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BPCI and the evolution of bundled payments [PODCAST]

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The Hospital Finance Podcast

In this episode, Christine Gordon and Kate Gillespie of Virtua Health System discuss their recent involvement in Medicare’s BPCI program and what future developments may hold.
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Mike Passanante: Hi, this is Mike Passanante. And welcome back to the Hospital Finance Podcast.

Today, I am joined by Kate Gillespie who is the Associate Vice President of the Orthopaedic Service Line at Virtua Hospital here in New Jersey, and Christine Gordon who’s the Manager of Reimbursement also at Virtua Hospital in New Jersey.

And we’re live here at the New Jersey HFMA ANI Meeting. And you may recall if you’re a long time listener of the podcast that, about a year ago, we had the pleasure of interviewing Kate and Christine here on the program, and we talked about their involvement in Medicare’s BPCI Program. And they shared some great insights as to the performance of their hospital and how they’ve been doing in that program.

They’re here presenting again this year to talk about some changes that have taken place and give everyone an update on where they are.

So, Kate and Christine, welcome to the program!

Christine Gordon: Thank you.

Kate Gillespie: Thank you.

Mike: I’ll also mention that seated beside me is Maria Miranda who is the Director of Emerging Payment Models here at BESLER. She lives and breathes these models on a daily basis. So I’m looking forward to a vibrant discussion.

So, just looking at some of the things you’re talking about this year and kind of honing in to some changes you’ve experienced since last year, you did note some challenges related to gainsharing with your physicians. And we talked about that again on last year’s program, but why don’t you give us an update on that?

Kate:  I think for the gainsharing, again, the alignment with the physicians has been great. But what happened was that we have many BPCI programs that have physician group awardees.

Now, as a hospital system, we’re an awardee. So there’s a conflict sometimes with that. And one of our physician who was a gainsharer actually became part of a group that was an awardee.

So, what we found was—CMS, as we always know, is clear as mud—we found the conflict where the physician’s cases were no longer appearing on our claims data for a couple of quarters; and then, all of a sudden, they appeared on our claims data. And we never got—and we still to today—have a clear message on do we continue to gain share with him, is he receiving funds from his awardee. And so, we’ve pretty much not given him funds because we don’t have a clear answer.

And that’s something that everybody should be aware of. There are a lot of physician group awardees and there are hospitals. And a physician cannot be a part of two awardees; they have to choose one.

Christine: And a lot of it is Medicare has not given us a clear definition on what needs to be included with gainsharing. So it’s kind of us making our own decisions and getting the physicians to buy off on it.

We have made some modifications this year. But we have to get approval surrounding discharge instructions and quality metrics. But Medicare has not been very helpful in regards to clear, definitive—you know, they always want to ride that line for us.

And that’s another one of our challenges. We’ve had different Medicare managers with the program. We haven’t gotten clear definitions. And even with this issue that we’re having with the physician, we’ve gone back and forth, we’ve had calls, we’ve emailed back and forth, and we still haven’t gotten it resolved yet.

So, that is part of the challenge we have this year.

Kate: Though we’re hoping with BPCI Advance or 2.0 (which is supposed to be announced in the next month) that there’ll be clearer definitions of what gain sharing is. I did hear that they will require, just like they did with CJR, that there are some quality metrics—which we’re already doing that, so we’re in a good place with that. But again, hopefully, there’s more defined instruction around the new advanced BPCI.

Mike: And we’ll talk about that more in a minute as well. You noted that you’ve had some great success reducing total episode spending through managing discharges. Of course, that’s a double-edged sword sometimes when it gets into your target pricing. So maybe we can touch on that.

But why don’t you tell us about what you’re doing around discharges that’s been so successful.

Kate: I think one is key that we have the alignment of our physicians who definitely understand and buy into—and we’ve shown them very, very transparently the cost of in-patient rehab versus skilled nursing facility versus home care. So, that is pretty evident. And they’re onboard with this. Getting the patient to agree to that is always a challenge for any hospital.

But I think with our big group of physicians that we have, they are very proactive of setting that expectation to all our patients, that our idea is for them to go home to out-patient.

So we have seen a big shift in, not only from in-patient rehab to skilled nursing facility, but also looking at patients that are going directly to out-patient rehab. So has been a huge savings.

Christine: And we also had a committee that actually went through our discharge policy and revamped the whole thing. So everybody’s onboard across—the nurses, the physicians, the social workers.

Everybody has gone through our new discharge policy for that. I think that has helped a lot as well for questions from the patients and their families going forward for their post-acute care.

Mike: And you did note also in your presentation that you’ve seen an increase in out-patient therapy, but a decrease in home health. So what do you think is driving that?

Kate: The patients, there is no real reason to keep the patients home, to have home care. So what we’re seeing is that, instead of having home care, they’re just going home. And then what we’re doing is we’re scheduling their out-patient visit right away. So there’s no gap.

We still do home care, but I think really, now, we’ve actually taken a look at what criteria does a patient have to meet prior to discharge to then say, “This is the right setting for them.”

And again, it’s been always the same thing. When we tried to shift the patient from a skilled nursing facility to home care, then home care and out-patient, we’ve always had to get the confidence of the patient to understand the best thing for them to do is to move around and get active.

Mike: I’m going to throw a curve ball at you. There’s been a lot going on recently in terms of doing these total joint replacements at out-patient facilities versus in-patient. So what’s your take on that? What’s the story there?

Kate: Well, we’ve been forecasting that for a long time. Currently, at Virtua, we’re actually building a new ASC to really accommodate the volume that will shift to out-patient.

One of our facilities currently is doing hips and knees Medicare patients that are averaging 1.2 days. That’s great. And we’ve actually done a paper down at CMS to say we’re seeing great outcomes. And I think that’s where CMS is now saying, “You know what? We could move to out-patient.”

For us, that may be a good thing because, right now, as a Medicare patient, we have them in the bed so they can stay the 23 or 24 hours so that we are getting paid for Medicare. But Medicare on the back end is saying, “Well, we’re only going to pay you a partial payment because that patient did not stay the full length of stay.”

So, for us, I’m very curious to see 1) if the new BPCI will include an out-patient hip or knee, 2) what they’re going to do if they agree to let them be done in an ASC and what is the reimbursement for that. That’s huge for a hospital.

Right now, we know that in 2019, there will be a big shift of volume to an ASC which is going to cut the hospital’s revenue in half. Even though we’re joint partners with them, we’re not going to see their revenue. So, we have to prepare as a hospital to budget accordingly.

Maria Miranda: And will CMS adjust your target rates because their historical rates, that include those lower…

Christine: Exactly! It’s going to be interesting how they go forward with BPCI 2.0 or advanced. It’s where they’re going to go with the target rates, especially for the…

Kate:  They’re going to go low.

Christine: It’s going to be much lower, much lower.

But that’s a great question about the reimbursement. But like I said, we get dinged reimbursement-wise already because we’re doing them so quickly. That might not be a good thing, but it definitely is not going to hit us as hard I think as some other places.

Maria: Well, I remember in your presentation last year, you mentioned how communication was so important with the physicians and how you are actually keeping the cost of implants down sometimes just because of a conversation that occurs between physicians.

Kate: Actually, Virtua has been very active. We have what’s called an Orthopaedic Product Committee and a Spine Product Committee. And what we’ve done is work with physicians to say, “What are those key providers of implants?” And we really tried to narrow our scope.

So, for example, spine, we had maybe twelve vendors, but we have now narrowed it down to four. Again, that allows us to get better pricing. It’s the same thing for joints. Basically, we’ve narrowed it down to one or two. We get the biggest volume, but we also get the better cost on it.

So, that’s internal cost which we capture that, but truly, with the target, it’s the out-patient. That’s where you really need to focus.

Mike: And you mentioned BPCI 2.0 a minute ago. And we’re here in October 2017, it’s coming. What do you anticipate? What do you think you’re going to see in that?

Kate: I’ve actually talked to someone that used to work for CMS. She sort of gave me a little bit of scoop.

There will be an opportunity to—because right now, with BPCI, you cannot go into another DRG or open those gates. So when they come, BPCI 2.0, they will allow us to participate in other DRG’s.

I’ve also been told that they’re going to be some out-patient DRG’s that will be included in that. So we’re going to take a look at all our services, both medical and surgical.

The other thing that I’ve also heard is, again, they’re going to take historical volume now, historical cost. We were lucky that they started 2009 to 2012. Now, they’re going to look at 2013 to 2016. And because we’ve done so well, we’re going to see a target price that’s going to really drop low.

And one of the advisors said, “You may want to take a look at how more efficient can you be. And would you be able to meet this lower target?” And our question is “I don’t know.” So, they said, “You may want to look at do you want to put your efforts into total joints if you can’t meet that target.”

So, all good question. We’re anticipating something coming up because BPCI will sunset in September 2018.

Christine:  And it’s funny. I mean, it’s just Kate and I doing this right now. And with the opening up of the flood gates, we’re going to have to… you know…

Kate: More resources.

Christine: More resources. I mean, I know a lot of people have outside companies that help them. We have an outside company that helps us with the data only. We do everything else internally administratively.

So, it’s definitely going to be eye-opening for organizations going forward with all the new nuances with all the new bundle programs that are going to be out there.

Mike: Yes, certainly. The landscape of bundled payments is changing quite a bit. It’s changed a lot this year; it will change again probably both on the public and the private payer side, no doubt.

I think we asked this question last year. Are you seeing anything on the private payer side with regard to joints? Are you involved in any of that?

Kate: Every year, we do a strategy. So, our strategy again is to go into bundled payments. But we’re also looking at—we have our own insurance products. We’re going to take that as our first step.

And second, I really want to create a bundle or a product that I can go out and definitely go private.

The information I’ve heard right now is some of the insurance companies are not quite ready to be able to do it. I know there’s a Christ Hospital that has been very successful in private bundles. So we’re going to take a look at what we can do.

But definitely, that’s my strategy. Now that I know I have a good product, I got to move it.

Maria: And I think a lot of them are testing them more so with the physician groups as opposed to with the hospital.

Kate:  Yes.

Maria:  And even if they negotiate with the hospital, you’re still going to have that overlap where there’s a case that can be initiated at the hospital, and might be initiated by the physician as well. So, you’ll have that overlap issue.

Kate:  And we have a great orthopaedic physician group that is very in line with us. So I think, together, we can probably do some good.

Christine: Yeah, absolutely.

Mike: Kate and Christine, congratulations with all of your success at Virtua and leading the way on this initiative. And thank you again for joining us on the podcast today.

Christine: Thank you.

Kate: Thank you. Thank you again.

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