PYA Principal Martie Ross and Senior Consultant Aaron Elias conducted a session at the Association of Healthcare Internal Auditors (AHIA) 36th Annual Conference. The presentation was titled: “The Times, They Are A- Changin’: Alternative Payment Models Panel Presentation.” Areas of focus included: •Discussing new payment models available to providers, including the Merit-Based Incentive Payment System and Advanced Alternative Payment Models. •Exploring CMS’ progress toward goals related to payment reform. •Understanding alternative payment models and pay-for-performance programs—which components require auditing and recommendations for potential auditing processes.

1. Martie Ross
Aaron Elias
PYA
The Times, They Are A-Changing:
Alternative Payment Models Panel

2. Page 1
Agenda
Defining Alternative
Payment Models
(APMs)
Managing the
Transition to APMs
Panel Discussion:
New Compliance
Challenges

3. APM Trends

4. Page 3
A Movement Is Underway
Committed to having
75% of respective
businesses operating
under value-based
payments by 2020

5. Page 4
APM Framework
FEE-FOR-SERVICE
(FFS) PAYMENTS
POPULATION-BASED
APMs
ADJUSTED FFS
PAYMENTS
APMs INCORPORATING
FFS PAYMENTS
$
$
Bank
A Pay for
Reporting
B Pay for
Performance
C Foundational
Payments for
Infrastructure
and Operations
A APMs with Upside
Gainsharing
B APMs with Upside
Gainsharing /
Downside Risk
A Condition-Specific
Population-
Based
Payments
B Direct Primary Care
C Comprehensive
Population-
Based
Payments
A Traditional FFS
Source: Health Care Payment Learning & Action Network, Alternative Payment Model (APM) Framework Final Whitepaper (2017)

6. Page 5
Payment Reform in Action
Source: Health Care Payment Learning & Action Network, Alternative Payment Model (APM) Framework Final Whitepaper (2017)

7. Page 6
Payment Reform in Action
One-quarter of commercial plan payments
now flow through APMs.*
* Health Care Payment Learning & Action Network 2016 Commercial Payer Survey (respondents represent over 128 million covered lives, or
nearly 44% of the combined commercial, Medicare Advantage, and Medicaid markets)

8. Page 7
FFS Care Management
Rewards the monitoring and maintenance of care plans
Other Examples:
 Advance Care Planning
 Behavioral Health
Integration
Chronic Care Management
Incentive: Payment for non-face-to-
face time caring for
patients
Structure:  Expanded CCM
program in the 2017
Medicare Physician
Fee Schedule
 Separate payment for
care plan development
Transitional Care Management
Incentive: Payment to smooth
transitions between
providers
Structure:  Providers must make
contact with
beneficiaries within 7 or
14 days of discharge

9. Page 8
Spotlight: CPC+
Comprehensive Primary Care Plus
Key Features
 Multi-payer
 PBPM care management fee to
support infrastructure development
 PBPM refundable performance
payment
 Adjusted E/M payments (Track 2)
 2,866 primary care practices
across 18 selected regions (by
January 1, 2018)
 Includes:
 Care Management Fees
 Performance-Based Incentive
Payments
Care
Management
Fee (PBPM)
Performance-
Based Incentive
Payment (PBPM)
Payment
Structure
Redesign
Objective
Support augmented
staffing and training
for delivering
comprehensive
primary care
Reward practice
performance on
utilization and quality
of care
Reduce
dependence on
visit-based fee-for-
service to offer
flexibility in care
setting
Track 1 $15 average $2.50 opportunity
N/A
(Standard FFS)
Track 2
$28 average;
including $100 to
support patients with
complex needs
$4.00 opportunity
Reduce FFS with
prospective
“Comprehensive
Primary Care
Payment” (CPCP)

10. Page 9
Pay for Performance
9
 Pay for reporting
 Bonus payments based on quality scores
 Upward/downward adjustments to fee schedule
payments

11. Page 10
Spotlight: MIPS
Merit-Based Incentive Payment System is the primary pay-for-performance
program
Quality Cost
Improvement
Activities
Advancing Care
Information
−Report quality
measures
−Scored based on
relative
performance
−“Practice
Transformation”
−Drive patient-
centered care
−Promote expanded
adoption of EHRs
−Improve utilization
and sharing of
electronic health
information
−Drive efficient care
−Providers forced to
accept risk
60%
0%
15%
25%
60%
0%
15%
25% 30%
30%
15%
25%
2017 Performance Year 2018 Performance Year 2019 Performance Year
Impacts 2019 Payments Impacts 2020 Payments Impacts 2021 Payments

12. Page 11
Shared Savings Arrangements
Rewards providers for working together to reduce payer’s cost
for an attributed population
Incentive: Portion of the savings realized, in addition to
fee-for-service payments
Structure: One- or two-sided models depending on risk
tolerance
Examples:  Medicare Shared Savings Program
 Next generation ACOs
 Commercial payer programs

13. Page 12
Spotlight: MSSP
Medicare Shared Savings Program
▪ Rewards ACOs that lower
growth in healthcare costs
while meeting performance
standards
 Medicare pays providers under
the Medicare Fee-For-Service
payment systems
 ACO spending measured against
a historical financial benchmark
 Shared savings are subjected to
adjustment based on quality
 Tracks 1+, 2, and 3 count as
Advanced APMs under QPP
Track 1
One-sided risk
Sharing rate: Up to 50%
Performance payment limit: 10%
Track
1+
Two-sided risk
Sharing rate: Up to 50%
Performance payment limit: 10%
Shared loss rate: Fixed 30%
Prospective beneficiary assignment
Choice of MSR/MLR
Track 2
Two-sided risk
Sharing rate: Up to 60%
Performance payment limit: 15%
Shared loss rate: 40% - 60%
Track 3
Two-sided risk
Sharing rate: Up to 70%
Performance payment limit: 20%
Shared loss rate: 40% - 75%
Prospective beneficiary assignment

14. Page 13
Spotlight: MSSP
13
 MSSP Waivers
 ACO Pre-Participation Wavier
 ACO Participation Wavier
 Shared Savings Distribution Waiver
 Compliance with the Stark Law Waiver
 Patient Incentive Waiver
 Protect financial arrangements that further the purposes
of the MSSP from challenge under the Anti-Kickback
Statute, the Stark Law, and Civil Monetary Penalties Act

15. Page 14
Episodic (Bundled) Payments
Rewards coordination and efficiency among all providers within
a specific episode of care
Incentive: Retain overage of payment if costs are managed
below target
Structure: Payment for all services furnished during an
identified cost of care, prospective or retrospective
models depending on risk tolerance
Examples:  Bundled Payment for Care Improvement
 Oncology Care Model
 Comprehensive Care for Joint Replacement
 Episodic Payment Model

16. Page 15
Spotlight: CJR
Comprehensive Care for Joint Replacement
▪ Hospitals accountable for quality and cost for hip and
knee replacement surgeries (adding hip and femur
fractures effective January 1, 2018)
▪ Incentivizes increased coordination of care among:
 Hospitals
 Physicians
 Post-acute care providers
▪ 90-day episode of care
▪ 67 MSAs included

17. Page 16
Spotlight: EPM
Episode Payment Model
▪ Final rule released December 20, 2016
 Effective January 1, 2018
▪ New models:
 Acute Myocardial Infarction (AMI)
 Coronary Artery Bypass Grafting (CABG)
▪ 98 MSAs included

18. Page 17
EPM Bundle Definitions
AMI, CABG, & SHFFT
AMI CABG
Services included Part A and B services
Episode start
At admission for AMI
treatment
At admission for CABG
treatment
Episode end 90 days following hospital discharge
Payment Retrospective
MS-DRGs
280, 281, 282
Contingent:
246, 247, 248, 249, 250,
251
231, 232, 233, 234, 235,
236

19. Page 18
Example: AMI Analysis
 PYA performed
analytics for AMI
episodes in
Nashville, TN market
 Episodes initiated at
10 different
Nashville-area
hospitals
 260 different SNFs,
outpatient facilities,
and home health
agencies
KEYFINDINGS
 Among these 270 organizations, there was a wide
variation in AMI-associated costs – ranging from
$5,500 to $58,000
 By far, the largest drivers of cost variations were
hospital readmissions and length of SNF stays
 Among the costliest 20% of episodes, the average
was $43,200 - nearly 4 times higher than the overall
average
 The overall AMI readmission rate was 27%, but the
20% highest paid episodes had a rate nearly 3 times
higher: 76%
 The top quintile of highest paid episodes had SNF
costs that were 3 times higher than the overall
average

20. Page 19
Gainsharing Under Cardiac EPMs
19
 Three permitted financial arrangements under a Sharing
Arrangement
 Sharing a Reconciliation Payment with an EPM
Collaborator--hospitals may pay all or a portion of the
reconciliation payment for a given performance year
 Sharing Internal Cost Savings with an EPM Collaborator--
hospitals may share measurable and actual cost savings
with EPM collaborators
 Sharing a Repayment Obligation with an EPM
Collaborator--hospitals may pay all or a portion of the
repayment obligation to CMS

21. Page 20
Global Budgets
Rewards provider network for managing a defined patient
population within a single budget
Incentive: Reduce unnecessary and avoidable services to
remain within budget
Structure: Advance payment for network to assume full
responsibility for defined population
Examples:  Comprehensive ESRD Care Model
 Provider-led Medicare Advantage plans

22. Managing the Transition to APMs

23. Page 22
Fee-for-Service Payments
Incentives Measures Regulators Providers Patients Risk
FFS
Model
 Maximize
Patients
 Maximize
Services
 DRGs and
APCs
 CPTs
 Fraud and
Abuse Laws
 Reimburse-
ment Rules
 Silos
 Competitors
 Unmanaged
chronic
conditions
 Uninvolved
with care
 Resides
with payer
 Increasing
costs

24. Page 23
Messaging
Must clearly define goals and
requirements of new,
alternative payment models

25. Page 24
Value-Based Payments
Incentives Measures Regulators Providers Patients Risk
APMs
and
Value-
Based
 Manage
patient
population
 Coordinate
continuum of
care
 Quality
 Efficiency
 Network
participation
 Continuum of
care
 Collaborators
 Educated
 Engaged
 Moves to
providers
Keys to Success:
 Physician-led governance
 Performance feedback, transparency, and accountability
 Evidence-based decision-making
 Care coordination and management

26. New Compliance Challenges
Panel Discussion25

27. Save the Date
San Diego, CA
August 26-29, 2018

28. Page 27
Thank You
27
Aaron Elias
Senior Consultant
PYA
aelias@pyapc.com
(319) 560-0716
Martie Ross
Principal
PYA
mross@pyapc.com
(913) 232-5145
Susan Thomas
Senior Manager
PYA
sthomas@pyapc.com
(913) 232-5145