Medicare’s RRP and HAC Programs

DataGen Susan McDonough

Bill Shyne Lauren Davis

June 27, 2016

Washington State Hospital Association Apprise Health Insights /

Oregon Association of Hospitals and Health Systems

Today’s Objectives

• Overview of Medicare Readmission Reduction and Hospital

Acquired Condition Programs

• Review Methodologies

• Review Washington and Oregon’s RRP and HAC Reports

Medicare Quality Based Payment Reform (QBPR) Programs

• Mandated by the ACA of 2010 • VBP Program (redistributive w/ winners and losers)

• Readmissions Reduction Program (remain whole or lose) • HAC Reduction Program (remain whole or lose)

• National pay-for-performance programs

• Most acute care hospitals must participate; CAHs excluded

• Program rules, measures, and methodologies adopted well in advance (2013-2021)

General Medicare Quality Program Themes

• Payment adjustments based on facility-specific performance compared to national standards

• Performance metrics are determined using historical data

• Dynamic programs change every year

• Increasing financial exposure:

Medicare Readmission Reduction Program (RRP)

• Program became effective FFY 2013 (October 1, 2012)

• Penalizes hospitals for exceeding expected readmission rates

• Expected rates based on national performance levels

• Program expands over time with addition of new conditions

• Penalty capped at 3% for 2015 and thereafter

• 1% in FFY 2013;

• 2% in FFY 2014;

• 3% in FFY 2015+

• Measures are established in advance, usually in the IPPS rule

Excess Readmission Ratios by Condition

Excess Readmission Revenue by Condition

Total Excess Readmission Revenue

(all conditions)

RRP Adjustment Factor

Program Impact

• Excess readmission ratios are calculated for multiple condition areas

– AMI, HF, and PN (with a principal diagnosis of viral or bacterial) in FFY 2013 & 2014

– Addition of COPD & TKA/THA in 2015+

– Changes in 2017+: • Refined PN measure will add 2 types of claims: aspiration PN, and those with a principal

diagnosis of sepsis (not severe sepsis) and a secondary diagnosis of Pneumonia (POA)

• CABG

– Improvement is not recognized

– Certain planned readmissions are not counted

RRP Methodology

• Excess Ratios are multiplied by revenue in each condition area to find excess readmission revenue by condition

• Sum of all conditions = total excess readmission dollars

• Each measure weighted by hospital specific revenue

• Revenue = exposure

• More conditions = More exposure

• Total excess readmission revenue is used to calculate adjustment factors

RRP Methodology

Adjustment Factor Percent Cut

No Payment Penalty 0.0% 34.2% 21.9% 21.8%

0.9951 to 0.9999 -0.01% to -0.5% 47.4% 42.4% 43.9%

0.9901 to 0.9950 -0.5% to -0.999% 13.4% 19.7% 19.1%

0.9851 to 0.9900 -1.0% to -1.499% 3.8% 8.9% 8.7%

0.9801 to 0.9850 -1.5% to -1.999% 0.8% 3.8% 3.2%

0.9751 to 0.9800 -2.0% to -2.499% 0.5% 1.5% 1.5%

0.9701 to 0.9750 -2.5% to -2.999% 0.6% 0.7%

= 0.9700 -3.0% 1.2% 1.1%

% of Hospitals

2014 2015 2016

RRP Trends

• Continually evolving

• As measures are added, exposure to penalties increases

• As measures are added, hospitals are more likely to receive penalties

RRP Penalty Calculation Worksheet

A Eligible Discharges

B Predicted Rate 15.1% ||||||||||||||||||||||||||||||||||||||||||||| 22.9% |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||| 18.7% |||||||||||||||||||||||||||||||||||||||||||||||||||||||| 4.7% |||||||||||||| 22.8% ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||

C Expected Rate 16.8% |||||||||||||||||||||||||||||||||||||||||||||||||| 23.6% |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||| 18.4% ||||||||||||||||||||||||||||||||||||||||||||||||||||||| 4.6% ||||||||||||| 22.4% |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||

D Excess Ratio [ B / C — see footnote on face validity] **

EEstimated 3-Year Inpatient Operating Revenue(MedPAR, condition-specific discharges)

F Estimated Excess Dollars [if D is greater than 1.0 then ( D - 1 ) X E ]

G Estimated Total Excess Dollars [ Sum of F ]

HEstimated 3-Year Total Inpatient Operating Revenue(MedPAR, all discharges hospital wide)

I Estimated Uncapped Adjustment Factor [ 1 - ( G / H )]

Estimated Capped Adjustment Factor[i cannot be less than 0.9700 for FFY 2015]

J Actual Capped Adjustment Factor for FFY 2016

K Actual Penalty % Applied to Inpatient Payments [ J - 1 ]

LEstimated Inpatient Operating Payments Subject to

Adjustment *Estimated Impact on Inpatient Payments [ K X L ]

441

$0

-0.18%

FFY 2016 Program Penalty

$29,840,200

$4,528,309

COPD

590

$63,069

($53,700)

0.9969

$3,414,912

Estimated: FFY 2016 Detailed Program Penalty Calculation

FFY 2016 Program ESTIMATE (Based on ACTUAL and ESTIMATED data)

0.8999

THA/TKAPN

649

$2,857,786$4,217,442

0.9982

$175,053

$56,092,129

1.0175

- Revenue values used in the calculation of the program penalty above are for discharges between July 1, 2011 and June 30, 2014.

1.0139

0.9969

This table is intended to provide a detailed calculation and estimate of the FFY 2016 Readmissions Reduction Program payment penalty based on publicly available data. The estimated penalty is then compared to the actual

program penalty factor published by CMS in the FFY 2016 Medicare IPPS final rule. The use of slightly different hospital claims data is the cause of any difference between the actual and estimated factors.

$0

1.0181

$50,052

$2,252,547

$61,931

HF

0.9692

228

AMI

250

RRP Performance Scorecard Worksheet

ConditionPredicted

Rate÷

Expected

Rate=

Excess

Ratio

Excess

Readm. %

Predicted

Rate÷

Expected

Rate=

Excess

Readm. %

Predicted

Rate÷

Expected

Rate=

Excess

Readm. %

AMI 14.6% ÷ 15.1% = 0.9708 0.00% 14.4% ÷ 14.3% = 1.0076 ▲ 0.76% 14.4% ÷ 14.3% = 1.0076 — 0.76%

HF 21.3% ÷ 22.0% = 0.9675 0.00% 21.3% ÷ 21.5% = 0.9906 ▲ 0.00% 21.3% ÷ 21.5% = 0.9906 — 0.00%

PN 15.8% ÷ 16.4% = 0.9617 0.00% 16.7% ÷ 15.9% = 1.0478 ▲ 4.78% 16.7% ÷ 15.9% = 1.0478 — 4.78% *

THA/TKA 4.3% ÷ 5.0% = 0.8510 0.00% 4.6% ÷ 4.8% = 0.9652 ▲ 0.00% 4.6% ÷ 4.8% = 0.9652 — 0.00%

COPD 20.5% ÷ 18.8% = 1.0870 8.70% 20.8% ÷ 18.5% = 1.1249 ▲ 12.49% 20.8% ÷ 18.5% = 1.1249 — 12.49%

CABG 17.2% ÷ 14.9% = 1.1544 — 15.44%Does Not Apply

FFY 2016 Program ACTUAL Performance(Based on data from July 2011 - June 2014)

Performance Overview

FFY 2017 Program ESTIMATED Performance(Based on data from July 2011 - June 2014)

FFY 2015 Program ACTUAL Performance(Based on data from July 2010 - June 2013)

Excess Ratio Excess Ratio

Condition

AMI (Revenue)

HF (Revenue)

PN (Revenue)

THA/TKA (Revenue)

COPD (Revenue)

CABG (Revenue)

Total

FFY 2015 Program ACTUAL Performance

(Based on data from July 2010 - June 2013)

Does Not Apply

FFY 2016 Program ACTUAL Performance

(Based on data from July 2011 - June 2014)

$5,584,044

$22,459,890

$4,414,516

$3,466,636

$21,049,332

$4,438,995

$4,475,435

$7,417,725

$30,484,281

$4,335,930

FFY 2017 Program ESTIMATED Performance

(Based on data from July 2011 - June 2014)

$4,335,930

$5,527,596

$4,475,435

Estimated Revenue by Condition

$4,288,600 $4,288,600

$3,832,329

$5,527,596

$3,833,300

$3,750,836

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

CABG

COPD

THA/TKA

PN

HF

AMI

RRP Performance Scorecard Worksheet (con’t)

Condition

Total Inpatient Operating Revenue ***

AMI (Excess $$ and Penalty %)

HF (Excess $$ and Penalty %)

PN (Excess $$ and Penalty %)

THA/TKA (Excess $$ and Penalty %)

COPD (Excess $$ and Penalty %)

CABG (Excess $$ and Penalty %)

0.9843

0.98430.9926

0.9926▼ ▼

$183,030

-0.66%Does Not Apply

FFY 2016 Program ACTUAL Performance

(Based on data from July 2011 - June 2014)

FFY 2017 Program ESTIMATED Performance

(Based on data from July 2011 - June 2014)

Estimated Total Excess Revenue and Penalty

%

$95,740,249 $103,067,663

Estimated Capped Adjustment Factor(0.97 for FFY 2015+)

0.9966

-0.04%0.00%

$326,380 -1.57%

$685,214

0.00%

$1,617,569

$42,233

Estimated Uncapped Adjustment Factor(1 - Penalty %)

0.9966

$0

$0

$0

-0.34%$354,266

-0.34%

$42,233

-0.74%

-0.18%

$0 -0.04%

0.00%

$103,067,663

0.00%

$0

$535,857

Estimated Construct of Program Penalties

0.00%

-0.52%

$0 0.00%

$535,857 -0.52%

$761,119

$0$0 0.00%

$326,380 -0.34%

FFY 2015 Program ACTUAL Performance

(Based on data from July 2010 - June 2013)

0.00%

-3.50%

-3.00%

-2.50%

-2.00%

-1.50%

-1.00%

-0.50%

0.00%

CABG

COPD

THA/TKA

PN

HF

AMI

Maximum Payment Penalty

Washington RRP Revenue by Condition

Condition/Procedure 2013-2014 2015-2016 2017

AMI $127,524,400 $127,524,400 $127,524,400

Heart Failure $149,592,100 $149,592,100 $149,592,100

Pneumonia $95,081,600 $95,081,600 $282,192,300

THA/TKA N/A $294,297,800 $294,297,800

COPD N/A $91,103,400 $91,103,400

CABG N/A N/A $80,487,400

Total Program Exposure $372,198,100 $757,599,300 $1,025,197,400

Increase in Exposure 103.5% 35.3%

Oregon RRP Revenue by Condition

Condition/Procedure 2013-2014 2015-2016 2017

AMI $65,742,400 $65,742,400 $65,742,400

Heart Failure $67,029,200 $67,029,200 $67,029,200

Pneumonia $44,768,100 $44,768,100 $114,124,600

THA/TKA N/A $142,446,000 $142,446,000

COPD N/A $38,518,400 $38,518,400

CABG N/A N/A $49,987,700

Total Program Exposure $177,539,700 $358,504,100 $477,848,300

Increase in Exposure 101.9% 33.3%

Washington RRP Impact by Condition

Eligible providers and their characteristics are based on the FFY 2016 IPPS Final Rule.

Condition/Procedure 2014 2015 2016

AMI ($568,000) ($614,300) ($818,200)

Heart Failure ($687,700) ($822,400) ($708,100)

Pneumonia ($414,900) ($443,600) ($467,400)

THA/TKA - ($1,802,100) ($1,617,000)

COPD - ($495,600) ($484,900)

Total Impact ($1,670,600) ($4,178,000) ($4,095,600)

Oregon RRP Impact by Condition

Eligible providers and their characteristics are based on the FFY 2016 IPPS Final Rule.

Condition/Procedure 2014 2015 2016

AMI ($153,400) ($112,600) ($111,000)

Heart Failure ($126,900) ($212,800) ($234,600)

Pneumonia ($156,100) ($68,600) ($125,100)

THA/TKA - ($91,600) ($612,500)

COPD - ($61,100) ($57,800)

Total Impact ($436,400) ($546,700) ($1,141,000)

Washington Readmission Rate Trends

Rate of Readmission for Heart Attack Patients 18.6% 18.5% ▼ 17.3% ▼ 17.2% ▼ 16.6% ▼

Rate of Readmission for Heart Failure Patients 23.6% 24.0% ▲ 22.3% ▼ 22.3% ▲ 21.4% ▼

Rate of Readmission for Pneumonia Patients 17.4% 17.7% ▲ 17.0% ▼ 16.9% ▼ 16.7% ▼

Rate of Readmission After Hip/Knee Surgery 5.0% 4.8% ▼ 4.5% ▼

Rate of Readmission for Chronic Obstructive

Pulmonary Disease Patients20.5% 19.8% ▼

Rate of Readmission After Coronary Artery

Bypass Graft Surgery13.9%

Rat

es

State Rate

June 2011 Dec. 2013 * Dec. 2014July 1, 2009 - June 30,

2012

July 1, 2010 - June 30,

2013

June 2012July 1, 2008 - June 30,

2011

July 1, 2011 - June 30,

2014

June 2015July 1, 2007 - June 30,

2010

No Data

No Data

No Data

Oregon Readmission Rate Trends

Rate of Readmission for Heart Attack Patients 18.3% 18.1% ▼ 17.6% ▼ 17.0% ▼ 16.1% ▼

Rate of Readmission for Heart Failure Patients 22.7% 22.7% ▼ 21.1% ▼ 21.5% ▲ 20.9% ▼

Rate of Readmission for Pneumonia Patients 17.4% 17.5% ▲ 16.8% ▼ 16.4% ▼ 16.2% ▼

Rate of Readmission After Hip/Knee Surgery 4.7% 4.6% ▼ 4.4% ▼

Rate of Readmission for Chronic Obstructive

Pulmonary Disease Patients19.9% 19.2% ▼

Rate of Readmission After Coronary Artery

Bypass Graft Surgery13.8%

Rat

es

State Rate

June 2011 Dec. 2013 * Dec. 2014July 1, 2009 - June 30,

2012

July 1, 2010 - June 30,

2013

June 2012July 1, 2008 - June 30,

2011

July 1, 2011 - June 30,

2014

June 2015July 1, 2007 - June 30,

2010

No Data

No Data

No Data

Washington Readmission Rank Trends

Rate of Readmission for Heart Attack Patients 8 of 51 10 of 51 ▲ 11 of 51 ▲ 16 of 51 ▲ 21 of 51 ▲

Rate of Readmission for Heart Failure Patients 11 of 51 19 of 51 ▲ 20 of 51 ▲ 25 of 51 ▲ 21 of 51 ▼

Rate of Readmission for Pneumonia Patients 7 of 51 11 of 51 ▲ 11 of 51 13 of 51 ▲ 15 of 51 ▲

Rate of Readmission After Hip/Knee Surgery 8 of 51 10 of 51 ▲ 14 of 51 ▲

Rate of Readmission for Chronic Obstructive

Pulmonary Disease Patients20 of 51 12 of 51 ▼

Rate of Readmission After Coronary Artery

Bypass Graft Surgery7 of 51

For the State Ranks displayed above, an ▼arrow indicates a better rank from the prior data period, while an ▲ arrow indicates a worse rank from

the prior data period.

Dec. 2013 * Dec. 2014 June 2015July 1, 2009 - June 30,

2012

Ran

ks

No Data

June 2012July 1, 2008 - June 30,

2011

July 1, 2007 - June 30,

2010

No Data

No Data

July 1, 2011 - June 30,

2014

June 2011July 1, 2010 - June 30,

2013

State Rank

Oregon Readmission Rank Trends

Rate of Readmission for Heart Attack Patients 5 of 51 3 of 51 ▼ 18 of 51 ▲ 10 of 51 ▼ 6 of 51 ▼

Rate of Readmission for Heart Failure Patients 3 of 51 3 of 51 4 of 51 ▲ 10 of 51 ▲ 10 of 51

Rate of Readmission for Pneumonia Patients 8 of 51 8 of 51 6 of 51 ▼ 7 of 51 ▲ 5 of 51 ▼

Rate of Readmission After Hip/Knee Surgery 3 of 51 3 of 51 6 of 51 ▲

Rate of Readmission for Chronic Obstructive

Pulmonary Disease Patients3 of 51 4 of 51 ▲

Rate of Readmission After Coronary Artery

Bypass Graft Surgery5 of 51

For the State Ranks displayed above, an ▼arrow indicates a better rank from the prior data period, while an ▲ arrow indicates a worse rank from

the prior data period.

Dec. 2013 * Dec. 2014 June 2015July 1, 2009 - June 30,

2012

Ran

ks

No Data

June 2012July 1, 2008 - June 30,

2011

July 1, 2007 - June 30,

2010

No Data

No Data

July 1, 2011 - June 30,

2014

June 2011July 1, 2010 - June 30,

2013

State Rank

RRP Program Timeframes

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

2017

FFY 2017 Program

Performance Period (All Conditions)

FFY 2017 Program

Payment Adjustment

FFY 2016 Program

Payment Adjustment

FFY 2015 Program

Performance Period (All Conditions)

FFY 2015 Program

Payment Adjustment

FFY 2016 Program

Performance Period (All Conditions)

2014 2015 20162010 2011 2012 2013

RRP Reference Guide

• See RRP Reference Guide for more detail – Conditions

– Methodology

– Performance Periods

Applicable Conditions:

Quality Based Payment Reform (QBPR) Reference Guide

Readmission Reduction Program (RRP) Overview

Applicable conditions, performance timeframes, and other details for the FFY 2016, 2017, and 2018 programs

The Readmission Reduction Program (RRP) adjusts Medicare Inpatient payments based on hospital readmission rates for several conditions. This program is

punitive only and does not give hospitals credit for improvement over time or lower readmission rates than the nation. First, CMS compares hospital risk-

adjusted readmission rates to national rates to calculate excess readmission ratios for each condition. Next, CMS applies the excess ratio to aggregate payments

for each condition to find excess readmission dollars by condition. The sum of all excess readmission dollars for all applicable conditions divided by all inpatient

operating revenue determines program adjustment factors/impacts under the program. The basic program methodology is shown below:

The RRP program evaluates hospital readmission rates for several

conditions. In FFY 2013/2014, hospitals were evaluated on AMI,

Heart Failure, and Pneumonia. Additional conditions, COPD and

THA/TKA, were added to the program in 2015, and CABG is added in

2017, along with an expansion to the Pneumonia measure.

Readmission rates, aggregate payments by condition, and excess

readmission dollars by condition are all defined by a predetermined

list of procedure and/or diagnoses codes specific to each condition.

Each condition excludes certain planned readmissions or regular,

scheduled followup care.

Each condition increases the revenue exposed under the program

and the potential for excess readmissions that results in penalties

under the program. The total estimated revenue across all hospitals

for each condition is shown in the graph to the right to indicate the

relative magnitude of each condition under the program.

Importantly, the two new measures added in FFY 2015 expanded the

program substantially and increased the national revenue exposure

under the program by 81%. The expansion in FFY 2017 is slightly less

significant, but increases the revenue at risk for excess readmissions

for the nation by an additional 33%. However, the magnitude of

Hospital specific revenue/exposure in each condition may vary.

Program Timelines

$0

$10

$20

$30

$40

$50

$60

Estimated U.S. Revenue by Condition

THA/TKA:$12.02 Billion

COPD:$6.49 Billion

CABG:$4.39 Billion

20

13

& 2

01

4P

rogram

20

15

& 2

01

6P

rogram

20

17

& 2

01

8 P

rogram

Excess Readmission Ratios by Condition

Excess Readmission Revenue by Condition

Total Excess Readmission Revenue

(all conditions)RRP Adjustment Factor Program Impact

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

2018

FFY 2018 Program

Performance Period (All Conditions)

FFY 2018 Program

Payment Adjustment

FFY 2017 Program

Payment Adjustment

FFY 2016 Program

Performance Period (All Conditions)

FFY 2016 Program

Payment Adjustment

FFY 2017 Program

Performance Period (All Conditions)

2015 2016 201720142011 2012 2013

PN:$6.77 Billion

HF:$9.34 Billion

AMI:$6.83 Billion

PN Expansion:$9.10 Billion

Medicare Hospital Acquired Condition (HAC) Reduction Program

• Program became effective FFY 2015 (October 1, 2014)

• Penalizes hospitals with the highest HAC rates

• Rates are per 1,000 patients

• Compared to all other eligible hospitals nationally

• 1% Penalty applied to all hospitals in the worst performing quartile

• 25% of hospitals will receive a penalty

• Applied to Total Medicare FFS Inpatient Dollars

• Penalty is in addition to existing HAC DRG demotion policy

Measure Scores Domain Scores Total HAC ScoreTop Quartile/1.0% Penalty

DeterminationAnnual Program Impact

• HAC measures are grouped into two domains: • Domain 1 (AHRQ measures):

• PSI-90 Composite Measure

• Domain 2 (CDC measures): • CAUTI and CLABSI • SSI (colon surgery and abdominal surgery) 2016+ • C-Diff and MRSA 2017+

• Separate performance scores are calculated for each HAC measure • 1 to 10 (where 1 = best; 10 = worst)

• Based on national deciles for all program eligible hospitals • Improvement is not recognized

• Averages are calculated for each domain, then the domains are weighted together for a total score

• Total HAC Score determines worst performing quartile of

hospitals to receive 1% payment penalty

HAC Reduction Program Methodology

Domain Weight

Domain 1 Domain 2

FFY 2015 35% 65%

FFY 2016 25% 75%

FFY 2017+ 15% 85%

HAC Reduction Program Trends

• Continually evolving

• Changes to measures

• Changes to domain weights

• Parameters set in IPPS rulemaking at least one year in advance

Domain Weight3

PSI 15: Accidental Puncture or Laceration

PSI 12: Postop PE Or DVT

PSI 13: Postop Sepsis

PSI 6: Iatrogenic Pneumothorax

PSI 7: Central Venous Catheter-Related Blood

PSI 3: Decubitus Ulcer

PSI 14: Postop Wound Dehiscence

PSI 8: Postop Hip Fracture

7.4%

1.7%

0.1%

35% (FFY 2015)

25% (FFY 2016+)

PSI-90: Patient Safety Indicator Composite Ratio1 Weight

49.2%

25.8%

2.3%

6.5%

Domain 1: AHRQ Claims Based Measures

7.1%

Central Line Associated Blood Stream Infection (CLABSI) Domain Weight3

Catheter Associated Urinary Tract Infection (CAUTI)

Surgical Site Infection (SSI) Pooled SIR2 (FFY 2016+)

SSI from Colon Surgery

SSI from Abdominal Hysterectomy

Clostridium difficile (C.diff.) SIR (FFY 2017+)

Methicillin-resistant Staphylococcus Aureus (MRSA) (FFY 2017+)

65% (FFY 2015)

75% (FFY 2016+)

Domain 2: CDC Chart Abstracted Measures

85% (FFY 2017)

15% (FFY 2017)

HAC Reduction Program Measure Calculation Worksheet

0.0

00

0.2

45

0.3

33

0.4

24

0.5

23

0.6

31

0.7

82

1.0

48

4.2

34

0.473

Me

asu

re P

oin

ts

SIR

5 4 3

10 9 8 7 6

Decile2

7.00

14.810.473 51st-60th=

Measure Points (Lower Is Better)2

6

HAI_1: Central Line Associated Blood Stream Infection (CLABSI) Performance Detail

Number of Observed CLABSI Infections

Number of Expected CLABSI Infections=Standardized Infection Ratio (SIR)

1 =

0.0

00

0

.24

5

0.3

33

0

.42

4

0.5

23

0

.63

1

0.7

82

1

.04

8

4.2

34

0.473

Me

asu

re

Po

ints

SIR

543

109876

HAC Reduction Program Measure Calculation Worksheet (con’t)

Domain 2 Scoring Summary 3 SIR Decile Measure

Points

Domain 2 Score 3

FFY 2016 FFY 2017

HAI_1: Central Line Associated Blood Stream Infection (CLABSI) 0.473 51st-60th 6

8.67 8.20

HAI_2: Catheter Associated Urinary Tract Infection (CAUTI) 2.079 91st-100th 10

Surgical Site Infection (SSI) Pooled Standardized Infection Ratio (SIR) 2.112 91st-100th 10

HAI_5: Methicillin-resistant Staphylococcus Aureus (MRSA) 1.935 91st-100th 10

HAI_6: Clostridium difficile (C.diff.) 0.730 41st-50th 5

HAC Reduction Program Impact Calculation Worksheet

Estimated Total HAC Score

Lowest Total HAC Score Receiving Payment Penalty3

Hospital Estimated to be in the Top (worst) Quartile?

Estimated HAC Program Payment Impact

Estimated Program Performance in FFY 2017

Raw Score Domain Weight Weighted Domain Score

Domain 1 - AHRQ Claims Based Measure 9.00 X 15% = 1.35

Raw Score Domain Weight Weighted Domain Score

Domain 2 - CDC Chart Abstracted Measures 8.20 X 85% = 6.97

Total HAC Score (Sum of Weighted Domain Scores)1 8.32

Estimated Program Impact in FFY 2017

Hospital Revenue Exposure Estimate:

Estimated FFY 2017 Revenue $33,792,300

Revenue at Risk For Payment Reduction $337,900

Total HAC Score Performance Summary:

8.32

6.45

HAC Payment Penalty Determination:3

YES

($337,900)0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

Per

cen

tile

2

Total HAC Score

No Payment Penalty

1% Penalty

Payment Determination with Ties

• CMS Approach: Will not penalize more than 25% of hospitals

• DataGen Approach: Inclusive of ties at the 75th percentile in order to be conservative

HAC Program Timeframes

Washington HAC Reduction Program Performance

Percentage of Revenue and Hospitals Affected by State

Eligible providers and their characteristics are based on the FFY 2016 IPPS Final Rule.

32.7%

0.4%

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

0.6%

0.7%

0.8%

0.9%

0%

10%

20%

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% Eligible Hospitals % Revenue

HAC Reduction Program Performance

Statewide Impact

Number of Penalty Hospitals

Percent of Hospitals Receiving Penalty

Percent of Total Revenue Affected

FFY 2015

($8,497,500)

17

34.7%

0.42%

FFY 2016

($8,334,900)

16

32.7%

0.41%

Oregon HAC Reduction Program Performance

Percentage of Revenue and Hospitals Affected by State

Eligible providers and their characteristics are based on the FFY 2016 IPPS Final Rule.

HAC Reduction Program Performance

Statewide Impact

Number of Penalty Hospitals

Percent of Hospitals Receiving Penalty

Percent of Total Revenue Affected

FFY 2015

($2,106,600)

9

26.5%

0.22%

FFY 2016

($2,166,400)

9

26.5%

0.22%

HAC Reduction Program Reference Guide

• See HAC Program Reference Guide for more detail – Program Measures

– Domain Weights

– Measure Scoring

– Performance Periods

– Penalty Determination

Domain Weight3 Central Line Associated Blood Stream Infection (CLABSI) Domain Weight3

PSI 15: Accidental Puncture or Laceration Catheter Associated Urinary Tract Infection (CAUTI)

PSI 12: Postop PE Or DVT Surgical Site Infection (SSI) Pooled SIR2 (FFY 2016+)

PSI 13: Postop Sepsis SSI from Colon Surgery

PSI 6: Iatrogenic Pneumothorax SSI from Abdominal Hysterectomy

PSI 7: Central Venous Catheter-Related Blood Clostridium difficile (C.diff.) SIR (FFY 2017+)

PSI 3: Decubitus Ulcer Methicillin-resistant Staphylococcus Aureus (MRSA) (FFY 2017+)

PSI 14: Postop Wound Dehiscence

PSI 8: Postop Hip Fracture

Notes:

Program Timelines

Other Program Calculations

Quality Based Payment Reform (QBPR) Reference Guide

Hospital Acquired Condition (HAC) Reduction Program Overview

Applicable conditions, performance timeframes, and other details for the FFY 2015, 2016, and 2017 programs

The Hospital Acquired Condition (HAC) Reduction Program sets payment penalties each year for hospitals in the top quartile (worst performance) of HAC rates for the country. The HAC

reduction program is punitive only and does not give hospitals credit for improvement over time. Under the program, hospitals are scored measure by measure based on their decile ranking

nationwide. Scores for similar measures are combined into domain scores. Domain scores are then weighted together into a Total HAC score. The Total HAC score is used to determine the top

quartile (worst performance) for payment penalty in each year. The HAC payment penalty is 1.0% of total Medicare Fee-For-Service (FFS) revenue and does not change year to year. The basic

program methodology is shown below:

Domain 1: AHRQ Claims Based Measures Domain 2: CDC Chart Abstracted Measures

7.1%

1The Domain 1 PSI-90 composite measure is calculated by combining performance on 8 individual Patient Safety Indicator (PSI) measures. While hospitals are scored on the overall PSI-90 composite measure,

each component PSI and their weight towards the overall composite are shown above. Weights shown are based on version 4.5 of the AHRQ Quality Indicators software. 2Beginning in FFY 2016, the HAC reduction program adds a pooled Surgical Site Infection (SSI) measure that is made up of two individual SSI measures: SSI - Abdominal Hysterectomy and SSI - Colon. For the

pooled SIR measure, observed infections for both SSI measures are divided by predicted infections to calculate a pooled SIR. Hospitals are then evaluated and assigned measure points based on their pooled

SIR.3Under the program, individual measure scores are combined into domain scores, and domain scores are combined into a Total HAC score. In FFY 2015, Domain 1 is weighted at 35% and Domain 2 is

weighted at 65%. The number of measures included and the weight associated with Domain 2 increase over time.

PSI-90: Patient Safety Indicator Composite Ratio1 Weight

4Unlike the Value Based Purchasing and Readmission Reduction Program, penalties under this program are applied to total Medicare payments, inclusive of Operating, Capital, Uncompensated Care payments,

and outlier payments, inclusive of payment adjustments such as DSH, IME, and Value based purchasing (VBP)/Readmission Reduction Program (RRP) program adjustments.

49.2%

25.8%

2.3%

6.5%

Measure Scoring

7.4%

1.7%

0.1%

For each program measure, HAC ratios for all program-eligible hospitals nationwide are separated into deciles for scoring (lowest decile = best

performers). Hospitals are awarded points based on their national decile. When multiple hospitals have the same ratio and the ratio crosses more

than one decile, the lowest decile determines the measure score.

In order to receive a score on a measure, hospitals must meet minimum requirements. For Domain 1, a hospital must have 3 or more cases in at

least one of the eight component PSI measures that make up the PSI-90 composite measure. For Domain 2, a hospital must have 1 or more predicted

infections.

*Measures not meeting the minimum scoring requirements are dropped from the domain score calculation. If a domain does not contain at least

one eligible measure, then the Total HAC score is determined based solely on the other domain.

35% (FFY 2015)

25% (FFY 2016+)

65% (FFY 2015)

75% (FFY 2016+)

Measure Scores Domain Scores Total HAC ScoreTop Quartile/1.0% Penalty

DeterminationAnnual Program Impact

National HAC Ratio

Percentile Range

Measure Points

(Lower is Better)

1st-10th 1 pt.

11th-20th 2 pts.

21st-20th 3 pts.

31st-40th 4 pts.

41st-50th 5 pts.

51st-60th 6 pts.

61st-70th 7 pts.

71st-80th 8 pts.

81st-90th 9 pts.

91st-100th 10 pts.

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

2015 2016 2017

FFY 2015: Domain 1

Performance Period

2011 2012 2013 2014

FFY 2017 Program

Payment AdjustmentFFY 2017: Domain 2

Performance Period

FFY 2015: Domain 2

Performance Period

FFY 2015 Program

Payment Adjustment

FFY 2016: Domain 1

Performance Period FFY 2016 Program

Payment AdjustmentFFY 2016: Domain 2

Performance Period

FFY 2017: Domain 1

Performance Period

SAMPLE HOSPITAL QBPR OVERVIEW

AVG PERCENTILE

Hospital

Score

Hospital

Percentile2

Hospital

Score

Hospital

Score

PROCESS 78th 75% 81st ▲ 54% 39th ▼

HCAHPS 4th 10% 1st ▼ 18% 15th ▲

MORTALITY 28th 6% 1st ▼ 21% 4th ▲

EFFICIENCY 20% 57th 30% 68th ▲

TPS 43% 36th 24% 4th ▼ 26% 10th ▲

Payback Percent (TPS x Slope) 61.17%

Final VBP Adjustment Factor4 0.9942 ▼ 0.9951 ▲

Estimated Annual Impact ▼ ▲

1 2

3

4

Excess

Ratio

Revenue by

Condition

Excess

Readm.

Dollars*

Excess

Ratio

Revenue by

Condition

AM 0.9360 X $4,058,178 = $0 0.9728 X $4,110,239 = $0 ▲ 0.8993 X $4,167,599 = $0 ▼

HF 0.7863 X $2,488,321 = $0 0.8077 X $2,895,057 = $0 ▲ 0.8641 X $3,034,410 = $0 ▲

PN 0.9571 X $4,935,550 = $0 0.9445 X $5,599,806 = $0 ▼ 0.9558 X $5,456,675 = $0 ▲

HI 0.9442 X $5,060,270 = $0 1.0156 X $4,977,554 = $77,527 ▲

CO 0.8943 X $3,959,784 = $0 0.9082 X $3,815,633 = $0 ▲

Est. Excess Readmission Dollars ▲

Final RRP Adjustment Factor

Percentage Impact

Estimated Annual Impact - ▼

Percentile

AM Domain 1 Score 8.0 -

HF Domain 2 Score 6.0 ▼

Total HAC Score 82nd ▼ 69th

75th Percentile Total HAC Score

Receives 1.0% Reduction?

Estimated Annual Impact ▲

▼ ▲

-

E

Does Not Apply

Does Not Apply

35% 8.0 70th

Excess Readm.

Dollars

▼

7.00

Yes

($312,600) $0

Domain

Weight

$0

0.9993

-0.07%

45%

Excess Ratio

0.00%

$0

1.0000

30%

30%

FFY 2014 FFY 2015

30%

25% 20%

0.9987

-Payment adjustments under the program reflect actual, final performance for all three years. VBP adjustment factors, RRP Adjustment factors, and FFY 2015 HAC Flags are taken from Tables 15, 16, and 17 released with each final rule. The FFY 2016

HAC Flags are taken from the December 2015 update to Hospital Compare. Correction notices are reflected in the base operating dollars.

7.3500

Program Contribution Percentage

Revenue by

Condition

Efficiency

89.25%

($29,700)

1.25%

0.00%

2.0962

14%

20%

2.5801

1.50%

Does Not Apply

Domain

Weight

FFY 2016FFY 2015

Hospital

Percentile2

Hospital

Percentile2

74% 10%

Medicare Quality Based Payment Reform (QBPR)

Re

adm

issi

on

s R

ed

uct

ion

Pro

gram

(R

RP

)H

AC

Re

du

ctio

n P

rogr

am

VBP Payout Percentage 1.12% 0.92% 1.26%

Process of Care

7.0 69th 55th

Val

ue

Bas

ed

Pu

rch

asin

g (V

BP

)

Federal Fiscal Year (FFY) 2014 - FFY 2016 Program Performance

SAMPLE HOSPITAL

Patient Experience of Care

Do

mai

n

FFY 2014

Domain

Weight

($129,600)

$0

$0

1.0000

Does Not Apply

6.75

Domain

ScorePercentile

Domain

Weight

Domain

Weight

FFY 2016

-Under the HAC reduction program, hospitals with Total HAC scores above the 75th percentile Total HAC score for all US hospitals will receive a 1.0% reduction to overall Medicare payments. Total HAC scores are calculated by combining performance

on three measures for FFY 2015, with the addition of a pooled SSI measure in FFY 2016, grouped into the two domains shown above. The table displays the percentile performance on each domain to indicate relative performance on each domain.

Total Impact of QBPR Programs ($124,900)

FFY 2016

AMI

HF

($15,700)

70th

65%

25%

40%

25%

No

Ove

rall

Imp

act

FFY 2014 FFY 2015

($442,200)($29,700)

Percentile

-Under the RRP program, hospitals are evaluated on multiple condition areas based on the amount of revenue paid for what CMS determines to be excess readmissions during a three year performance period. Excess readmission dollars for each

condition are calculated based on the 'excess ratio,' (percent of readmissions in excess to what is predicted) and revenue by condition area.

*Excess readmission dollars by condition are estimated based on FFYs 2009-2014 MedPAR claims data for each program year and are shown above to indicate the condition areas that are driving hospital performance in each year. Actual revenue and

excess dollars by condition area will vary due to differences in data sources and calculation methodologies.

FFY 2015

COPD

Co

nd

itio

n

Domain

Score

Domain

Weight

Domain

Score

FFY 2014

$77,527

2.7731

PN

THA/TKA

72.10%

1.75%

FFY 2016

VBP Slope3

Excess Readm.

Dollars

($109,200)

Total Performance Score (TPS)1

Outcomes of Care

6.5000

Performance on all domains is combined to calculate a Total Performance Score (TPS) used to redistribute contributions under the program. Importantly, each domain is not weighted equally and domain weights change over time.

Hospitals consistently performing better than their peers on all measures/domains will likely gain under the program while hospitals performing worse will lose under the program. Hospital percentile ranks are shown for each domain to

indicate performance relative to peers where the 100th percentile represents the best performance and 1st percentile represents the worst.

Each year CMS calculates a VBP slope that is used to determine hospital payouts under the VBP program and results in a budget neutral program. The slope is dependent on the distribution of all Total Performance Scores and will

vary each year.

Adjustment factors are calculated based on each hospital's program contribution and payout amounts. Adjustment factors are applied to payments on a per-discharge basis to adjust for VBP program performance.

20%

25%

75%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1 2 3 4 5 6 7 8 9 10

Per

cen

tile

2

2016 Total HAC Score

68

th

78

th4

th2

8th 3

6th

81

st1

st1

st5

7th

4th

39

th1

5th

4th 1

0th

0

10

20

30

40

50

60

70

80

90

100

Per

cen

tile

Process of Care

Patient Experience of Care

Outcomes of Care

Efficiency

Total Performance Score (TPS)

FFY 2014 FFY 2015 FFY 2016

$15,700

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

AMI HF PN THA/TKA COPD

FFY 2014 FFY 2015 FFY 2016

No Payment Penalty

1% Penalty

Other Quality Data Sources

• Hospital Compare

• Quality Net

• Other

Key Reminders for Hospitals

• Payment levels are at stake

• Historical data will continue to drive these programs

• Program targets move with national performance, so hospitals must keep pace with the pack

• Complexity of program measures

• Overlap with other quality based payment reform programs

• VBP & HAC: PSI-90, CAUTI, CLABSI, Surgical Site Infection (SSI), MRSA and C-Diff Measures

• VBP & RRP: AMI, HF, and PN

• HACs will have a worst performing 25%

Questions?