Benchmark Target Management In Medicare Shared Savings Program Presented by Michael Barrett at the FLAACOs Fall 2014 Conference

1. Benchmark Target Management
In
Medicare Shared Savings Program
September 2014

2. Managing Benchmark
• Managing Benchmark Surprises
• Impact of Churn
• Risk scoring in MSSP vs. Medicare Advantage
• ESRD, Dual, Disabled, Aged
– Movements Between Categories

3. Benchmark Surprises!
• Many ACOs experienced a significant adverse move
in benchmark
• 1.5% of benchmark reduction in savings payment.
– $10,000 annual benchmark = 150 per bene lost payment or
$12.50 “pmpm” or 50% more than CMMI advance payment
– 8,000 bene = $1.2 million
• Mix of beneficiaries by segment
• Missing bene – where did they go?
• Final Assignment
3

4. Assignment and Risk Selection
• Quarterly updates
– Getting newly assigned addresses
– Deceased
– Claims info stop = reassigned to different ACO, MA?
– Where did they go?
• Category
– ESRD?
– Dual?
– Disabled?

5. Segment Management
• ESRD is 6-10x or more Aged/Dual
• Dual 20% or more than Aged
• Disabled mixed bag – some ACOs have
higher, some lower.
• Will vary by ACO – how are you managing
which patients are in each segment?
5

6. Cash Flow Time Lines
• RAF in an ACO, a study in delayed gratification
– ACO is a 3 Year Contract
• Year 2 drives Year 3 risk score
• Year 3 risk score is drives normalization of Year 1 & 2 costs for
2nd
Contract (Years 4-6) benchmark
• Upward sloping RAF scores “bake in” a favorable bias for 3
years
– Year 4 savings paid mid Year 5
– RAF is a 3 year benefit for a 1 year effort
• Just delayed a long time
• Downward sloping RAF is certain economic failure
6

7. MSSP and Risk Scoring
• MSSP will receive some value for RAF
management
– Not as much as Medicare Advantage on an
annual basis
– 3 Year Value
• Not “managing” RAF is risking a negative
slope to risk scores which bakes in an
unfavorable bias for 3 years!
7

8. Risk Score – Positive Slope Example
8
Year Risk Score
Risk Score Adj Factor
(BY3/BYx) Weight Component
Risk
“Inflation”
for 2016,7,8
PY1 2013 0.75 1.27 10% 0.127
PY2 2014 0.75 1.27 30% 0.380
PY3 2015 0.95 1.00 60% 0.600
Imputed Risk Score 1.107 10.67%
Moderate Increase in BY 3 Risk Score
PY1 0.75 1.40 10% 0.140
PY2 0.75 1.40 30% 0.420
PY3 1.05 1.00 60% 0.600
Imputed Risk Score 1.160 16.00%
Significant Increase in BY 3 Risk Score
PY1 0.75 1.47 10% 0.147
PY2 0.75 1.47 30% 0.440
PY3 1.10 1.00 60% 0.600
Imputed Risk Score 1.187 18.67%

9. RAF in MSSP Benchmark Calculations
• Three year trend effects benchmark for next
three years.
– Getting it right is an imperative.
– Not an immediate gratification
– Changes can overwhelm care coordination impact
• Relative movement vs. absolute level
• Upward trend is good, downward is bad
• There are no MMR, MOR, RAPS return files
– New administrative structures and efforts
– Front loaded efforts
9

10. No RAPs file!!!
• No RAPS, MMR, MOR, or Error File
• No specific member to HCC identification
• Engaging the physician, EMR & Billing
• Claims line feed – some of the data
• Typical analysis
• Action items to physicians
• Reconciling CLF vs. MMR/MOR
• Twists from MSSP Assignment process
10

11. Submitting New Dx to CMS
• There is no RAPS file!
• There is no 2nd
chance.
• Codes go to CMS on the claim.
• 5010 sort of compliant vs. fully
compliant
• MSO type pre-clearing house validation
11

12. Managing Beneficiary Assignment
• Not managing assignment is trusting a
negatively biased environment to provide a
fair cross section of risk.
• Benchmark credit accrues differently than
health care expense
• Cultural nature of ACOs is to further
adverse risk selection
12

13. Benchmark vs. Cost Accumulation
• Benchmark credit is earned equally for each assigned beneficiary
• Total healthcare expense is incurred in a non linear fashion
(note: claims are truncated at 99nth percentile limit on per beneficiary expense)

14. Savings Credit and Beneficiary Expense
Not Worried
Well
COE
Transitions

15. Typical Management Activity
• COE Transition Beneficiaries
• Instinctively MSSP contractors reached out to and assisted the
vulnerable and high cost population
• Increased PCP engagement slowed or eliminated transition to COE
external to the ACO
• MSSP contractors “managed” to keep disproportionate number of
high cost beneficiaries, i.e. reduce high cost churn compared to base
year processes
• Not Worried Well (NWW)
• PCP visits 12-16 months
• Drive attribution to every other year
• Most MSSP contractors did not “manage” to reduce NWW churn.

16. Impact On Total Savings
• Assumptions:
– 10,000 Beneficiaries
– $9,000 Benchmark
– 10% a priori “NWW Churn”
• Moves to 7% from Beneficiary Outreach
– 2% a priori “COE Churn”
• Moves to 0% from Case Coord, etc
– Ratio of High Cost Cases to Benchmark
• 10% of population = 50% of cost is approximately a 4.5:1
Ration of High to Low Cost
• Conclusion
– 5.4% Savings needed to offset unbalanced churn
reduction

17. Sensitivity To Eliminating COE Churn
Average High Cost Case to Benchmark Ratio
a priori
COE
4 4.5 5 5.5 6
3.5% 8.4% 10.6% 12.9% 15.2% 17.7%
3.0% 6.6% 8.4% 10.3% 12.2% 14.2%
2.5% 4.8% 6.3% 7.8% 9.3% 10.9%
2.0% 3.1% 4.2% 5.4% 6.6% 7.8%
1.5% 1.5% 2.3% 3.2% 4.0% 4.8%

18. Sensitivity To NWW Churn
Prior NWW Churn
New
Churn 10.0% 9.0% 8.0% 7.0% 6.0%
6.0% -4.% -3.1% -2.1% -1.2% 0%
5.0% -4.9% -4.0% -3.1% -2.1% -1.1%
4.0% -5.8% -4.9% -4.0% -3.0% -2.1%
3.0% -6.6% -5.7% -4.9% -3.9% -3.0%
2.0% -7.5% -6.6% -5.7% -4.8% -3.9%
* Negative numbers represent favorable savings

19. Segment Qualifications
• When is ESRD really ESRD?
• Duals are under reported
• Disabled are under reported
19

20. ESRD
• Benchmark is 6-10 X “Aged”
– CKD 4 is not ESRD and considered “Aged”
– Care coordination w/o qualification only holds CKD 4 as
“Aged” longer.
– ESRD is assigned monthly
– Small population (1.5%) at 8 x Aged cost = 12% of
Benchmark expense
– Qualification management and ESRD “Medical Home”
should improved appropriate qualification and total and
average cost
– Minimum Savings Rate could be achieved from ESRD
patients alone
20

21. Duals & Disabled
• Social Work Fairytale
– Long time ago hospitals employed social workers to
qualify uninsured patients to Medicaid
– 20% increase in Benchmark warrants a look at MSSP
contractors to evaluate “Aged” populations
• Same infrastructure can work disabled status
– Automatic processes for CM to review to SW
evaluation?
21

22. High Risk/Opportunity Populations
– ESRD = 5% of Benchmark (+/-)
• ESRD = 1% of population = manageable
• ESRD Medical Home
• ESRD MA spend patterns
– Diabetes – an imperative for quality, cost AND
BENCHMARK
• Diabetic risk score should exceed 1.5 as a population
• Typically under reported/coded
• Managed through diet/exercise often not coded at all
• Impacts 25% - 40% of Benchmark

23. Conclusions and Questions?
23
Conclusion: You must manage Assignment, Risk
Selection and Risk Score