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Texas Hospital Association Quality & Reimbursement: The New Payment World Kenneth M. Davis, M.D. Chief Medical Officer San Antonio Methodist Healthcare System Gregory N. Etzel Partner King & Spalding LLP Introduction • Who would oppose a quality-based payment system…? Introduction • But there are challenges… Today’s Agenda • We seek to address the following questions faced by hospitals: ― ― ― ― ― How did we get here? What is being measured? How can a hospital determine where it stands and how it will get paid? What should be its operational goals to maximize reimbursement? How can resources be allocated to achieve these goals? Evolution of Medicare as a Purchaser Cost reimbursement ― rewards furnishing more services • Prospective payment ― incentives for efficiency • Value based purchasing ― adds incentives for quality • I. Brief History Medicare Hospital Inpatient Quality Reporting Program (a/k/a IQR Program or RHQDAPU) ― Medicare Modernization Act of 2003, section 501(b) (implemented in FY 2005 IPPS Final Rule) ― Deficit Reduction Act of 2005, section 5001(a) (implemented in FY 2007 IPPS Final Rule) • 2.0 percentage point reduction to base PPS payment rate per discharge for failure to report • I. Brief History • Measures and data listed on Hospital Compare website ― Also QualityNet website for providers • HHS 2007 report to Congress regarding internal CMS deliberation on value-based purchasing program (would have replaced IQR) II. Where We Are Now • PPACA ― Section 3001(a) (becomes 42 U.S.C. 1395ww(o) ― Requires HHS to establish VBP program beginning with payments for discharges occurring on or after October 1, 2012 ― Funded through reductions in base operating DRG per discharge payment reductions ― ― • 1% in FY2013, 1.25% in FY2014, 1.5% in FY2015, 1.75% in FY2016, and 2% for FY2017 and each subsequent year Estimated pool for FY 2013 = $850mm Final Rule published May 6, 2011 III. Hospital Value Based Purchasing • • • • Set aside a pool from existing Medicare PPS dollars Redistribute the pool among PPS hospitals based on their performance ― as compared to other hospitals ― as compared to each hospital’s prior performance Create incentives to improve quality Should be budget-neutral in the aggregate Who Participates in VBP? All “subsection (d) hospitals” • Exempt or excluded hospitals ― Payment reduction under IQR ― Cited for deficiencies ― Puerto Rico & Maryland (?) ― IPPS-excluded hospitals ― Need to have at least 4 quality measures to participate and at least 10 cases per measure + 100 HCAHPS surveys • The VBP in FY 2013 • Five aspects ― 1. The Measures ― 2. The Performance Period ― 3. The Performance Standards ― 4. The Score ― 5. The Payment VBP Measures By statute, the measures in the following categories must be included in the VBP program: AMI, heart failure, pneumonia, surgeries, HAI, and HCAHPS • Must be listed on HospitalCompare for at least one year prior to use • Started with 45 measures, ended up with 12 process measures + HCAHPS in the Final Rule • VBP Clinical Process Measures for FY2013 • • • • • • • • • • • • AMI-7a - Fibrinolytic Therapy Received Within 30 Minutes of Hospital Arrival AMI-8a - Primary PCI Received Within 90 Minutes of Hospital Arrival HF-1 - Discharge Instructions PN-3b - Blood Cultures Performed in the Emergency Department Prior to Initial Antibiotic Received in Hospital PN-6 - Initial Antibiotic Selection for CAP in Immunocompetent Patient SCIP-Inf-1 - Prophylactic Antibiotic Received Within One Hour Prior to Surgical Incision SCIP-Inf-2 - Prophylactic Antibiotic Selection for Surgical Patients SCIP-Inf-3 - Prophylactic Antibiotics Discontinued Within 24 Hours After Surgery End Time SCIP-Inf-4 - Cardiac Surgery Patients with Controlled 6AM Postoperative Serum Glucose SCIP-Card-2 - Surgery Patients on a Beta Blocker Prior to Arrival That Received a Beta Blocker During the Perioperative Period SCIP-VTE-1 - Surgery Patients with Recommended Venous Thromboembolism Prophylaxis Ordered SCIP-VTE-2 - Surgery Patients Who Received Appropriate Venous Thromboembolism Prophylaxis Within 24 Hours Prior to Surgery to 24 Hours After Surgery Patient Experience Measures for FY2013 • HCAHPS - Hospital Consumer Assessment of Healthcare Providers and Systems Survey ― Communication with Nurses ― Communication with Doctors ― Responsiveness of Hospital Staff ― Pain Management ― Communication about Medicines ― Cleanliness and Quietness of Hospital Environment ― Discharge Information ― Overall Rating of Hospital. The Performance Period For process measures and HCAHPS, July 1, 2011March 31, 2012 for FY 2013 • Compared to performance during baseline period of July 1, 2009 through March 31, 2010 (FY 2013) • For future measures, performance period will begin 1 year from the time they are added to Hospital Compare ― HAC & AHRQ measures will begin March 3, 2012 • Performance Standards • Threshold = median of hospital performance (50th percentile) during baseline period • Benchmark = mean of top decile of hospital performance during baseline period • No minimum performance standard The Score • Three-Domain Performance Scoring Model ― Only two active in FY 2013 • Points for both achievement and improvement Achievement score for process measure • Here’s the formula: [9 X ((performance period achievement threshold) / (benchmark - threshold))] + 0.5, then round to nearest whole number • The simpler version is simply that you get 0 to 10 points based on where your performance falls between the threshold and the benchmark Achievement scoring 10 points for meeting or exceeding the benchmark • 0 points for performing below threshold • 1-9 on a linear scale between the threshold and benchmark • Some benchmarks are 100% • Improvement scoring Similar formula to achievement score • 0-9 points • 0 for below baseline score • 1-9 points on a linear scale if above baseline score • Example of scoring Another example The VBP “Compression Problem” The VBP “Compression Problem” 11 of the 12 clinical measures have very little space between the threshold and the benchmark ― benchmarks > .90 & thresholds >.99 ― E.g. SCIP-Inf-2- Threshold = .9766; Benchmark = 1.0 • This compression means that very small differences in performance generate large differences in scores • 2013 Clinical Process of Care MeasuresThreshold and Benchmarks Measure ID AMI-7a AMI-8a HF-l PN-3b PN-6 SCIP-Inf-l SCIP-Inf-2 Measure Description Threshold Benchmark Fibrinolytic Therapy Received Within 30 Minutes of Hospital Arrival Primary PCI Received Within 90 Minutes of Hospital Arrival 0.6548 0.9191 0.9186 1.00 Discharge Instructions 0.9077 1.00 Blood Cultures Performed in the Emergency Department Prior· to Initial Antibiotic Received in Hospital Initial Antibiotic Selection for CAP in Immunocompetent Patient 0.9643 1.00 0.9277 0.9958 Prophylactic Antibiotic Received Within One Hour Prior to Surgical Incision Prophylactic Antibiotic Selection for Surgical Patients 0.9735 0.9998 0.9766 1.00 2013 Clinical Process of Care MeasuresThreshold and Benchmarks (cont.) Measure ID Measure Description Threshold Benchmark SCIP-Inf-3 Prophylactic Antibiotics Discontinued Within 24 Hours After Surgery End Time 0.9507 0.9968 SCIP-Inf-4 Cardiac Surgery Patients with Controlled 6AM Postoperative Serum Glucose 0.9428 0.9963 Surgery Patients with Recommended Venous Thromboembolism Prophylaxis Ordered Surgery Patients Who Received Appropriate Venous Thromboembolism Prophylaxis Within 24 Hours Prior to Surgery to 24 Hours After Surgery Surgery Patients on a Beta Blocker Prior to Arrival That Received a Beta Blocker During the Perioperative Period 0.95 1.00 0.9307 0.9985 0.9399 1.00 SCIP-VTE-1 SCIP-VTE-2 SCIP- Card-2 Example of Compression Problem Example Measure Threshold Benchmark SCIP-Inf-2 .98 .99 • 3 possible achievement scores - 0, 1, 10 • If a hospital’s score drops from .99 to .97, points drop from 10 to 0 • Problem is intensified for hospitals with fewer cases per measure (min. is 10) • 2013 Clinical Process of Care Measures100% Compliance • 6 of the 12 measures require 100% compliance to receive the full 10 points ― No room for error ― Increases possibility of losing 10 points for missing just one or two cases ― Compliance with a measure is not always medically indicated or feasible (e.g., if a patient is discharged against doctor’s orders). HCAHPS Scores Must report minimum of 100 surveys • Eight dimensions are weighted equally • Achievement - 0-10 points • Improvement - 0-9 points • Formulas are similar to process scores • Can also achieve points for consistency • Total = sum larger of achievement or improvement for each measure + consistency score • HCAHPS Scores -- Consistency Purpose is to encourage higher performance across all HCAHPS dimensions • Promote wider systems changes within hospitals to improve quality by offering hospitals additional incentives • HCAHPS Scores -- Consistency • Calculation of Consistency Points: ― If all dimension rates are greater than or equal to the Achievement Thresholds: ― ― If any individual dimension rate is less than or equal to the worst-performing hospital dimension rate from the Baseline Period ― ― 20 Consistency points (Maximum) 0 Consistency points If the lowest dimension rate is greater than the worst-performing hospital’s rate but less than the Achievement Threshold: ― 0-20 Consistency points awarded based on formula Normalizing scores • Will only use measures that apply to the hospital • Convert to percentage of total points available Total score • 70% clinical process of care • 30% HCAHPS The Payment The payment works as an adjustment to base operating DRG per discharge payment ― Remains unclear how VBP interacts with payments for DSH, IME, outliers • Budget neutral • CMS’s impact analysis shows that: ― top 95th percentile hospitals will receive as much as 1.575% in VBP payment ― 5th percentile hospitals will receive as little as 0.434% in VBP payment • Payment Exchange Function CMS looked at several possibilities • Linear, cube, logistic • For FY 2013, exchange function will be linear • Other Matters • Publication ― Notice of estimated incentive payment through QualityNet at least 60 days prior to October 1, 2012 ― Score released on November 1, 2012 with 30 days for review ― Actual VBP payment amount not entered into claims processing system until January 2013 ― Aggregate VBP program info published on HospitalCompare Other Matters • Appeals ― Very limited review rights ― May appeal calculation of scores and performance assessment ― Left for future rulemaking IV. VBP in FY 2014 and beyond • • • • Adding outcome measures- 3 30-day mortality measures (AMI, HF, Pneumonia), 2 AHRQ composite measures, 8 HAC measures Performance period will be July 1, 2011-June 30, 2012 for outcome measures Future measures can be added after being listed on HospitalCompare for at least one year Proposed subregulatory process for adding and retiring measures ― Rejected in Final Rule (preserves notice-and-comment) ― Measures may be adopted for IQR and VBP at the same time VBP in FY 2014 and beyond • Starting FY 2014, VBP program will include efficiency measures (Medicare spending/beneficiary) ― In the 2012 IPPS proposed rule, CMS proposed to use claims data to measure all Medicare Part A and Part B payments for each beneficiary discharge during an “episode.” ― “Episode” = 3 days prior to an inpatient PPS hospital admission through 90 days post hospital discharge. ― Base period = May 15, 2010 - Feb. 14, 2011 ― Performance period = May 15, 2012 - Feb 14, 2013. ― Scoring would be similar to other VBP measures. Preparing for VBP • Know where your hospital stands on each selected measure for the baseline period and identify which measures have the best rate of return. ― For example, if a hospital was at the benchmark for a compressed measure in its baseline period, then a slight percentage change in score on that measure for the performance period could cause the hospital to lose 10 points (if it drops below the compressed threshold) ― On the other hand, it could take a very large percentage improvement to pick up less than 9 points, as an improvement score, on a measure where the hospital was well below the threshold for the benchmark period ― In that scenario, it may make sense to play defense first, before devoting resources to improvement on the latter measure Preparing for VBP • Understand how discharge volume by measure factors into the VBP score ― Each clinical performance measure has an equal weight. ― An orthopedic hospital’s great performance on clinical process indicators in hundreds of surgical cases could, therefore, be offset by missing performance indicators in a handful of heart failure cases. V. Hospital Acquired Conditions • Section 1886(d)(4)(D) requires hospitals to furnish coding information on claims indicating certain conditions “present on admission” to prevent Medicare payment for certain hospital acquired conditions ― CMS identified 8 HACs in the FY 2008 IPPS rule unless there is documentation supporting that the condition was present on admission ― In FY 2009 two categories were added and refined codes on the HACs list ― FY 2010 and 2011 contained no new or withdrawn categories V. Hospital Acquired Conditions • PPACA reduces payments 1% to hospitals that rank in the top quartile of hospital acquired condition (HAC) rates ― Cumulative effect with other HAC and quality payment adjustments ― Expansion to Medicaid populations and conditions as of July 1, 2011 VI. Readmissions Reduction Program • PPACA imposes financial penalties on hospitals with high readmission rates ― Performance based on 30-day readmission measures under the Medicare pay-forperformance program for heart attack, heart failure and pneumonia VII. Bundled Payments Initiative VII. Bundled Payments Initiative • Recent “Bundled Payments for Care” initiative ― Four Models ― ― ― ― ― ― Acute, Post-Acute, and combinations of the two Hospitals propose discounts from fee for service amounts and keep additional savings gained from care management Gainsharing opportunities Responsibility for certain post-episode costs Applications being sought by CMS for voluntary participation Less restrictive than ACO • Opportunity for Hospitals to share in gains from improved care management ― Implementation of quality measures • The future of Medicare reimbursement… Questions… Gregory N. Etzel Partner King & Spalding LLP 713-751-3280 [email protected]