Payment Reform

CY2017 Physician Fee Schedule Proposed Rule Continues Trend Towards Value-Based Payments

CMS’s 2017 Physician Fee Schedule (PFS) proposed rule offers a lot for organizations interested in transformation to celebrate. In addition to making a number of tweaks to the Shared Savings Program that demonstrate CMS leadership are listening to provider feedback, the proposed rule removes barriers for rural health care organizations to offer more preventative and consultative services.

Most importantly, CMS proposes to remove the requirement for direct supervision in rural health clinics and federally qualified health centers when providing comprehensive care management (CCM) services. When CMS first finalized CCM as a billable service, the agency determined that for rural clinics and federally qualified health centers the primary practitioner must directly supervise all aspects of the care. In the proposed rule CMS  would allow such facilities to use general supervision for services incident to CCM, just as currently allowed in a standard physician office.

CMS also simplified the conditions for practitioners operating in all settings to provide CCM services, removing cumbersome requirements for a comprehensive pre-visit as well as written agreement to receive services and share health information. They also propose important new payments for care coordination and behavioral health integration. Caravan Health will assist you in implementing these new codes once approved.

Additionally, in a significant sign that CMS is thinking about our rural members, two new telehealth codes are proposed that will allow clinicians to offer advance care planning remotely.

CMS also proposes a new program focused squarely on prevention in high risk populations. The Medicare Diabetes Prevention Program would begin January 1, 2018 and offer an opportunity for providers to partner with local community organizations or even host prevention programs themselves. CMS is seeking comments on all aspects of the new program, and we expect to see at least one more round of additional rule-making on this before the program rolls out.

Finally, CMS is proposing a few new quality measures and sun-setting others. They also propose changes to the audit process and are considering beneficiary self-assignment.

Click here to read Caravan Health’s full analysis of the proposed rule.

We will have a webinar to review the proposed rule on Tuesday, Aug. 23 at 9am PT/11am CT/12pm ET. To join, log in to www.readytalk.com, participant code 5004777. If you are unable to access the web-audio function, dial 303.248.0285.

Comments on the proposed rule will be accepted by CMS until 5pm EST September 6, 2016. A final rule is expected no later than November 1, 2016.

 

LeeAnn Hastings
Director of Policy & Compliance
Caravan Health

The National Rural ACO: Hundreds of Rural Health Systems, 50 ACOs, and the New World of Value-Based Payments

When we began this journey, our central premise was that every rural community should not have to figure out how to accomplish population healthcare on their own and that the population numbers had to reach enough scale to be affordable. We planned to develop the systems with our pilot group, test our scale up with second year enrollments and be ready to serve the market the third year. Our plan was to have 10 communities in year one, 30 communities in year two and 100 communities in year three. For every 10 communities we brought on board, we would need a project manager and a care coordination coach. We partnered with high-performing rural networks to engage the Executive Directors who lead the ACOs, and provided our own as well. We tested the scale up for 30 communities this year. Our plan worked and we are now ready to scale to the next level to support the 2016 applicants.

We have hired most of our senior staff and are currently refining our programs with the 2015 ACOs. Every member has their data, has hired Care Coordinators and has met with us monthly to work on redesigning the workflows at the clinic to optimize quality and reduce cost. We are constantly learning and sharing best practices across the country. The scale up of ACO Managers and Care Coordination coaches has been successful and can be replicated to meet the demands of our 2016 cohort.

The biggest change to our model in 2016 will be the addition of management and financial consultants to the team. These consultants will work hand in hand with the member’s CFO to ensure a smooth transition to value-based payments. Our 2016 members will get to choose from premier firms such as Alliant, BKD, Blue and Company, Coker, Eide Bailly, HFS Consultants and Quorum to attend steering committee meetings, review member financials monthly and make recommendations to improve performance. Alternatively, members can choose to work with our local network partners such as Hometown Health, Indiana Rural Health Association, Monida Health Network, New Mexico Rural Hospital Network, Northland Health Alliance, Southeast Texas Hospital System, Washington Critical Access Hospital Network, Washington Rural Health Collaborative, and the West Virginia Critical Access Hospital Network.  These partnerships allow us to access local expertise while training our partners in these new programs.

Finally, we have selected four regional Vice Presidents who will serve as the Executive Directors of their ACOs and who will work with our member’s consultants to develop relationships with other payers in their state to implement similar gain-sharing arrangements for their Medicaid and commercial patients.

By leveraging our experience, scale and depth, we are the best opportunity for success in the transformation of your delivery system and preparation for the new world of value-based payments.

 

 

Legislative Alert: Senators Thune and Cantwell Introduce Legislation to Allow Patient Assignment to Rural Providers for Medicare Shared Savings Program

CALL YOUR CONGRESSMAN TODAY TO SUPPORT THIS IMPORTANT LEGISLATION

Today, rural providers struggle to have the majority of their patients attributed to them for the Medicare Shared Savings Program because the Affordable Care Act requires patients to be assigned based on the plurality of care by a physician.

As a result, rural providers who rely heavily on Nurse Practitioners to deliver care only get about one-third of their patients attributed to them, compared to almost two-thirds of patients attributed to urban providers. This makes it twice as hard for rural providers to qualify for the program and means we get paid half as much for the same work.

Senators Cantwell and Thune have introduced legislation to fix this wording issue in the Affordable Care Act. Please take a moment now to have a member of your staff reach out to your Senator and tell him or her that it is very important to support this bill. It is budget neutral and fair to everyone, including our rural patients.

The Senators’ press release follows below. We really appreciate their support, and especially their comment, ““The rural ACO model has the potential to greatly improve access to high quality care in rural parts of our state.” Yes it does.

Screen Shot 2015-06-15 at 3.35.25 PMSENATORS INTRODUCE BILL TO IMPROVE MEDICAL PAYMENT MODELS FOR RURAL HEALTH CARE ORGANIZATIONS

WASHINGTON, D.C. – Last Friday, U.S. Senators Maria Cantwell (D-WA), Patty Murray (D-WA) and John Thune (R-SD) introduced bipartisan legislation that would improve Medicare Accountable Care Organizations (ACO’s) for patients and health care providers.

The Rural ACO Improvement Act of 2015 promotes access to coordinated, patient-focused health care services in rural and underserved areas by implementing improvements to the way patients are assigned to the Medicare Shared Savings Program, a key Medicare ACO.  The legislation allows Medicare to include primary care visits by nurse practitioners, physicians’ assistants and clinical nurse specialists, as well as primary care services furnished in Federally Qualified Health Centers and Rural Health Clinics, in assigning patients to an ACO.  The changes aim to make ACO assignment more accurate and inclusive in communities lacking primary care physicians, while enabling health care providers to attain enough ACO participants to make the model successful.

“Washington state has long been an innovator in the delivery of efficient and coordinated health care.” said Cantwell.  “This legislation advances that innovation by promoting health care that puts the health of patients at the forefront, particularly in rural communities that lack primary care physicians.  Improvements to Medicare’s delivery of health services mean higher-quality care for Washington state beneficiaries and lower costs for taxpayers.”
“I’m focused on building a health care system that works for Washington state families, and to do that, we need to make sure that families are able to get high quality care right in their own communities,” said Senator Murray. “Our legislation will help more families in Elma, Shelton, and communities throughout our state benefit from innovative delivery system reforms that are designed to put patients and families first and save taxpayer dollars, by helping to bend the cost curve and improve quality of care.”

“While health care reimbursement models are transforming, it’s important to level the playing field so rural health care organizations can participate in new payment models, like ACOs, that reward well-coordinated, high-quality, low-cost care,”said Thune. “This bipartisan legislation takes several common-sense steps that would not only help rural ACOs get off the ground, but would also result in more coordinated access to value-based rural health care for Medicare beneficiaries across the country.”

“We commend the Senators’ legislation which will ensure those patients who have chosen to receive primary care services from a nurse practitioner are eligible to be included in an ACO,” said Dave Hebert, CEO of the American Association of Nurse Practitioners.  “This change will result in increased access to the quality primary care that nurse practitioners provide especially for those patients in rural and underserved communities.”

“The rural ACO model has the potential to greatly improve access to high quality care in rural parts of our state. But to achieve that goal, it must reflect the realities of who provides care in these communities,” said Scott Bond, CEO of the Washington State Hospital Association. “This bill recognizes the critical role nurse practitioners and physician assistants play in providing access for residents of rural communities.”

Accountable Care Organizations, or ACO’s, are groups of hospitals, doctors, and other health care providers who voluntarily join together to coordinate care for a specific patient population.  In ACO’s, health care providers are responsible for effectively managing the health and wellness of patients: when an ACO delivers high-quality care at a lower cost than traditional fee-for-service spending, the ACO recoups part of the savings.  Created by Congress in 2010, the Medicare Shared Savings Program is a voluntary program enabling health care providers to share savings with Medicare if they beat cost targets and achieve specified quality measures.

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Call Your Congressman TODAY About the SGR Fix — What About Rural Health Clinics and FQHCs?

The “Doc Fix” is in play once more and looking to move toward approval. The attached document outlines how Congress intends to alter physician fee schedule payments, making 25% of physician payments variable based on cost and quality by 2020.

One of the key components of this legislation provides special incentives for clinicians who participate in Advanced Payment Models. “Professionals who receive a significant share of their revenues through an APM(s) that involves risk of financial losses and a quality measurement component will receive a five percent bonus each year from 2019-2024. A patient-centered medical home APM will be exempted from the downside financial risk requirement if proven to work in the Medicare population.”

Guess what? Providers that practice in RHCs and FQHCs (who are not paid under the Physician Fee Schedule) are not eligible for those five percent bonuses. This is a SUBSTANTIAL INCENTIVE that will leave rural providers behind in their costly efforts to transform their practices.

Call your congressman today and ask that the SGR Fix includes language that requires CMS to provide similar incentives for Rural Health Clinic and FQHC providers to join Advanced Payment Models.

Your Seat at the Table

The speed of change in healthcare is breathtaking, and the latest announcements of ambitious new goals and timelines will turn the pressure up even more.   To quote Secretary Burwell, “our goal is for virtually all Medicare fee-for-service payments to be tied to quality and value; at least 85% in 2016 and 90% in 2018.”

We see some real world challenges for rural health. Twenty percent of Medicare fee-for-service beneficiaries live in rural America, yet rural health clinics and FQHCs are exempt from value-based payments and quality reporting; including PQRS, Value-Based Modifiers and Medicare Meaningful Use. Instead of celebrating our freedom from regulations, we should be very worried about how these changes could devastate the rural safety net and negatively impact our patients.

If the rest of the delivery system is paid on quality, and we aren’t, we become a liability to our referral network. CMS is making everyone else report on quality because they know that when we report quality, we improve. CMS is creating a quality chasm. If we don’t participate, our resulting lower quality will negatively affect our patients and our partner’s payments.

If the rest of the delivery system is paid on cost, and our unit costs are higher because of special payments, we become a liability to our referral network. Our special payments will negatively affect our partner’s income.

Given 1) and 2) above, the pressure for our partners to optimize value will result in our patients being diverted from our health systems. Declining quality and volumes will increase costs further, creating a death spiral for rural health systems. Yet today, even if we wanted to participate in quality reporting programs, we don’t have the same access to information or option to do so other than through the Medicare Shared Savings Program (MSSP). And although Medicare has the ability to “standardize” our payments to the PPS rates (like they do with IME, DSH, GPCI and others to protect urban safety net providers), they do not make those concessions for rural payments, putting the target squarely on our backs.

This announcement could not have come at a better time!

The National Rural Accountable Care Organization and our thirty member hospitals and community health systems are now in our second year, working together with a clear unified voice that is being heard and changing policy that will secure the future of rural health care in America. We are most proud of our members who are creating patient-centered health systems, leading rural healthcare policy reform discussions and taking charge of their destiny.

To us, the new goals and timelines proposed by HHS Secretary Burwell are simply the next initiative coming from the rapid-changing machinery behind the ACA. There’s much to fix and much to do. We’re ready. We will be in Washington DC the week of February 2nd at the Rural ACO Summit to kick off our 2015 campaign for transforming accountable care for rural communities. We can use your help.

  1. by February 6th. Download our CMS comment letter here.
  2. Activate your political network.  The plight of rural healthcare needs to become a state and national issue.  Too much is at risk for communities that do not act. Ask you representatives to demand that CMS standardizes all rural payments to the PPS rate for the purposes of value-based payments. Download a sample letter for your congressman here.
  3. Join us.  The National Rural ACO. Your seat at the table.  Your path to a sustainable future.

Secretary Burwell Throws Down the Gauntlet

On January 26th, Secretary Burwell laid out an ambitious goal of having “30% of all Medicare provider payments to be in alternative payment models that are tied to how well providers care for their patients, instead of how much care they provide – and to do it by 2016.Our goal would then be to get to 50% by 2018.”

See her blog post on the topic here.

She continues, “Our second goal is for virtually all Medicare fee-for-service payments to be tied to quality and value; at least 85% in 2016 and 90% in 2018.” Hmmm. More than 20% of fee-for-service payments are for rural beneficiaries, yet RHCs, CAH’s and FQHC’s are the only providers whose payments are not tied to quality and value. No PQRS, no value-based purchasing, no value-based modifiers, not even Medicare Meaningful Use. How will the Secretary achieve her goal without offering incentives for rural providers? As one CEO wrote to me yesterday, the times they are a’changin.

Expect more to come from HHS. We’d like to help the Secretary achieve her goal with better incentives for rural providers to participate in ACOs. Better payments, better assignment, more flexibility and having Medicare pay residual cost-sharing for our seniors to encourage them to get care in their rural ACO would go a long way.

Please review our comments letter here.  If you agree, go to www.regulations.gov and send in a comment on CMS-1461-P supporting our ideas. Comments matter! And so do rural beneficiaries!

National Rural ACO’s Response to the Proposed Rule for the Medicare Shared Savings Program

What is at stake? CMS has introduced a proposed rule to improve the integrity and attractiveness of the Medicare Shared Savings Program. Many of the changes are welcome improvements for all providers, but they fall short of meeting the unique needs of rural providers. For a brief summary of the proposed rule please see our comments, which follow.

Who is the National Rural ACO? The National Rural Accountable Care Organization was the first of its kind t bring together unaffiliated providers in multiple states to enable rural participation in the Medicare Shared Savings Program by pooling lives, expertise and financial resources. Now in its second program year, the leaders of National Rural ACO have blazed a trail for others to follow as a non-profit peer learning and education organization that can disseminate knowledge learned from our data. Today, thirty health systems in six ACOs covering nine states participate in the National Rural ACO under a single data warehouse.

Why do we care so much about the MSSP? Safety net providers are the only primary care systems left in the country that are not eligible for incentives for providing better care at a lower cost. This lack of incentives may create health disparities for rural beneficiaries, who are in desperate need of Medical Homes and Care Coordination. Without the appropriate data and incentives, cash-strapped rural providers cannot redesign their delivery systems to meet the three-part aim. The MSSP is the only program broadly available today to create the framework for change that safety-net patients need.

What are the rural issues? The key economic issues that affect rural providers are that they are low volume with high fixed costs and little or no operating margin, and are almost wholly dependent on Federal payments. They constantly struggle to survive and have very limited cash reserves, which provide no margin for error or “rainy days.” The effect of small cuts to their payments in the past few years has resulted in a record number of closures. According to the Flex Monitoring Team, the average days of cash on hand for CAHs is a paltry 69 days.

“We count our cash on hand in minutes. Every day we open the checks to see who we can pay.”

Lee Barron, CEO, Southern Inyo Hospital

The following chart illustrates key economic considerations of CAH-based health systems.Table1_SelectedMedian

Could volume be the answer to saving the rural safety net? Rural cost accountants postulate that CAHs have very high fixed costs; therefore incremental volume is essentially free. To illustrate that point, if CAH discharges are 75% Medicare, the CAH’s allowable costs are $5,000,000, and there are 1000 patient days, Medicare pays the CAH 75% x $5,000,000 x 101% = $3,787,500 or $3,786 per patient day. If the CAH doubled its average daily census from 3 to 6, and the incremental cost was only 15%, Medicare would pay the CAH $4,365,625, or $2,178 per patient day. The same is true for outpatient services, which account for almost 75% of CAH revenue. It is no coincidence that the CAH in our ACO that has the highest market share (62%) also has a very low cost per beneficiary. Different facilities have different fixed costs and different abilities to increase share, but increasing volume is a clear way to reduce the cost of rural healthcare. The following chart illustrates the potential savings by driving increased volume to cost-based reimbursed providers.

[1] “CAH Financial Indicators Report: Summary of Indicator Medians by State.” Flex Monitoring Team Data Summary Report No. 16. October 2014. [Data from 2012.]

PotentialMedicareSavings

Figure 1: Volume Effects on Cost-Based Reimbursement

Can rural health systems increase market share? From the claims data we see, they certainly can. Our ACOs only get claims data on the patients who use their primary care more than anyone else, so these are presumably our most loyal customers, yet the claims data shows that they on average only capture 35% of the claims for their attributed lives. Reviewing that claims data shows they would be capable of providing an additional 35% of the services if the patient chose to get their health care locally.

 ACOMarketShare

Figure 2: National Rural ACO Share of All Claims Data

Why aren’t people using the local health system, even when their PCP works for the CAH? We can only speculate here, but our Community Needs Assessments show some interesting data. Unlike the national average of 70%, only 50% of our patients can name their PCP. Similarly, only 30% of ED visits nationally are for primary care, yet our data shows that 50% of our rural ED visits are for primary care. Our patients use the ED, the internet, or get in their car and drive when they can’t get an appointment. There is no urgent care center in town to take care of their needs and it is very expensive to keep the clinic open after hours, in addition to creating yet another barrier to recruiting rural physicians.

Meet Linda. She is 74 rural resident and was in fair health. In the last two years she has broken her hand, broken her arm, sprained her ankle and suffered a head injury from a series of falls. She has been seen in 10 different Part A facilities and 43 Part B facilities with total claims exceeding $250,000 in the past two years. Without a regular PCP, Linda used the internet to find a doctor who would help her with her back pain. The botched spinal surgery resulted in her $163,000 admission to a renowned tertiary hospital to remove the implant and help her recover. Linda deserves a medical home and a care coordinator to “watch her back.”

How can we increase volume for Medicare Beneficiaries? Essentially by creating a rural Medicare PPO. We could increase local volume considerably if we had the ability to incentivize our patients to get care in our community by having Medicare cover residual patient cost-sharing (after supplemental insurance.) As cost-based reimbursed facilities with high fixed costs, increased local volume naturally lowers costs for Medicare while also bringing the patient closer to their medical home.

The cost of having Medicare cover in-network cost-sharing after supplemental insurance can be estimated using 2012 data from MEDPAC reports, which showed average beneficiary cost-sharing is $1550 per year, and that 10% of seniors do not have supplemental insurance that covers these costs. Currently, our cost-based facilities only have a 35% of total claims. This should yield a cost per beneficiary of ($1,550 X 10% X 35% X 50%) = $54.25 per beneficiary per year, which would be charged against total Medicare spending for the ACO. Rural providers would bear 50% of this cost by virtue of being in a shared savings program. Medicare would gain significantly due to the effect of higher volumes on per capita cost-based reimbursement. The greatest winner would be the beneficiary and the rural community, which would see increased local spending, employment and better, more comprehensive care. See Figure 1 for a model of potential savings for Medicare based on increasing volume to cost based providers.

What does the data say about rural care coordination? Our patients are literally scattered to the wind. Our members range from 182-3200 patients attributed to them who are using from 75-300 different Part A facilities and thousands of different doctors.

A good example is Mammoth Lakes Hospital and Rural Health Clinics. Mammoth has 520 attributed lives that have been seen in 259 different Part A facilities and 3,294 unique Part B providers in the past two years. Review of their patients data is a “trail of tears” with patients bouncing from one provider to the next, one hospital to the next, without communication, coordination or forethought. Given the opportunity and the data, rural providers can do much better.

How can rural providers increase market share? Any business that is the sole proprietor of services in a service area that has the ability to increase its market share can do so by focusing on business fundamentals. Customers want value – high quality, great service and a low price. If a patient is ill and cannot get care in their community, the evidence suggests that he will either use the ED or get in his car and drive to the nearest available provider. They will not simply wait for the next appointment. Rural communities must create capacity for primary care to be successful in the future.

In addition, focusing on the 25% of Medicare patients that comprise 82% of total Medicare spending and giving them the help and support they need can increase market share the most with the least amount of effort. If implemented well, primary care frequently determines how and where patients get more advanced care. Rural health systems should actively recruit these patients providing them with care coordination services to help them navigate their disease and the byzantine healthcare system, identifying high value providers for them and ensuring their data and history follow them wherever they go. Losing these highly coveted patients to competing health systems can devastate a rural health system.

How can rural providers increase their margin? Increasing market share is good for our patients and good for Medicare, but cost-based reimbursement still leaves the rural provider without an operating margin, always teetering on the brink of insolvency. We think this can be solved by the Medicare Shared Savings Program, where rural providers can earn a margin by delivering high-quality care and lower cost through care coordination of the chronically ill and by building market share. In order for it to work, however, we need specific changes to the MSSP that recognizes our unique needs and payment system.

Conclusion

The Medicare Shared Savings Program provides the necessary framework for improving care, improving health and lowering costs for rural beneficiaries. Unlike urban providers, there are no other programs for the safety net that enable these new systems of care proven to improve cost and quality. Our proposed creation of a Safety Net Track 4 will make the program extremely attractive to safety net providers and encourage their participation. Cost-based reimbursement can be effective if coupled with the right incentives to provide the right care at the right time for the beneficiaries, while allowing rural providers to earn more for delivering better care. Please comment today at regulations.gov, CMS-1461-P.

Download the National Rural ACO’s comment letter here.

Download this blog post as a PDF here.

The Critical Role of the CFO and Financial Consultants in Healthcare Reform

Many have described the transition from fee-for-service to fee-for-value for hospitals as crossing a “shaky bridge.” We are being asked to increase our spending to manage population health, resulting in preventing avoidable admissions that reduces per capita hospital revenue. It is no wonder that CFO’s are often reluctant to join ACOs.

The beauty of rural health is that the mission of a rural hospital CEO isn’t maximizing the daily census; it is serving the community’s health needs. Over time, most rural hospitals have acquired the majority of health services in town, including physician practices, skilled nursing, home health and hospice. The average rural hospital’s income is only 30% for inpatient care, with 70% of income coming from outpatient care. They have evolved into integrated delivery networks that provide about 70% of the total services that their community needs, although we do not capture anywhere near 100% of the market share for those services.

Rural hospitals also have small cash reserves, so any disruption in payment can be threatening to its survival. Our bridges are a bit shakier than most, and that is why the CFO and Financial Consultants are critical to the success of the transformation of rural health.

As we continue to implement our rural ACOs and study their impact on rural health systems, we have instituted a new role for the CFO and Financial Consultants in the transformation of the rural health system. We begin our monthly community steering committee meetings with a report from the CFO about the effect of the transition on the finances of the community health system. The hospital can and must control the rate of change so that the health system survives to serve its community for many years to come. If the bridge feels shaky, we can focus on quality, prevention and wellness visits until the system has time to adapt. We can work on our referral patterns to maximize the value of care given outside of the community.

We have to work on building local market share at the same time we help people manage their disease and keep them healthy. We have to increase primary care services and access, while still supporting the largely fixed costs of the hospital. Using the claims data provided for ACOs, we have to understand what services we could provide our patients that we don’t today, and how to increase our market share for the ones we do offer.

Beginning with our 2016 ACOs, we will have Financial Consultants at the table to hold the bridge steady while we cross to the new value-based payment models. Working side by side with the CFOs, we can create a better future for our communities with better quality of life and a thriving rural health system. Rural health systems are blessed with several great Financial Consulting firms, and the National Rural Accountable Care Organization will be announcing partnerships with these firms in the weeks to come.

 

2015 Physician Fee Schedule Released – Join Us on Nov. 11 to Discuss

On Friday October 31, CMS released the 2015 Physician Fee Schedule rule, which includes important information about how to receive reimbursement for Care Coordination services – a key component of an Accountable Care Organization.

There are important changes regarding the PQRS and Value-Based Modifier programs, as well as updated quality reporting requirements for the Medicare Shared Savings Program. Our short summary is available to download.

We will have a Webinar on November 11th at 10am PT via www.readytalk.com / 303.248.0285 / 5004777 to discuss these changes and answer your questions on the new rules.

Last Day to Comment!
Reminder: CMS has asked for comments on innovation in the Medigap and Retiree Supplemental Design. Using this PDF comment form, please enter your contact information on page 2 and answer question 13 on page 5 (my comments are included, please use your own words) and save the document.

Submit the form to HealthPlanInnovationRFI@cms.hhs.gov today, (due November 3rd).

Comments matter! Your voice will be heard.