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BCBSM Pay-for-Performance

Measure Technical Document (Version 2.0)

Developed by

Michigan Value Collaborative

July 2017

P4P Measure Methodology Report 2 July 2017

ACKNOWLEDGEMENTS


TABLE OF CONTENTS

LIST OF TABLES 5

LIST OF FIGURES 5

EXECUTIVE SUMMARY 6

INTRODUCTION 8

BACKGROUND .......................................................................................................................................................................... 8

CHARGE FOR THE MICHIGAN VALUE COLLABORATIVE COORDINATING CENTER ...................................................................................... 8

MEASURE DEVELOPMENT TIMELINE .............................................................................................................................................. 8

GUIDING PRINCIPLES FOR MEASURE DEVELOPMENT .......................................................................................................................... 9

DESCRIPTION OF MVC DATA 10

DEFINING THE EPISODE OF CARE ................................................................................................................................................. 10

Claims Attribution Process ............................................................................................................................................. 10

Standard Inclusions…………………………………………………………………………………………………………………..………………………………10

Site of Service ................................................................................................................................................................. 11

Transfer Cases ................................................................................................................................................................ 11

Policy for inclusion of end-stage renal disease (ESRD) and cancer patients .................................................................. 11

Standard Exclusions……………………………………………………………………………….………………………………………………………….....…..11

PRICE STANDARDIZATION ......................................................................................................................................................... 12

Inpatient Facility Claims ................................................................................................................................................. 12

Post- Acute Care Claims…………………………………………………………………………………………………………………………………….……..13

Skilled Nursing Facility (SNF) Claims…………………………………………………………………………………………………………….…….……..13

Other Facility Claims ...................................................................................................................................................... 13

Professional Claims ........................................................................................................................................................ 14

Limitations ..................................................................................................................................................................... 14

RISK-ADJUSTMENT .................................................................................................................................................................. 15

Background .................................................................................................................................................................... 15

What is risk-adjustment? ............................................................................................................................................... 15

How does MVC calculate risk-adjusted episode payments? .......................................................................................... 15

How does MVC calculate expected payments? ............................................................................................................. 15

Required Variables ......................................................................................................................................................... 15

Non-required variables .................................................................................................................................................. 15

Condition Specific Risk Adjustment Variables (CSRAV) .................................................................................................. 16

DESCRIPTION OF P4P MEASURE 17

OVERVIEW ............................................................................................................................................................................. 17

DATA SOURCES ....................................................................................................................................................................... 17

EPISODE DURATION ................................................................................................................................................................. 18

SELECTION OF SERVICE LINES ..................................................................................................................................................... 19

QUALITY REQUIREMENTS .......................................................................................................................................................... 22

STRUCTURE AND SCORING SYSTEM.............................................................................................................................................. 23

IMPROVEMENT TARGET METHODOLOGY…………………………………………………………………………………………………………....……………………26


MVC COHORTS………………………………………………………………………………………………………………………………………………………………...27

SUPPORT FOR HOSPITALS .......................................................................................................................................................... 28

ANTICIPATING UNINTENDED CONSEQUENCES ................................................................................................................................ 28

APPENDICES 30


LIST OF TABLES

Table 1: BCBSM Pay-for-Performance Program ............................................................................................ 8

Table 2: Eligible service lines and minimum annual case requirements .................................................... 20

Table 3: P4P measure structure and scoring system .................................................................................. 24

Table 4: Potential unintended consequences and proposed interventions ............................................... 29

LIST OF FIGURES

Figure 1: Cohorts Developed for the Service Lines of: Joint, Pneumonia, CHF, & Colectomy…………………………. 49

Figure 2: AMI Cohort Designation…………………………………………………………………………………………………………………. 49

Figure 3: CABG Cohort Designation………………………………………………………………………………………………………………. 50

Figure 4: Spine Cohort Designation………………………………………………………………………………………………………………. 50


EXECUTIVE SUMMARY

The Michigan Value Collaborative (MVC) is a Collaborative Quality Initiative (CQI) funded by Blue Cross Blue

Shield of Michigan’s (BCBSM) Value Partnerships program. MVC aims to help Michigan hospitals achieve the

best possible patient outcomes at the lowest reasonable cost by adhering to the Value Partnerships

philosophy of using high quality data to drive collaborative quality improvement.

BCBSM included a new Pay-for-Performance (P4P) measure derived from MVC data in their 2016 Hospital P4P

Program. In developing and recommending a measure to BCBSM, the MVC coordinating center has been

guided by the following core principles:

1. The measure will reflect the BCBSM Value Partnerships philosophy of using high quality data to drive

collaborative quality improvement.

2. The measure will be fair, simple, and transparent.

3. The measure will align with existing BCBSM and CMS hospital quality measures when possible and be

consistent with Value Partnerships CQI principles.

4. The measure will encourage examination and use of MVC data to drive value improvement and

reward those efforts.

Outlined below is a summary of the proposed P4P measure.

Measure: Risk adjusted, price standardized total episode cost

Data sources: BCBSM PPO plus Medicare fee-for-service claims

Episode duration: Index hospitalization plus 30 days post-discharge

Number of service lines: Voluntary selection of two service lines from a pool of seven

Eligible service line pool: Acute myocardial infarction, congestive heart failure, pneumonia, joint

replacement (hip and knee replacement episodes combined), colectomy

(non-cancer), coronary artery bypass graft, spine surgery1

Minimum case requirement: The minimum case volume must be twenty cases (including both BCBSM

PPO and Medicare) for each service line over the most recently available

twelve-month period

Baseline year: Hospital service line total episode cost for a twelve-month period prior to

the start of the program year

1 On the MVC registry website, this service line is labeled “Other Spine”.


Performance year: Hospital service line total episode costs for the most recently available

twelve-month period at the end of the program year

Program year: Twelve-month period for which BCBSM P4P payments will commence

Quality requirement: No points for this performance measure if a hospital, adjusted for case

volume, is ranked below the 10th percentile in the performance year for

condition-specific in-hospital mortality or related readmissions.

Confidence intervals will be used to ensure that these hospitals are true

statistical outliers

Scoring system: A three-year active scoring system is outlined below. The final 2018 and

2019 scoring systems will be determined based on ongoing empirical

analyses and feedback from hospital partners. The two service lines

selected by hospitals for quality improvement action plans and risk

adjustment feedback in 2016 will be the same two services lines that will

be measured for performance in 2018 and 2019. Refer to Appendix I for

more details.

Program year 2016: Structured preparatory measures

Scoring based on site visit and MVC meeting participation; providing

formal feedback on the P4P measure and risk adjustment; and developing

service line improvement action plans

Program year 2017: Transition year

No scoring will be earned in this year; however, performance in 2017 will

be captured in subsequent P4P program years.

Program year 2018 and 2019: Performance measure

Scoring based on internal year-over-year improvement or achievement

relative to MVC cohort group

Collaboration goals: Bonus points for all hospitals working on the same service line if those

hospitals achieve a ≥ 5% service line cost improvement2

2 The maximum points attainable is ten even for those hospitals earning a bonus point.


INTRODUCTION

Background

Since 2000, Blue Cross Blue Shield of Michigan has included a pay-for-performance program in its

hospital contracts. This P4P program is currently structured as a potential 5% bonus payment added to

baseline annual contracted rates, and it is measured during a January 1 through December 31

performance period. Across all 80 Michigan hospitals currently eligible to participate in the P4P

program, the annual bonus pool is valued at approximately $200 million.

From 2006 through 2013, the P4P program comprised two domains: quality and cost efficiency. In

2014, BCBSM modified the structure to include five distinct measures, as outlined in Table 1. These

new measures provide further emphasis on the value of care delivered in the state, and they are

intended to incentivize high quality, low cost, coordinated care.

Charge for the Michigan Value Collaborative Coordinating Center

The Michigan Value Collaborative is a quality improvement (QI) collaborative funded by BCBSM.

Established in 2013, MVC aims to help Michigan hospitals achieve the best possible patient outcomes

at the lowest reasonable cost by providing hospital leaders with claims-based utilization and episode

cost data to drive local quality improvement activities.

In recognition of MVC’s emerging role as a convener of utilization data and infrastructure for sharing

best practices for improving episode cost-efficiency, BCBSM implement a new P4P measure based on

MVC data in the 2016 Hospital Pay-for-Performance program. The requested measure will be weighted

at 10% of the total bonus pool and will be a freestanding measure, not part of the CQI performance

domain.

Measure development timeline

The request for the MVC coordinating center to develop a new measure was delivered on July 16,

2015. A proposal was due to BCBSM for discussion at its P4P Measurement Workgroup meeting on

September 8, 2015. There was a specific request for feedback from participating MVC hospitals prior

to submission of the proposed measure.

Table 1: BCBSM Pay-for-Performance Program

2014-2015 measures

Collaborative Quality Initiatives (CQI) performance 40%

Population-based per-member/per-month (PMPM) costs 20%

Hospital inpatient cost/case efficiency 20%

30-day readmissions 10%

Admission/discharge/transfer (ADT) notification system participation 10%


Guiding principles for measure development

MVC is one of BCBSM’s Value Partnerships Program Collaborative Quality Initiatives. The CQIs have long

followed the Value Partnerships philosophy of using high quality data to drive collaborative quality

improvement. The measure development team, comprised of members of the MVC Coordinating Center

and several external advisors, was guided by this philosophy throughout the process (Appendix A).

Specifically, the measure development group adhered to the following core principles:

1. The measure will reflect the BCBSM Value Partnerships philosophy of using high quality data to drive

collaborative quality improvement.

2. The measure will be fair, simple, and transparent.

3. The measure will align with existing BCBSM and CMS hospital quality measures when possible and

be consistent with Value Partnerships CQI principles.

4. The measure will encourage examination and use of MVC data to drive value improvement and

reward those efforts.


DESCRIPTION OF MVC DATA

Defining the episode of care

Claims Attribution Process

The Michigan Value Collaborative (MVC) defines each service line episode using ICD 9/10 procedure

and diagnosis codes or CPT codes. The transition to ICD-10 coding was successful using CMS’ General

Equivalence Mappings (GEMs). With each data update, we look at different data trends and have

observed no unexpected deviations. Certain exclusion criteria are applied to ensure patient groups are

as homogeneous as possible and thus comparable across hospitals in contrast to using diagnosis

related groups (DRG), CPT or revenue codes to define each episode. The MVC validation project of

2015 identified an important opportunity to update the process by which post-discharge claims are

attributed to index admissions and thus included in a 30 or 90 day episode window.

For each claim in the post discharge period, the first and second Dx code of that claim is examined

against an episode-specific document listing the Dx codes that are considered related to that episode.

Post discharge claims are considered related to the index admission if the first or second Dx code listed

on the claim is considered related to the episode type.

The MVC validation project identified that there were Dx codes in the episode-specific document that

were currently considered unrelated to the episode type, but should be considered related. This

finding triggered a comprehensive review of each episode-specific document to examine the Dx codes

listed as related or unrelated to the episode.

Each episode-specific document was updated based on a multi-round review by clinical content

experts and MVC Coordinating Center staff. Disagreements were discussed as a group, consensus was

reached, and the final episode-specific documents were approved and transmitted to ArborMetrix for

processing.

Standard Inclusions

These standard inclusions (Appendix B) are based on complications as defined by CMS for their

complication measures, CMS’ Serious Reportable Events, American College of Surgeons National

Surgical Quality Improvement Program (ACS NSQIP), and clinical experts3456. Claims within 90 days with

the following diagnosis codes should be considered related to the index hospitalization for all

episodes.

3 Blue Cross Blue Shield of Michigan. 2016 Hospital Pay-for-Performance Program Peer Groups 1-4. April 2016. 4 Michigan Value Collaborative. Hospital P4P Survey. May 2016. 5 2015 CMS Medicare Severity Diagnosis-Related Groups (MS-DRGS), relative weighting factors and geometric, and arithmetic mean length of stay (Table 5). 6 2014 American Hospital Association survey database.


Site of Service

Consistent with CMS methodology, any facility claim originating from one of the below sites of service,

or any professional claim associated with outpatient rehab, will be considered related to the index

admission. It will be included in the 90 day episode cost and utilization calculations (see MVC Claims

Categorization Rules document). This site of service relationship supersedes the Dx codes described

above.

Facility claim SNF

HH

IP Rehab

OP Rehab

Transfer Cases

MVC attributes transfer patients to the hospital where the index admission began. If a patient is

transferred from the originating hospital before an MVC episode has been triggered, then the patient

is attributed to the receiving hospital. Transfer cases represent a small percentage of overall cases,

but since they represent real patients, inclusion in the MVC analytics ensures this population’s

outcomes have the ability to be measured and improved as part of overall quality improvement.

Policy for inclusion of end-stage renal disease (ESRD) and cancer patients

MVC has chosen to include end-stage renal disease patients and most cancer patients in our episode

cost calculations. These conditions are included in the risk adjustment model as candidate variables.

When those variables are found to significantly impact costs, they become part of the final models.

Since potential high costs from these conditions are accounted for by the risk-adjustment, we do not

exclude them. A detailed description of the MVC risk-adjustment model is discussed in a later section

of this document.

Standard Exclusions

Chemotherapy is excluded using the following ICD-9 and ICD-10 codes.

Professional claims OP Rehab

ICD 9 DX CC ICD9 CODE DESCRIPTION V580 45 RADIOTHERAPY ENCOUNTER

V581 45 CHEMOTHERAPY ENCOUNTER (End 2005)

V5811 45 ANTINEOPLASTIC CHEMO ENC (Begin 2005)

V5812 45 IMMUNOTHERAPY ENCOUNTER (Begin 2005)

V661 45 RADIOTHERAPY CONVALESCEN

V662 45 CHEMOTHERAPY CONVALESCEN

V671 45 RADIOTHERAPY FOLLOW-UP

V672 45 CHEMOTHERAPY FOLLOW-UP


MVC applies an algorithm to identify clinically related readmissions that occur within 30 and 90 days post-discharge. For example, claims data with primary and secondary diagnosis codes for chemotherapy are classified as an unrelated readmission and excluded from readmission rate calculations.

Price Standardization

ArborMetrix has developed a process to standardize medical claim payments for the purpose of analyzing hospital level variation in utilization. The goal of our approach is to eliminate the extent to which price variations are a result of contractual differences by assigning the average amount for a given service for each instance of the service in the data. This does not account for geographic variation that may be caused by cost structure differences and would tend to overstate the actual prices in rural or low-wage areas and understate actual prices in urban and high-wage areas.

This particular process was developed for the joint analysis of BlueCross BlueShield of Michigan and Michigan Medicare data and likely contains some idiosyncrasies specific to BCBSM and Medicare data. The overarching goal is to standardize the prices of both the BlueCross and Medicare claims to be priced the average amount for that service in Medicare. Reconciling the occasionally different reimbursement practices of BCBCM and Medicare is an ongoing challenge and this process is subject to further refinement. However, the basic practices should remain consistent.

Our price standardization process divides up the data into three parts: facility claims are comprised of 1) inpatient facility claims and 2) other facility claims, while 3) professional claims are treated as one group. This document will describe price standardization for each group separately.

Inpatient Facility Claims

We calculate two payment amounts for inpatient claims: DRG base payment and outlier payment.

DRG Adjustment

ICD 10 CCS Description

Z510 45 Encounter for

antineoplastic radiation

therapy


antineoplastic

chemotherapy


antineoplastic

immunotherapy


One complication in pricing data over multiple years is that the DRG definitions (and relative weights) change over time. To account for this, we used 3rd party DRG grouping software. This takes information from five data elements (patient sex, patient age, patient discharge disposition, ICD9 diagnoses, ICD9 procedures) and defines DRGs for each inpatient claim using definitions from whatever year the user chooses. For the development, we took all BCBSM PPO and all Medicare claims and assign them DRGs as if those claims had been processed in 2012. Over time, the DRG mapping should be updated.

DRG Base Payment Inpatient claims are assigned payments by DRG. Each DRG is associated with the average price for that DRG in the Medicare data.

Outlier Payment Outlier payments are made separately from the base payment to providers to compensate for particularly complicated patients (i.e., when the level of treatment greatly exceeds the expected average for a given DRG’s relative weight). As a general rule, these outlier payments are triggered when the claim’s length of stay is significantly longer than the average length of stay for its DRG.

As with the base payment, our outlier payment calculation uses information from TRICARE to standardize patients. The TRICARE DRG schedule includes a national long stay threshold. Inpatient claims associated with a length of stay that exceed the national long stay threshold will be flagged as outliers. The outlier payment is calculated as $2,500 per day over the length of stay threshold.

If LOS>LOS ThresholdDRG, then Outlier Payment = (LOS-LOS ThresholdDRG)*$2,500

Otherwise, Outlier Payment = 0

Post- Acute Care Claims

Skilled Nursing Facility (SNF) Claims

For CMS patients, SNF payments are calculated based on length of stay and the Resource Utilization

Groups (RUG) reported in the individual SNF claims. Daily RUG rates range from $180 to $743. For

BCBSM patients, SNF payments are calculated based on length of stay and a standard daily payment

rate of $479 per day that was calculated based on three independent analyses.

Other Facility Claims

These constitute the wide variety of facility claims that are not inpatient care. When possible, we use the CPT code associated with the claim. In cases where the CPT code is not available, we use the revenue code on the claim line. Each CPT or revenue code is associated with a quantity. The total payments for each code are summed and then divided by the sum of quantities to create a code rate for each CPT and revenue code. Prior to the rate calculations, payments for Other Facility Claims were trended at 3% per year up to $2012.

Standardized payment = Code Rate * Quantity

where Code Rate = Total payment for code / Total code quantity and quantity is capped at 0.95*max code quantity


Professional Claims

This process is similar to the one used for Other Facility Claims. The only difference is that all the claims have CPT codes. Ideally, this would be the simplest of the pricing standardization procedures. Each professional claim is associated with a CPT code, quantity, and unit. Each quantity*unit payment would be the same for a given CPT code. However, our version of the BCBSM data does not include unit amounts. Thus we have claims associated with a quantity, but no unit for that quantity. For most claims this is not a problem because the same unit is used for all claims (surgery, for example). However, for some pharmaceuticals the unit is not always constant and simply taking the average payment and dividing by average quantity can skew the rate calculation. To get around this we cap the top allowed quantity for both rate calculation and payment calculation purposes at 95% of the top quantity, yielding a simple formula:

Standardized payment = CPT Rate * Quantity

where CPT Rate = Total payment for CPT/ Total CPT quantity and quantity is capped at 0.95*max CPT quantity

This process also incorporates CPT modifiers codes when calculating CPT rates. The CPT rates are calculated separately for CPTs with certain modifier codes7 to account for the fact that reimbursement differs based on the use of these codes.

Limitations

One challenge is when Medicare does not reimburse certain codes we see in the BCBSM data. When that occurs, we rely on commercial claims data to which we have access.

The pending addition of Medicaid data may have its own pricing peculiarities that need to be explored and accounted for.

Lack of units in the professional data significantly limits our confidence in our pricing of certain high quantity services (e.g., prescription drugs). In the future, we should make sure that any data used on the website include all the fields necessary for our price-standardization process.

The outlier payment calculation could be improved. The current $2,500 per-day rate functions well for most cases, but for extremely long lengths of stay (>1 year), the methodology likely overstates the actual outlier payment. MVC received a one-time feed of outlier indicators from BCBSM. ArborMetrix analyzed that file as was to show that reasonable overlap with what MVC were calling outlier and what BCBSM had as an outlier. However, it was difficult to rigorously compare the pricing for those because BCBSM could only supply the outlier payments in broad categories, and not the specific amounts.

We only use the most common CPT modifiers as part of our rate schedule creation. Some evidence from users is that surgical assistant modifiers are not being accounted for in all instances. We may need to review which modifiers are being used and which CPT modifier fields (currently only the first modifier) are being included when calculating professional claim rate schedules.

7 The following are the modifier codes currently included during rate schedule creation: AS,80,81,82,26,25,TC,GP,NU,59,RR,AM,RH,76,SH,51,RT,LT,AA,GC,HN,AT,U1,QK,SQ,50,HH,QX,QW,33,SA,AI,30,NH,57,GO,24,GN,58,KX,SL,Q8,79,U2,91,KS,NJ,JN,AJ,QY,AH,PH,A1,PT,77,SW,U5,JR,RJ,52,HR,QS,GR,RG,Q9,EC


Risk-Adjustment

Background

As discussed in the November 2015 collaborative meeting, the Coordinating Center performed

extensive research on different risk adjustment approaches. Given its findings, MVC recommended

transitioning to CMS’ Condition Categories for identifying and accounting for comorbidities in the

calculation of episode payments and other MVC metrics. The MVC risk adjustment models now

employ the 79 Hierarchical Condition Categories that CMS has empirically shown to be predictive of

expenditures for Medicare beneficiaries. Our methodology utilizes all 25 Dx codes reported on a

Medicare and BCBS claim.

What is risk-adjustment?

Hospitals treat a variety of patients, and some patients are costlier than others. Hospitals that treat a

disproportionate number of costly patients may be unfairly classified as “high cost hospitals” simply

because of the type of patients that they treat. Risk-adjustment is a statistical method that “levels the

playing field” by accounting for differences in case-mix.

How does MVC calculate risk-adjusted episode payments?

MVC performs risk-adjustment using observed/expected (O/E) ratios. The numerator in this ratio is the

aggregate of the all observed payments for a particular hospital. The denominator is the aggregate of

the all expected payments. This ratio is multiplied by the statewide expected mean payment to arrive

at the “risk-adjusted payment” for that hospital.

How does MVC calculate expected payments?

MVC calculates expected payments for each condition (e.g., AMI, pneumonia, CABG) and each

component (e.g., total episode payments, readmission payments) separately. Condition and

component-specific expected payments are based on a statistical model that uses a combination of

required variables and non-required variables.

Required variables

The following required variables are always included in the final model: age, gender, history of prior

high spending, end-stage renal disease.

Non-required variables

Non-required variables include 79 comorbidities based on hierarchical condition categories (Appendix

C), and condition specific risk adjusters (Appendix D).

Non-required variables are selected using a model specification technique that occurs in two steps:

1. All candidate variables are individually tested using a univariate regression model to see if they

predict payment. Non-required variables with a p-value < 0.10 are retained.

2. All of the retained variables are included in a multivariable regression model and variables with a p

< 0.05 are used for the final model.

The final variables for all conditions are listed Appendix E.


Condition Specific Risk Adjustment Variables (CSRAV)

MVC incorporates several condition-specific variables into our risk-adjustment model. CSRAVs have

been suggested by participating hospitals and clinicians. For each CSRAV that is suggested, MVC

evaluates the appropriateness of including the variable by following the four principles below:

Principle 1: All CSRAVs will be considered as a “candidate” for the risk-adjustment model. In other

words, any CSRAVs may be excluded in the final model if they are not found to be statistically

significant.

Principle 2: For surgical conditions, treatment decisions (e.g., laparoscopic vs open) are typically not

considered CSRAVs.

Principle 3: For all conditions, we will consider certain diagnosis codes as a CSRAV:

Cancer diagnosis

Reoperation diagnosis

Principle 4: Variables that represent small variations of a disease process should not be considered a

CSRAV. However, these variables can be grouped into broad categories:

Simple case

Complex case

Examples

Variable Category Appropriate risk-adjustment variable?

Lap vs Open for Colectomy Treatment decision (rarely both) No

Cancer for Colectomy Severity of illness Yes

Dialysis for AMI Treatment decision or complication No

Emergency intubation for AMI Treatment decision or complication No

GI bleed for colectomy Severity of illness Yes

Re-operative CABG Severity of illness Yes

Cardiac surgery for AMI Severity of illness Yes*

Trach for pneumonia Treatment decision or complication No *In select instances, a treatment decision strongly reflects severity of illness


DESCRIPTION OF P4P MEASURE

Overview

Description: The proposed efficiency measure is price-standardized, risk-adjusted 30 day episode

costs.

Rationale: The selection of total episode payments for two selected service lines reflects the centrality

of this measure to the work of MVC. This measure is also immediately available for hospitals in reports

from the MVC registry.

Other considerations: The selection of total episode costs, as opposed to one or more component

costs (e.g., readmissions or post-acute care), is consistent with MVC’s efforts to develop and maintain

a quality improvement focus across the continuum of care settings.

Alignment: In Appendix F, we describe key characteristics of several value-based incentive programs

from CMS that were reviewed during the measure development process. A condition-specific 30-day

total episode spending aligns directly with the format of condition-specific episode-based cost

measures being considered by CMS as supplements to the MSPB metric in the Hospital Value-Based

Purchasing (HVBP) program.

Hospital Feedback: There was no specific feedback on total episode versus component costs.

Final Decision: MVC will measure total episode payments.

Data sources

Description: Based on ongoing analyses and feedback from hospital partners, it is recommended the

measure use BCBSM PPO and Medicare fee-for-service claims.

Discussion: As of July 2017, data available in MVC reports will include BCBSM PPO claims for January

2011 through June 2016, and Michigan Medicare fee-for-service claims for January 2011 through

March 2016. We receive quarterly feeds of updated Medicare data that will allow MVC reports to

include more synchronous and timely data from both BCBSM PPO and Medicare. We anticipate

incorporating data fourth quarter 2016 BCBSM PPO and Medicare claims into the MVC registry by end

of 2017.

The consideration of using BCBSM PPO and Medicare claims versus only BCBSM PPO claims hinges on

the tradeoff between an increased number of episodes for each hospital and the reality that hospitals

cannot currently use the MVC registry to “drill down” into patient-level details of the Medicare cases

(due to Medicare data privacy requirements). If the measure includes Medicare data, there will likely

be more internal record review required for hospitals to understand the root causes of high-cost

episodes among Medicare beneficiaries.


Including both BCBSM PPO and Medicare claims in the measure increases the number of episodes

available and will enable the measure to better focus on two services lines. The inclusion of more

admissions in the calculation of episode costs will also ensure greater reliability of cost estimates. This

assumes, however, that our anticipated timeline for receipt of updated Medicare claims comes to

fruition.

Including BCBSM PPO claims alone in the measure would require that the measure become an

aggregate of the seven eligible service lines. However, hospitals could “drill down” into patient level

details for all patients covered by the measure. Feedback from participating hospitals and CQI partners

has consistently indicated that condition or service-line specific payment measures are more

actionable from a quality improvement perspective, so an aggregate measure could limit quality

improvement.

Alignment: Using both BCBSM and Medicare claims in the measure would provide greater alignment

between MVC activities and related metrics from CMS, including the condition-specific episode

measures developed by CMS to supplement MSPB in the efficiency domain of the HVBP program and

the Comprehensive Care for Joint Replacement (CCJR) project (Appendix F). A composite spending

measure would be more analogous to CMS’ Medicare Spending per Beneficiary (MSPB) that reflects

spending across multiple Diagnosis Related Groups (DRGs).

Hospital Feedback: From a survey sent to all participating MVC hospitals, 54/66, or 81.8%, preferred

BCBSM PPO plus Medicare data.

Comments in support for BCBSM and Medicare data:

- Alignment with current CMS activities and goals

- Drill down will reveal opportunities for both populations

- Statistically meaningful data

Comments in support for BCBSM alone

- Lack of detail and timeliness with CMS data

- Better alignment with other BCBSM CQIs

- Better ability to partner with post-care entities such as physician offices when data is relevant

- Root causes may be determined more easily (with drill-down), less internal record review

Final Decision: MVC will use BCBSM PPO plus Medicare Fee-for-Service claims data.

Episode duration

Description: The episode duration will include the index hospital stay plus 30 days post-discharge.

Rationale: The main decision point was the selection of a 30 versus 90 day episode. Ultimately,

selection of a proposed measure based on 30 day episodes was influenced by several considerations


including the following: 1) feedback from MVC hospitals has consistently suggested that a 30 day

window is more clinically relevant and actionable for most of the MVC service lines; and 2) the 30 day

episode better aligns with several concurrent initiatives from CMS and BCBSM, allowing hospitals to

focus their improvement efforts on this time window.

Other considerations: In addition to the rationale provided above, internal empirical analyses and

review of claims submitted from days 31-90 after hospital admissions suggest declining face validity

with respect to attribution of services to the index hospital stay. We felt that inclusion of distantly

related claims as part of a longer 90 day episode could undermine “buy-in” with respect to the

proposed measure.

Alignment: As described above, the selection and specification of 30-day total episode spending aligns

well with measures in Medicare’s HVBP program and the Hospital Readmissions Reduction Program

(HRRP). In addition, this episode duration is consistent with the 30-day readmission measure already

included in the BCBSM P4P program, thereby allowing hospitals, clinicians, and post-acute care

providers participating in MVC to maintain a focus on care processes and transitions during this

discrete time period.

Although the recently announced Comprehensive Care for Joint Replacement Program (CCJR) from

CMS involves a 90 day episode, there was widespread agreement among the development team that a

30 day episode is more consistent with the overarching principles for measure development.

Moreover, only two Metropolitan Statistical Areas in Michigan (Flint and Saginaw) are participating in

the CCJR, we did not feel that the different episode durations would be a major concern for most

hospitals in the state.

Hospital Feedback: There was no specific feedback on episode duration.

Final Decision: MVC will use a 30 day measure.

Selection of service lines

Description: If the final measure includes BCBSM PPO and Medicare claims, hospitals will be required

to select two service lines from a pool of seven eligible diagnoses and procedures (Table 2). Hospitals

will select two service lines in 2016 for quality improvement action plans and will be evaluated on the

same two service lines during the 2018 and 2019 performance periods. If the final measure includes

BCBSM PPO claims alone, then the seven eligible services lines below will be combined into one

aggregate measure.

The seven service lines below were selected because they met the following criteria:

1. The service line was included in the 2015 MVC data validation project

2. The service line represents an area of focus for existing BCBSM clinical CQI programs


Table 2: Eligible service lines and minimum annual case requirements

Service Line

Numbers of episodes

reviewed in 2015 MVC data

validation project

Minimum annual

case

requirement*

Percent of 2012

cases from

BCBSM PPO

patients

Acute myocardial infarction 218 20 14%

Congestive heart failure 53 20 2%

Pneumonia 71 20 6%

Hip and knee replacement 956 20 29%

Colectomy (non-cancer) 76 20 36%

Coronary artery bypass graft 76 20 27%

Spine surgery^ 91 20 36%

*Minimum annual case requirement includes both Medicare FFS and BCBSM PPO patients. A hospital’s condition-

specific case volume will be measured during the most recently available 12-month period.

^Labeled as “Other Spine” on MVC registry

Rationale:

Number of service lines Our measure development group and external advisors reached a consensus that two service lines is a

reasonable initial number for hospitals to work toward both achievement and improvement targets. A

single service line might not sufficiently encourage hospitals to pursue crosscutting interventions and

infrastructural changes aimed at improving efficiency. On the other hand, if the proposed measure

involves too many service lines, hospitals may be overwhelmed and could have difficulty deciding

where and how to focus limited resources.

Selected service lines

The selection of eligible service lines reflects the dual goals of 1) maximizing a hospital’s choice in

terms of where to focus its efforts, and 2) alignment of MVC measures with existing cost and quality

improvement initiatives from CMS and BCBSM. To this end, we first considered all service lines that are

already part of a similar CMS initiative [i.e., HVBP, HRRP, and CCJR, which together cover acute

myocardial infarction (AMI), congestive heart failure (CHF), pneumonia, and joint replacement]. We

next considered clinical service lines that represent areas of focus for existing BCBSM clinical CQI

programs. From this initial larger roster, we then selected for final inclusion only those service lines

that were also included in the 2015 MVC Data Validation project.

Data Validation Project

As part of the 2015 data validation project, we asked all MVC hospitals to submit information on

utilization of relevant services (e.g., post-acute care, readmissions) during and after an index admission

based on review of local medical records. We then compared the submitted information to data in the

MVC registry based on BCBSM claims. All 63 MVC hospitals participated in the data validation, and this


project examined the claims classification algorithms for eleven service lines.8 This process was

completed to ensure that the MVC Coordinating Center and participating hospitals had an opportunity

for transparent examination, and subsequent refinement, of the claims classification algorithms for the

included service lines. Detailed results from the validation project, and consequent modifications to

MVC methods, was shared individually with hospitals during fall 2015 and with the entire collaborative

at the November 2015 meeting. We anticipate that other service lines will become eligible for the MVC

P4P measure as we extend the data validation process to more diagnoses and procedures in the

future.

Minimum case requirements

We selected the minimum episode volume requirements based on several empirical analyses. First, we

calculated the total episode volume for each MVC hospital with each service line. Second, we

calculated the year-to-year reliability of our payment measure for all service lines. We then tested the

reliability of the condition-specific measure across three years (2010-2012). Ultimately, we selected

minimum case thresholds that simultaneously maximize the reliability of the episode cost metric and

the number of eligible hospitals for each service line. Appendix G provides additional details around

these calculations.

Other considerations: We considered many service line options before deciding on the approach

described above. For example, we considered basing the proposed P4P measure on two standard high-

volume service lines (i.e., pneumonia and AMI) for all hospitals. We also considered asking hospitals to

select from more restricted pools (e.g., only service lines overlapping with CMS initiatives). However,

the MVC development team and external advisors felt that such approaches were too restrictive,

especially for hospitals that already have existing efficiency improvement initiatives.

We also considered using statistical methods to improve the reliability of the proposed measure for

hospitals with small case volumes. Using this approach, episode costs for hospitals with a smaller

number of eligible cases would be “shrunk to the mean” to reduce the effect of random variation due

to small sample sizes. While our working group acknowledged that this approach is used by CMS for

public reporting of outcome measures on Hospital Compare, we felt that this strategy might also blunt

the year-over-year improvement for some hospitals (i.e., small hospitals) and thus make it difficult for

low volume hospitals to demonstrate high performance.

Alignment: The eligible service lines align with many of the conditions that CMS includes in its value-

based incentive programs (Appendix F). For example, CMS recently developed 30-day episode

payment measures for AMI, CHF, and pneumonia, as well as the CCJR program for episode-based

bundled payments for hip and knee replacement. A requirement for minimum case thresholds is also

used in the HVBP and MSPB programs.

8 At the time of the data validation project there were only 63 participating hospitals; however, there are currently 75 member hospitals.


Hospital Feedback: From a survey sent to all participating MVC hospitals, 41/66, or 62.1% of hospitals,

preferred a selection of two service lines from a pool of seven. Nine hospitals selected a performance

measure based on selection of two service lines and use of BCBSM data alone for the P4P measure.

These choices are mutually exclusive, but 6/9, or 66.7% of hospitals say the selection of two service

lines is more important to them than using BCBSM data alone.

Comments in support for selection of two service lines:

- Difficult to find opportunities for improvement that span all service lines

- More specific, actionable data

- Desire to be evaluated based on specific initiatives in problem areas; aggregate would “dilute”

efforts

- Hard to make meaningful changes in 1-2 years for all service lines

- Can allocate resources to service lines in greatest need

- Suggestion that hospitals should be able to select ANY service line that meets case volume criteria

Comments in support for aggregate measure:

- Alignment with CMS and BCBSM metrics

- Greater flexibility to manage cost

- Smaller hospitals forced to choose service lines with adequate volume; low volume makes episode

costs less reliable

Final Decision: MVC will measure performance based the hospital’s voluntary selection of two service

lines from the pool of seven.

Quality requirements

Description: In our proposed measure, hospitals will not be eligible for a bonus if they are ranked in

the bottom 10th percentile in the performance year for condition-specific, risk-adjusted in-hospital

mortality or related readmissions. Statistical adjustments will be made for hospitals ranked in the

bottom 10th percentile if their case volumes are too low to allow for a reliable estimate. Accordingly,

we will utilize confidence intervals to ensure that these hospitals are true statistical outliers. This

approach is aligned with the method used by CMS for public reporting of outcomes on Hospital

Compare. We recognize that future analyses may lead the 10th percentile benchmark to be shifted to

other levels and/or help us decide whether multiple years of data should be considered for calculation

of this quality requirement. We plan to work towards the eventual replacement of percentile-based

quality thresholds with criterion-based quality thresholds.

Rationale: It was the consensus of our measure development team that the MVC episode cost

measure should be linked with a required minimum quality standard. The group felt it would be

inconsistent with MVC and BCBSM principles to reward hospitals that are low cost, but also potentially

lower quality. We selected condition-specific mortality and related readmissions because these


outcomes can be measured from claims data, are consistent with quality measures already used by

CMS and BCBSM, and are endorsed by the National Quality Forum.

Other considerations: We reviewed several approaches to defining a quality minimum for the

proposed MVC measure. In particular, we considered linking the MVC measure with quality measures

submitted by the BCBSM clinical CQIs. However, this approach would be difficult to implement since

some Michigan hospitals are not currently participating in the clinical CQIs. In the future, we would like

to incorporate CQI-specific outcomes measures as part of the required quality standard whenever

possible.

Alignment: The quality standards that we selected are used by CMS for several programs including

HVBP, the Physician Value-Based Payment Modifier, and the Medicare Shared Savings Program for

ACOs. In addition, the CCJR program requires hospitals to meet three quality metrics to be eligible for

bonus payments. These quality metrics are based on hospital level risk-standardized complication

rates for joint replacement, 30-day all-cause readmission rates and the Hospital Consumer Assessment

of Healthcare Providers and Systems (HCAHPS) survey.

Hospital Feedback: Only 3/66, or 4.5%, of the MVC hospitals surveyed indicated no quality threshold

should be applied. Four hospitals suggested a penalty in place of forgoing the bonus for those

hospitals not meeting the quality threshold. One hospital, however, recommended raising the

threshold. While most surveyed agreed with the proposed standards, a few hospitals suggested

adding the following:

− Complication rate

− Provision of preventative health services

− Correlation to performance improvement plans

− Hospital acquired infections and conditions

− Other CQI clinical measures

− Length of Stay

− Physician follow up post-discharge

− Avoidable emergency department utilization

Final Decision: MVC will impose a quality requirement whereby a hospital’s adjusted case volume must

be above the 10th percentile in the performance year for the condition-specific in-hospital mortality or

related readmissions to receive performance points.

Structure and scoring system

The new P4P measure was developed according to the principles outlined earlier in this document, and

aims to be as simple, fair, and transparent as possible. The proposed structure and scoring system for

this measure is depicted in Table 3 and Appendix H.


We proposed that program year 2016 be a formal preparatory year that encourages MVC hospitals to

become more familiar with the data, organize resources to enact change, and create infrastructure

and care processes that enable success in 2017 and beyond. In this year, two service lines will be

selected by hospitals prior to submission of the QI action plan. Those two service lines will remain the

target service lines for the hospital in 2018 and 2019.

Hospital performance was initially set to be measured in program year 2017; however, based on

feedback from the P4P Measurement Workgroup, scoring was delayed until 2018. to allow hospitals

more time to prepare. The proposed metrics for program years 2018 and 2019 aim to provide

Michigan hospitals with an opportunity to be measured fairly and to be rewarded for high

performance and collaboration.

In program years 2018 and 2019, each hospital’s service line-specific total episode cost for a twelve-

month period two years prior to the performance year would serve as its own improvement baseline.

Table 3: P4P measure structure and scoring system

2016 2017 2018 and 2019

Measure theme

Deep engagement with MVC data

Transition Year Year over year improvement

Absolute achievement

Measure scoring

2 pts - Participate in site

visit with MVC 1 pt - Provide feedback

on risk adjustments

1 pt - Provide feedback on P4P measure

1 pt - Attend MVC meetings

5 pts - Create specific QI action plans for 2017

No Score

Baseline: Hospital service line total episode costs for the most recently available 12-month period 2018/2019 scoring:^ 1 pt = baseline mean 2 pts = baseline mean -

0.05 * SD based target

3 pts = baseline mean - 0.10 * SD based target



Baseline: MVC cohort group service line total episode costs for the most recently available 12-month period 2018/2019 scoring:^ 50th %tile = 1 pt 60th %tile = 2 pts 70th %tile = 3 pts 80th %tile = 4 pts 90th %tile = 5 pts

Collaboration goal

+1 pt per service line if ≥ 5% improvement among

hospitals choosing the specific service line

^ = scoring for each service line assumes use of both BCBSM PPO and Medicare claims SD = standard deviation

or


Appendix I provides additional details regarding the proposed method for calculating baseline

performance data. During these years, improvement would be measured against the baseline. This

calculation will be performed separately for each service line. As illustrated in Table 3, the

improvement target for each hospital will be scaled based on case volume to account for differences in

the reliability of MVC cost estimates across hospitals.

In addition to measuring year-over-year improvement, hospitals may earn bonus payments based on

their achievement. The MVC cohort group service line mean total episode cost from the twelve-month

period two years prior to the performance year would serve as the achievement baseline for

calculating percentile-based achievement targets. For 2018 and 2019 payments, hospitals would

receive the higher of their improvement or achievement points. Performance points for improvement

or achievement will only be awarded to hospitals that also meet the quality requirements.

Collaboration goal: The MVC measure development team felt that it was important to follow closely

the Value Partnership’s philosophy of using high quality data to drive collaborative quality

improvement. In order to foster collaboration at the local, regional, and state levels, a collaboration

goal is also built into the scoring system for 2018 and 2019 (Table 3). Among hospitals selecting the

same service line (if applicable), each hospital will receive one additional bonus point if that group of

hospitals achieves a 5% or greater improvement in total episode costs compared to their collective

average episode cost during the baseline period. However, a hospital would not receive a collaboration

bonus if its own performance declined from one year to the next.

Appendix H provides a more detailed example of how the proposed scoring system would be applied

in all three performance periods.

Hospital Feedback: There were many comments on the survey distributed to MVC hospitals about the

scoring system:

- Year-over-year improvement should be used. Will encourage collaboration, data transparency, and

sharing of best practices

- Outlier high costs should be removed

- MVC patient population should be homogenous (ESRD should be excluded, and potentially cancer

patients as well)

- Clear and concise date range to base improvement targets against

- Does not recognize or award organizations that are already high performers

- Percent improvement expected over 2 years seems unreasonable

Comments regarding how continued collaboration can be incentivized within MVC:

- Bonus points for hospitals sharing cost reduction strategies

- Incentivize attending MVC events

- Reward year-over-year improvements

- Incentive points for low performing hospitals to partner with successful “mentoring hospital”

- Grant opportunities for specific themes


Final Decision: In 2016, hospitals will earn points based on engagement and contributions to MVC.

For 2017, hospitals will be measured based on year-over-year improvement, and in 2018, hospitals will

be scored based on improvement or achievement, whichever yields the highest score.

Improvement target methodology

Description: The improvement targets for each hospital is measured by the service line total episode

payments for the baseline year. To earn one P4P point, a hospital must have equal or lower total

episode costs during the performance year compared to the baseline year for the measured service

line. Subsequent bonus points will be calculated based on the ratio of each individual hospital’s total

episode payment to MVC total episode payment multiplied by a proportion of the MVC standard

deviation.

Baseline Mean – x% * MVC Winsorized Standard Deviation where Baseline Mean = Hospital Mean Cost/MVC Mean Cost

and x% represents .05 through .20

The intent of the formula is to account for each hospital’s baseline mean costs and the service line-

specific variability. The MVC mean and standard deviation will include all cases, and the MVC standard

deviation will be winsorized at the 99th percentile. The utility of winsorization is to mitigate the impact

of extreme outlier cases. The percentage reduction of the MVC standard deviation required to earn

P4P points was determined based on extensive internal modeling and comparisons to provider

performance in the BPCI Model 2 program.

Other considerations: We considered alternatively applying winsorization to both the hospital cost

ratio and standard deviation as proposed by members of the P4P Measurement Workgroup. In this

scenario, the MVC average cost (the denominator) will be winsorized for all hospitals; however, not all

hospitals will have their individual costs (the numerator) winsorized. The individual hospital cost will

only be winsorized if its case(s) contributed to the top 1% of MVC episode costs and the hospital has at

least 100 cases. As a result, the majority of hospitals will have a slightly higher benchmark (ranging

from approximately $1-$200 greater). After applying the P4P reduction targets (5-20%), the cost

difference is minimized ($0-$20 on average, per patient) between options one and two but still greater

compared to only winsorizing the MVC standard deviation. Hospitals with cases in the top 1%,

however, will benefit more noticeably from winsorizing the cost ratio.

Rationale: The decision to winsorize at the 99th percentile was based on empirical analysis showing

that many of these top 1 percent of cases appear to be outliers. Cases winsorized at the 95th

percentile, however, were not extreme cases. In reviewing other incentive-based programs,

winsorizing at the 99th percentile is consistent with CMS’ MSBP methodology.

As part of its original proposal, the MVC measure development team did not recommend winsorizing

the hospital cost ratio primarily because it presents a bias to low volume hospitals. If each hospital’s

costs were winsorized, the hospital must have at least 100 cases during the baseline and performance


periods to be impacted. For five of the seven service lines more than half of the hospitals have less

than 100 cases in a twelve-month period.

Hospital Feedback: Both options were shared with BCBSM’s P4P Measurement Workgroup, and only

one hospital expressed a preference, which was to only winsorize the standard deviation.

Final Decision: Each hospital’s P4P baseline mean will be computed as a ratio of the hospital’s average

cost to the MVC average cost and multiplied by the winsorized MVC standard deviation. Cases will be

winsorized at the 99th percentile.

MVC cohorts

Description: Beginning in 2018, hospitals may earn year-over-year achievement points as compared to

their respective cohorts. The MVC cohort methodology comprises two years of data that has

empirically demonstrated stability in the groupings. In general, each MVC cohort is comprised of

structurally similar hospitals identified by case mix index (CMI), bed size and teaching status.

Methodology: CMI is defined based on the hospital’s index admissions for the P4P service lines for

Medicare FFS and BCBSM PPO patients from July 1, 2013 through June 30, 2015. For the purposes of

classification, episodes without a Medicare Severity-Diagnosis Related Group (MS-DRG) associated

with the index admission were excluded. The Centers for Medicare and Medicaid Services (CMS) MS-

DRG relative weights are applied to all inpatient admissions to calculate the mean relative CMI weight

for each hospital. Using the calculated mean relative CMI weights, hospitals are sorted from highest to

lowest to establish a median threshold. The median CMI was 1.67; therefore, all hospitals with a CMI

of 1.67 or greater will be classified as either Cohort 1 or 2. Hospitals with a low CMI (below 1.67) will

be grouped as either Cohort 3 or 4. CMI is used as a primary grouper to account for the differences in

the complexity of DRGs observed at each hospital.

The cohorts are further refined based on bed size and teaching status. The presence of 300 or more

beds and teaching status are used to distinguish between Cohorts 1 and 2. A hospital must meet both

criteria to be categorized as Cohort 1. The presence of 100 beds or more and teaching status are used

to differentiate between Cohorts 3 and 4. Unlike distinguishing between Cohorts 1 and 2, a hospital

only needs to meet one of these criteria to be classified as Cohort 3 to ensure balance in the grouping

dispersion. See Appendix J for the cohort flow chart and distribution.

Rationale: The purpose of the MVC cohort groups is to provide for a more equitable and effective

comparison of each hospital’s performance.

Hospital Feedback: Comments provided by BCBSM’s P4P Measurement Workgroup on the original

cohort structure was to develop service line specific cohort groups for Spine, AMI and CABG. The

Workgroup believed a greater amount of variability with respect to cost is found within these

conditions due to hospital structural characteristics. Therefore, a single cohort for across all service

lines would not adequately capture these variances.


Final Decision: Separate cohort groups were created for Spine, AMI and CABG. See Appendix J for

greater detail on how each cohort is structured. The remaining service lines (Joint Replacement,

Pneumonia, CHF and Colectomy) will share the same grouping based on CMI, bed size and teaching

status.

Support for hospitals

Two documents were made available to hospitals to support their participation in 2016. The first

provided hospitals with a summary of the baseline costs for their two selected service lines. The

document displayed component cost breakdowns similar to those provided on the MVC registry.

The second document was a template for a specific quality improvement action plan. The template will

help hospital leaders undertake a structured assessment of opportunities for improvement and

provide a framework for identifying and deploying resources necessary to achieve episode cost

improvements for the selected service lines. The ideas and strategies outlined in these templates will

also serve as a foundation and framework for collaborative learning and best practice sharing at MVC

meetings.

Each year, the MVC Coordinating Center will also provide partner hospitals with an updated hospital

P4P report. The P4P report will identify hospital baseline costs for the relevant performance year. This

document outlines hospital-specific episode payment reduction targets for eligible service lines in that

performance year to help hospitals identify what is needed to achieve successive P4P points. All data is

adjusted, and a hospital must have a minimum of 20 episodes in a service line for it to be displayed in

the report.

The MVC Coordinating Center will also host a series of virtual workgroups based on input from its

hospital partners. The primary goal of these workgroups is to provide hospital leaders with a highly

accessible platform to share best practices and challenges facing hospitals throughout the state of

Michigan. The ideas and strategies outlined in these discussions will serve as a foundation and

framework for collaborative learning and best practice sharing at MVC meetings. The MVC

Coordinating Center will also continue its work to improve the utility of the MVC data registry website

and host semiannual meetings to prove a venue for the sharing of best practices and additional

insights.

Anticipating unintended consequences

Despite best intentions, there are possible unintended consequences that can result from efforts and

metrics aimed at improving quality and reducing costs in complicated health care settings. The MVC

development group and external advisors considered possible unintended outcomes that could ensue

from the structure of this proposed P4P measure. These discussions also focused on potential

interventions that could be applied to minimize the risk of such adverse outcomes.


Several potential unintended consequences, and proposed interventions intended to protect against

such outcomes, are outlined in

Table 4.

Table 4: Potential unintended consequences and proposed interventions

Possible unintended consequence Proposed intervention(s)

Incentivizing competition

Initial focus on internal improvement and participation; include “collaboration goal” to encourage statewide collaboration and reward statewide improvement

Rewarding low quality hospitals Include quality minimums that must be met to be eligible for performance bonus

Rewarding cost improvements that result from inappropriate reduction in services provided

Include quality minimums that must be met to be eligible for performance points; possible future inclusion of CQI-based quality measures

Rise in number of low-cost episodes driven by changes in admission thresholds

Monitoring year-to-year changes in hospital-level case mix index for selected service lines

Hospitals not responding to P4P measure because bonus payment is out of balance with efforts required to achieve improvements or opportunity costs associated with improvement efforts

Ongoing analyses evaluating balance between bonus amount vs. reduction in costs

Focus on costs incurred outside of the hospital to the exclusion of improvements in hospital-based services

Include index hospitalization costs and readmissions in the P4P measure

Hospitals not responding to P4P measure because of lack of additional “shared savings”

Implement a group collaboration bonus for achieving state-wide improvement goals


Appendices

Appendix A: Measure Development Team

Name Position

Michigan Value Collaborative Coordinating Center

Jim Dupree, MD, MPH Director

Scott Regenbogen, MD, MPH Co-Director

Chad Ellimoottil, MD, MS Program Associate, Analytics

Kristyn Vermeesch, MPP Project Manager

John Syrjamaki, MPH Associate Project Manager/Senior Analyst

Edward Norton, PhD Program Economist

External advisors

Andrew Ryan, PhD Associate Professor, University of Michigan School of Public Health

Ellen Ward, MHSA Manager, BCBSM Value Partnerships Program

John Ayanian, MD, MPP Director, University of Michigan Institute for Healthcare Policy and Innovation

Anup Das PhD candidate, University of Michigan School of Public Health


Appendix B: Standard Inclusions

Sepsis/Infection

00845 03841 04102 0417 6868

0090 03842 04103 04183 6869

0380 03843 04104 04184 78552

03810 03844 04105 04185 78559

03811 03849 04109 04189 7907

03812 0388 04110 0419 99591

03819 0389 04119 4210 99592

0382 0390 0412 4211 99593

0383 04100 0414 5670 99594

03840 04101 0416 56739

Urinary Tract Infection (UTI)

5909 5950 5959 5990

Acute Myocardial Infarction (AMI)

41000 41021 41050 41071 4110

41001 41030 41051 41080 4111

41010 41031 41060 41081 41181

41011 41040 41061 41090 41189

41020 41041 41070 41091 42292

Stroke + Transient Ischemic Attack (TIA)

43300 43321 43390 43411 4352

43301 43330 43391 43490 4353

43310 43331 43400 43491 4358

43311 43380 43401 4350 4359

43320 43381 43410 4351 436


Pneumonia

4658 4808 48231 48281 4831

4659 4809 48232 48282 4838

46619 481 48239 48283 4848

4800 4820 48240 48284 485

4801 4821 48241 48289 486

4802 4822 48242 4829 4870

4803 48230 48249 4830

Pulmonary Embolism (PE) Deep Vein Thrombosis (DVT)

41511 45381 45386 45111 45183

41512 45382 45387 45119 45184

41519 45383 45389 4512 45189

45340 45384 4539 45181 4519

45341 45385 4510 45182 4536

45342

Acute gastrointestinal ulcerative disease

53100 53131 53230 53321 53420

53101 53200 53231 53330 53421

53110 53201 53300 53331 53430

53111 53210 53301 53400 53431

53120 53211 53310 53401 538

53121 53220 53311 53410 5789

53130 53221 53320 53411

Pressure Ulcers

70700 70703 70706 70720 70723

70701 70704 70707 70721 70724

70702 70705 70709 70722 70725


Electrolyte Imbalance

2760 2763 27651 2766 2768

2761 2764 27652 2767 2769

2762 27650

Debility, malaise, fatigue, weakness 7197 72887 78079 7812 7993

Complications of surgical and medical care, not elsewhere classified 997-999 37960 5187 51852 99665

E870-79 37961 51881 58153 99666

2440 37962 99659 99660 99667

28984 37963 2851 99661 99668

2910 4275 78820 99662 99669

29181 5070 72888 99663 99670

33818 5185 51851 99664

Pneumothorax, plural effusions

51189 5119 5121 5128 51289

Medication effects

693 9954 99586 99522 99523

9952

Aftercare

V5789 V571 V5849


Acute exacerbations of chronic diseases

Diabetes Mellitus (DM)

24910 24930 25012 25022 25032

24911 24931 25013 25023 25033

24920 25010 25020 25030 2510

24921 25011 25021 25031 2513

Asthma

49301 49311 49321 49391 49392

49302 49312 49322

Chronic Obstructive Pulmonary Disease (COPD)

49121 49122

Congestive Heart Failure (CHF)

4150 42823 42833 42841 42843

42821 42831

Renal failure

5845 5846 5847 5848 5849

Hypertension

4010 40200 40201


Appendix C: Hierarchical Condition Categories

Condition Categories

Acute Myocardial Infarction Hemiplegia/Hemiparesis

Acute Renal Failure Hip Fracture/Dislocation

Amputation Status Complications HIV/AIDS

Amyotrophic Lateral Sclerosis Inflammatory Bowel Disease

Angina Pectoris Intestinal Obstruction/Perforation

Artificial Openings for Feeding or Elimination Ischemic or Unspecified Stroke

Aspiration and Specified Bacterial Pneumonias Lung and Other Severe Cancers

Atherosclerosis of the Extremities Lymphoma and Other Cancers

Bone/Joint/Muscle Infections/Necrosis Major Head Injury

Breast, Prostate, and Other Cancers Major Organ Transplant or Replacement Status

Cardio-Respiratory Failure and Shock Metastatic Cancer and Acute Leukemia

Cerebral Hemorrhage Monoplegia, Other Paralytic Syndromes

Cerebral Palsy Morbid Obesity

Chronic Hepatitis Multiple Sclerosis

Chronic Kidney Disease, Stage 4 Muscular Dystrophy

Chronic Kidney Disease, Stage 5 Myasthenia Gravis/Myoneural Disorders

Chronic Obstructive Pulmonary Disease Opportunistic Infections

Chronic Pancreatitis Paraplegia

Chronic Ulcer of Skin, Except Pressure Parkinson's and Huntington's Diseases

Cirrhosis of Liver Pneumococcal Pneumonia, Empyema, Lung Abscess

Coagulation Defects Pressure Ulcer of Skin with Full Skin Loss

Colorectal, Bladder, and Other Cancers Pressure Ulcer of Skin with Necrosis

Coma, Brain Compression Protein-Calorie Malnutrition

Complications of Implanted Device Quadriplegia

Congestive Heart Failure Respirator Dependence

Cystic Fibrosis Respiratory Arrest

Depressive, Bipolar, and Paranoid Disorders Rheumatoid Arthritis

Diabetes with Acute Complications Schizophrenia

Diabetes with Chronic Complications Seizure Disorders and Convulsions

Diabetes without Complication Septicemia or Sepsis

Diabetic Retinopathy and Vitreous Hemorrhage Severe Head Injury

Dialysis Status Severe Hematological Disorders

Disorders of Immunity Severe Skin Burn or Condition

Drug/Alcohol Dependence Specified Heart Arrhythmias

Drug/Alcohol Psychosis Spinal Cord Disorders/Injuries

Endocrine and Metabolic Disorders Traumatic Amputations and Complications


End-Stage Liver Disease Unstable Angina, Acute Ischemic Heart Disease

Exudative Macular Degeneration Vascular Disease

Fibrosis of Lung Vascular Disease with Complications

Vertebral Fractures


Appendix D: Condition Specific Risk-Adjustment Variables

AMI Colectomy CABG

lvad colectomy_other cabg_reop

cardiac_surgery colectomy_inflam_bowel arterial_graft

iabp colectomy_vasc_insuf iabp colectomy_volvulus iabp colectomy_diverticulitis lvad colectomy_gibleed lvad

emergency_intubation

pci

pci

pci

ptca

ptca

electrophys_test

ptca

ptca

electrophys_test

electrophys_test

ptca

CHF, Pneumonia, Hip Replacement, Knee Replacement, and Other Spine:

No condition-specific risk adjustors.


Appendix E: Expected Total Episode Cost 30-day Regression Variables

Colectomy Variables

female

agegrp

large_prior_total

bcbsm

colectomy_diverticulitis

colectomy_gibleed

colectomy_inflam_bowel

colectomy_lap

colectomy_open

colectomy_ostomy

colectomy_other

colectomy_vasc_insuf

hcc_arrhythmia

hcc_artificial_openings

hcc_bact_pneumonia

hcc_bone_muscle_infect

hcc_cardio_resp_failure

hcc_chf

hcc_chron_kidney_stg5

hcc_chron_pancreatitis

hcc_coag_defects

hcc_copd

hcc_diabetes_no_cmp

hcc_drug_alcohol_depend

hcc_drug_alcohol_psych

hcc_endo_metab_othr

hcc_hemiplegia

hcc_immunity_disorder

hcc_intest_obstruct

hcc_lower_amputation_cmp

hcc_lymphoma

hcc_major_depressive

hcc_met_cancer_leuk

hcc_morbid_obesity

hcc_opp_infect

hcc_parkins_huntingtons

hcc_pdr

hcc_press_ulcer_necrosis

hcc_pro_cal_malnutr

hcc_renal_failure

hcc_rheum_arthritis

hcc_schizophrenia

hcc_seizure

hcc_septicemia

hcc_spinal_cord

CABG Variables

female

agegrp

large_prior_total

bcbsm

bypass

cabg_reop

hcc_ami

hcc_angina_pectoris

hcc_arrhythmia

hcc_atherosclerosis


hcc_chf



hcc_coma

hcc_copd

hcc_diabetes_chron_cmp

hcc_diabetes_no_cmp

hcc_ibd

hcc_implant_cmp

hcc_lymphoma

hcc_macular_degen


hcc_morbid_obesity


hcc_pro_cal_malnutr

hcc_renal_failure

hcc_rheum_arthritis

hcc_septicemia

hcc_severe_hemat

hcc_spinal_cord

hcc_stroke

hcc_trauma_amputation

hcc_vascular

hcc_vascular_cmp


AMI Variables

female

agegrp

large_prior_total

bcbsm

cardiac_surgery

electrophys_test


hcc_arrhythmia

hcc_atherosclerosis

hcc_bact_pneumonia



hcc_chf


hcc_cirrhosis_liver

hcc_copd

hcc_diabetes_acute_cmp


hcc_diabetes_no_cmp

hcc_endo_metab_othr

hcc_hemiplegia

hcc_hip_fracture

hcc_implant_cmp

hcc_morbid_obesity

hcc_organ_trans

hcc_paraplegia

hcc_pro_cal_malnutr

hcc_renal_failure

hcc_resp_depend

hcc_seizure

hcc_stroke

hcc_vascular

hcc_vascular_cmp

hemodialysis

lvad

pci

ptca

Pneumonia Variables

female

agegrp

large_prior_total

bcbsm

hcc_ami

hcc_arrhythmia


hcc_atherosclerosis

hcc_bact_pneumonia



hcc_cerebral_hem

hcc_chf


hcc_chron_ulcer

hcc_coag_defects

hcc_copd


hcc_diabetes_no_cmp

hcc_dialysis


hcc_end_stage_liver

hcc_endo_metab_othr

hcc_hemiplegia

hcc_ibd


hcc_implant_cmp

hcc_lower_amputation_cmp

hcc_lung_cancer

hcc_lymphoma


hcc_met_cancer_leuk

hcc_morbid_obesity

hcc_ms

hcc_opp_infect

hcc_organ_trans

hcc_paraplegia


hcc_pdr

hcc_pneumococcal

hcc_pro_cal_malnutr

hcc_quadriplegia

hcc_renal_failure

hcc_schizophrenia

hcc_seizure

hcc_septicemia

hcc_severe_burn

hcc_severe_hemat

hcc_spinal_cord

hcc_stroke

hcc_unstable_angina

hcc_vascular

hcc_verteb_fracture

pneumonia_intubation

pneumonia_mechvent

pneumonia_trach


CHF Variables

female

agegrp

large_prior_total

electrophys_test


hcc_ami

hcc_arrhythmia

hcc_atherosclerosis


hcc_cerebral_palsy

hcc_chron_hep



hcc_chron_ulcer

hcc_copd

hcc_crectal_bldr_cancer


hcc_diabetes_no_cmp

hcc_dialysis

hcc_end_stage_liver

hcc_endo_metab_othr

hcc_hemiplegia

hcc_ibd

hcc_implant_cmp

hcc_lung_cancer

hcc_lung_fibrosis


hcc_met_cancer_leuk

hcc_morbid_obesity

hcc_muscular_dystrophy

hcc_opp_infect

hcc_organ_trans

hcc_paraplegia


hcc_pneumococcal

hcc_press_ulcer

hcc_press_ulcer_necrosis

hcc_pro_cal_malnutr

hcc_quadriplegia

hcc_renal_failure

hcc_rheum_arthritis

hcc_seizure

hcc_septicemia

hcc_severe_hemat

hcc_vascular

hcc_vascular_cmp

hcc_verteb_fracture

ptca

Hip Replacement Variables

female

agegrp

large_prior_total

bcbsm

hcc_arrhythmia


hcc_bact_pneumonia

hcc_breast_prost_cancer

hcc_chf


hcc_chron_ulcer

hcc_coag_defects

hcc_copd


hcc_diabetes_no_cmp

hcc_dialysis

hcc_endo_metab_othr

hcc_hemiplegia

hcc_hip_fracture


hcc_lymphoma

hcc_macular_degen


hcc_major_head_injury

hcc_monoplegia

hcc_morbid_obesity

hcc_ms


hcc_pro_cal_malnutr

hcc_rheum_arthritis

hcc_schizophrenia

hcc_seizure

hcc_severe_hemat

hcc_vascular

hcc_verteb_fracture


Knee Replacement Variables

female

agegrp

large_prior_total

bcbsm

hcc_angina_pectoris

hcc_arrhythmia


hcc_chf



hcc_chron_ulcer

hcc_coag_defects

hcc_copd


hcc_diabetes_no_cmp

hcc_dialysis


hcc_end_stage_liver

hcc_endo_metab_othr

hcc_hemiplegia

hcc_hip_fracture

hcc_ibd

hcc_implant_cmp

hcc_lung_fibrosis

hcc_macular_degen


hcc_major_head_injury

hcc_morbid_obesity

hcc_myasthenia_gravis

hcc_paraplegia


hcc_pro_cal_malnutr

hcc_renal_failure

hcc_resp_depend

hcc_schizophrenia

hcc_seizure

hcc_septicemia

hcc_severe_head_injury

hcc_severe_hemat

hcc_unstable_angina

hcc_vascular

hcc_vascular_cmp

hcc_verteb_fracture

Spine Variables

female

agegrp

large_prior_total

bcbsm

cervical_disc_degen_dx

cervical_spinal_sten_dx

hcc_angina_pectoris


hcc_cerebral_palsy

hcc_chf

hcc_chron_hep


hcc_coag_defects

hcc_copd


hcc_drug_alcohol_depend

hcc_endo_metab_othr

hcc_hemiplegia

hcc_implant_cmp

hcc_lymphoma


hcc_monoplegia

hcc_morbid_obesity

hcc_organ_trans

hcc_paraplegia


hcc_pneumococcal

hcc_pro_cal_malnutr

hcc_quadriplegia

hcc_renal_failure

hcc_rheum_arthritis

hcc_spinal_cord

hcc_stroke

hcc_vascular

hcc_vascular_cmp

hcc_verteb_fracture

lumbar_disc_dx

lumbar_spinal_stenosis_dx

lumbar_spondyl_dx

myelopathy


Appendix F: Value-based incentive programs from the Centers for Medicare & Medicaid Services (CMS)

Bundled Payment for Care Improvement (BPCI)

BPCI is a voluntary program developed and implemented by CMS to test the effectiveness of bundling

payments for episodes of care. There are four separate models distinguished by the episode length, number of

providers involved in the program, and how payments are distributed. Nationally, more than 2,115 hospitals,

post-acute care facilities, and other providers are currently participating in BPCI.

Hospital Value-Based Purchasing (HVBP)

HVBP is a program developed by CMS that links Medicare payments to various quality and cost-efficiency

measures. At present, value-based payments are distributed to over 3,500 hospitals. The magnitude of the

value payments depends on hospital performance with measures defined by four specific categories: efficiency

(20%), clinical process of care (20%), outcome (30%), and patient experience of care (30%) The specific

efficiency measure used in this program is Medicare Spending per Beneficiary (MSPB). MSPB is a claims-based

measure that is calculated using risk-adjusted, price-standardized payments for episode of care comprising the

index hospital stay plus three days prior to admission and 30 days post-discharge.

Condition-specific episode payment measures for AMI, Heart Failure, and Pneumonia

CMS recently designed and released episode payment measures for three common medical diagnoses. The

measure calculates risk-adjusted payments for 30-day episodes of care. At present these measures are not tied

to value-based payments, however, they are publically reported as part of the Hospital Compare program.

Comprehensive Care for Joint Replacement (CCJR)

The proposed CCJR model was developed by CMS to test episode-based bundled payments for joint

replacement surgery. Unlike BPCI (which is a voluntary program), CMS selected 75 geographic regions

(metropolitan statistical areas) to participate in in CCJR. The participants include a wide range of hospitals with

varying baseline costs. In this model, CMS will establish “target episode prices” and provide year-end

reconciliation payments for hospitals that provide joint replacement at a lower cost. Hospitals that exceed the

target price will be required to pay the difference back. To be eligible for reconciliation payments, hospitals

must simultaneously meet quality standards for complications, readmissions and patient satisfaction.

The table below provides additional details for each program.


Summary characteristics of CMS value-based incentive programs

BPCI (Model 2) MSPB (HVBP)

AMI/HF*/Pneumonia

Episode payment

measure

CCJR

Episode Length

30, 60, or 90

days post

discharge

3 days prior to index

admission through 30

days post discharge

30 day episode of care

beginning with a

hospitalization

90 day

episode

Episode Triggers

Inpatient

admission of

eligible

beneficiary to

acute care

hospital for one

of the MS-DRGs

in a selected

episode

Index inpatient

hospital admission

Index admission for

AMI/HF/Pneumonia

MS-DRG 469

or 470

Episode Inclusion

Captures

payments for all

care covered

under Medicare

Part A and Part

B within time of

episode

Captures payments for

all inpatient,

outpatient and post-

acute care claims

Captures payments for

all inpatient, outpatient

and post-acute care

claims

Captures

payments for

all inpatient,

outpatient

and post-

acute care

claims

Medical/Surgical Both Both Medical Surgical

Readmissions Included Included Included Included

*HF – Heart Failure


Appendix G: Reliability calculations for minimum case requirements

The reliability of a metric is the extent to which the variation in the measure represents actual change versus

statistical noise. We were interested in studying whether year-to-year variation in collaborative-wide mean

cost for a particular service line could be reliably distinguished from random variation. For this purpose, we

calculated the reliability ratio for all eligible service lines using data from BCBSM and Medicare patients from

2010-2012. The reliability ratio is measured on a scale from 0 (poor reliability) to 1 (good reliability).

The table below presents reliability ratios for each eligible service line stratified by annual hospital case volume

thresholds. Collectively, these data show that the aggregated (i.e., collaborative-wide) episode payment

measure is very reliable at our 10 case minimum for all service lines, with ratios generally in the range of 0.7 to

0.9. There was minimum improvement in reliability with a higher case threshold.

Reliability ratios for eight MVC service lines

Condition All hospitals Hospitals with

>10 cases Hospitals with




>30 cases

n* Reliability

ratio n* Reliability





ratio

CABG 34 0.84 33 0.85 31 0.76 29 0.82 27 0.81 25 0.85

AMI 71 0.76 69 0.79 67 0.79 66 0.80 64 0.79 60 0.81

Pneumonia 71 0.92 70 0.92 70 0.92 70 0.92 70 0.92 69 0.90

CHF 71 0.61 69 0.72 69 0.72 69 0.72 69 0.72 69 0.72

Hip replacement 71 0.83 66 0.85 63 0.87 59 0.87 52 0.89 50 0.90

Knee replacement 71 0.93 71 0.93 70 0.94 68 0.93 67 0.93 67 0.93

Spine surgery 62 0.89 43 0.91 41 0.91 39 0.92 36 0.93 36 0.93

Colectomy 71 0.76 56 0.86 45 0.84 36 0.88 31 0.89 25 0.87 *n represents the number of hospitals that fulfill the minimum case threshold reported in each column


Appendix H: Application of proposed scoring system assuming use of both BCBSM PPO and Medicare Data (example)

Program Year 2016

Hospital A selects pneumonia and joint replacement as its two service lines.

In 2016, Hospital A participates in a site visit (2 pts), attends the MVC meetings (1 pt), and creates a specific QI

action plan for improving efficiency of its pneumonia and joint replacement service lines (5 pts). However,

Hospital A did not provide feedback on risk adjustment methods. In addition, Hospital A performs above the

10th percentile on the mortality and related readmission measures, thereby meeting the quality requirements.

Therefore, Hospital A will earn 8 out of 10 possible points for 2016.

P4P measure structure and scoring system 2016 2017 2018 and 2019

Measure theme

Deep engagement with MVC data

Transition Year Year over year improvement

Absolute achievement

Measure scoring

2 pts - Participate in site

visit with MVC 1 pt - Provide feedback

on risk adjustments

1 pt - Provide feedback on P4P measure

1 pt - Attend MVC meetings

5 pts - Create specific QI action plans for 2017

Baseline: Hospital service line total episode costs for the most recently available 12 month period 2018/2019 scoring:^ 1 pt = baseline mean 2 pts = baseline mean

- 0.05 * SD based target




Baseline: MVC-wide service line total episode costs for the most recently available 12 month period 2018/2019 scoring:^ 50th %tile = 1 pt 60th %tile = 2 pts 70th %tile = 3 pts 80th %tile = 4 pts 90th %tile = 5 pts

No Score

Collaboration goal

+1 pt per service line if ≥ 5% improvement

among hospitals choosing the specific service line

^ = scoring for each service line assumes use of both BCBSM PPO and Medicare claims SD = standard deviation

or


Program Years 2018 and 2019

In 2018, Hospital A again meets the quality requirement by performing above the 10th percentile on the

mortality and related readmission measure.

Hospital A’s 30-day mean episode costs for joint replacement are outlined below:

Service line Mean costs for baseline period

MVC Winsorized Standard

Deviation based target for

baseline period

Mean costs in 2018

performance period

Joint replacement $16,393 $2,100 $16,871

Hospital A’s 2018 cost improvement targets for joint replacement are calculated as follows:

Because Hospital A does not reduce its joint replacement costs any further in 2018, it does not earn any points

for year-over-year improvement. However, because Hospital A’s 2018 episode costs for joint replacement are

well below its cohort’s average episode cost for joint replacement (i.e., Hospital A is a high performer), it is still

eligible for achievement points.

Mean costs for baseline period

Hospital A’s Cohort $19,202

Hospital A $16,871

2018 year over year

improvement targets Points

$16,393 1

$16,393 – (0.05*$2,100) = $16,288 2

$16,393 – (0.10*$2,100) = $16,183 3

$16,393 – (0.15*$2,100) = $16,078 4

$16,393– (0.20*$2,100) = $15,973 5

2018 achievement targets Points

$19,202 (50th percentile) 1






Hospital A will earn 4 points for absolute achievement because its 2018 joint replacement costs are ranked

between the 80th and 90th percentiles. Separately, all hospitals in the state working on joint replacement

reduced average episode costs by more than 5% (data not shown). However, since Hospital A’s 2018 joint

replacement costs were higher than its baseline costs, it would not be eligible to earn an additional bonus

point as part of its collaboration goal.

For 2018, Hospital A will earn a total of 4 points for its joint replacement service line. Its 2018 pneumonia

service line performance would be scored separately using the same methodology.


Appendix I: Method for calculating baseline performance data

The schedule for determining baseline costs must take into account the claims rectification and distribution

schedules from BCBSM and Medicare. The baseline cost will be calculated from the most recently available

twelve-months of claims data and will be two-years prior to the performance year. The purpose of the two-

year window is to provide hospitals with prospective targets and allow more time for the impact of quality

initiatives to be observed in episode costs. The performance costs will be derived from the most recently

available twelve-months of claims data, which will be approximately twelve-months prior to the beginning of

the 2017 and 2018 program years. This twelve-month lag period accounts for the time required for hospital

claims submissions, processing of claims by BCBSM and Medicare, and analytics and reporting by MVC.

Reporting Timeline

P4P Program Year

Cal

en

dar

Ye

ar

2018 2019

20

15

Baseline Period (Services provided 1/1/15 – 12/31/15)

20

16

Baseline Period

(Services provided 1/1/16 – 12/31/16)

20

17

Performance Period (Services provided 1/1/17 – 12/31/17)

20

18

Data Analysis/Claims Adjudication Performance Period

(Services provided 1/1/18 – 12/31/18)

20

19

Payment Applied 7/1/19 Data Analysis/Claims Adjudication

20

20

Payment Applied 7/1/20


Appendix J: P4P Cohort Structure

Figure 1. Cohorts developed for the service lines of: Joint, Pneumonia, CHF, and Colectomy.

The presence of 300 or more beds and teaching status are used to distinguish between Cohorts 1 and 2. A

hospital must meet both criteria to be categorized as Cohort 1. The presence of 100 beds or more and

teaching status are used to differentiate between Cohorts 3 and 4. Unlike distinguishing between Cohorts 1

and 2, a hospital only needs to meet one of these criteria to be classified as Cohort 3 to ensure balance in the

grouping dispersion.

Figure 2. AMI Cohort Designation

The AMI cohort groups are based upon clinical intervention services.

N=33

N=14

N=9


Figure 3: CABG Cohort Designation

The CABG cohort is based upon the structural characteristic of bed size. This decision was made because

nearly half of MVC hospitals to not offer CABG services, and the CMI distribution does not produce distinct

clusters of hospitals.

Figure 4. Spine Cohort Designation

The spine cohort groups are based upon whether a hospital performs complex spine surgery (as determined by

Spine DRG CMI) as well as the structural characteristics of bed size and teaching status.

N=17

N=15

N=15

N=17

N=18

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