Part 1. Confusing Terminology. Moving from Volume to Value: Value- based Payment for Hospitals and Physicians HVBP VBPM. An overview of HVBP and VBPM

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1 Moving from Volume to Value: Value- based Payment for Hospitals and Physicians John Nelson, MD, MHM Principal, Nelson Flores Hospital Medicine Consultants Medical Director, Hospitalist PracBce Overlake Hospital, Bellevue, Washington (425) Part 1 An overview of HVBP and VBPM Confusing Terminology Hospital Value- Based Purchasing HVBP Physician Value- Based Payment Modifier VBPM

2 HVBP + VBPM SimilariBes Similar evolubon: Voluntary reporbng Pay for repor%ng Pay/penalize for performance Ongoing increases in $ and metrics Small but growing dollars involved Applies only to Medicare; other payers may follow HVBP + VBPM SimilariBes (cont.) Small players exempted inibally Hospitals w/ too few cases, e.g., cribcal access hospitals ( 25 beds) Physician groups 100 billing under same tax ID (regardless of specialty) All performance data publically reported a- doctor HVBP + VBPM SimilariBes (cont.) As complicated to learn as the enzyme defects for each variant of porphyria. But relevant for a much larger population of patients.

3 HVBP + VBPM: Notable Differences Timeline HVBP Already influencing payment to hospitals VBPM First influences provider reimbursement 2015 Cost of care metrics Included later (FY 2015) From program incepbon Quality data metrics IQR measures (aka core measures) PQRS measures Part 2 Hospital Value- Based Purchasing HVBP HVBP Components FY 2012 AKA CoreMeasures AKA PaBent SaBsfacBon Process of Care Measures (12) Experience of Care Dimensions(8) Source:Advisoryboard Core measures now called Inpatient Quality Reporting (IQR) measures.

4 Hospital s MSPB NaBonal Median MSPB MSPB = Medicare spending per beneficiary; includes Medicare A and B, 3d before and 30d a1er hospitalizabon. Severity adjusted. Baseline: May Dec 2011 Performance: May Dec 2013 HVBP Domains by Year Domain Core Measures (Process of care) PaBent SaBsfacBon (Experience of Care) FY 2013 FY 2014 FY % 45% 20% 30% 30% 30% Outcomes - 25% 30% Efficiency % Total 100% 100% 100% 30 d. all cause mortality for CHF, AMI, and pneumonia pts. Performance on AHRQ s PSI 90 measures CLBSI Year payment is made. Typically based on performa nce 2 yrs. Same prior. weight HVBP Financial Underpinnings 1. Money withheld from all DRG payments to hospital 2. Calculate hospital s Total Performance Score Poorest performers get none of the withheld money back (net loser) Best performers get back more than was withheld (net winner) 3. Budget neutral for CMS $ withheld = $ paid out Payment Year Revenue Withhold* % % % % % * Percent of a hospital s total Medicare payments (all DRGs) CalculaBng a Hospital s Total Performance Score Complicated But based on either: Auainment = scoring above a threshold and then graded on a curve of all hospitals performance OR Improvement = how much the hospital improved over its own baseline

5 A Sample HVBP CalculaBon Process of care score 74 Experience of care score 23 X 70% X 30% Total Performance Score th %tile of all hospitals Withheld $535,562 Earned Back $649,329 Net $113,767 One more thing Hospital Readmissions ReducBon Program The second part of value- based purchasing Fiscal Year Diagnoses Max Penalty 2013 CHF, AMI, Pneumonia 1% 2014 Same as above 2% 2015 Above + COPD, elecbve hip or knee replace PaBents readmiued w/in 30 days for any cause Financial penalty only, no net financial gain for good performance Financial effects start FY 2013 (Oct 2012) based on performance from July 1, 2008 to June 30, % Think HVBP for doctors. But makes learning HVBP look as easy as earning your multiplication tables. Part 3 (Physician) Value- Based Payment Modifier VBPM

6 Think of 2 Programs PQRS VBPM PQRS and VBPM run concurrently for a few years, then PQRS will likely be replaced enbrely by VBPM PQRS Established 2006 but has undergone many changes Based on repor%ng, not performance Clinical process metrics only (e.g., ACE/ARB for LVSD) OpBons: report or don t, choose metrics VBPM Starts 2015 (based on 2013 performance)* Based on performance Cost, quality, and outcome metrics MulBple opbons for parbcipabon *VBPM first influences 2015 MD reimbursement for groups 100 providers billing under same tax ID number (regardless of specialty). Begins in 2017 for all providers. More on PQRS

7 PQRS $ Payment or Penalty by Year 2.0% 1.5% 1.0% 0.5% 0.5% 0.5% Based on repor%ng from 2 yrs. prior 2015* 2016* (1.5%) (2.0%) *PQRS penalbes in Bed to reporbng in respecbvely. Providers required to report only one measure in to avoid penalbes. But 3 measures sbll required to be paid the bonus of 0.5%. AddiBonal Bonus for MOC ParBcipaBon Opportunity to earn an addibonal 0.5% bonus for parbcipabng in an approved (e.g., ABIM) Maintenance of CerBficaBon Program along with PQRS Requirements: 1) SaBsfactorily submit PQRS data as an individual or group AND 2)More frequently than is required to qualify for or maintain board cerbficabon: ParBcipate in a MOC program and Successfully complete a qualified MOC program pracbce assessment More on VBPM

8 Cost of Care Cost a6ributed to the provider w/ the most charges and minimum of 2 E&M services Quality of Care Precise metrics TBD Outcome Measures Generally very outpa%ent focused VBPM Metrics Total per capita cost of care (M care A&B) for pts w/ CHF COPD DM CAD Clinical Care (e.g., PQRS) PaBent experience (pt. sabsfacbon) PaBent safety Care coordinabon Efficiency 30- day post discharge visit All cause readmission Composite of acute prevenbon quality indicators Composite of chronic prevenbon quality indicators Choose Your Method of VBPM ParBcipaBon 1) Don t report data and accept 1% penalty (add to 1.5% PQRS penalty = 2.5%) 2) Report only (avoid 1% penalty, but don t compete for upside) 3) Report and compete for financial upside and risk downside for poor performance Groups of 100 providers billing under same tax ID must make one of the above choices (CMS calls this self nominate ) before October 15, 2013, to avoid penalty. VBPM Financial Underpinnings 1. Budget neutral for CMS $ withheld = $ paid out 2. Providers graded on curve to determine net winners and losers

9 Part 4: Appendix Some editorial comments If you re focused solely on financial ROI, then HVBP and VBPM aren t worth bothering with*. Beuer to ignore them and accept financial penalty since they require significant effort to understand and perform well. BUT 2 reasons every hospital and provider should energebcally pursue them: 1) They might lead to beuer outcomes for our pabents and our economy 2) Provider dollars at stake likely to grow steadily; best to become proficient at this stuff now rather than later *PQRS is not very difficult to comply with, so worth parbcipabng solely for the dollars at stake. HVBP and VBPM are complex and always changing; too complex for every provider to keep up with. I suggest: Pick someone (MD or non- MD) in your pracbce to be responsible for managing all of this for your group. and/or Ask your hospital to make someone (e.g., CMO) available to work with your group in this. As long as someone else is paying auenbon to the regulatory and financial details, the providers can focus on things like how to improve pabent sabsfacbon and ensuring pabents get CHF discharge instrucbons, etc.

10 The complexity of these programs is an addibonal force leading doctors to join larger organizabons, such as becoming employed by their hospital. A final nail in the coffin of small group pracbce? 2012 Hospitalist- related PQRS Measures PQRS# Diagnosis Measure 5 CHF ACE/ARB for LVSD* 6 CAD AnBplatelet Rx at discharge 7 CAD ß- blocker for prior MD* 31 Stroke VTE prophylaxis 32 Stroke Discharged on anbplatelet Rx 33 Stroke AnBcoaculaBon for A. Fib.* 35 Stroke Screening for dysphagia 36 Stroke ConsideraBon of rehab 47 Any pt 65 yo DocumentaBon of advance care plan 72 Any CVC inserbon protocol *Must be reported only via registry