Comprehensive Care for Joint Replacement, Part 2
By Rick Gawenda, PT
Last month, I wrote an article providing a general overview of the Comprehensive Care for Joint Replacement (CJR) model that the Centers for Medicare & Medicaid Services (CMS) implemented on April 1, 2016, in 67 geographic areas impacting approximately 800 hospitals that are paid under the Inpatient Prospective Payment System (IPPS). This month, I discuss more in-depth target pricing, reconciliation payments, repayments to the Medicare program, and how quality scores can impact the target price.
Every year during the approximate five performance years of this model, CJR hospitals will receive separate episode target prices for Medicare Severity-Diagnosis Related Groups (MS-DRGs) 469 and 470. CMS will also use a simple risk stratification methodology to set different target prices for patients with hip fractures within each MS-DRG. CMS determines the target price based on the hospital’s historical performance (DRG + 90 days postdischarge spend for a rolling three-year period) and the expenditures of other hospitals in the region.
The rolling three-year period for calendar years (CY) 2016-2020 is as follows:
- CY 2016: January 2012–December 2014
- CY 2017: January 2012–December 2014
- CY 2018: January 2014–December 2016
- CY 2019: January 2014–December 2016
- CY 2020: January 2016–December 2018
In 2016 and 2017 target pricing will be determined by two-thirds hospital specific and one-third regional.
In 2018 target pricing will be determined by one-third hospital specific and two-thirds regional.
In 2019 and 2020, target pricing will be 100 percent regional.
The CMS is divided into 10 regions. Regional pricing for each individual hospital is determined by what region the hospital is located in and the target price for all hospitals within that region.
For my example, to determine the target price for a hospital, I will pretend we are in CY 2018. This hospital’s expenditures for a total knee replacement (TKR) averaged $22,000 between January 2014 and December 2016, and the hospitals in their region averaged $25,000 in expenditures for a TKR during the same period. In CY 2018, the hospital’s target price will be determined by one-third hospital specific ($22,000) and two-thirds regional ($25,000). This means the hospital’s target price for CY 2018 will be $24,000 for a TKR ($25,000 +$25,000 + $22,000 = $72,000/3 = $24,000).
CMS will then reduce that target price by 3 percent so the hospital’s actual target price for a TKR in 2018 would be $23,280 ($24,000 times 0.03 = $720) ($24,000 – $720 = $23,280).
The CJR model also requires hospitals to complete two required measures, and hospitals have the option to report voluntary measures. The required measures are
- The Hospital-Level Risk-Standardized Complication Rate Following Elective Primary Total Hip Arthroplasty and/or Total Knee Arthroplasty National Quality Form (NQF #1550)
- The Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey measure (NQF #0166)
Voluntary measures are
- PROMIS Global (all items) or Veterans Rand 12 (all items) and a condition-specific patient- reported outcome measure
- Knee injury and Osteoarthritis Outcome Score (KOOS) (all items)
- Hip disability and Osteoarthritis Outcome Score (HOOS) (all items)
The Hospital-Level Risk-Standardized Complication Rate Following Elective Primary Total Hip Arthroplasty and/or Total Knee Arthroplasty is worth 10 points, HCAHPS is worth 8 points, and the voluntary measures are worth 2 points for a total of 20 possible points. If the hospital scores well on the quality measures, this can reduce their 3 percent reduction from their target price, thereby increasing their target price and perhaps obtaining a bigger bonus payment or reducing the amount they have to pay back to CMS.
In 2016, there is no penalty for hospitals that go over their target prices for DRG’s 469 and 470.
Stop-Loss and Stop-Gain Policy
CMS will limit how much a hospital can gain (in reconciliation payments from Medicare) or lose (in repayments back to Medicare) based on its actual episode payments relative to the target prices. These are termed stop-gain and stop-loss limits, respectively.
Share the Reward and Risk
The CJR model will allow participant hospitals to enter into financial arrangements with certain types of providers and suppliers (skilled nursing facilities [SNFs], long-term care hospitals, home health agencies [HHAs], inpatient rehabilitation facilities, physician and nonphysician practitioners, and outpatient therapy providers). Those arrangements will allow participant hospitals to share, subject to the limitations outlined in the rule, with these third-party providers and entities (called Collaborators) the following: reconciliation payments, internal cost savings, and the responsibility for repayment to Medicare.
CMS places a limit on how much financial risk a CJR hospital is allowed to share with Collaborators. A CJR hospital must retain at least 50 percent of its total risk, meaning that if the hospital owes CMS a repayment, it cannot share more than 50 percent of that repayment responsibility with Collaborators. Additionally, a hospital cannot share more than 25 percent of its responsibility with any single CJR Collaborator.
For a case example, I will use Medicare beneficiaries who had a TKR (MS-DRG 470) performed in calendar year 2019 at Hospital ABC, which is in the CJR model. Hospital ABC has entered into financial arrangements with a home health agency known as RST HHA and a physical therapy private practice known as Kinetix (Collaborators), and each Collaborator has 25 percent risk. The target price for Hospital ABC for MS-DRG 470 is $24,000 and after the automatic 3 percent reduction is $23,280.
Hospital ABC performed 100 TKRs in calendar year 2018 that were ultimately discharged under MS-DRG 470. All 100 cases also had home health services provided by RST and outpatient physical therapy services provided by Kinetix postdischarge. Hospital ABC’s target price for the 100 cases is $2,328,000.00 ($23,280 times 100 cases). The total expenditures for the 100 TKR cases were $2,025,000.00. This is $303,000.00 less than the target price ($2,328,000.00 – $2,025,000.00).
In addition, Hospital ABC’s quality score for calendar year 2018 was 14.4. Referring to Table 2, a quality score of 14.4 would reduce Hospital ABC’s reduction from 3 percent to 1.5 percent off of their target price. Prior to the automatic 3 percent reduction, the target price was $24,000. Due to their quality score, their target price will be reduced by 1.5 percent and not 3 percent, so Hospital ABC’s new target price is $23,640 ($24,000 times 0.15 = $360) ($24,000 − $360 = $23,640).
We now need to multiply the new target price ($23,640) by the number of cases (100) to come up with the new target price of $2,364,000.00. We now take this new dollar amount and subtract the actual expenditures ($2,364,000.00 − $2,025,000.00), and we see that Hospital ABC came in at $339,000.00 less than its target price. Since Hospital ABC had an excellent quality score, Hospital ABC and their Collaborators are eligible for a reconciliation payment.
Referring to Table 3, the Stop-Gain limit for CY 2019 is 20 percent. We need to multiple $339,000 by 0.2, and this equals $67,800 that CMS will pay to the hospital for coming in under their target price and having an excellent quality score. Since Hospital ABC has a financial arrangement with RST, HHA, and Kinetix, and each Collaborator assumed 25 percent risk, Hospital ABC would pay both Collaborators $16,950 and Hospital ABC would keep $33,900.
1. Centers for Medicare & Medicaid Services, Comprehensive Care for Joint Replacement Model. https://innovation.cms.gov/initiatives/cjr. Accessed May 4, 2016.
2. Federal Register, Medicare Program; Comprehensive Care for Joint Replacement Payment Model for Acute Care Hospitals Furnishing Lower Extremity Joint Replacement Services, November 24, 2015. www.federalregister.gov/articles/2015/11/24/2015-29438/medicare-program-comprehensive-care-for-joint-replacement-payment-model-for-acute-care-hospitals. Accessed April 2, 2016.
3. CMS Regional Offices, Regional Map.
www.cms.gov/About-CMS/Agency-Information/RegionalOffices/RegionalMap.html. Accessed April 26, 2016.
4. American Physical Therapy Association, Comprehensive Care for Joint Replacement Model (CJR).
www.apta.org/CJR/. Accessed May 4, 2016.
Rick Gawenda, PT, is a PPS member and President of Gawenda Seminars & Consulting (www.gawendaseminars.com), which provides education and consulting for private practices in the areas of billing, coding, compliance, documentation, and practice management. He can be reached at email@example.com
A recent Marquette University study assessed payer policies of the three largest health care payers in each state.
By Jim Hall, CPA
Those who know me well know that I am a huge proponent of federalization of insurance laws. Now, before you stop reading, let me make it clear that I am not referring to a single payer system but a system where one set of laws are applied in all 50 states (just like interstate banking and commerce laws). In the April 2011 issue of Impact magazine, I wrote an article outlining my reasons why I feel it is necessary.
It is easy to relate anecdotal stories of why federalization of insurance laws is necessary, but without data most legislators can only sympathize. The stories are fascinating, but how big an issue could this really be? And if you are like me, who has time to sit down and gather the information necessary and put it into a meaningful document?
Enter American Physical Therapy Association Private Practice Section (APTA PPS) Payment Policy Committee members Bridget Morehouse and Mary Daulong, along with assistance from Marquette University doctoral students Stephanie Fiore, Sabrina Weng, A.J. Butts, Nico Olson-Studler, Sarah Iglar, and Danny Coppin. Under the direction of Mary Daulong, these students were tasked with the project of researching the top three insurance payers’ websites in every state. The purpose of this study was to design a document that would assist private practitioners in researching information that would be required in order to appeal claims denials or find authorization forms. However, this purpose was overshadowed by the “bigger picture.”
Their task was to locate on each payer’s website items such as Physical Therapy Medical Policy and Medical Necessity, among other things. They were then asked to use a 1 to 5 grading scale to score how easy (1) or difficult/problematic (5) it was to find the document(s) identified. The results of this exercise were exactly what all of us would have anticipated; the students were shocked at the lack of consistency from insurance company to insurance company. They anticipated Blue Cross Blue Shield would have a consistent medical policy from state to state, however that was not the case.
This document is the first step toward illustrating the problems providers experience in trying to understand what an insurer needs from them in order to get paid. By the way, the students prepared a 17-page PowerPoint presentation and 180+ pages of insurance website information along with the grading scale described. The document will eventually be made available to PPS members, and I am hopeful that a second round of this study will provide additions, which would include how long it takes to navigate the website to determine this information, as well as downloading Medical Policies, Medical Necessity information, and Pre-Authorization forms. When this is done, I anticipate adding these documents as an addendum to the original study, and this document should grow from 180 pages to thousands of pages. That document will also illustrate how easy it is to treat a patient, but how difficult and time consuming it is to appeal a $50-$150 visit when an insurer arbitrarily decides to deny coverage and tell you all you have to do is go to their website and find the policy, forms, etc., and fill them out to complete an appeal (after waiting on hold for 30 minutes to speak with someone for direction).
If you are still not convinced this is an issue, the study encompassed the top 3 payers in all 50 states. I went out to the Trizetto Clearinghouse website and downloaded their professional payer list (Institutional/Hospital payers were excluded from the list). That list does not include payers that only accept paper claims. Want to hazard a guess as to how many payers there were? There are slightly more than 6,400 payers listed. While your practice may not file claims to more than 50 payers consistently, at some point you are going to run across new payers. This new payer experience may be a messy one, and the cleanup is going to take a while.
All that said, not only will these documents help you in that process, they will also become an effective tool to carry to legislators everywhere to ask for one cohesive set of federal insurance laws that all insurers would use to compete for business. And if that’s not a large enough task, maybe state insurance commissioners could be confronted by not only state association members lobbying for insurance reform, but other health care practitioners as well. I believe that we all owe the individuals involved in this study a collective “thank you.” We will work to share this document with other medical specialties to form a unified position.
Jim Hall, CPA, is the general manager of Rehab Management Services and a member of the PPS Payment Policy Committee. Jim can be reached at firstname.lastname@example.org.
PPS Strategically Targets Payment at a Local Level
By Paul Gaspar, PT, DPT, CCS
Payment is quite possibly the number one concern of physical therapists in private practice. Many insurance companies have cut payment by 25 to 40 percent during the last five years. Others have chosen to hire “middleman” discount networks to effectively lower payment and curb the utilization of physical therapists’ services. To top it off, some have used “all contracts” clauses and questionable pricing and product rollout schemes to lower their costs—and this is at a time when several insurance companies have been posting dramatically higher profits and stock prices, as well as record CEO compensation. Is that fair or legal? Most physical therapists would argue it is not fair, but whether it is legal is a much more difficult question. The legality of specific payment contracts and conditions has to be determined on a case-by-case basis and largely depends on state laws and regulations for most payers. That is one of the main reasons the Private Practice Section (PPS) started a legal fund to support their PPS members at the local level. And it seems to be paying off in a big way.
California physical therapists have been frequent recipients of PPS legal grants, several of which have been used to win the legal status of the Physician-Owned Physical Therapist Services (POPTS) two years in a row. In cases where California physical therapists were no longer able to achieve their goals in the POPTS battle, they returned the remaining legal funds back to PPS so that they could be used where the outcome would be more satisfying to PPS members.
Since direct access and POPTS issues have been largely decided in California, fair payment has been the advocacy focus. California physical therapists continue to be crushed by predatory pricing, middleman networks, and questionable payer tactics. PPS has been relying on its physical therapist members in California to keep them informed about physical therapists’ rights or contracts being infringed. Recently, PPS funded a legal action against a payer’s alleged retribution against PPS members for their fair payment advocacy. The legal action resulted in a positive financial settlement for the PPS members.
PPS remains in close contact with their members in California because many consider it ground zero for payment reform. California’s PPS members are among the most proactive PPS members in the country, often pushing back forcefully if they feel they have been wronged by payers. Many in California are identifying potential actions regarding allegedly illegal contract offers, breaches of contracts, and unfair pricing schemes.
If your goal is to get paid more fairly by insurance companies, don’t sit back and expect others to do the work for you. PPS cannot be in all places at all times. If you think you are being treated unfairly, relay your concerns to your local colleagues, your local private practice group, your attorney, and/or PPS. It would not be a bad idea to consider contacting a PPS member in California either, because if there is a payer problem it is likely that California physical therapists have experienced it, or are doing so currently. After doing so, if it is clear that there may be a viable legal concern, please consider contacting the PPS Board and applying for a legal aid grant. We hope physical therapists in other states will take advantage of this unique opportunity offered only to PPS members.
Paul D. Gaspar, PT, DPT, CCS, is a Private Practice Section (PPS) member and owner of Gaspar Physical Therapy since 1994. He has served on the board of the California Physical Therapy Association, three terms as a PT PAC Trustee, and currently serves as President of the Independent Physical Therapists of California.
By Bridget Morehouse, MPT, MBA
Change continues to dominate the payment landscape for Private Practice Section (PPS) members and health care providers across the spectrum. The challenge of keeping pace with change and innovating clinic operations can be daunting at times. The Payment Policy Committee works diligently to be aware of payer and market changes as well as to develop and deliver practical resources for PPS members.
After spending the past two years focused on implementing resources, and delivering pricing information from the data set purchased from Milliman, the committee is slightly shifting gears to stay ahead of additional changes within the industry. Specifically, these include value-based contracting, the Comprehensive Care for Joint Replacement (CJR) pilot from Centers for Medicare & Medicaid Services (CMS), and industry consolidation driving vertical partnerships. The committee has formed work groups with specific objectives to address these areas. In addition, the PPS Board of Directors has committed monetary support to engage additional outside legal expertise to support the CJR and the value-based and payer contracts work groups. The committee has already put out one webinar this year on CJR and has one or two additional webinars planned. The committee will continue to share expertise through articles in Impact and the weekly e-newsletter. The objectives for these work groups are listed here.
Value-Based Model and Physical Therapy Contract
- Develop a model participating provider contract for private practices that would be held with a third-party payer; the contract should include common clauses found in a participating provider contract.
- Manage request for proposal (RFP) process for soliciting outside legal resources.
- Design a webinar that will be recorded and maintained on the PPS website for members.
- Draft two or three articles for Impact magazine highlighting the key aspects and strategies when negotiating with payers.
- Provide template CJR Collaboration Agreement for members.
- Manage RFP process for soliciting outside legal resources.
- Provide education and updates to members on CJR through Impact magazine.
- Design updates to members at the pre-conference session regarding CJR.
- Address member questions regarding CJR.
Vertical Integration and Joint Venture Partnerships
- Explore potential vertical integration/joint venture opportunities for PPS members.
- Provide case studies of successful partnerships.
- Educate members on potential partnership opportunities through Impact magazine, webinars, or in the pre-conference.
Finally, the committee is planning to provide a 4-hour Pre-Conference Payer Update session at the PPS annual conference. This will be provided to members who register ahead of time. This is the third year of offering this session. Previous years’ sessions were limited to standing room only. The topics will include Medicare updates, including CJR, and major payer updates. We look forward to seeing you there. It is a priceless member benefit that is sure to provide you a return on investment. The committee thanks Allyson for her endless energy and attention to detail and is tremendously grateful for the Board of Directors’ support, which always proves to be without limits.
By Stacy M. Menz, PT, DPT, PCS
I’m not sure about the rest of you, but the first thing I think of when I think of human resources is my onboarding process for my first hospital job. I had a lot of paperwork to fill out, a lot of tests to take, a few long days of orientation (during which I struggled to stay awake), and then finally I could start doing the job I wanted to do. I never even thought about Human Resources after that initial process because all of my other interactions were with my supervisor or director.
As a business owner, I have realized that human resources is more than a department. However large or small your Human Resources team is, whether just you or a team of people, the function is key to your practice’s success. Being in a service industry, our primary asset is the people that deliver the service. Given that, the dollar and resource investment you make in this area is paramount.
While there is a wonderful resource on “how to do it” via the PPS Human Resources Compendium (see page 74), I have found, that since your team is made up of individuals, an individual approach is needed while also maintaining consistency. Luckily there are systems you can put in place to help provide the consistent policy and procedures. Within the systems you can individualize so that the needs of your team members and your organization are being met as well as ensuring they are meeting the expectations and needs of the organization.
This issue includes some pointed articles on the topic of human resources. I was excited to read “How to Drive the Journey of Change” in this issue, as it provides a systematic and evidence-based way to bring change to your organization. Change is often one of the hardest parts of managing people and a business. This article provides some great insight…I will be reading this one again!
I was also intrigued by the idea of decreasing the formality of performance reviews. We do reviews two to three times a year but they are time consuming and while I find that taking the time to put my thoughts onto paper can clarify things for me, I often wonder if the time investment translates into meaningful feedback for the employee as the formality of the “review” at times seems to limit true dialogue. If they can be done in less time and be more meaningful, this is definitely something I want to explore.
We hope that this issue of Impact brings about thought and you spend some time pondering your most important resource and asset—the humans!