Paying for Hospital Performance in the Maryland All-Payer Rate System

Activity Based Financing Conference January 30, 2014

Toronto Conference Center

Rewarding and Penalizing Hospitals On Rates of Hospital Acquired

Complications

Presented by Robert Murray, former Executive Director of the Health Services Cost Review Commission (DRG-based hospital payment system): RMurray@globalhealthpayment.com

Overview • Maryland Hospital Payment System Overview

• Context for Quality based P4P

• Steps in implementing Quality P4P in the underlying hospital payment system

• Focus on Rewards/Penalties for Performance on Rates of Hospital Acquired Complications

• Broader Portfolio of Quality and Patient Experience of Care Measures

• Combining Efficiency and Quality in P4P

Maryland – Not an American Model • Only All-Payer rate setting system in the U.S (public/private

payers); applies to Hospital Inpatient and Outpatient services

• 46 Acute Hospitals including Johns Hopkins Hospital & small rural hospitals; $14 billion in revenue, 700,000 cases

• Consistent incentives: first prospective DRG-based payment system for IP services; per Visit methodology for OP services

• Operated by an Independent Government Commission

• Strengths: per case cost control; improved equity and access for patients; financial stability/predictability for hospitals

• Weaknesses: induces increased volumes and didn’t hold hospitals accountable for total cost and quality of care

Context for P4P • Large variation in quality and outcomes across providers in

both the US and OECD countries

• US impressive cancer survival rates but generally lags behind OECD countries on most quality metrics

• 1999 and 2000 Institute of Medicine reports – called attention to the potential for improved quality

• Progress very slow: first reporting; limited P4P around “process of care” measures; P4P around complications

• P4P: provider payments partially at risk for relative performance (performance related bonuses/penalties)

• U.S. Quality Program: driven by Medicare program; some private activity

Keys for Success of P4P • Measurement: Can be the Achillies’ heel of P4P; are the

indicators measuring what they are meant to measure?

• Potential Impact of the Program: Breadth and Scope of the program very important; if too limited less overall impact and potential negative externalities (teach to the test)

• Consistency of Incentives: In US, Medicare sets most standards, but 2,000 private insurance companies may also have their own P4P incentives

• Unintended Consequences: Must always be mindful of

• Overall Maryland Approach: Categorical Metrics from DRG Data; Broad Scope; Strong & Consistent Incentives; Monitor and Evaluate

Establishment of Benchmarks

Steps/Key Pts. in Developing P4P (Quality)

1) Started with Process Measures (reporting then P4P)

2) Moved quickly to Outcomes (requires risk adjustment and more robust data collection effort)

3) Bonuses/Penalties applied at time of annual rate update

4) Increase $ at Stake and Raise the performance bar for promoting continuous improvement

5) Need cross checks and audits to ensure accurate reporting

6) Development of a Broader Portfolio (process, outcomes, patient experience, patient safety = composite score)

P4 Quality - Metrics

• Process Measures

• “Core measures” endorsed by quality agencies (political)

• In 4 Domains: AMI; PNU; HF and Surgical Infection Prevention

• Easy to collect; hard to verify; all hospitals max out soon

• No risk-adjustment necessary

• Outcome Measures (all risk-adjusted)

• Complication rates

• Readmission Rates

• Mortality Rates

• Broader Portfolio of Process, Outcome, Utilization, Patient Satisfaction, Patient Safety and other measures

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Process Measures – AMI & PNU

1. AMI—1 Aspirin at arrival.

2. AMI—2 Aspirin prescribed at discharge.

3. AMI—3 Angiotensin converting enzyme inhibitors (ACEI) or angiotensin receptor blockers (ARB) for left ventricular systolic dysfunction (LVSD).

4. AMI—4 Adult smoking cessation advice/counseling.

5. AMI—5 Beta blocker prescribed at discharge.

6. AMI—6 Beta blocker at arrival.

7. PN—2 Pneumococcal vaccination. PN—3a Blood cultures performed within 24 hours prior to or 24 hours after hospital arrival for patients who were transferred or admitted to the ICU within 24 hours of hospital arrival.

9. PN—3b Blood culture before first antibiotic—Pneumonia.

10. PN—4 Adult smoking cessation advice/counseling.

11. PN—5b Pneumonia patients receive their first dose of antibiotics within eight hours after arrival in the hospital.

12. PN—7 Influenza vaccination.

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Measures (cont’d.) HF, SIP & Outcome

13. HF—1 Discharge instructions.

14. HF—2 Left ventricular systolic dysfunction (LVSD) assessment.

15. HF—3 ACEI or ARB for LVSD.

16. HF—4 Adult smoking cessation advice/counseling.

17. SIP—1 Prophylactic antibiotic received within one hour prior to surgical incision (by surgery type for eight procedures.)

18. SIP—2 Prophylactic antibiotic selection for surgical patients (by surgery type for eight procedures.)

19. SIP—3 Prophylactic antibiotics discontinued within 24 hours after surgery end time (48 hours for CABG) -by surgery type for eight procedures.

Outcome Measures

20. Central line associated bloodstream infections in the ICU.

21. Ventilator—associated pneumonia in the ICU.

22. Symptomatic indwelling urinary catheter—associated urinary tract infections (UTIs) in the ICU.

Process Measure Observations

• After pay for reporting performance “topped-off” for many measures

• Rewarded for both Improvement and Attainment

• Changed structure of rewards to raise the bar over time

• Limited set of measures – danger of hospital redirecting resources (teaching to the test)

• Recent literature can find little or no impact of Process Measure P4P on improved outcomes

Quickly moved to Outcome Measures • Started with “Hospital Acquired” Complications

• Derived from existing data used for payment system (DRGs assignment) Secondary Diagnoses (complications)

Already coded by hospital for payment purposes

• Requires some indicator of what Complications were “present on admission” (POA)

• Cross checks available

Can audit data vs. medical record

Data used for payment so hospital “caught” if they don’t report

• Also requires Risk-Adjustment

Selected Complications (Most Significant)

Extreme Complications • Extreme CNS Complications • Acute Pulmonary Edema &

Respiratory Failure w Ventilation • Shock • Ventricular Fibrillation, Cardiac

Arrest • Renal Failure with Dialysis • Post-Operative Respiratory

Failure w Tracheostomy

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Gastrointestinal Complications • Major GI Complications w

Transfusion or Significant Bleeding • Major Liver Complications

Cardiovascular-Respiratory Complications

• Stroke & Intracranial Hemorrhage

• Pneumonia, Lung Infection • Aspiration Pneumonia • Pulmonary Embolism • Congestive Heart Failure • Acute Myocardial Infarct • Peripheral Vascular

Complications Except VT • Venous Thrombosis

Infectious Complications • Clostridium Difficile Colitis • Urinary Track Infection • Septicemia & Severe Infection

Selected Complications (Most Significant) Perioperative Complications • Post-Op Wound Infection & Deep Wound

Disruption w Procedure • Reopening of Surgical Site • Post-Op Hemorrhage & Hematoma w

Hemorrhage Control Proc or I&D Proc • Accidental Puncture/Laceration During

Invasive Procedure • Post-Op Foreign Body

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Malfunctions, Reactions Etc. • Iatrogenic Pneumothrax • Mechanical Complication of Device,

Implant & Graft • Inflammation, & Other Complications of

Devices, Implants or Grafts Except Vascular Infection

• Infections due to Central Venous Catheters

Obstetrical Complications • Obstetrical Hemorrhage w Transfusion • Obstetrical Laceration & Other Trauma

w/o Instrumentation • Obstetrical Laceration & Other Trauma w

Instrumentation • Major Puerperal Infection and Other

Major Obstetrical Complications

Other Medical/Surgical Complications • Post-Hemorrhagic & Other Acute

Anemia w Transfusion • Decubitus Ulcer • Encephalopathy

Maryland Hospital Acquired Complication P4P Methodology

• Medicare Program focused very narrowly on “Never Events” (i.e., categories 100% preventable) – but complications aren’t all 100% preventable

• Maryland: Use of 64 Different “Hospital Acquired” Complication Categories (different levels of preventability)

• Methodology developed to measure relative performance on this much broader set of complication categories

• Hospitals measured on their “rates of complications” risk adjusted (based on their “mix of patients” across DRGs and severity subclass)

• Results generate Expected vs. Actual rates of complication by category for each hospital (risk adjusted)

Maryland Hospital Acquired Complication P4P Methodology

• Weighted by average “cost” of each complication category (regression to determine average resource use associated with each complication category)

• Rewards/Penalties Applied: $20 million available = Revenue Neutral Overall

• “Robin-Hood approach” – rob from the poorer performers and give to the better performers

• Expand magnitude of rewards; Improve Performance standards over time

• Consistent incentives applied through the rate system; Very Broad program (64 categories); Sound metrics (derived from DRG data); Continuous monitoring, auditing and evaluation

Hospital Acquired Complications – Statewide Frequency Rate per Cost per

Infection-Related Hospital Acquired Complicaitons HACs 1000 Episode Total Cost

Infections due to Central Venous Catheters 343 0.55 $29,564 $10,140,545

Post-Operative Wound Infection & Deep Wound Disruption with Procedure 80 0.48 $21,129 $1,690,358

Septicemia & Severe Infections 2,198 3.93 $17,143 $37,681,318

Post-Operative Infection & Deep Wound Disruption Without Procedure 709 4.44 $15,791 $11,195,884

Pneumonia & Other Lung Infections 2,523 5.57 $15,167 $38,266,395

Moderate Infectious 431 0.92 $15,162 $6,534,889

Infection, Inflammation & Clotting Complications of Peripheral Catheters 314 0.54 $14,190 $4,455,522

Aspiration Pneumonia 1,522 2.75 $11,148 $16,967,923

Inflammation & Other Complications of Devices, Implants or Grafts 948 1.65 $9,174 $8,697,177

Urinary Tract Infection 4,381 7.97 $8,392 $36,767,521

Cellulitis 757 1.50 $4,604 $3,485,094

Subtotal 14,206 $175,882,625

Top 10 Other Hospital Acquired ComplicationsAcute Pulmonary Edema and Respiratory Failure with Ventilation 1,587 3.01 $24,599 $39,037,853

Other Complications of Medical Care 583 0.99 $19,172 $11,177,134

Shock 2,020 3.57 $18,294 $36,953,874

Decubitus Ulcer 849 1.38 $18,026 $15,303,944

Ventricular Fibrillation/Cardiac Arrest 1,633 2.78 $16,496 $26,938,526

Venous Thrombosis 1,166 2.02 $12,854 $14,988,108

Other Pulmonary Complications 1,451 4.14 $8,873 $12,874,692

Renal Failure without Dialysis 5,601 11.02 $7,526 $42,151,614

Post-Operative Hemorrhage & Hematoma 2,680 12.87 $6,263 $16,783,815

Acute Pulmonary Edema and Respiratory Failure without Ventilation 3,882 7.36 $5,338 $20,722,619

Subtotal 21,452 $236,932,178

All Other PPCs included in Maryland HAC methodology (28) 13,623 $108,511,349

Other PPCs not yet included in Maryland HAC methodology (15) 10,700 $35,285,556

State-Wide Totals FY 2010 59,981 $556,611,708

High volume Complications

Individual Complication Categories

Number of Complications

Cost of each Complication

Total Cost

P4 Quality Scaling

% Revenue Rate of

Hospital Name At-R isk Complications Rank Percentile Adjustment D olla r I mpac tPrince Georges Hospital $178,190,982 4.35% 1 0% -1.50% ($2,672,865)

Montgomery General Hospital 100,257,704 2.60% 2 4% -0.90% ($899,312)

Shady Grove Adventist Hospital 213,531,084 2.38% 3 7% -0.82% ($1,753,090)

Doctors Community Hospital 114,901,908 2.30% 4 9% -0.79% ($911,172)

University of Maryland 560,470,190 2.21% 5 11% -0.76% ($4,270,783)

Sinai Hospital 365,194,980 1.97% 6 13% -0.68% ($2,479,674)

: : : : : : :

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State-wide Avg. 0.00%

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: : : : : : :

: : : : : : :Calvert Memorial Hospital 61,553,830 -1.26% 40 87% 0.823% $506,588

Peninsula Regional 262,717,273 -1.29% 41 89% 0.843% $2,214,707

Carroll Hospital Center 143,028,893 -1.31% 42 91% 0.856% $1,224,327

Mercy Medical Center 205,914,768 -1.43% 43 93% 0.935% $1,925,303

Garrett County 20,456,088 -1.47% 44 96% 0.961% $196,583

Dorchester General 30,163,278 -1.57% 45 98% 1.026% $309,475

Bon Secours Hospital 74,581,886 -2.26% 46 100% 1.477% $1,101,574

“Scaling” $20,109,000 on the Basis of Rates of Hospital Acquired Complications (risk adjusted)

46 hospitals included in analysis

Worst Performing

Best Performing – lowest complication rates

$20.1 million “scaled” from here

To Here

Quality Results • Consistent platform of payments (incentives) & Broad

Scope/Impact - linked into quality performance

• Maryland hospitals reduced their rates of preventable complications by 20% and infections by over 30%

• Cost savings of over $105 million due to elimination of these complications

• Maryland hospitals are reducing their rates of preventable readmissions by 5-10% currently

• Potential Cost savings of between $100-200 million expected from Readmission Initiative

PROVIDER ID PROVIDER NAMEOBSERVED NUMBER

of COMPLICATIONS

PREDICTED NUMBER

of COMPLICATIONS

BASED on STATE

AVERAGE

COMPLICATION

RATE per 1,000

CASES, ADJUSTED

for SEVERITY of

PATIENTS

DIFFERENCE

FROM STATE

AVERAGE

TOTAL COST (+)/

SAVINGS(-) of

EXCESS

COMPLICATIONS

COST/SAVINGS as

% of INPATIENT

REVENUE AT RISK

210038 Maryland General Hospital 398 722 1.34 BETTER -$3,535,709 -3.24%

210028 St. Marys Hospital 235 401 1.43 AVERAGE -$1,522,272 -2.62%

210013 Bon Secours Hospital 304 508 1.46 BETTER -$1,825,650 -2.55%

210008 Mercy Medical Center, Inc. 803 1283 1.53 BETTER -$5,306,405 -2.92%

210054 Southern Maryland Hospital 771 1115 1.68 BETTER -$2,916,078 -2.18%

210039 Calvert Memorial Hospital 306 442 1.69 AVERAGE -$1,368,142 -2.47%

210048 Howard County General Hospital 709 987 1.75 BETTER -$2,475,869 -1.82%

210004 Holy Cross Hospital of Silver Spring 1160 1585 1.78 BETTER -$3,899,581 -1.58%

210058 James Lawrence Kernan Hospital 253 344 1.79 BETTER -$710,985 -1.68%

210043 Baltimore Washington Medical 1314 1758 1.82 BETTER -$4,043,886 -2.16%

210019 Peninsula Regional Medical Center 1866 2473 1.84 BETTER -$6,789,929 -2.92%

210033 Carroll County General Hospital 772 1023 1.84 AVERAGE -$2,521,905 -1.94%

210011 St. Agnes Hospital 1287 1667 1.88 BETTER -$3,981,598 -1.83%

210044 Greater Baltimore Medical Center 1219 1574 1.89 BETTER -$3,931,988 -1.96%

210010 Dorchester General Hospital 181 231 1.91 AVERAGE -$541,330 -2.11%

210024 Union Memorial Hospital 2052 2613 1.91 BETTER -$4,724,454 -1.76%

210040 Northwest Hospital Center, Inc. 790 1006 1.91 BETTER -$2,504,387 -2.09%

210049 Upper Chesapeake Medical Center 849 1067 1.94 BETTER -$1,908,259 -1.76%

210006 Harford Memorial Hospital 329 413 1.94 AVERAGE -$961,856 -1.59%

210037 Memorial Hospital at Easton 659 801 2.01 AVERAGE -$1,600,610 -1.97%

210001 Meritus Medical Center 1057 1269 2.03 BETTER -$2,352,735 -1.73%

210056 Good Samaritan Hospital 1396 1653 2.06 AVERAGE -$2,855,007 -1.56%

210029 Johns Hopkins Bayview Med. Center 1233 1455 2.07 BETTER -$2,113,203 -0.87%

210027 Sacred Heart Hospital 988 1157 2.08 BETTER -$1,089,767 -0.90%

210061 Atlantic General Hospital 303 352 2.1 BETTER -$726,475 -1.15%

210022 Suburban Hospital Association,Inc 1162 1350 2.1 BETTER -$1,604,115 -2.09%

210009 Johns Hopkins Hospital 3782 4332 2.13 BETTER -$5,255,133 -0.64%

210023 Anne Arundel General Hospital 1567 1794 2.13 BETTER -$1,657,915 -0.72%

210045 McCready Foundation, Inc. 28 32 2.14 NA -$45,890 -0.85%

210005 Frederick Memorial Hospital 1248 1397 2.18 AVERAGE -$1,969,832 -1.27%

210017 Garrett County Memorial Hospital 147 159 2.26 BETTER -$106,658 -0.55%

210015 Franklin Square Hospital 1848 1960 2.3 AVERAGE -$1,793,184 -0.70%

210034 Harbor Hospital Center 841 857 2.39 AVERAGE -$146,534 -0.12%

210012 Sinai Hospital 2680 2685 2.43 BETTER -$539,716 -0.16%

210007 St. Josephs Hospital 2391 2364 2.47 WORSE -$1,863,911 -0.83%

210030 Chester River Hospital Center 237 231 2.5 AVERAGE -$141,996 -0.52%

210016 Washington Adventist Hospital 1680 1629 2.51 WORSE $507,085 0.28%

210051 Doctors Community Hospital 956 920 2.53 WORSE $1,327,591 1.27%

210055 Laurel Regional Hospital 441 417 2.57 AVERAGE $492,416 0.90%

210035 Civista Medical Center 557 526 2.58 WORSE $383,608 0.58%

210002 Univ. of Maryland Medical System 4019 3668 2.67 WORSE $7,696,350 1.21%

210032 Union Hospital of Cecil County 586 532 2.68 AVERAGE $511,638 0.88%

210018 Montgomery General Hospital 757 686 2.69 WORSE $741,128 0.83%

210057 Shady Grove Adventist Hospital 1553 1402 2.7 WORSE $974,636 0.51%

210025 The Memorial Hospital 252 200 3.06 WORSE $517,200 1.97%

210003 Prince Georges Hospital 1255 749 4.08 WORSE $6,766,528 5.00%

NOTES:

COLOR CODES:

Green=Better than State Average

Red=Worse than State Average

Yellow=Same as State Average

White=Rate is not calculated due to small numbers

COMPLICATIONS: Measured by Potentially Preventable Complication Software developed by 3M Health Information Systems and defined as complications that are unlikely to be a

consequence of the natural progression of an underlying illness. PPC are not present when the patient is first admitted and, thus, are associated with the care during the hospitalization.

DIFFERENCE FROM THE STATE AVERAGE: Hospitals’ rates are "risk-adjusted." That is, they take into account how sick patients were before they were admitted to the hospital. Hospitals are

shown to be "Better" or "Worse Than State Average" only if we can be 95% certain that the difference between the hospital’s rates and the State rate is not due to chance. All others are

shown in the "Average" category or as "NA". NA hospitals have very few cases to reliably tell how well the hospital is performing compared to the state average.

TOTAL COST/SAVINGS: If hospital's observed number of complications is smaller than the predicted number, this hospital would have savings compared to the state average rate. Each PPC

has different costs based on the estimated marginal costs, therefore some hospitals may have savings despite having rates worse than the state average or vice versa.

TABLE 2: OVERALL COMPLICATION RATES by HOSPITAL, FY2010

REPORTING PERIOD: 07/01/2009-06/30/2010

For more technical information please click here.

For more technical information please click here.

Quality Rankings Posted Publicly

Longer Term Strategy: Balanced Portfolio

• Combine measures to create broader measure of Quality

• Example of Composite – Process Measures

– Outcomes (Complication, Readmissions, Mortality)

– Patient Satisfaction (surveys)

– Patient Safety Measures (AHRQ)

– Utilization Measures (ER visits, Amb. Care Sensitive Conditions, other

– Structural Measures (Pharmacy reconciliation System)

– Other

• Combine into a composite score (requires consensus on weighting and method

• Dramatically increase magnitude of $ at Risk

Maryland P4P Strategy • So it is the broader payment mechanism that has been the

“change agent” to promote better system performance

• Payment System allows for application of consistent incentives across all hospitals and all payers

• Extensive data infrastructure and experience with DRG related data now used for quality assessment

• Categorical approach (like use of DRG categories) creates a powerful communication tool for hospitals

• Adopted a broad program and applied significant rewards and penalties to provide strong incentives for positive change

• Along with robust monitoring/evaluation mechanisms

The Key is Providing the Right Broad-based Incentives to Influence Medical Practice

Thanks