Prepared for AAHCP and constituents of the IAH Coalition by Bruce Kinosian, MD Associate Professor of Medicine University of Pennsylvania

Objectives

Prepare for Independence at Home implementation

Describe the context of risk-adjusted payments

Explain relationships of ICD-9 codes to HCC groups

Demonstrate the ability of risk adjustment to accurately predict costs for IAH-eligible patients

Discuss potentially relevant requirements of PCP documentation and ICD-9 coding

• IAH retains Fee for Service payment structure

• Incorporates incentives of Capitation (“risk”) • Rewards come from reducing utilization

• Quality must be maintained

• Covers the added Interdisciplinary Team cost

• Savings will be shared by payer and providers

• Guaranteed to be less expensive than current arrangement (minimum 5% savings guarantee)

Final I.A.H. Regs. Not Public

Known Shared savings will be provided

CMS will measure what “costs would have been” to calculate savings

Risk adjustment will be involved

HCC scores are often used in this context

Risk adjustment using HCC scores accurately measures what “costs would have been”

Unknown How CMS will calculate “what costs would have been” and determine the gain sharing amount

Some adjustment is essential to payment models involving very high cost patients

One approach is prospective modeling such as we will show using HCC scores (later)

Another is matched controls – must be matched on disease burden and expected costs

You will need to understand your patients’ co-morbidities and how those relate to costs

Widely used with Medicare Advantage (MA) payments ◦ Also, used in P.A.C.E. and S.N.P.

Ensures more accurate payments to MA organizations based on health status of enrolled beneficiaries rather than demographic data

Involves funds from Part D as well as Parts A and B

Risk adjustment is based entirely on diagnosis coding, therefore: encounter data are key

Fee for Service rewards CPT coding, not ICD-9 coding ◦ Accordingly, provider diagnosis coding is often inaccurate

and/or incomplete

BBA 1997 mandated accurate payment to Medicare Advantage plans based on risk adjustment

In March 2002, CMS chose a model based on selected chronic conditions – the CMS- Hierarchical Condition Category (or CMS-HCC) payment model

BBA required initial implementation by 2004 ◦ full implementation by 2007/2008

Physician coding is the main source (90%) of diagnostic data that drives the HCC (and Rx HCC) payment models

Key diseases broadly organized by body system, using ICD-9 codes (~ 3,100)

87 disease groups (HCC), each with assigned scores, plus disease interactions

Hierarchy logic for certain disease groups ◦ Payment for most severe manifestation of a disease

when less severe manifestation is also present

◦ “Sicker” participants with more diagnoses may

trigger more HCCs

HCCs are additive HCC models are recalibrated periodically (annually)

using more recent cost data

ICD-9-CM codes (~18,000)

Qualifying codes

(~3000+)

HCCs (87)

HCC Disease Group Score 1 HIV/AIDS 0.945

2 Septicemia/Shock 0.759

5 Opportunistic Infections 0.3

7 Metastatic Cancer or Acute Leukemia 2.276

8 Lung, Upper Digestive Tract, and Other Severe Cancers 1.053

9 Lymphatic, Head and Neck, Brain, Other Major Cancers 0.794

10 Breast, Prostate, Colorectal, Other Cancers and Tumors 0.208

15

Diabetes with Renal or Peripheral Circulatory Manifestation 0.508

16 Diabetes with Neurologic or Other Specified Manifestation 0.408

17 Diabetes with Acute Complications 0.339

18

Diabetes with Ophthalmologic or Unspecified Manifestation 0.259

19 Diabetes without Complication 0.162

21 Protein-Calorie Malnutrition 0.856

ICD-9 Description HCC

250.4 DIAB W RENAL MANIFEST* 15

250.40 DMII RENL NT ST UNCNTRLD 15

250.41 DMI RENL NT ST UNCNTRLD 15

250.42 DMII RENAL UNCNTRLD 15

250.43 DMI RENAL UNCNTRLD 15

250.6 DIAB W NEUROLOGIC MANIF* 16

250.7 DIABETES W CIRCULAT DIS* 15

250.60 DMII NEURO NT ST UNCNTRL 16

250.61 DMI NEURO NT ST UNCNTRLD 16

250.62 DMII NEURO UNCNTRLD 16

250.63 DMI NEURO UNCNTRLD 16

250.70 DMII CIRC NT ST UNCNTRLD 15

250.71 DMI CIRC NT ST UNCNTRLD 15

250.72 DMII CIRC UNCNTRLD 15

250.73 DMI CIRC UNCNTRLD 15

If HCC in this

column

. . .Then Drop the HCC in this

Column

15 Diabetes with Renal Manifestations 16,17,18,19

16 Diabetes with Neurologic Manifestation 17,18,19

17 Diabetes with Acute Complications 18,19

18 Diabetes with Ophthalmologic Manifestations 19

67 Quadriplegia/Other Extensive Paralysis 68,69,100,101,157

81 Acute Myocardial Infarction 82,83

82 Unstable Angina, Acute Ischemic Heart Disease 83

95 Cerebral Hemorrhage 96

100 Hemiplegia/Hemiparesis 101

104 Vascular Disease with Complications 105,149

111 Aspiration and Specified Bacterial Pneumonias 112

130 Dialysis Status 131,132

EXAMPLE: beneficiary triggers both Disease Groups 148 (Decubitus Ulcer of the Skin) and 149 (Chronic Ulcer of Skin, Except Decubitus). DG 149 will be dropped.

Current HCC models use ICD-9 diagnosis codes ◦ CMS HCC (Medicare Part C)

◦ ESRD

◦ New Enrollees

◦ Community/Long Term Institutional versions

◦ Rx HCC (Part D)

CMS-HCC and ESRD models ◦ 70 HCCs (there will be 87 HCCs in 2012)

◦ 6 disease interactions (there will be 12 in 2012)

Demographic Component (~.7 HCC points) ◦ Gender, Age, Medicaid status ◦ How person entered Medicare, disability ◦ LTI and LIS multipliers (for Part D)

Frailty Factor(~.2 points and <0.05 in 2012) ◦ Predicts Medicare expenditures for functionally

impaired not explained by CMS-HCC model ◦ Based on self-reported ADL dependency -- HOS-M

HCC Component (~1.7 points)

• Original HCC model V.12 – Recalibrated in 2007, adjusted frailty factors

– Modest reduction in some high-volume, high cost factor weights (pvd, ckd, pcm, pressure ulcer)

• For 2012, V.12 would produce average

HCC score 2.12 /Risk score 2.216

For 2012, V.21 will produce an average

HCC score 2.24/Risk score 2.282 Frailty factor average .102 for V.12; .047 for V.21

• Major drops in areas targeted for enhanced provider coding by large MA plans • Diabetes with complications • Depression • Oxygen • CKD

• With provider attention to coding, severity/cost thresholds dropped, leading to reduced factors

• Attention to accurate coding for graded conditions is important for next recalibration: CKD and Pressure Ulcers

Condition Group

Predicted/Observed $ V.12

Predicted/Observed $ V.21

Diabetes 1 1

Cognitive .858 1

Psych 1 1

CVD 1 1.002

Cardiac 1.003 1.002

Skin 1 1

Infections 1.003 1.004

Neuro 1.005 1.001

78 y.o. AA woman, Lives independently in

neighborhood for 50 years 2-story row home Bi-polar daughter lives with

her along with her 2 children (one with autism)

Recurrent utility crisis due to poor money management

Oxygen dependent Held and personally catered

annual block party Multiple cats with fleas Medicare risk score 4.6 Personal goal to survive to

80th birthday

2004 2005 2006 2007 2008 2009

COPD

COPD/ICU COPD/ICU

COPD/ICU

COPD/ICU

COPD

Start

Housecall

ED 80th birthday

491.21 COPD 518.83 Resp Fail 02 327.3 Sleep Apnea 440.2 PVD 585.3 CKD 404.11 HTN c CKD and HF 416.8 Pulmonary Htn 428.3 Diastolic CHF 427.89 SVT 358.8 Neuropathy 274.0 gout 285.29 anemia 721.9 Cervical spondylosis 295.30 Depression 366.9 cataract 530.81 GERD 389.9 Hearing loss 250.40 Diabetes wCKD 250.70 Diabetes w PVD

HCC-V.12

108 - COPD

79 – Respiratory Failure

105 -- PVD

131-- CKD

80 -- CHF

92- Arrythmia

71- Neuropathy

55 – Depression

15 – Diabetes w/ renal or vascular comp.

491.21 COPD 518.83 Resp Fail 02 327.3 Sleep Apnea 440.2 PVD 585.3 CKD 404.11 HTN c CKD and HF 416.8 Pulmonary Htn 428.3 Diastolic CHF 427.89 SVT 358.8 Neuropathy 274.0 gout 285.29 anemia 721.9 Cervical spondylosis 295.30 Depression 366.9 cataract 530.81 GERD 389.9 Hearing loss 250.40 Diabetes wCKD 250.70 Diabetes w PVD

HCC-V.12 HCC-V.21 Weight

108-COPD 111-- COPD .388

79– Resp Fail 84– Respiratory failure .326

105-- PVD 108 Vascular disease .288

131-- CKD 138– CKD stage 3 .227

80-- CHF 85 CHF .361

92-Arrythmia 96 Arrhythmia .276

71-Neuropathy 78- Polyneuropathy .281

55– Depression 58- Depression .318

15 – Diabetes w renal or vasc 18- DM w chron comp .344

DM*CHF DM* CHF .233

CHF*COPD CHF*COPD .255

CHF*Renal*DM CHF*Renal .201

Resp. failure*COPD .42

Total HCC score 3.92

Using the CMS-HCC model, county payment amounts are determined for each enrollee

Enrollees’ demographic characteristics and diagnostic information are linked to numeric scores that add to determine individual HCC risk scores

A frailty adjuster is added to the HCC risk score for community and “new” enrollees (not LTI or ESRD enrollees)

Each enrollee’s total risk score (HCC score + frailty adjuster, if applicable) is multiplied to the appropriate county payment amount to generate a monthly payment amount

23

County payment rates are the greater of ◦ prior year’s rates trended forward or

◦ average per capita fee-for-service payment amounts

Rates vary; for example in 2011/2012 ◦ Miami, FL (Dade county): $1,237.75 / $1,301.37

◦ Portland, OR (Multnomah county): $818.86 / $816.73

◦ Big Stone Gap, VA (Wise county): $769.22 / $743.23

◦ Pittsburgh, PA (Allegheny county): $820.57 / $845.21

◦ Oakland, CA (Alameda county): $940.50 / $942.70

◦ New Orleans, LA (Orleans county): $1108.66 / $1134.37

24

Community Resident in 2012 -- ◦ 82 year-old woman: .517

◦ Medicaid eligible: .213

◦ CHF (HCC85): .361

◦ COPD (HCC111): .388

◦ Dementia (HCC 51): .616

◦ CHF_COPD (INT4): .255

◦ Normalization Factor: 1.051

◦ MA Coding Intensity Adjustment: 3.41%

HCC Risk Score = (.517+ .213+ .361+ .388+ .616+

.255) /1.051 = 2.236

MA Coding Intensity Adjustment: 2.236 * .9659 = 2.160

25

HCC Risk Score*: 2.160

Frailty Adjuster: 0.05

County Payment Rate: $845.21

Payment = (2.160 + .05) * $845.21 = $1,867.91 per month

* After normalization and coding intensity adjustment

26

Accounts for variations in beneficiaries’ Medicare

costs not explained by CMS-HCC model

Organizational-level frailty adjuster added to HCC

risk score for community-based and “new

enrollees”

Frailty adjuster based on functional impairments

reported by organization’s enrollees on Health

Outcomes Survey - Modified (HOS-M)

Currently only for PACE, mandated by ACA to

develop frailty adjustor for Special Needs Plans

28

CMS recognizes only three sources from face-to-face encounters: ◦ CMS-certified hospital inpatient

◦CMS-certified hospital outpatient

◦ “Physician”

Short-term (General and Specialty) Hospitals Medical Assistance Facilities/Critical Access

Hospitals Community Mental Health Centers Federally Qualified Health Centers/Religious

Non-Medical Health Care Institutions Long-term Hospitals Rehabilitation Hospitals Children’s Hospitals Rural Health Clinics, Freestanding and Provider-

Based Psychiatric Hospitals

Clinical Psychologist Licensed Clinical Social

Worker Nurse Practitioner Occupational Therapist Optometrist Oral Surgery Physical Therapist Physician Assistant Podiatrist Medical or surgical

specialty

Audiologist Certified Clinical

Nurse Specialist Certified Nurse

Midwife Certified Registered

Nurse Anesthetist Chiropractor “Unknown” Specialty

Concurrent vs. Prospective models ◦ 5x better prediction vs. gaming and funds flow

◦ Comparing “control” patients to estimated modeled cost as a “model correction factor”

Reconciliation and lags ◦ Time frame for diagnosis codes

◦ Expenditure data come in over time

◦ Calculation of final savings depends on the time frame for data

Adjustment for “extreme cost tail”

County Rate “skewness” for “extreme cost tail”

HCC Applied and Lessons Learned

$17 $19 $24 $32

$45 $54

$71

$98

$156

$395

$16 $19 $22 $25

$42 $54

$72

$104

$163

$396

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

Average Cost ‘00

Hu

nd

red

s

Risk Adjustment Deciles

Observed Predicted

A

$22 $24

$26 $28

$31 $35

$40

$46

$56

$88

$22 $24

$26 $28

$31 $35

$40

$47

$57

$86

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

Average Cost ‘000

Tho

usa

nd

s

Risk Adjustment Deciles

Observed Predicted

B

$15

$19

$24

$29

$35

$43 $46

$58

$76

$113

$22 $26

$29

$33

$38

$42

$48

$56

$68

$97

$19

$23 $26

$30

$36 $37

$43

$49

$58

$77

$0

$20

$40

$60

$80

$100

$120

Ave

rage

Co

st

Tho

usa

nd

s

Risk Adjustment Deciles (ordered by VA-HCC decile ranges with mean CMS-HCC for each decile)

Observed Predicted Post Admission Annualized

.91 1.4 1.8 2.1 2.4 2.9 3.3 3.8 4.7 6.6

2.9

IAH-eligible patients are costly, on average $35,000-$45,000 per patient per year

CMS-HCC model is useful to determine “what costs would have been”– either to determine risk, or as part of IAH shared savings formula.

IAH-eligible patients have a high degree of disease burden which the CMS-HCC model can capture if diagnostic coding is comprehensive

This site is the Risk Adjustment Medicare Advantage homepage.

http://www.cms.hhs.gov/MedicareAdvtgSpecRateStats/06_Risk_adjustment.asp ◦ Contains a number of downloadable files containing

information on HCC and RxHCC.

CSSC operations- Customer Service & Support Center

www.csscoperations.com ◦ Contains RAPS information, and PDIC (Prescription Drug

Information Center).

http://www.cdc.gov/nchs/datawh/ftpserv/ftpicd9/icdguide08.pdf ◦ Website for Official Guidelines for Coding and Reporting,

effective October 1, 2008.

• CMS-provider contracts • Medical fund :HCC-predicted costs less CMS’ 5% • FFS payments • Interdisciplinary Team fee (pmpm) • Pooled outlier risk (7-12% of HCC premiums) • Shared savings of Medical fund balance (after

withholds for IBNR, reconciliation). • Prospective HCC initial funding, concurrent HCC for

final reconciliation • Concurrent HCC-matched controls to obtain a

“model adjustment factor” to correct for systematic over or under-prediction of the model relative to costs to ensure savings.

Avg predicted cost

Individual IAH enrollees

A C T U A L C O S T S

Higher cost outliers

Savings that offset high cost outliers

Reserve pool, held back by CMS for IBNR and reconciliation

IAH Program share

Savings pool for distribution to IAH programs

CMS share

5 % minimum savings, off the top