The Bridge

Your top 4 reimbursement questions, answered

by Viggy Hampton and Lindsay Conway

With all of the new policies and payment methodologies, it can be easy to get lost in the reimbursement labyrinth. Here, we've answered a few FAQs to help you stay up-to-date on pay-for-performance, bundles, accountable care organizations (ACOs), and telehealth. We've also included additional resources for further learning and offered implications for suppliers and service providers.

Medicare 101: Cheat sheets for Parts A through D

1. What are the key changes to Medicare's pay-for-performance programs?

In 2019, up to 6% of your customers' Part A payments are put at risk with CMS' P4P programs: the Hospital Value Based Purchasing program (VBP), the Hospital Readmission Reduction Program (RRP), and the Hospital-Acquired Conditions Reduction Program (HAC). Even though that 6% has been in effect for several years, more hospitals received penalties in 2018 than in 2017. In fact, 44% of hospitals received multiple P4P penalties—a 3% increase—potentially due to a combination of changing program structures, shifting performance measures, and a lag in data reporting.

Whereas methodology and scoring for HAC and VBP programs will stay the same for 2019, the RRP program methodology will change slightly. Previously, CMS calculated readmissions penalties by comparing individual hospitals with all hospitals nationwide. Now, CMS will put hospitals into quintile-based cohort groups based on their proportion of patients, known as "dual eligible," who receive Medicare and Medicaid benefits. Since patients' readmission risk is inversely correlated with their socioeconomic status, this methodological change aims to reduce penalties and level the playing field for safety net hospitals, which have disproportionately large populations of dual eligibles.

Key takeaway for suppliers: CMS' quality performance standards are increasing, meaning all providers have to work harder to avoid penalties. Safety net providers, in particular, need help addressing social determinants of health. And while other providers may serve more affluent populations, provider executives tell us that they believe their biggest opportunity for performance improvement is better supporting underserved patients—meaning these providers would also benefit from solutions that address social determinants of health.

2. What's happening with Medicare bundled payments, especially BPCI Advanced?

While P4P programs have remained fairly steady, Medicare bundled payments have undergone huge changes. After cancelling proposals for two new mandatory bundled payment programs in 2017, CMS announced Bundled Payments for Care Improvement Advanced, or BPCIA, in 2018.

BPCIA is a voluntary advanced alternative payment model with downside risk. It covers 29 inpatient episodes and three outpatient episodes, spanning 90 days post-discharge or post-procedure. As with BPCI, both hospitals and physician groups may initiate episodes, and while post-acute care providers may participate, they can no longer initiate episodes. However, unlike BPCI, BPCIA participants must take on downside financial risk from the outset, which could be up to 20% of the target price for each episode. Payment is tied to quality measures, including all-cause readmission.

Key takeaway for suppliers: Yes, CMS has rolled back mandatory bundles—but voluntary bundles with downside risk are the new norm. You may consider segmenting your customers based on participation in BPCIA and other bundling programs. Organizations signing up for bundled payments will be laser-focused on episodic costs. And while they will strenuously avoid anything that adds cost to individual episodes, they will be receptive to investments that enable them to cut episodic costs for specific populations.

3. What are the new ACO tracks, and how do they work?

As with bundled payments, ACOs have experienced a recent sea change. In December 2018, CMS issued a rule overhauling the Medicare Shared Savings Program (MSSP). The rule created a program called "Pathways to Success," with the goal of transitioning more ACOs to downside risk. This rule also cut the number of ACO tracks from four (Tracks 1, 1+, 2, and 3) to two (BASIC and ENHANCED). CMS created these new tracks in part because, under the old system, provider organizations were not voluntarily taking on downside risk. Now any provider participating in the program will be held accountable for their patients' total costs of care.

Both of the new tracks are five-year agreements, but they differ in how quickly downside risk is phased in. ACOs in the BASIC track will have upside-only risk for the first two years, then transition to moderate downside risk for the last three years. In contrast, ACOs in the ENHANCED track will face much greater downside risk for the entirety of the five-year agreement—but providers in tracks with greater downside risk also have greater upside potential.

By 2028, CMS expects 36 ACOs to complete Pathways to Success. Early estimates of financial savings are formidable: $380 million in savings to beneficiaries, and $2.9 billion in federal savings.

Key takeaway for suppliers: New ACO tracks are pushing providers to take on downside risk, which will likely make providers more cautious purchasers—but also more willing to invest in new technologies to manage patients beyond the hospital. Admittedly, this shift from fee-for-service (FFS) to value-based payments has been much slower than anyone anticipated. As a result, providers have been caught between trying to maximize fee-for-service revenues while preparing for a value-based environment. And their purchasing decisions have been similarly split. But Pathways to Success is a meaningful push toward value. While there may be fewer providers in these new tracks, those that do engage will likely have a clearer focus on value-driven solutions.

For more information on the changing ACO landscape, view our on-demand webconference, Pathways to Success: What Medicare's ACO overhaul means for your risk strategy.

4. Where do we stand with telehealth reimbursement?

Providers and payers both recognize the value telehealth can bring: enhanced patient access, increased quality of care management, and decreased unnecessary utilization. In fact, Medicare FFS telehealth volumes grew by 28% between 2015 and 2016, and 83% of health industry executives said they were likely to invest in telehealth in 2017. However, despite this interest, low reimbursement has stymied telehealth adoption among traditional provider organizations.

That said, recent Medicare policy changes have expanded telehealth coverage:

  • Medicare's 2018 physician fee schedule includes reimbursement for remote patient monitoring;

  • The Bipartisan Budget Act of 2018 reduces geographic and care site restrictions (which had limited telehealth coverage to patients living in areas with minimal health care access) in two-sided risk payment models for specific conditions; and

  • The 2019 Home Health Prospective Payment System allows home health agencies to bill Medicare for remote patient monitoring services.

And telehealth reimbursement continues to expand. In late 2018, CMS proposed that starting in 2020, Medicare Advantage plans use their entire pool of benefit dollars to finance telehealth coverage, instead of just using a small bonus pool for that purpose. This proposal would, in short, reduce restrictions on reimbursement and drastically increase the amount of money available for telehealth coverage.

Key takeaway for suppliers: All signs point to continued expansion of telehealth coverage—but incumbent providers' progress is slow. Customers are increasingly receptive to telehealth solutions, especially in so far as they improve access, care management, and patient experience. But they are still struggling to secure a reliable ROI. Whether or not you offer a telehealth-related solution, consider how your services and products can support your customers' evolving telehealth strategies, whether it's ensuring interoperability with existing solutions, or offering wraparound services that complement remote monitoring to improve at-home care management.

Have a question we didn't cover? Contact your DA and we’ll work to get your question answered.

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