Ready for risk? 4 key ways Medicare episode claims data analytics offer a competitive advantage in CJR

Preparing to take the plunge into the Comprehensive Care for Joint Replacement (CJR ) model calls for providers to navigate significant changes in how they conduct business and how they deliver care.

Episodic-based payment arrangements , also known as bundled payment, require that hospitals not only have a heightened understanding of all clinical care provided for its lower extremity joint replacement (LEJR) patients but also the cost and type of care provided in other settings across the 90 day episode.

For hospitals, managing a 90 day episode in CJR includes the "burden" of managing the major cost driver of post-acute care. Merely relying on hospital claims data for information, which typically does not account for what happens to the patient in the post-discharge period, paints a partial picture. To make it possible to manage this wider spectrum of LEJR patients' health and manage the pitfalls, a tactical approach is needed to aggregate, analyze and utilize Medicare claims data.

Medicare claims data is a seemingly endless and complicated data source that includes all costs both inside and outside the 4 four walls of the hospital throughout the 90 day episode duration. One of the challenges of Medicare claims data is the need to transform those data files into usable "episodes of care" information for analysis. Medicare claims data expertise is critical to drive successful outcomes. Hospital leaders are making the necessary decisions about whether their hospital has the internal capabilities to manage CMS claims data and analyses or are turning to an external resource for analytics support. Four key ways a hospital should consider utilizing Medicare claims data as they prepare for CJR include:

1. Episode Cost Opportunity Analysis: As a first step, prior to receiving your hospital specific Medicare claims data, work to access complete historical Medicare claims data to create an episode cost opportunity analysis. Utilize this analysis to prepare your organization's key stakeholders to understand opportunities, risks and the potential financial impact of CJR. Hospitals who participate in BPCI often cite the time spent understanding historical experience and preparing prior to "go- live" in BPCI as critical to their current success. Some spent nearly 2 years preparing!

2. Target Price Analysis with Detailed Deep-Dive Baseline Financial Analysis: Make a plan to request and obtain your hospital's claims data as soon as Medicare gives the" green light" for access. CMS reports baseline data will be provided before April 1, 2016. Verifying your hospital's target prices( including hip fracture stratification) and conducting a deep-dive baseline financial analysis (to understand historical costs and trends and quantify the potential financial impact of the program) provides clarity on how to prioritize care redesign initiatives and provider alignment activities.

3. Ongoing Quarterly Reporting and Analysis: Secure capabilities to take in the CMS claims data and produce "dashboard reports" on at least a quarterly basis for key hospital and physician stakeholders to understand practice patterns, CJR program performance, and leading indications for reconciliation results. Monitoring progress and communicating results with providers, administrators, and clinicians who play a part in the patient care in the CJR program provides a forum for continuous performance improvement expectations. As the cliché goes, what gets measured gets done.

4. Annual Reconciliation Analysis: It is anticipated that CMS will provide reconciliation results to providers about a year following the initial go-live date of April 1, 2016. Plan to audit that information and conduct an analysis of the performance year's results. It is through performing this reconciliation review that any discrepancies may be uncovered, and thereby require a direct appeal to Medicare. Through the reconciliation analysis, you will gain a full understanding of the financial performance including areas of focus to improve future performance. If you are gainsharing with providers, this analysis will help you identify who is contributing to your results and calculate how the gainsharing distributions should occur.

As payors like Medicare mandate risk-based payment models, visibility into financial risk and the ability to account for it is more important than ever. Whether you develop internal capabilities or engage with a partner for help, developing a strategy for Medicare Episode Claims Data Analytics offers hospitals a competitive advantage in CJR.

What Questions Do You Ask When Assessing Internal Data Analytics Capabilities or a Potential Vendor for Support?

1. Are you currently involved in taking in, storing, and processing claims data under the Medicare BPCI program?

2. Are you assuming financial risk (upside and downside) for any bundled payments with private or public insurers or employers?

3. Do you have clinical expertise/care redesign solutions that can leverage the data for actionable change in the episode of care? Do you have clinical programs that focus on the Total Joint episode of care and the Fracture episode of care? Do you have benchmarks and the ability to measure your impact on clinical quality improvement and episode cost reduction? Are you able to evaluate yourself relative to best practices to drive continuous quality improvement with aggressive but realistic targets and expectations for the total joint episodes?

4. Have you ever administered gainsharing agreements between hospitals and physicians or used using claims data and internal hospital data to develop auditable, accurate flow of funds models? Do you have standard gainsharing tools and templates to develop gainsharing agreements?

Jennifer Johnson, Director, Alignment Strategy & Reform, Payment Reform

Rina C. Vertes, FSA MAAA, Chief Actuarial Consultant

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