Leading the Value Journey: Value Based Purchasing“What should you be focused on?”

Melinda S. Hancock, FHFMA, CPASecretary/TreasurerHFMA

HFMA Western Pennsylvania Chapter Winter Education EventFebruary 18, 2014

Waste in the System

The New ConstructEvolving Population Health in a Fee for Service Era

Healthcare Reform

4

2 Key Components of Payment Reform

Goals of Payment Reform

This will include establishing measures to (1) establish performance based payment incentives and (2) protecting against unintended consequences of cost containment.

Source: Rand, Payment Reform: Analysis of Models and Performance Measurement Implications, 2011

0.75%

1% 2%

0.1% 0.1%

1.0% 0.7%

TOTAL IMPACT% = % OF MEDICARE INPATIENT OPERATING PAYMENTS

Value-Based Purchasing

30-day readmissions

Hospital-acquired conditions

Market basket reductions

Multifactor Productivity Adj*

Documentation and Coding Adj (DCA)**

Across the board cuts to finance debt ***

OCT2014

OCT2011

OCT2018

OCT2019

OCT2020

OCT2017

OCT2013

OCT2016

OCT2015

OCT2012

1.0% 1.25% 1.5% 1.75% 2.0%

3.0%

1.0%

0.3%

0.5% 0.5% 0.5%

1.9%4.9%

2.0%

6.7% 10.6% 10%6.0%

*The Multifactor Productivity Adjustment is an estimate generated by the CMS Office of the Actuary **DCA, also known as the behavioral offset, shown here does not show the future affects of these cuts on baseline spending. Estimates FY 2014-FY 2017 impact of the American Taxpayer Relief Act of 2012*** If Congress has not adopted the Joint Committee’s report to reduce the deficit by at least $1.2 trillion, the 2% cut will be implemented April 2013

0.2%

8.1% 11.4% 9.4%10.5% 9.3% 8.7%8.9%

1.0% 2.0%

Current Reform Landscape

0.4%

2.1% 2.1% 2.1%2.1%

0.65% 0.9% 0.7%

Timeline of Performance

Reform ReadinessAmount at Risk

2013 2014 2015 2016 2017

Readmission Program (a) 1.0% 2.0% 3.0% 3.0% 3.0%

Value Based Purchasing (b) 1.0% 1.25% 1.5% 1.75% 2.0%

Hospital Acquired Conditions (a) 1.0% 1.0% 1.0%

Total Potential Rates at Risk 2.0% 3.25% 5.5% 5.75% 6.0%

a: Represents a worst case scenario and a ceiling of the maximum penaltiesb: Represents a withhold of payment that can be earned back based on quality metrics

The Medicare DRG FormulaStandard Federal Rate

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Labor PortionX Wage Index

Non Labor Portion

Adjusted Base Rate

Case Mix/DRG Weight

Generic Base Rate

DSH Adjustment + IME Adjustment

Payment

Facts about FY 14 VBP

Bonuses

Pennsylvania Average

.24%

US Average,24%

Penalties

Pennsylvania Average

-.20%

US Average-.26%

% With Bonuses

Pennsylvania Average

45%

LESS REIMBURSEMENTA total of 1,451 hospitals got paid less in FY 14 vs FY 13 for VPB. 1,231 got

paid more.

$1.1B at play in FY 14

VBP Largest increase .88%

Largest Decrease 1.14%Change from FY 13 VBP

Pennsylvania Hospital Performance

-0.80% -0.60% -0.40% -0.20% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00%

-1.60%

-1.40%

-1.20%

-1.00%

-0.80%

-0.60%

-0.40%

-0.20%

0.00%Value Based Purchasing

Read

mis

sion

s

For FFY 2014

VBP Shifting of Domain Weights

70%

30%

FY 2013

45%

25%

30%

FY 2014

10%

25%

40%

25%

FY 2016

20%

20%

30%

30%

FY 2015

• Outcomes

• Patient Experience

• Efficiency (MSPB)

• Core Measures

New NQS Based Domains in FY 17

25%

15%

35%

25%

Patient and Caregiver Centered Experience of CareSafetyClinical CareEfficiency and Cost Reduction

Note: The Clinical Care Component is split 25% Outcomes and 10% Process

Per August 13, 2013 Federal Register

What Determines Reimbursement?• Reimbursement Determined Two Ways

– Improvement– Achievement

• Improvement– How we measure against ourselves

• Did we do better than last year

• Achievement– How we compare to Top Decile

• Must Meet or Exceede the Mean Scores of Top Decile Performers (350 Hospitals)

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Clarification of Definitions

• In the Final Rule: August 19, 2013– “Achievement Threshold (or achievement performance standard)

means the median (50th percentile) of hospital performance on a measure during a baseline period with respect to a fiscal year, for Hospital VBP Program measures other than the Medicare Spending Per Beneficiary measure and the median (50th percentile) of hospital performance on a measure during the performance period with respect to a fiscal year, for the Medicare Spending per Beneficiary measure”

– “Benchmark means the arithmetic mean of the top decile of hospital performance on a measure during the baseline period with respect to a fiscal year, for Hospital VBP Program measures other than the Medicare Spending per Beneficiary measure, and the arithmetic mean of the top decile of hospital performance on a measure during the performance period with respect to a fiscal year, for the Medicare Spending Per Beneficiary measure” Per August 13, 2013 Federal Register

Scenario on ScoringAMI 7a- Fibrinolytic Therapy

.6548Achievement Threshold

.9191Benchmark

Baseline

Performance

Score.4287

Score.8163

Achievement Range (1-10)

Improvement Range (0-9)

Sourced: 2010 August Federal Register

FY 16 Clinical Process of Care 10%Measure ID Description

Achievement Threshold Benchmark

AMI-7a Fibrinolytic Therapy received within 30 min of hospital arrival

.91154 1.0000

IMM-2 Influenza Immunization .90607 .98875

PN-6 Initial antibiotic selection for CAP in Immunicompetent pt

.96552 1.0000

SCIP-Inf-2 Prophylatic Antibiotic Selection for Surgical Pts .99074 1.0000

SCIP-Inf-3 Prophylatic Antibiotics discontinued 24 hrs after surgery end time

.98086 1.0000

SCIP- Inf-9 Urinary catheter removed on post op day 1 or 2 .97059 1.0000

SCIP- Card-2 Surgery patients on beta blocker therapy prior to arrival who received a beta blocker during perioperative period

.97727 1.0000

SCIP-VTE-2 Surgery patients who received appropriate VTE prophylaxes within 24 hours prior to surgery to 24 hours after surgery

.98225 1.0000

Per August 13, 2013 Federal Register

FY 16 Outcome Measures 40%Measure ID Description

Achievement Threshold Benchmark

CAUTI Catheter Associated Urinary Tract Infection

.801 .000

CLABSI Central Line Associated Blood Stream Infection

.465 .000

SSI Surgical Site Infection Colon Abdominal Hysterectomy

.668

.752.000.000

Mort-30-AMI AMI 30 day Mortality rate .847472 .862371

Mort- 30-HF HF 30 day Mortality rate .881510 .900315

Mort- 30-PN PN 30 day Mortality rate .882651 .904181

PSI-90 Complication/patient safety for selected indicators (composite)

.622879 .451792

Per August 13, 2013 Federal Register

FY 16 Patient Experience of Care 25%

DescriptionFloor

Achievement Threshold Benchmark

Communication with Nurses 53.99 77.67 86.07

Communications with Doctors 57.01 80.40 88.56

Responsiveness of Hospital Staff 38.21 64.71 79.76

Pain Management 48.96 70.18 78.16

Communication about Medicines 34.61 62.33 72.77

Hospital Cleanliness & Quietness 43.08 64.95 79.10

Discharge Information 61.36 84.70 90.39

Overall Rating of Hospital 34.95 69.32 83.97

Per August 13, 2013 Federal Register

30 Day Risk-Standardized Mortality Rate Calculation

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Facility Predicted Deaths

Facility Expected DeathsX

Measure (AMI, HF, PN) National Crude Rate

=

This is 30 days post admission: the majority of these may be post discharge.

HF Mortality FormulaNumerator & Denominator Description The measure cohort consists of admissions for Medicare Fee-for-Service (FFS) and Veterans Health Administration (VA) beneficiaries aged 65 years and older discharged from non-federal acute care hospitals or VA hospitals, respectively, having a principal discharge diagnosis of heart failure (HF). The hospital-specific risk-standardized mortality rate (RSMR) is calculated as the ratio of the number of "predicted" deaths to the number of "expected" deaths, multiplied by the national unadjusted mortality rate. The "denominator" is the number of deaths expected on the basis of the nation's performance with that hospital's case mix.The "numerator" of the ratio component is the number of deaths within 30 days predicted on the basis of the hospital's performance with its observed case mix.

It conceptually allows for a comparison of a particular hospital's performance given its case mix to an average hospital's performance with the same case mix. Thus, a lower ratio indicates lower-than-expected mortality or better quality, and a higher ratio indicates higher-than-expected mortality or worse quality.

Source: http://www.qualitymeasures.ahrq.gov/content.aspx?id=35573

Heart Failure Risk Adjustments

Demographics •Age-65 (years above 65, continuous) •Male

Cardiovascular •History of percutaneous transluminal coronary angioplasty (PTCA) •History of coronary artery bypass grafting (CABG) •Congestive heart failure •Acute myocardial infarction (AMI) •Other acute/subacute forms of ischemic heart disease •Chronic atherosclerosis •Cardio-respiratory failure and shock •Valvular and rheumatic heart disease

Comorbidity •Hypertension •Stroke •Renal failure •Chronic obstructive pulmonary disease (COPD) •Pneumonia •Diabetes and diabetes mellitus (DM) complications •Protein-calorie malnutrition •Dementia and senility •Hemiplegia, paraplegia, paralysis, functional disability •Peripheral vascular disease •Metastatic cancer, acute leukemia, and other severe cancers •Trauma in the last year •Major psychiatric disorders •Chronic liver disease

The final set of risk-adjustment variables included:

Source: http://www.qualitymeasures.ahrq.gov/content.aspx?id=35573

Trend of Mortality

Source: Medicare Hospital Quality Chartbook, 2013

Distribution of Mortality

Source: Medicare Hospital Quality Chartbook, 2013

Efficiency Definition• Medicare Spending Per Beneficiary (MSPB)

– Captures total Medicare spending per beneficiary, relative to a hospital stay, bundling hospital sources (Part A) with post acute care (Part B).

– Bundles the cost of care delivered to a beneficiary for an episode of care across the continuum of care.

• 3 days prior to admission and 30 days post discharge• Indexed by the discharging hospital regardless of who

provides services in the 3 days prior and 30 days post

– The first performance period ended 12/31/13 for FFY 15 and the second one started 1/1/14 for FFY 16.

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Medicare Spending Per Beneficiary

Lists percent of spending for the hospital vs. state

and national statistics by

provider type.

By MDC for each Hospital27

Lists all 25 MDCs with state and national averages

Three additional reports along with the summary on Qnet: index admission file, beneficiary risk score file and an

MSPB episode file.

What should I be looking for next?

Watch for the flags…

On Hospital Compare

Heads Up: Stroke

Source: Medicare Hospital Quality Chartbook, 2013

Timeline of Performance

Reform ReadinessAmount at Risk

2013 2014 2015 2016 2017

Readmission Program (a) 1.0% 2.0% 3.0% 3.0% 3.0%

Value Based Purchasing (b) 1.0% 1.25% 1.5% 1.75% 2.0%

Hospital Acquired Conditions (a) 1.0% 1.0% 1.0%

Total Potential Rates at Risk 2.0% 3.25% 5.5% 5.75% 6.0%

a: Represents a worst case scenario and a ceiling of the maximum penaltiesb: Represents a withhold of payment that can be earned back based on quality metrics

Hospital Acquired Conditions: Final Rule for FFY 2015

First Domain 35% : PSIsPerformance Period: 7/1/11-6/30/13

Second Domain 65%: CDCPerformance Period: CY 2012 & 2013

Pressure Ulcer Rate CLABSI

Foreign Object Left in Body CAUTI

Iatrogenic Pneumothorax Rate

Postoperative Physiologic and Metabolic Derangement Rate

Postoperative Pulmonary Embolism and Deep Vein Thrombosis Rate

Accidental Puncture and Laceration Rate

1% Medicare Reimbursement at riskLowest performing quartile will be penalized

HAC Domain Weightings33

CLABSI: 32.5%

CAUTI: 32.5%

Pressure Ulcer Rate: 8.33%

Foreign Object LeftIn Body: 8.33%

DOMAIN 1: 35% DOMAIN 2: 65%

Proposed Future Measures: Domain 2

First Domain: PSIs Second Domain: CDC

Pressure Ulcer Rate CLABSI

Foreign Object Left in Body CAUTI

Iatrogenic Pneumothorax Rate SSI Following Colon Surgery (FY 2016)

Postoperative Physiologic and Metabolic Derangement Rate

SSI Following Abdominal Hysterectomy (FY 2016)

Postoperative Pulmonary Embolism and Deep Vein Thrombosis Rate

Methicillin-Resistant Staphylococcus Aureus (MRSA) Bacteremia (FY 2017)

Accidental Puncture and Laceration Rate Clostridium Difficile (FY 2017)

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Why is patient financial communication important now?

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• The U.S. health care system is inherently complex—even for healthcare professionals

• Today, more people are covered by high- deductible health plans

• Consumers want to know exactly how much they will be expected to pay

• Media coverage has raised public awareness of issues around healthcare costs and prices

Donna ShalalaFormer U.S. Secretary of Health and Human ServicesOctober 2013

“There’s never been a more important time in our history for very clear communication between healthcare professionals and our patients.”

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What do the best practices cover?

• Where and when to have financial discussions• Who participates• What topics to address• Discussion parameters• Assessment framework

40

How were the best practices developed?

These best practices reflect the consensus of a steering committee of experts across many fields, including

• Patients• Hospitals• Physicians• Payers

…advised by a team of leading national policymakers

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How can we demonstrate our commitment to excellence in patient financial communication?

• Adopters receive acknowledgement on the HFMA website and in hfm magazine.

• Adopters may use the phrase “Supporter of the Patient Financial Communications Best Practices” in marketing materials.

• No fees involved• All healthcare provider organizations are eligible.

Become an Adopter of the best practices.

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hfma.org/communications

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Price Transparency Task Force

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Medical Debt Collection Task Force

“The challenges that we face… will require leadership from everybody in this room.”

Steve Rose2013-2014 Chair, HFMACFO, Conway Regional Health System

Speaking at ANI 2013

Thank you!