Welcome to TIM Talks: Business Acumen

“Where Do I Begin”

May 17th, 2016
Where Do I Begin: 

Community Based 

Organizations (CBOs) 

and Business Acumen

Timothy P. McNeill, RN, MPH
Why is Business Acumen Important?

• The growth of the population of older adults and persons 

with disabilities is quickly outpacing the available 

funding to support them

• Community Based Organizations that provide home and 

community-based services are increasingly finding that 

they do not have enough funding to meet the demands for 

services

• Diversifying your organization’s revenue streams will 

provide opportunities to serve more people in your 

community

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Shift Toward Value-Based Purchasing

• The current health care system is changing from Fee-ForService to payment for outcomes.

• A Value-Based Purchasing system provides financial 

incentives for outcomes (Value)

• Medicare legislation provides direct incentives to 

Physicians and Hospitals to move towards a system that 

pays for outcomes

• In the past, there were real financial incentives to 

providers when complications happened

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Examples of Contracting Successes 

• Care Transitions

• Care Management Services

• Nursing Home Transition Services

• Veterans Directed Home and Community Based Services 

(VD-HCBS)

• Home Delivered Meals

• Nutrition Assessments

• Diabetes Self-Management Training (DSMT)

• PEARLS – Depression Management Program

• In-home assessments

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Sample Rate - Care Transitions

• 30 – 90 day care transition intervention 

• Objective is to facilitate a safe hospital discharge and 

prevent an unnecessary readmission

• Sample contract rates:

– $250 - $500 for the first 30 day care transitions intervention

– $100 - $150 per contact for the 31 – 90 day episode of care

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Sample Rate - Care Management Services

• Managed Care Organizations have a responsibility to 

provide care management services.

• They can delegate this function to other organizations

• When they delegate these services it often occurs as a 

sub-capitation rate of the per member per month rate

• Sample contract rate:

– $75 - $150 PMPM

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Sample Rate - Nursing Home Transition Services

• Nursing Home Transition Services is similar to Money 

Follows the Person (MFP)

• Objective is to transition low-acuity consumers that are in 

long-term care facilities into the community

• Sample contract rate:

– $500 for initial transition and then $125 - $150 for each 

subsequent contact

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Sample Rate - Home Delivered Meals

• Meals delivered to the home of high-risk beneficiaries

• Meal delivery often coincides with a recent 

hospitalization

• Sample contract rates $6 - $7.50 per meal

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Sample Rate - DSMT

• Evidence-Based Diabetes Self-Management Training

• The Stanford DSMP is an acceptable model -- as long as 

the program meets the National Accreditation Standards 

for DSMT

• Medicare Rate (2016) = $364.84 per person. $5,472.60 

for a group of 15

• DSMT/MNT (2016) = $569.64 per person. $8,544.60 for 

a group of 15

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Sample Rate - PEARLS

• An evidence-based treatment program for depression 

• Target population is older adults with mild depression 

symptoms

• 6 – 8 sessions that take place in a client’s home and focus 

on brief behavioral techniques

• Current contract negotiations with a MCO

• Proposed Rate = $150 per session (6 – 8 sessions total)

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Sample Rate - In-home assessments

• There is wide variation in what is included in an in-home 

assessment.

• Services range from a safety check to an in-home clinical 

assessment.

• Payment range also has a wide variation depending on the 

complexity of what is being requested

• Simple safety check sample contract = $100

• In-home pharmacist review of medication = $1,000

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Purchasers 

• Managed Care Organizations (MCOs)

• Medicaid Managed Long Term Services and Supports 

(MLTSS) Plans

• Bundled Payment Participating Organizations

• Accountable Care Organizations (ACOs)

• Medicare Special Needs Plans (SNPs)

• Duals Demonstration MCOs

• Medicare Advantage Plans

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Payment Models 

• Fee for Service

• Per Member Per Month

• Outreach Fee followed by additional payment for 

engagement

• Fee for service with a percentage withheld 

– Withholding will be paid if defined quality metrics are met

• Evidence-Based Program Completion

• Evidence-Based Program enrollment with additional 

payment made if the consumer completes

• Payment with penalties for missing quality metrics

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Payment Models Example 

• There are pros and cons for each payment model type

• Fee for Service - heavily dependent upon volume. If you 

have no volume, there is no revenue or margin

• PMPM – Flat rate for all services provided over a month.

– If the program has a large number of high-need consumers, the 

services will cost more than the payment rate

• Risk-bearing contracts – Heavily dependent upon 

outcomes. 

– If you cannot be assured that the desired outcomes will be 

met, this will be difficult to maintain

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Payment Models Example 

• Evidence-Based Program Payment for completers –

Money is expended up-front to recruit and deliver the 

program. 

– Payment only for completers will ultimately lead to lost revenue 

when consumer(s) drop out

• Evidence-Based Program payment for recruitment with 

additional payment for completers

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Network Contracting Models

• Contracting as a group can provide advantages to 

contracting

• There are things to consider when approaching a network 

contracting model

– Who will hold the contract?

– Do we create a new entity to hold the contract?

– Who ”Owns” or “Controls” the new entity?

– How will decisions be made?

– How will revenues be shared? 

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Health Care Business Climate

• Shift from Fee-For-Service to Risk-Based Contracting

• Risk-Based contracting – aka – Value-Based Payment 

Models

• Everyone is expected to take risks

• Revenue is highest when the volume of services and 

quality of services are both high

• You must constantly think “Volume” if you want to be 

sustainable

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In order to seize the opportunity...

• CBOs must understand how they bring value

– What are my strengths?

– What are my weaknesses?

– What is the target population that I can impact?

– How do I define the Return on Investment (ROI) for 

my services?

– What is my value proposition?

– What are the external and internal threats?

– What relationships do I have that increase my 

market potential?

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Challenge for CBOs

• Understanding how your business brings value to the 

system

• Defining your return on investment (ROI)

• Implementing the required culture change to realize the 

opportunity - Significant

• Acquiring IT systems that are compatible with Healthcare 

providers (Meaningful Use)

• Implementing systems to drive change and document 

your impact

– Continually reinforcing your ROI to your 

customer

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Success will require

• Full understanding of the changes impacting the market

• Vigilance to ensure that you stay aware of the current 

changes and pending changes

• Model your program to meet the needs of your 

CUSTOMER

– Who is the customer?

– How does the customer differ from the beneficiary?

– Can you meet the needs of both the Customer 

and the Beneficiary?

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What does the Customer need?

• Data

• Data

• More Data

• Integrated Care Organizations have performance goals to 

meet 

– Financial and Quality Risks

• How do you contribute to improving quality and reducing 

financial risk?

– If you are not, why should they contract with you?

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How do we prepare for the market?

• Now that we have a better understanding about the dynamic 

healthcare market, what do we do next?

• It is important to prepare and know your market before 

seeking contracts

• Know who your customer is

– Customer is the entity that buys your services

– Beneficiary (Consumer) is the recipient of the services that are 

paid for by your customer

– BOTH the Customer and Beneficiary needs must be met

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What Should You Do NOW

• Understand the changing landscape in your community

• Assess the opportunities

• Define the Return on Investment (ROI) for your 

services

• Assess your IT capacity to meet the needs of the 

customer

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Know Your Market

• Medicare Population

• Those at-risk for Institutional Care

• Target services to those impacted by change

• Define how your services will lead to cost reduction and 

improved health outcomes

• Drive value and continually document the ROI that you 

provide

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Questions

• Time for Q & A

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