/Budgets

Transitioning to Tomorrow

1

I N T R O D U C T I O N

One of the overarching objectives of Health Reform

initiatives - Transform the Medicare and Medicaid

reimbursement systems and drive delivery system reform

To prepare for payment reform, health centers must:

– Improve cost efficiencies today and generate reserves

– Create the business processes and reporting necessary for

success in the future

2

Fee-For-ServiceBundled Payments

“Value-Based” Purchasing

M E D I C A R E ’ S PAY M E N T R E F O R M

G O A L S

On January 26, 2015, DHHS announced its goals for shifting

Medicare reimbursement from volume to value

Goal for shifting Medicare fee-for-service reimbursement to

alternative payment models (e.g. ACOs and/or bundled

payment models)

– 30% by 2016

– 50% by 2018

Additional goal of tying traditional Medicare payments (fee-

for-service) to quality and value (e.g. Hospital Value Based

Purchasing and Hospital Readmissions Reduction programs)

– 85% by 2016

– 90% by 2018

DHHS will also intensify its work with states and private

payers to support adoption of alternative payment models,

attempting to exceed the goals/timeline set by Medicare

3

W H AT I S A B U N D L E D PAY M E N T ?

Primary

Care

Physicians

Specialty

Care

Physicians

Outpatient

Hospital

Care and

ASCs

Inpatient

Hospital

Acute

Care

Long Term

Acute

Hospital

Care

Inpatient

Rehab

Hospital

Care

Skilled

Nursing

Facility

Care

Home

Health

Care

Post Acute Care Episode Bundling

Total Cost of Care Bundle

Acute Care Bundling

Medical Home

The Bundled Payments initiative is comprised of broadly

defined models of care, which link payments for multiple

services beneficiaries receive during an episode of care.

W H AT I S VA L U E - B A S E D

P U R C H A S I N G ?

Value-Based Purchasing (“VBP”) is part of the effort to link

the payment system to a value-based system to improve

healthcare quality

Medicare’s Hospital VBP program

– A % of a hospital’s payments are withheld by Medicare and

maintained in a “pool”

– During the year, each hospital’s quality of services are scored

(attainment and improvement)

– The “pool” is then redistributed to the hospitals based on

each individual hospital’s Total Performance Score as

compared to its peers

• Those providers that receive higher Total Performance Scores will

receive higher incentive payments than those that receive lower

Total Performance Scores

Medicare’s ACO and Shared Savings innovation

5

M E D I C A R E ’ S S H A R E D S AV I N G S

P R O G R A M

Elements of the payment model -

– ACO providers and suppliers are paid for specific items and services as it currently does under the Fee-for-service payment systems

– ACOs may choose 1 of 2 program tracks –• Track 1: ACO to operate on a shared savings only arrangement for

the duration of their first agreement

• Track 2: ACO to share in savings and losses for the duration of the agreement, in return for a higher share of any savings it generates

– CMS establishes a benchmark for each ACO using the most recent available 3 years of per-beneficiary expenditures for Medicare Fee-for-service beneficiaries assigned to the ACO

– The amount of an ACO’s shared savings or losses depends on its performance on quality measures.

– An ACO that meets the program’s quality performance standards will be eligible to receive a share of the savings if its assigned beneficiary expenditures are below its own specific updated expenditure benchmark.

• Certain ACOs will be accountable for sharing losses by requiring ACOs to repay Medicare for a portion of losses.

6

M E D I C A R E ’ S S H A R E D S AV I N G S

P R O G R A M

Patient Attribution -

– Beneficiaries will be assigned to an ACO, in a two-step process, if

they receive at least one primary care service from a physician

within the ACO:

1) The first step assigns a beneficiary to an ACO if the beneficiary

receives the plurality of his or her primary care services from primary

care physicians within the ACO.

2) The second step only considers beneficiaries who have not had a

primary care service furnished by any primary care physician either

inside or outside the ACO. Under this second step, a beneficiary is

assigned to an ACO if the beneficiary receives a plurality of his or

her primary care services from specialist physicians and certain

non-physician practitioners (nurse practitioners, clinical nurse

specialists, and physician assistants) within the ACO.

– Primary care services mean the set of services identified by the

following HCPCS codes: 99201-99215, 99304-99340, 99341 through

99350, G0402, G0438, G0439

ACO participants that bill for primary care services must be

exclusive to a single Medicare Shared Savings Program ACO

7

M U L T I - P A Y O R A D V A N C E D P R I M A R Y

C A R E P R A C T I C E D E M O N S T R A T I O N

CMS will participate in multi-payer reform initiatives in

selected states to make advanced primary care practices

more broadly available

Advanced primary care (APC) practices, or “medical

homes,” utilize a team approach to care, with the patient at the center

– APC practices emphasize prevention, health information

technology, care coordination and shared decision making

among patients and their providers

The demonstration program will pay a monthly care

management fee for beneficiaries receiving primary care

from APC practices

– The care management fee is intended to cover care

coordination, improved access, patient education and other

services to support chronically ill patients

8

N E W Y O R K ’ S D S R I P P R O G R A M

The overarching goal of the DSRIP plan is to:– Transform the health care delivery system in New York

– Reduce avoidable hospital use by 25% statewide and achieve significant improvements in other health and public health measures at both the provider systems and state levels

– Reduce Medicaid spending trend rates statewide DSRIP requires the creation of “Performing Provider Systems” that

are expected to be collaborative networks of care that are responsible for most or all Medicaid beneficiaries in the given geography or medical market area

– Should include all of the major providers of Medicaid services in the region

– Must have a minimum of 5,000 attributed Medicaid beneficiaries a year in outpatient settings

The State’s expectation is that at the end of 5 years, – Performing Provider Systems will contract directly with managed care

plans to meet all the health care needs of Medicaid beneficiaries, and

– 80-90% of managed care payments to providers will be based on value instead of volume

9


Options Level 0 VBP Level 1 VBP Level 2 VBP

Level 3 VBP (only feasible after

experience with Level 2; requires

mature PPS)

All care for total population

FFS with bonus and/or withhold based on quality scores

FFS with upside-only shared savings when outcome scores are sufficient

FFS with risk sharing (upside available when outcome scores are sufficient; downside is reduced when outcomes scores are high)

Global capitation (with outcome-based component)

By 2020, 80-90% of all Medicaid MCO payments must be in

Value-Based Payment Levels 1 - 3

10


Examples of potential VBP Arrangements

Outcome Targets %

Met

Level 1 VBP

Upside only

Level 2 VBP

Up- and downside

When actual costs < budgeted costs

Level 2 VBP

Up- and downside

When actual costs > budgeted costs

≥ 50% of Outcome Targets met

50-60% of savings returned to PPS/ Providers

90% of savings returned to PPS/ Providers

PPS/ Providers responsible for 50% of losses.

< 50 % of Outcome Targets met

Between 10 – 50/60% of savings returned to PPS/ Providers (sliding scale in proportion with % of Outcome Targets met)

Between 10 – 90% of savings returned to PPS/ Providers (sliding scale in proportion with % of Outcome Targets met)

PPS/ Providers responsible for 50%-90% of losses (sliding scale in proportion with % of Outcome Targets met).

Outcome Worsen

No savings returned to PPS/ Providers

No savings returned to PPS/ Providers

PPS/ Providers responsible for 90% of losses. For Stop Loss see text.

11

12

N E W Y O R K ’ S D S R I P AT T R I B U T I O N

Step 1:

Medicaid “utilizing” members

will be placed into one of

these population

subcategories based on a

mutually exclusive hierarchy

(Left to Right)

Step 2:

After a member is assigned

to a population subcategory,

the member will then been

assigned to a PPS based on

a hierarchal loyalty algorithm

that is specific to their

population subcategory (Top

to Bottom.

O R E G O N M E D I C A I D H E A L T H

S Y S T E M T R A N S F O R M AT I O N

Coordinated Care Organizations (CCOs)

– Governed by partnership of providers, community

members and other stake holders

– Tasked with the development of new models of

integrated care: patient-centered and team-focused;

integrated physical, behavioral and dental health

– A global budget that grows at a sustainable, fixed rate

with payment alternatives that incentivize positive health

outcomes

Safety-net FQHCs to be paid under an Alternative

Payment Method (APM) rather than the “encounter

method”

13

O R E G O N M E D I C A I D H E A L T H

S Y S T E M T R A N S F O R M AT I O N

APM is aligned with Health System Transformation objectives

– Move away from billing for each office visit

– De-links the treadmill of churning office visits for payment by

paying a Per Member Per Month (PMPM) payment

– Maintain same level of revenue in to the FQHCs

– Oregon to pay a PMPM (wraparound) payment to supplement

payments received from the MCOs up to the total PMPM

payment target for each FQHC based on historical payment

experience

• Historical payment = 3.5 visits X $150 Medicaid rate = $525 PMPY

• Oregon supplemental payment = $525 PMPY – MCO payments

regardless of the number of FQHC billable visits provided PMPY

– Quality and access measures developed to make sure they do

not deteriorate

– Payment based on attributed members to the FQHC given an

18-month lookback on claims data

14

M A S S A C H U S E T T S P R I M A R Y C A R E

P A Y M E N T R E F O R M I N I T I A T I V E ( P C P R I )

Comprehensive Primary Care Payment (CPCP):

– A risk adjusted*, per Panel Enrollee, per month payment for a –

• Defined set of primary care services,

• Medical home services, and

• Options for a defined set of behavioral health services

– 3 tiers of CPCP rates will be developed -

Tier

Type of Behavioral Health

Integration

Level of Behavioral

Health Covered Services

1 Non-Co-Located but

Coordinated

None

2 Co-Located Minimum

3 Clinically Integrated Maximum

* Risk-adjusted means a health center’s rate will be adjusted to reflect (1) the demographics

of patients served and (2) adjusted for CPCP services provided by external providers

15

M A S S A C H U S E T T S P R I M A R Y C A R E

P A Y M E N T R E F O R M I N I T I A T I V E ( P C P R I )

Quality Incentive Payment: Additional payments for

achieving certain thresholds relative to selected quality measures

Shared Savings/Risk Payment: Additional payment/payback,

with an option of one of the following 3 risk tracks, with

varying levels of risk and reward -

* Require certification as a risk-bearing provider

Track

Risk

Arrangement

Minimum

Panel Size Risk/Reward

1* Upside/Downside 5,000 For all 3 years, receive/owe 60% of difference

between actual and target spend levels, with

a risk corridor

2* Transitioning to

Downside

5,000 Year 1 - similar to Risk Track 3

Year 2 – transitional downside risk

Year 3, similar to Risk Track 1

3 Upside Only 3,000 For Year 1, receive an increasing amount of

the savings, capped at 50%

Year 2 – expected to move up to Track 2 or 3

16

E L E M E N T S O F A VA L U E - B A S E D

PAY M E N T M O D E L

An ACO manages the total cost of care (global budget) for

patients attributed to the ACO

Beneficiaries are assigned to an ACO based on a specified

attribution algorithm

MCO pays providers within the ACO for services provided and

monitors the global budget.

MCOs pay providers for specific services (Base Compensation)

– Fee-for-service versus partial capitation

– PMPM case management fee

Providers may also be eligible for quality incentive payments

Surplus-sharing/Risk-sharing arrangements:

– Surpluses/losses shared amongst providers based on an algorithm

established by the governing body

– Amount of surpluses/losses shared are often impacted by

performance against specified performance metrics

17

PAT I E N T AT T R I B U T I O N

In a fee-for-service demo where patients retain freedom of

choice, the payer assigns beneficiaries to ACOs based on

their specific attribution algorithm

– Usually beneficiaries are assigned to an ACO if the beneficiary

receives the plurality of his or her primary care services from

primary care physicians within the ACO

– Attribution models will also include specific look-back periods

for claims data to make attribution decisions

– Attribution models may also 2-step processes in which

beneficiaries are first assigned to specific sub-populations, and

then attributed based on specific attribution algorithms

In a mandatory managed care environment, the beneficiary

is generally attributed to their assigned Primary Care Provider

ACO participants that bill for primary care services are

generally required to be exclusive to a ACO for a specific

payer

18

O T H E R C O M M O N T H E M E S

Integration of physical and behavioral health care

services

– Medicare’s Advanced Primary Care initiative

– Massachusetts’ Primary Care Payment Reform Initiative

– New York’s DSRIP Integrated Primary Care bundle

Development of FQHC integrated care networks

– As competition for health center patients increases,

FQHCs need to join forces to maintain market share

– With the expansion of global payment/budget models,

FQHCs need to pool patients to increase members and

minimize risk and share best practices

– Creation of shared service-type arrangements to obtain

high-quality services at reasonable cost

19

S U M M A R Y – V B P A R R A N G E M E N T S

Success in VBP arrangements requires:

– Knowledge of the payment mechanisms that drive

each component of these arrangements

– Development of new workflows and reporting

The key components of VBP arrangements include:

Base Compensation Models

• Fee-for-service

• Partial capitation

• Care management PMPM

Quality Incentive Payments

Global Payments/Budgets

• Surplus-sharing/Risk-sharing

• Global capitation

20

E V A L U A T I N G F E E - F O R - S E R V I C E

P A Y M E N T M O D E L S

Fee schedules – % of Medicare Physician Fee Schedule

versus payer-specific fee schedule

Evaluating the fee schedule

– Average payment per visit based on CPT code frequency analysis

– Comparison of reimbursement versus cost

• Per visit

• Per procedure (requires the creation of a cost-based

charge structure)

– Evaluation of appropriateness of coding

• Benchmarking E&M coding

• Proper coding of all ancillary services

21



In evaluating the fee schedule, Centers should apply its annual CPT coding frequency to the fee schedule to estimate the expected payment rates as compared to:

– Average cost per visit

– Cost-based charge structure

CPT CPT DescriptionCPT Annual Frequency

2013 Medicare Physician Fee

Schedule (MPFS)

Annual Reimbursement

under MPFS

99201 Office/outpatient visit new 100 $20.99 2,099 99202 Office/outpatient visit new 650 $39.70 25,805 99203 Office/outpatient visit new 1,850 $60.74 112,369 99204 Office/outpatient visit new 1,750 $103.78 181,615 99205 Office/outpatient visit new 650 $133.13 86,535

99211 Office/outpatient visit est 200 $7.13 1,426 99212 Office/outpatient visit est 450 $19.83 8,924

99213 Office/outpatient visit est 2,300 $40.18 92,414 99214 Office/outpatient visit est 1,800 $61.89 111,402 99215 Office/outpatient visit est 250 $87.20 21,800

Totals 10,000 $ 644,389Average Reimbursement per Visit ($644,389 ÷ 10,000) $ 64.44

22



Utilizing the Cost-Based Charge Structure, fee schedules

can be compared to cost:

– On a per procedure basis, versus

– On a per visit basis

CPT CPT Description

CPT Annual

Frequency

2013 Medicare Physician Fee

Schedule (MPFS)

Cost per Procedure

(CBCS) Variance

Annual Reimbursement

under MPFS Annual Cost by

Procedure Variance

99201 Office/outpatient visit new 100 $20.99 $62.50 $(41.51) 2,099 6,250 (4,151)


99203 Office/outpatient visit new 1,850 $60.74 $152.00 $(91.26) 112,369 281,200 (168,831)

99204 Office/outpatient visit new 1,750 $103.78 $230.50 $(126.72) 181,615 403,375 (221,760)


99211 Office/outpatient visit est 200 $7.13 $29.50 $(22.37) 1,426 5,900 (4,474)


99213 Office/outpatient visit est 2,300 $40.18 $103.50 $(63.32) 92,414 238,050 (145,636)

99214 Office/outpatient visit est 1,800 $61.89 $152.00 $(90.11) 111,402 273,600 (162,198)


Totals 10,000 $ 644,389 $1,542,050 $(897,662)

Average Reimbursement per Visit (10,000 visits) $ 64.44 $154.21 $(89.77)

23

I M P R O V I N G E F F I C I E N C I E S A N D

R E D U C I N G T H E C O S T P E R V I S I T

Improving financial performance in today’s FQHC Medicaid and Medicare reimbursement systems is driven by reducing the total cost per visit as compared to established payment rates‒ Improving efficiencies and thereby reducing the cost per visit

will help a CHC prepare for future payment models!

FQHC Medicaid All-inclusive Rate per Visit $ 150.00

Total Operating Costs $ 1,542,100

Divided by: Total Visits ÷ 10,000

Total Operating Cost per Visit 154.21

Operating Loss per Visit $ (4.21)

Example of Prospective Payment Rate Financing Model:

24



All-inclusive cost per visit analysis

The following variables impact the calculation of the all-

inclusive cost per visit and must be managed to improve

financial performance

• Salary levels and staffing mix

• Support staff ratios (direct care versus patient support)

• Amount of enabling and ancillary services

• Administrative/overhead infrastructure

• Provider productivity

$ 1,542,100

⁼ $ 154.21 per visit10,000 visits

25



Variables Impacting Cost per Visit Health Center A Health Center B

Salary levels 2 FTE MDs @

$200,000

$ 400,000 2 FTE MDs @

$150,000

$ 300,000

Direct-care support staff

ratio

2.5:1 = 5 FTEs @

$65,000

325,000 3.0:1 = 6 FTEs @

$65,000

390,000

Patient support staff ratio 2.0:1 = 4 FTEs @

$35,000

140,000 3.0:1 = 6 FTEs @

$35,000

210,000

Enabling/Ancillaries Case Mgr @

$75,000; Health

Educ @ $50,000

125,000 Case Mgr @

$75,000; Health

Educ @ $50,000

125,000

Fringe benefits 23% of salaries 227,700 20% of salaries 235,750

Direct other expenses Supplies, etc. 67,400 Supplies, etc. 53,950

Overhead/infrastructure 20% 257,000 25% 328,500

Total costs 1,542,100 1,643,200

Visits 5,000 visits/MD FTE 10,000 4,000 visits/MD FTE 8,000

Total Cost per Visit $ 154.21 $ 205.40

26



Impact of Productivity – FFS Payment Models

Provider A Provider B Provider C

Provider Productivity (visits) 3,000 3,500 4,000

Average FFS Revenue per Visit $150.00 $150.00 $150.00

Total Revenue 450,000 525,000 600,000

Provider Salary 175,000 175,000 175,000

Direct Support Staff 125,000 125,000 125,000

Total Salary Cost 300,000 300,000 300,000

Fringe Benefits (25%) 75,000 75,000 75,000

Total Salary and Benefits 375,000 375,000 375,000

Variable Costs @ $10/visit (e.g. Supplies) 30,000 35,000 40,000

Total Direct Costs 405,000 410,000 415,000

Overhead (25%) 101,250 102,500 103,750

Total Costs 506,250 512,500 518,750

Surplus/(Loss) ($56,250) $12,500 $81,250

Revenue per visit $150.00 $150.00 $150.00

Cost per visit $168.75 $146.43 $129.69

Surplus/(Loss) per visit ($18.75) $3.57 $20.31

27

S U C C E S S I N T H E F E E - F O R - S E R V I C E

P A Y M E N T M O D E L

Whereas reimbursement rates are held fixed or have

minimal trend factors, surpluses are generated through

improving operational efficiencies

Proper coding of services provided

Creating additional revenue through improved provider

productivity

Improving cost efficiencies

• Increased provider productivity

• Managing staffing and cost metrics

Coding and cost efficiencies are at the cornerstone of

success in future payment models!

28

PA R T I A L C A P I TAT I O N

A R R A N G E M E N T S

Partial Capitation Arrangements

29

Patient A Patient B

Annual Revenue Rate ($25 PMPM) ×

12 months = $300

Rate ($25 PMPM) ×

12 months = $300

Annual Cost:

Cost per visit $125/visit $125/visit

# of visits per year 2 visits/year 3 visits/year

Annual Cost $250 $375

Financial Success $50 $(75)

How does a health center manage financial risk? One patient with

unusually high utilization can have a dramatic downward impact on

financial performance!



The paradigm shift in managing partial capitation arrangements

30

Fee-For-Service Capitation

Payment Model Payment based on the #

of units (visits) provided

Payment based on the # of

patients assigned to the

Center

Revenue Equation # of units × rate = revenue # of patients × rate PMPM ×

12 months = revenue

Financial Success Increase productivity and

the # of units to increase

revenue

Reduce the cost per unit,

manage patient utilization

and minimize risk through

increased # of patients and

improved health outcomes

Increased Provider

Productivity …

More visits =

Increased revenue

More capacity More

patients = Increased revenue



Impact of Productivity – Capitation Models

31

Provider A Provider B Provider C Provider D

Provider "capacity" (visits) 3,000 3,500 4,000 4,000

Average Visits per Patient 3.50 3.50 3.50 3.00

Panel Size (Members) 857 1,000 1,143 1,333

Number of Member Months (Members x 12) 10,286 12,000 13,714 16,000

Capitation Revenue PMPM $42.50 $42.50 $42.50 $42.50

Total Revenue 437,143 510,000 582,857 680,000

Total Expenses (driven by volume) 506,250 512,500 518,750 518,750

Surplus/(Loss) ($69,107) ($2,500) $64,107 $161,250



32

Service Description

Patient

Utilization Unit Cost

Annual Cost

per Patient

Primary Care 3 visits PMPY $175 per visit $ 525

Behavioral Health Care 1 visit PMPY $100 per visit 100

Care Management (PCMH) 1 patient $75 per patient 75

Total Direct Care 700

Administration/HIT 20% of direct 140

Total cost of covered services $ 840

Cost per member per month $ 70

Simple Cost PMPM Calculation – Per Visit per Patient Basis:

This example highlights the importance of understanding patient

utilization of services!

The analysis would be further enhanced if utilization and cost were

analyzed on a per procedure basis (use of a cost-based charge

structure)!



Service DescriptionPatient

UtilizationUnit Cost (per

procedure RVU)Annual Cost per Patient

Primary Care:

Office Visits 3.00 $ 150 $ 450

Immunizations 1.00 10 10

Medical Nutrition 2.00 60 120

Behavioral Health Care:

Individualpsychotherapy

1.00 100 100

Group psychotherapy 2.00 50 100

PCMH Services:

Case management 4.00 10 40

Total Direct Care 820

Administration/HIT 20% of direct 164

TOTAL $984

Complex Cost PMPM Calculation – Per Procedure per Patient Basis:

In this example, the cost PMPM for this patient is $82!

33

C A R E M A N A G E M E N T P A Y M E N T S

Financial success with care management PMPM payments

requires understanding care management costs PMPM

Key financial metrics Care manager capacity (productivity)

Patient utilization

Productivity: Patient Utilization:

# of service units/FTE # of service units/patient/year

(e.g. 2,400/FTE) (e.g. 12/patient/year)

Panel Size = 200 patients/FTE

If the personnel cost of a care manager is $75,000 and

requires annual HIT support of $10,000, what is the cost PMPM? $35 PMPM ($85,000 annual cost ÷ 2,400 member months)

What happens to the cost PMPM if patient utilization increases?

34



Financial success under a capitation payment model

is grounded in understanding:

– Cost Per Member Per Month (PMPM) which is driven by -

» Cost per unit (visit or procedure)

» Utilization of services

» Health condition of the patient

– Managing panel size for all direct care staff

– Actuarial mix of patients including cost and utilization

patterns

– Unusual utilization patterns and drilling down to the

patient level and identifying high utilizers of services

– Quality measures required to improve health outcomes and access incentive payments

35

S U C C E S S I N T H E P A R T I A L C A P I T A T I O N

P A Y M E N T M O D E L

As Centers move away from fee-for-service payment

arrangements to partial capitation, the driver of

successes expand

Proper coding of services provided required for

appropriate risk-stratification of patients

Managing provider productivity impacts panel size and

thereby revenue

Managing the cost per patient

• Improving cost efficiencies (per visit or per unit)

• Monitoring clinical staff capacity and panel sizes

• Managing patient utilization and health condition

– Improving quality metrics and accessing incentive payments

36

G L O B A L PAY M E N T S / B U D G E T S

37

Service Description

Expected

Utilization Unit Cost

Cost Per Patient

Per Year

Inpatient Care 1 $3,000 per discharge $ 3,000

Emergency Services 1 $500 per visit 500

Specialty Care 2 $150 per visit 300

Primary Care* 3 $125 per visit 375

Behavioral Health Care* 1 $100 per visit 100

Laboratory 8 $25 per lab test 200

Radiology 2 $100 per xray 200

Pharmacy 12 $25 per script 300

PCMH Services* 170

Administration/HIT 855

TOTAL $6,000

Sample Construct of a Global Payment/Budget:

If actual claims experience is less than $6,000, the provider shares in the

surplus; if actual exceeds $6,000, the provider may be “at risk”!

Differs based on

Health Condition

of Patient


Understand the attribution algorithm and manage

member/enrollee rosters

Monitor the cost and utilization of services provided

by other providers

‒ Analyze total cost PMPM by actuarial class

» Cost per unit (visit or procedure)

» Utilization

‒ Research high utilizers of services

‒ Analyze high cost providers (unit cost)

‒ Further analyze by health condition

‒ Quality measures!

38

U S I N G T H I R D - PA R T Y C L A I M S

D ATA

Analyze the high cost and high utilizing members

Combine Claims data files– determine the Total Cost of Care by patient and PMPM

– Determine Total Cost of Care for patients with like conditions

(e.g., all diabetic patients regardless of comorbidities)

Stratify the high cost members and develop plans to better

manage care and reduce the Total Spend– Clinical interventions to manage utilization

– Outreach efforts/patient engagement

– Specialty referral practices and high cost specialists

Link to EHR/PMS, ED Use and High Risk Member Reports

39


Financial success under a global payment/budget

arrangement requires:

– Ability to manage and report on third party claims data

– Efficient and effective electronic health records at

provider organizations

– Health information exchange systems are in-place

– Quality partners have been identified and arrangements

executed

– Informatics and data reporting systems in-place to

manage all services provided to the patient

– Benchmarks and expected utilization patterns evaluated;

ability to generate a surplus (actuary?)

40

H E A L T H C E N T E R S U C C E S S I N

V B P A R R A N G E M E N T S

42

Managing

the Visit

Managing

the Patient

In-House

Fee-For-Service Partial Capitation Global Budgets

Overall Patient Utilization

High Value Providers

Patient Utilization Quality Metrics

Panel Sizes

Quality Metrics

Effective Coding

Cost Efficiencies

Managing

the Patient

Total Cost

C H A N G I N G R O L E O F T H E C F O &

F I N A N C E F U N C T I O N

Additional roles/functionality of the future

– Connecting with clinical leadership:

• Understand metrics/outcome measures that drive

incentive payments

• Managing patient utilization both in-house as well as out-

house

– Better understanding of the health center’s patient base

to impact attribution

• Patient satisfaction

• Primary care and preventive services coding

– Create dashboards that monitor performance that

drives revenue

43

C H A N G I N G R O L E O F T H E C F O &

F I N A N C E F U N C T I O N

Additional roles/functionality of the future

– Emphasis on cost accounting and unit-costing

• Analyze/drive cost efficiencies

• Need to develop a new internal budget model centered

around patients – in-house versus out-house

– Heightened involvement with collaborations and

strategic planning

• Documenting value

• Understanding funds flow

– Risk management – managing risk-sharing arrangements

– New required skill sets/functionality

• Care management/coordination

• Clinical informatics

• Business intelligence solutions

44

T R A N S I T I O N I N G F R O M T O D AY T O

T O M O R R O W

TODAY TOMORROW

Proper coding for services

provided

Monitor/improve provider

productivity

Provision of services in a cost-

efficient manner

Manage and improve quality

metrics

Manage/monitor patient

utilization – in-house

Manage/monitor the total cost

of care

New skill requirements,

communication & technology

45

N E E D F O R B U S I N E S S

I N T E L L I G E N C E

To be financially successful, health centers will need to

manage financial operations by merging information from

disparate systems

Keys to Success:

High Quality

Low Cost

Electronic

Health Record

Practice

Management

System

General

Ledger

Payroll

System

Third Party

Claims Data

46

D A S H B O A R D S – M O N I T O R C O S T

E F F I C I E N C I E S

Dashboards required to identify the drivers of cost with

the goal of reducing the Center’s cost per visit

Provider Productivity Scorecard

• Visits per FTE

• Visits per Hour

• RVUs per FTE

• RVUs per Visit

Cost Analysis

• Average salary levels

• Support staff ratios

• Cost per visit by expense item

• Provider productivity

• Average cost per RVU

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P R O V I D E R P R O D U C T I V I T Y

S C O R E C A R D

Medical Dept.Provider

AProvider

BProvider

CProvider

DProvider

E Total

FTEs (hours paid) 1.00 1.00 1.00 1.00 1.00 5.00

# of Clinical Hours 1,640 1,640 1,310 1,640 1,640 7,870

# of Visits 5,000 3,000 4,000 4,500 3,500 20,000

# of Work RVUs 10,000 12,000 10,200 11,800 7,000 51,000

Productivity Metrics:

Visits per FTE 5,000 3,000 4,000 4,500 3,500 4,000

Visits per Hour 3.05 1.83 3.05 2.74 2.13 2.54

Work RVUs per FTE 10,000 12,000 10,200 11,800 7,000 10,200

Work RVUs per Visit 2.00 4.00 2.55 2.62 2.00 2.55

Consider:

• Analyzing E&M coding distribution by provider vs. benchmarks

• Visits by patient for providers, stratified by patient health status

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C O S T A N A L Y S I S D A S H B O A R D S

COST ANALYSIS –Per visit

Actual Benchmark

Total

Per

Patient Per Visit

Per

RVU Total

Per

Patient Per Visit

Per

RVU

Provider $1,090,000 $ 34.06 $990,000 $ 33.00

Direct-Care Support 1,200,000 37.50 1,080,000 36.00

Patient Services Support 875,000 27.34 630,000 21.00

Enabling/Ancillaries 100,000 3.13 200.000 6.67

OTPS/Fringe benefits 650,000 20.31 850,000 28.33

Overhead 785,000 24.54 750,000 25.00

Total Expenses $4,700,000 $652.78 $146.88 $58.75 $4,500,000 $600.00 $150.00 $50.00

Support Staff Ratios:

Direct-Care 2.00 2.00

Patient Services 2.50 2.00

Productivity Levels:

Medical 4,000 4,200

Dental 2,500 2,500

Behavioral Health 2,000 1,500

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D A S H B O A R D – M A N A G I N G PAT I E N T

U T I L I Z AT I O N

Managing the cost per patient is driven the

monitoring/understanding/impacting both cost

efficiencies and patient utilization

Drill-down on Patient Utilization and Outcomes

Reporting elements:

• Units per patient

• Average panel size

• Health outcome (red – yellow – green)

Reporting categories:

– By department/provider

– By health condition (chronic/episodic)

– By site

– By payer

50

PAT I E N T U T I L I Z AT I O N / O U T C O M E S

D A S H B O A R D S

ACTUAL

# of

Patients

Average

Panel

Size

# of

Visits

# of Visits

per

Patient

# of

RVUs

RVUs per

Patient Outcomes

Medical 6,000 1,250 20,000 3.33 51,000 8.50 Exceeds

Dental 2,500 625 10,000 4.00 25,000 10.00 Below

Behavioral Health 400 400 2,000 5.00 4,000 10.00 Exceeds

TOTAL 7,200 32,000 4.44 80,000 Exceeds

Versus

BENCHMARK

# of

Patients

Average

Panel

Size

# of

Visits

# of Visits

per

Patient

# of

RVUs

RVUs per

Patient Outcomes

Medical 7,000 1,750 21,000 3.00 68,250 9.75 Meets

Dental 1,875 625 7,500 4.00 18,750 10.00 Meets

Behavioral Health 300 300 1,500 5.00 3,000 10.00 Meets

TOTAL 7,500 30,000 4.00 90,000 Meets

51


D A S H B O A R D S

Actuarial Class# of

Patients# of Visits

# of Visitsper Patient # of RVUs

RVUs per Patient Outcomes

M/F (0-2 years) 2,000 5,000 2.50 10,000 5.00 Meets

M/F (3-16 years) 1,000 3,000 3.00 12,000 12.00 Exceeds

M (17-26 years) 1,200 4,000 3.33 10,200 8.50 Exceeds

F (17-26 years) 800 4,500 5.63 11,800 14.75 Below

M/F (27+ years) 1,000 3,500 3.50 7,000 7.00 Below

Medical Totals 6,000 20,000 3.33 51,000 8.50 Exceeds

Consider analyzing by health condition as well!

How does utilization compare

by actuarial class of patients?

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D A S H B O A R D S

M (17-26 years) # of Visits # of RVUsRVUs per

Visit Outcomes

Patient A 20 40 2.00 Below

Patient B 18 108 6.00 Exceeds

Patient C 16 24 1.50 Below

Patient D 12 36 3.00 Meets

Patient E 10 25 2.50 Meets

Patient F 8 32 4.00 Exceeds

Others ….. ….. …..

Totals 4,000 10,200 2.55 Exceeds

Consider analyzing patients with similar health

conditions to identify outliers!

Who are the high utilizers

of services?

53

Q U E S T I O N S

54

C O N TA C T I N F O R M AT I O N

Peter R. Epp, CPA, Partner

Co-Managing Director, Healthcare Industry Practice

CohnReznick

646.254.7411

[email protected]

55

mailto:[email protected]

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