Funding Adjustment Models How Do You Incentivize Value? Bob Opsut/Greg Atkinson OASD (HA) Health...

Funding Adjustment Models

How Do You Incentivize Value?

Bob Opsut/Greg AtkinsonOASD (HA)

Health Budgets and Financial Policy

What is Value in Health Care?

Volume (Activities, Episodes, Population) + Outcomes (Readiness, Population Health,

Customer satisfaction)

Resources (MilPers, appropriations, reimbursements)

2

How Much?How Well?

At What Cost?

Background

• PPS initiated in 2005 to rationalize the direct care budget adjustments– Presidents Management Agenda

– Budget to follow performance

– Declining workload– Care shifting to PSC

– Provide way to offset Efficiency Wedge– Budget could be stable if more work done

– Provide funds for recapture– Way to move PSC funds to Direct Care

3

Background (cont.)

Initially proposed as a capitated systemConsidered too risky and too large a leap

Fee for service (FFS) system seen as simpler to implement and necessary to familiarize the staff with workload measures

SMMAC decided to start as a Fee for Service system with capitation some time in the future

Concern remains that MTFs would have difficulty managing under capitation

However, higher growth in PMPM for MTF enrollees creates budget pressures to go to capitation

4

Transition In Both Payment & Delivery Systems

Today

Payment System

Adapted From “From Volume To Value: Better Ways To Pay For Health Care”, Health Affairs, Sep/Oct 2009.

Delivery System

Transition

Ideal?

Fully IntegratedDelivery

System

Volume-drivenfragmented care

Fee-for-service Medical HomePayments

Full PopulationPrepayment

Co-evolution of

organization and payment

Primary Care Sub-Capitation

PC

MH

Level 2/3 Medical Homes

5

How Much?Mechanism Units Coverage Potential Unintended

Side Effect

Fee for Service

Procedures, MS-DRGs, Beddays

Encounter ChurningUpcodingTreatment over Prevention

Episode Procedure plus associated care

ChurningUpcodingTreatment over Prevention

Care Management Fee

Population No value added

Sub-Capitation

Population All Primary Care

Shift to specialty careDenied access

Capitation Population All Care Denied accessUnder utilization

•Answering “How much” is not enough. •Unintended side effects can reduce value.

How Well?

Measure

Prevention HEDIS Preventive Services

Access 3rd Next Available

Treatment ORYX

Continuity % of visits seeing own PCM

Outcomes HEDIS Outcome MeasuresNever EventsMortality Qualty Adjusted Life Years (QALYs)

Satisfaction Visit SatisfactionPlan Satisfaction

Cost Productivity/efficiencyER UtilizationPMPM

Three Examples

Current PPSNavy Performance Planning Pilot SitesCMS Comprehensive Care Initiative

Current PPS – How Much?

The Current Performance Based Funding Adjustment

Value of MTF WorkloadFee for Service rate for workload produced

Rates based on price at which care can be purchasedTMAC ratesNot MTF costs

Computed at MTF level but allocated to servicesRolled up to Services

9

TMAC versus PPS

CivilianInpatient

InstitutionalHospital (MS-DRG)

Including ancillaries, pharmacy

Professional (RVU)SurgeonAnesthesiologistRoundsConsultants

OutpatientProfessional (RVU)Institutional (APC)

Outpatient Ancillary (RVU/Fee Schedule)

Direct Care PPSInpatient (RWP, i.e. MS-DRG)

All Institutional and ProfessionalHospital

Including ancillaries, pharmacySurgeonAnesthesiologistInternistConsultants

Outpatient Professional (RVU)Institutional (APC)

Outpatient Ancillary (Pass Thru)

None

10

Current PPS WorkloadInpatient – MEPRS A Workcenters

Non-Mental Health – Severity Adjusted DRGs Relative Weighted Products (MS-RWPs)

Mental Health - Bed Days

Outpatient – MEPRS B WorkcentersProvider Aggregate Relative Value Units (RVUs)

Non-credentialed providers get appropriate Practice Expense RVU credit

Ambulatory Payment Classification (APCs)Facility location now identified in CAPER

recordsConsistent with TRICARE change for CY09

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Valuing MHS Workload Fee for Service Rates FY12

Value per MS-RWP - $8,688 (MEPRS A codes)Average amount allowed

Including institutional and professional feesExcluding Mental Health (MH)/Substance Abuse (SA) Adjusted for local Wage index and Indirect Medical

Education Adjustment

Value per Mental Health Bed Day - $803 (MEPRS A codes) Average amount allowed

Including institutional and professional feesAdjusted for local Wage index and Indirect Medical

Education Adjustment

Value per RVU - $33.97 (MEPRS B codes)Standard Rate – like TMAC/CMS

Adjusted for local geographic price index both Work and Practice

Value per APC - $69.61 (Facility records)Standard Rate 12

How Well? - HEDIS

Paying for additional performance beyond workloadIn past this has been adjustment if MHS had

additional dollars available at Mid-yearMethod is really a performance based allocation

of excess dollars

Does not match external P4P programs where dollars are at risk

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P4P HEDIS

Values for standard set of measures

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HEDIS Measure DiabetesService Asthma Mammogram Pap Colorectal Screen LDL AC1 Grand TotalA 656,189$ 1,201,542$ 3,815,139$ 5,959,223$ 53,591$ 552,314$ 931,829$ 13,169,826$ N 343,581$ 1,069,876$ 2,545,224$ 3,683,218$ 281,790$ 620,774$ 876,828$ 9,421,293$ F 653,071$ (287,456)$ (3,637,264)$ 7,435,112$ (513,520)$ 991,360$ 1,188,027$ 5,829,329$ JTF 92,847$ 322,954$ 680,558$ 1,644,882$ 27,863$ 201,327$ 224,612$ 3,195,043$ Total 1,745,688$ 2,306,916$ 3,403,657$ 18,722,435$ (150,276)$ 2,365,776$ 3,221,296$ 31,615,492$

* Excludes Pilot Sites that are funded based on Service unique methods.

Current PPS Summary

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Army Navy Air Force JTF (1) MHS Total

PPS Recon with SA 2,911,345$ 9,488,684$ 11,638,532$ (65,582,389)$

Adjustments to Base Recon Value

PPS Funding Increase (103,493,000)$ -$ -$ -$

HEDIS 13,169,826$ 9,421,293$ 5,829,329$ 3,195,043$

Pilot site funds (2) 17,740,504$ 278,709$ 8,682,316$ -$

Recon + Adjustments Total (69,671,325)$ 19,188,686$ 26,150,177$ 3,195,043$ (21,137,418)$

(1) JTF Removed from Reconciliation until 2014 per decision from CFOIC. Currently there is no O&M factor for JTF (Service O&M factors range from 35% to 68%)(2) Per decision from CFOIC, Keesler is not to use a FY09 baseline. Currently Keesler is using a Rolling 12 to Prior Rolling 12 for increases.

Mid-year FY2012 Navy Pilots

Performance Funding Adjustment

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Performance Funding Items

How Much?Care Management FeePrimary Care Sub-capitationTraditional FFS for care outside of Sub-Capitation

How Well?HEDIS Quality adjustment

Colorectal/Cervical/Mammogram/DiabetesAccess/Continuity of care adjustment

3rd Available AppointmentContinuity of Care

SatisfactionNot available, due to change in Survey instrument

ER Utilization adjustmentPMPM adjustment

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Balanced Bonus Eligible Items

Care Management

An increase in enrollment is awarded with $2.50 per increased enrollee per month.

NCQA Level 2 Certified MTFs can earn $5 per increased enrollee.

Pensacola earned $33,250

Quantico earned $75,860

Enrollees

2009 42,541

2011 43,095

Increase 554 Enrollee

s

2009 20,874

2011 22,138

Increase 1,264 18

Traditional PPS compared to PPS + Primary Care Sub-

Capitation

MTF PPS Overall Funds

(A) Everything outside of Primary Care Product Line

(B) Primary Care Product Line

(C) Team care for own Enrollees

(D) Same MTF Other than Team (ie ER Office Vst)

(E) MCSC/ Other MTF

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Primary CareSub-Capitation

Funding of Primary Care Sub-Capitation

Baseline MTF PPS Overall Funds

(A1) Everything outside of Primary Care Product Line

(B1) Primary Care Product Line

(C1) Team care for own Enrollees

(D1) Same MTF Other than Team(ie ER Office Vst)

(E1) MCSC/ Other MTF

• Traditional PPS Earnings: • MTF PPS (A1+B1+C1+D1)

• Baseline Sub-capitation Value: (C1+D1+E1)• Capitation rate: (C1+D1+E1)/Eq Lives1

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Rolling 12MTF PPS Overall Funds

(A2) Everything outside of Primary Care Product Line

(B2) Primary Care Product Line

(C2) Team care for own Enrollees

(D2) Same MTF Other than Team (ie ER Office Vst)

(E2) MCSC/ Other MTF

Team currently represents entire Primary Care Product Line for same MTF Enrollee.

• Revised Pilot PPS Earning Calculation• Rolling 12 (A2+B2+D2) + Net Sub-capitation

• Sub-Capitation Total value = (Capitation Rate x Eq Lives2)

• Net Sub Capitation Earnings = Total value – (D2+E2)

Sub-Capitation

Adjusted for Provider Aggregate RVUsStandardized across years to prevent weight changes

causing utilization increasesUsing current Conversion factor without GPCIsTeam concept currently based on Primary Care

Product Line with adjustments for new PCMH clinics (BAZ/BDZ)

Equivalent LivesBased on Age/Gender/Bencat

Safe HarborBetween 25th and 75th Percentile No adjustmentAbove 75th Percentile reduction of 0.5 RVUs per Eq LifeBelow 25th Percentile growth permitted of 0.5 RVUs per

Eq LifeBase on number of Enrollees not Enrollment sites

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Provider Aggregate RVU per Primary Care Equivalent Life

7.19

8.54

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Range based on Total Enrollees

Provider Aggregate RVU per Primary Care Equivalent Life

7.19

8.54

Quantico

Pensacola

Safe HarborUpper

Safe HarborLower

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Baseline

Primary Care Sub-Capitation Pensacola

(C1) Team care for own Enrollees309,291 RVUs$10,506,613

(D1) Same MTF Other than Team (ie ER Office Vst)10,465 RVUs$355,480

(E1) MCSC/ Other MTF36,688 RVUs$1,246,302


• Capitation Value = $12,108,395 • Capitation Rate = $12,108,395/41,961 Eq Lives

• $289/Eq Life

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(D2) Same MTF Other than Team (ie ER Office Vst) 12,796 RVUs$434,672

(E2) MCSC/ Other MTF 35,740 RVUs$1,214,088


• Net Sub-capitation• Sub-Capitation Total value = (Capitation Rate x Eq Lives2)• Net Sub Capitation Earnings = Total value – (D2+E2)

• Sub-Capitation Total Value • = ($289 x 42,807 Eq Lives) = $12,352,476

• Net Sub Capitation Earnings • $12,352,476 – $1,648,760 = $ 10,703,716

Net Sub-Capitation Earning change: $10,703,716-$10,506,613 = $197,103 (On a per Eq Life basis MTF earnings decreased from $250.39/Eq Life to $250.05/Eq Life)

(C2) Team care for own Enrollees326,658 RVUsPPS $11,096,576

8.49 RVUs/ Eq Life 8.76 RVUs/ Eq Life

Primary Care Sub-Capitation Quantico

(C1) Team care for own Enrollees138,613 RVUs$4,708,675

(D1) Same MTF Other than Team (ie ER Office Vst)1,452 RVUs$49,328

(E1) MCSC/ Other MTF23,846 RVUs$810,055


• Capitation Value = $5,568,059• Capitation Rate = $5,568,059/20,241 Eq Lives

• $275/Eq Life

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(D2) Same MTF Other than Team (ie ER Office Vst) 4,243 RVUs$144,125

(E2) MCSC/ Other MTF 30,882 RVUs$1,049,064


• Net Sub-capitation• Sub-Capitation Total value = (Capitation Rate x Eq Lives2)• Net Sub Capitation Earnings = Total value – (D2+E2)

• Sub-Capitation Total Value • = ($275 x 22,256 Eq Lives) = $6,122,542

• Net Sub Capitation Earnings • $ 6,122,542 – $1,193,189 = $4,929,353

Net Sub-Capitation Earning change: $4,929,353-$4,708,675 = $220,103 (On a per Eq Life basis MTF earnings decreased from $232.64/Eq Life to $221.48/Eq Life)

(C2) Team care for own Enrollees134,163 RVUsPPS $4,557,512

8.10 RVUs/ Eq Life 7.61 RVUs/ Eq Life

How Well - HEDIS

• Eligibles determined by measure, valued on a sliding scale– $10.00/properly managed enrollee if enrollment site

manages to meet the 90th percentile– $5.00/properly managed enrollee at 50th percentile– $2.50/properly managed enrollee below the 50th percentile

• Performance Period (Rolling 12 months)– FY11 FM4 to FY12 FM3– FY10 Q4 months inferred

• Baseline– FY09

HEDIS Colorectal HEDIS Cervical HEDIS Mammography HEDIS A1c > 9 HEDIS A1c Screening HEDIS LDL > 100mg/dL Total0038 NH PENSACOLA 16,380$ (1,050)$ 1,355$ 9,278$ 28,345$ 48,023$ 102,330$ 0385 NMCL QUANTICO (2,613)$ (2,710)$ 638$ 510$ 1,950$ 6,568$ 4,343$

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How Well - Third Available Acute

• Pensacola earned $30,250.

• Quantico lost $34,568

• Earnings are calculated monthly.• By crossing above 60%, Pensacola began earning

$0.50/enrollee month versus $0.25 prior to crossing 60%.

• Conversely, Quantico dropped to $0.25/enrollee in most months, causing a significant earnings decline from 2009.

Raw Earnings

Performance Population

2009 $ 101,652 57%

42,541

2011 $ 131,903 62%

43,095

Raw Earnings


2009 $ 66,841 62%

20,874

2011 $ 32,273 49%

22,138

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How Well - Third Available Routine

• Pensacola lost $228,522.

• Quantico earned $36,097

• Earnings are calculated monthly.• In 2011, Pensacola decreased in raw performance from 92% to

84%• Additionally, they also dropped below 80% in some of the months

of 2011, which caused them to earn an additional dollar less per enrollee ($1.50 - $0.50) in those months.

• In the months that the performance dipped below 80%, earnings fell almost 33%.

• By passing above 60%, Quantico began earning $0.50 per enrollee per month instead of only $0.25.

Raw Earnings


2009 $ 721,578 92%

42,541

2011 $ 493,056 84%

43,095 Raw

EarningsPerformance Population

2009 $ 55,114 57%

20,874

2011 $ 91,211 60%

22,138

2011 2012 8 9 10 11 12 1 2 3 % $ % $ % $ % $ % $ % $ % $ % $

78% $

25,490 79% $

25,765 80% $

25,559 81% $

77,676 86% $

82,793 92% $

88,065 92% $

87,958 83% $

79,751

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How Well - Continuity

• Pensacola earned $79,067

• Quantico earned $163,090

• Earnings are calculated monthly.• Pensacola increased performance but was

also able to cross the 50% threshold in some months, earning $10 per PCM appointment.

• Quantico increased performance and was also able to earn $20 per PCM appointment by crossing above the 60% threshold.

Raw Earnings

Performance Appointments

2009 $ 378,653 43%

75,185

2011 $ 457,720 51%

118,940

Raw Earnings

Performance Appointments

2009 $ 261,800 49%

40,104

2011 $ 424,890 65%

50,185

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How Well - ER Visits / 100

• ER roughly calculates the difference in PPS earnings based on utilization that would be expected and then disperses a portion of the savings (or costs).

• ((Enrollees2011 * ER2009) – (Enrollees2011 * ER2011)) * 300 * X %

• Where X % is based on the performance year ER Rate– < 30.0, 20%– < 35.0, 10%– >35.0, 5%– Increase above baseline -5%

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ER Continued

Pensacola increased their expected visits by approximately 82.43,095*(.4774-.4755)

82 visits * 300 * 5% = ~$1,237 decreaseQuantico increased their expected visits by

approximately 1,01122,138 * (.3861-.3404)

1,011 * 300 * 5% = ~$15,172 decrease

$ (1,237)

% Population

2009 47.55 42,541

2011 47.74 43,095

$ (15,172)

% Population

2009 34.04

20,874

2011 38.61

22,138

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How Well - PMPM• PMPM earnings are based on the savings

(or cost) from the MHS target.• The 2 year target from 2009 to 2011 is a

9.38% increase. Anything within +/- 2% of that falls into the safe zone.

• 10% of the savings (or cost) is awarded to those that beat the target by 2% or more.

• 20% of the savings (or cost) is awarded to those that beat the target by 4% or more.

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PMPM Continued• Pensacola fell within the safe

zone and was neither awarded nor penalized financially.

• Quantico increased by well over 4% of the target and thusly was penalized 20% of the increased cost.

• Enrollees2011 * ((PMPM2011 – PMPMTarget) * 12) * 20%

• 22,138 * ((347-311)*12) * 20% = $1.9million


2009

301.47

42,541

2011

329.85

43,095 % Increase 9.4%

Target

329.74


2009

284.40

20,874

2011

346.96

22,138 % Increase 22.0%

Target

311.08

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Summary for Sites

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0038 0385 Navy TotalNH PENSACOLA NMCL QUANTICO

HEDIS Performance 102,330$ 4,343$ 3rd Available Appt

Acute 30,250$ (34,568)$ Routine (228,522)$ 36,097$

Continuity of Care 79,067$ 163,090$ ER Utilization (1,237)$ (15,172)$ PMPM Adjustment -$ (1,903,122)$

Non-Workload Peformance Sub-Total (18,112)$ (1,749,333)$

Balanced Bonus -$ -$

Non-Capitated Earnings change 1,593,594$ (74,332)$ Sub-Capitation 197,103$ 220,678$

Workload Performance Sub -Total 1,790,696$ 146,347$

Care Mgmt Fee 33,250$ 75,860$

Total Performance Adjustment 1,805,835$ (1,527,126)$ 278,709$

Both sites had a negative Non-Workload Performance Sub-Total, so there is no Balanced Bonus. Balanced Bonus is only applied if Performance results are positive.

Centers for Medicare and Medicaid Innovation

Comprehensive Primary Care Initiative

• Tests two models simultaneously• Practice redesign

Targeting 5 key primary care functions (does not equal PCMH specific model)

• Payment redesign – 2 key components of program

•PMPM care management fee •Shared savings

First program to focus on reduction of overall cost of beneficiary

• Better use of data• Ongoing, regular reports to providers

Practice and Payment Redesign Through the CPCI – Overview

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Reasons/Purpose for MHS Participation

1. Test new model of care for MCSC enrollees2. Investing in PC providers may --> increase in

network (Oregon state reps highlighted especially)3. Partnering with CMS4. Partnering with state5.Establishing roadmap for future such US-wide

demonstrations with other federal partners6.Helps inform future TRICARE contracts.

Does this payment mechanism reduce overall cost per beneficiary?

One of goals of CPCI is to build a medical neighborhood with

providers and payers

37

MHS Selection Criteria: Population

• MHS Criteria: populations eligible for demonstration– Prime enrollees to MCSC (does not include

standard care) Care for non-enrolled beneficiaries (standard patients)

potentially acquired at multiple providers Demonstration is testing management of enrollee care to PCMs

– Active duty family members, retiree and retiree family members

Potential geographic relocations of ADFMs may impact significance of results

– Outside a prism and catchment area– If in a prism or catchment area, referrals to MTFs would occur – Cost of care in MTFs highly variable and presents problem

with study review 38

MHS Selection Criteria: Regions• 7 regions selected by CMMI• 4 with population too small for MHS participation• Arkansas, Oregon (whole state); Oklahoma (only

Tulsa area)― Allows for testing model in rural and metropolitan

areas

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CPCI Markets TRICARE Region

% Purchased

CareTotal

Enrollees

Enrollees Meeting MHS Criteria for

ParticipationArkansas South 95% 18,829 11,732 Oregon West 95% 6,161 6,161 Oklahoma (Tulsa) South 95% 13,819 13,819 Colorado

Population too small for MHS participationNew JerseyNew York (Albany)Ohio (Cincinnati, Dayton)

How Much?• Management Fee

– Risk adjust using Medicare model; revise in future as MHS-specific model evolves

– Average year 1 & 2 estimates• ADFM - ~$7 per enrollee per month

Retirees, NADFM - ~$9 per enrollee per month

– Potential liability first year of 31,712 eligibles, assuming 20% participation: 6,343 enrollees = $652,150

Fee for Service for any care provided40

How well?Quality measures throughout initiative

• Core set of measures • “Not later than year 2” shared savings as

performance bonus, with reduction in care management fee

• Calculated at total area level (state for Arkansas & Oregon; Tulsa region for Oklahoma)

• Calculation– Actual risk-adjusted PMPM (including

management fee) compared to

– Projected risk-adjusted PMPM (based on baseline inflated)

Catastrophic individuals excluded

• Shared saving for distribution – 50%41

Shared Savings: Distribution

• As performance bonuses

• Based on individual practice performance

• Calculated on quality & utilization metrics – formula TBD

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Tentative Timeline

Commitment finalized with CMMI – May 31, 2012Start of demonstration for MHS: September 1, 2013Major mileposts from June 1, 2012 – August 31,

2013 to develop TRICARE specific requirements. No later than

― June 2012: Prepare Decision Memorandum for Director, TMA to establish approval to for the TRICARE demonstration project

― May 1, 2013: Develop and Publish Federal Register Notice of Demonstration

― July 1, 2013: Develop and issue contract modification to TMA contractors by July 15, 2012 to ensure implementation by September 1, 2013

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So…

Has FFS PPS outlived its usefulness?Concern that FFS induces:

Over-utilizationUpcodingTreatment over prevention

Considerable discussion each year on mid-year adjustments

Competition/rancor between services

MTFs strong focus only on PPS earning areasQulaity has ot been focus of performance

adjustments Only used to distribute excess funds

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FFS with Performance Bonus?Primary Care Sub-capitation with

Specialty FFS?Full capitation with Shared Savings?

Stay Tuned

45

Future PPS??(Performance Payment system)

Funding Adjustment Models How Do You Incentivize Value? Bob Opsut/Greg Atkinson OASD (HA) Health...

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