Opportunity abounds: the
compelling facts of the new
payment model
G Curt Meyer, FACHE, MAACVPR
VP of outpatient services Mary Free
Bed rehabilitation Hospital
Restoring hope and freedom through
rehabilitation
Part two....So now what?
•
•
•
•
Do I do anything?
When do I make a move?
What do I do when I decide to do something
Who do I talk to and what information is
needed to make informed decisions
Are You Ready for Healthcare
Reform?
Emotional Stages of the Unprepared
Denial
Anger
Remorse
Acceptance
Confusion
Depression
Anxiety
Where do we go
Home Health Doing Cardiac Rehab
Is this possibly the bridge to nowhere?
Clinical Integration Provides the Bridge Between FFS and Valuebased Payment
Crossing the Crevasse
Clinical Integration is the Bridge
FEE FOR SERVICE
VALUE BASED PAYMENT
•A business we know and love (and have
thrived at)
•It’s all about volume
•Maximize price to commercial payers to offset
losses on government business
•Focus on specialists
Brave new world
New business model – Focus on
populations and episodes of care
Primary care becomes key
Profits from higher quality care in home
setting
Longitudinal payments for chronic care
Bundled payment for implantable
Joint contracts with payers
Focus on data
6
The bridge from volume to value
Bundled Payment: What it Means to Us
Patient &
Physician
Health System
Rehabilitation
LTC
Nursing Home
Nursing Home
SNF
LTC
Assisted Living
Home Health
Outpatient Care
Home
Outpatient
Rehab
Payment bundling will further encourage health systems
keep patients within a narrow network
Home Health Doing Cardiac Rehab
Expanded Capabilities of rehab at
home
What ACOs are Doing
Assess Risks
• Identifying which
beneficiaries need
intensive
management and
monitoring
Implement
Longitudinal
Care
• Modeling care
management
methods
Develop
Network of
Care
Providers
• Continuing care
networks
What is value
• Low cost per case with
high clinical outcomes
and independence
• High patient satisfaction
• Significant discharge
status of independence
Measures of success
Do I do anything?
• Yes!!!! with or without health care reform
– Outcomes have to be presented
– Cost per case has to be understood And managed
– Clear understanding of where cardiac and pulmonary
rehabilitation fit into the post-acute continuum must be
communicated frequently
When do I make a move?
• When you know the infrastructure that you
have to work with…..
– Information technology inclusive of medical
record, finance and human resource costs
– Ability for predictive modeling of outcomes with
fixed cost
– Willingness to be at risk
What do I do When I decide to make a
move?
• Communicate, communicate,
communicate
– Costs
– Outcomes
• Clinical
– Hospital readmissions over 90
days
• Functional
– Patient Discharge destination
– Fit into the continuum of care
In cardiac rehab we have
been chasing the money
for over 30 years
•1980’s Telemetry
monitoring for higher
reimbursement
•1990s, 36 sessions for
higher reimbursement
•Early 2000, education
exercise and risk
management for higher
reimbursement
•Present day, high
outcomes at low costs
for better any
reimbursement
Basics of conversion from fee-for-service to
population health management
• Analyze current charges and costs per case in
the following areas:
– Total charges Across all patients served in the last
fiscal year
– Total costs
– Salary wage and benefit costs as a percent of total
charges
– Fixed costs as a percent of total charges
Conversation
Let's do the math
Current Volume approach
Current Outpatient cardiac rehab
Charge/visit
Deduction from charges
Net revenue
$
$
$
130.00
(46.80)
83.20
Salary Costs
RN
Exercise physiologist
receptionist
benefits
Total SWB costs
Net income before fixed costs
$
$
$
$
$
$
28.00
20.00
14.00
17.00
79.00
4.20
Value approach
Value based calculation
Cost/visit
Number of visits/case
Total cost/case
Value based calculation
Cost/visit
Number of visits/case
Total cost/case
$
79.00
36
$ 2,844.00
$
79.00
26
$ 2,054.00
Value based calculation
Cost/visit
Number of visits/case
Total cost/case
$
76.00
26
$ 1,976.00
Calculate contracting rate
• Current Range: $ 2,844.00 - 1,976.00
• No perceived margin under current cost
structure
• Net income to operations only occurs through
cost reduction and reduction in utilization
New net income model under value-based
purchasing
•
•
•
•
25,000 covered lives
Carve-out of $1976 per enrollee ( 8% of 25,000 lives)
24,000 patient months at risk
$3,952,000 to cover population Prone to heart
disease
• $164.67 allocated per member per month cost for
cardiac rehab in an ACO model (Amount allocated to
pay for cardiac rehab)
Impact on Annual Budget
• Annual salary costs $288,288
• Annual fixed costs $42,000
• Total operating costs $330,288
• 2000 referrals per year; Potential
revenue:$3,952,000
Summary take-away
• Don't focus on the numbers
• Focus on the following concepts:
– Reducing total costs is the primary means of managing
your business
– Understanding your total costs will better allow you to go
"at risk "for a given population
– Increased volume will no longer fix poor financials,
decrease costs and managed utilization will be the
measure of success
Summary take-away
Bundled payment model exposure for 30, 60 and 90 days
Event
Day one
through
Onset three
Acute MI
Inpatient hospitalization
Discharge home
Outpatient or postacute care follow-up
Exposure to
rehospitalization
Days three through
five
5 to 30 days
30 to 60 days
Cardiac and pulmonary rehabilitation outpatient
60 to 90 days
Summary and takeaways
• Cardiac rehabilitation has a primary role of
preventing re-hospitalization and managing
the health status of those served.
• We should consider providing our services in a
variety of settings, beyond traditional
outpatient hospital settings to home health
and skilled nursing
Questions or for further information