Medicare Value-Based Purchasing for Hospitals: A New Era in Payment

Medicare Value-Based Purchasing for Hospitals: A New Era in Payment Daniel J. Hettich March, 2012 I. Introduction: Evolution of Medicare as a Purchaser Cost reimbursement rewards furnishing more services Prospective payment incentives for efficiency Value based purchasing adds incentives for quality 2 1

Concept Set aside a pool from existing Medicare PPS dollars Redistribute the pool among PPS hospitals based on their performance as compared to other hospitals as compared to each hospital s prior performance Create incentives to improve quality Should be budget-neutral in the aggregate 3 II. Predecessor to VBP Program Medicare Hospital Inpatient Quality Reporting Program (a/k/a IQR Program or RHQDAPU) 2.0 percentage point reduction to base PPS payment rate per discharge for failure to report Measures and data listed on Hospital Compare website HHS 2007 report to Congress regarding internal CMS deliberation on value-based purchasing program (would have replaced IQR) 4 2

III. Where We Are Now PPACA Section 3001(a) (becomes 42 U.S.C. 1395ww(o) Requires HHS to establish VBP program beginning FY 2013 and will apply to payments for discharges occurring on or after October 1, 2012 Funded through reductions in base operating DRG per discharge payment reductions 1% in FY2013, 1.25% in FY2014, 1.5% in FY2015, 1.75% in FY2016, and 2% for FY2017 and each subsequent year Estimated pool for FY 2013 = $850 mill. 5 Who Participates in VBP? All subsection (d) hospitals Exempt or excluded hospitals IPPS-excluded hospitals Payment reduction under IQR Cited for health or safety deficiencies during performance period (many questions still unanswered regarding this exclusion criterion) Puerto Rico hospitals Need to have at least 4 quality measures to participate and at least 10 cases per measure + 100 HCAHPS surveys 6 3

The VBP in FY 2013 Five components 1. The Performance Period 2. The Measures 3. The Performance Standards 4. The Score 5. The Payment 7 The Performance Period (FFY 2013) The performance period is July 1, 2011-March 31, 2012. Compared to performance during baseline period of July 1, 2009 through March 31, 2010 8 4

VBP Measures Must be listed on HospitalCompare for at least one year prior to use Started with 45 measures, ended up with 12 process measures + HCAHPS in the Final Rule 9 2013 Hospital VBP Domains and Measures Measure Code AMI-7a AMI-8 Measure Title Percent of Heart Attack Patients Given Fibrinolytic Medication Within 30 Minutes Of Arrival Percent of Heart Attack Patients Given PCI Within 90 Minutes Of Arrival Brief Explanation Blood clots can cause heart attacks. Doctors may give this medicine, or perform a procedure to open the blockage, and in some cases, may do both. The procedures called Percutaneous Coronary Interventions (PCI) are among those that are the most effective for opening blocked blood vessels that cause heart attacks. Doctors may perform PCI, or give medicine to open the blockage, and in some cases, may do both. HF-1 Percent of Heart Failure Patients Given Discharge Instructions The staff at the hospital should provide you with information to help you manage your heart failure symptoms when you are discharged. PN-3b PN-6 SCIP-Inf-1 Percent of Pneumonia Patients Whose Initial Emergency Room Blood Culture Was Performed Prior To The Administration Of The First Hospital Dose Of Antibiotics Initial Antibiotic Selection for CAP in Immunocompetent Patient Prophylactic Antibiotic Received Within One Hour Prior to Surgical Incision A blood culture tells what kind of medicine will work best to treat your pneumonia. Antibiotics are medicines that treat infection, and each one is different. Hospitals should choose the antibiotics that best treat the infection type for each pneumonia patient. Getting an antibiotic within one hour before surgery reduces the risk of wound infections. This measure shows how often hospital staff make sure surgery patients get antibiotics at the right time. 10 5

2013 Hospital VBP Domains and Measures Measure Code Measure Title Brief Explanation SCIP-Inf-2 SCIP-Inf-3 SCIP-Inf-4 SCIP-Card-2 SCIP-VTE-2 SCIP-VTE-2 Prophylactic Antibiotic Selection for Surgical Patients Some antibiotics work better than others to prevent wound infections for certain types of surgery. This measure shows how often hospital staff make sure patients get the right kind of preventive antibiotic medication for their surgery. Taking preventive antibiotics for more than 24 hours after routine surgery Prophylactic Antibiotics is usually not necessary. This measure shows how often hospitals stopped Discontinued Within 24 Hours After giving antibiotics to surgery patients when they were no longer needed to Surgery End Time prevent surgical infection. Cardiac Surgery Patients with Controlled 6AM Postoperative Serum Glucose Surgery Patients on a Beta Blocker Prior to Arrival That Received a Beta Blocker During the Perioperative Period Surgery Patients with Recommended Venous Thromboembolism Prophylaxis Ordered Surgery Patients Who Received Appropriate Venous Thromboembolism Prophylaxis Within 24 Hours Prior to Surgery to 24 Hours After Surgery All heart surgery patients get their blood sugar checked after surgery. Any patient who has high blood sugar after heart surgery has a greater chance of getting an infection. This measure tells how often the blood sugar of heart surgery patients was kept under good control in the days right after their surgery. Many people who have heart problems or are at risk for heart problems take drugs called beta blockers to reduce the risk of future heart problems. This measure shows whether surgery patients who were already taking beta blockers before coming to the hospital were given beta blockers during the time period just before and after their surgery. Certain types of surgery can increase patients risk of having blood clots after surgery. For these types of surgery, this measure tells how often treatment to help prevent blood clots was ordered by the doctor. This measure tells how often patients having certain types of surgery received treatment to prevent blood clots in the period from 24 hours before surgery to 24 hours after surgery. 11 The Score Multiple-Domain Performance Scoring Model Only two active in FY 2013 Points for both achievement and improvement The hospital s achievement based on national measures and The hospital s improvement as against the hospital s own baseline performance The higher of its achievement score or its improvement score during the performance period will be used in calculating a hospital s total performance score 12 6

How Will Hospitals Be Evaluated? Improvement vs. Achievement Source: CMS 13 Performance Standards Threshold = median of hospital performance (50 th percentile) during baseline period Benchmark = mean of top decile of hospital performance during baseline period No minimum performance standard 14 7

Threshold v. Benchmark Source: CMS 15 Scoring Achievement: 10 pts for meeting or exceeding the benchmark 0 pts for performing below threshold 1-9 on a linear scale between the threshold and benchmark Improvement Similar formula to achievement score 0 pts if below hospital s own baseline score; 1-9 pts on a linear scale if above baseline score; 10 pts for meeting national benchmark 16 8

Sample VBP Score for Process Measure Baseline period 0429 Score 7 Performance period Measure: AMI-7a-Fibrinolytic Therapy Achievement Range.6548 Achievement Threshold Score.8163 1 2 3 4 5 6 7 8 9 10 Improvement Range Achievement Range.9191 Benchmark 0 1 2 3 4 5 6 7 8 9 10 Hospital A earns 6 points for achievement Hospital A earns 7 points for improvement Hospital A score = higher of achievement or improvement = 7 points 17 Another example 18 9

The Compression Problem 11 of the 12 clinical measures have very little space between the threshold and the benchmark thresholds >.90 & benchmarks >.99 E.g. SCIP-Inf-2- Threshold =.9766; Benchmark = 1.0 This compression means that very small differences in performance generate large differences in scores 19 Clinical Process of Care Domain Performance Standards based on National Measure Rates Source: CMS 20 10

2013 Clinical Process of Care Measures- Threshold and Benchmarks Measure ID Measure Description Threshold Benchmark AMI-7a Fibrinolytic Therapy Received Within 30 Minutes of Hospital Arrival 0.6548 0.9191 AMI-8a Primary PCI Received Within 90 Minutes of Hospital Arrival 0.9186 1.00 HF-l Discharge Instructions 0.9077 1.00 PN-3b Blood Cultures Performed in the Emergency Department Prior to Initial Antibiotic 0.9643 1.00 Received in Hospital PN-6 Initial Antibiotic Selection for CAP in Immunocompetent Patient 0.9277 0.9958 SCIP-Inf-l Prophylactic Antibiotic Received Within One Hour Prior to Surgical Incision 0.9735 0.9998 SCIP-Inf-2 Prophylactic Antibiotic Selection for Surgical Patients 0.9766 1.00 SCIP-Inf-3 Prophylactic Antibiotics Discontinued Within 24 Hours After Surgery End Time 0.9507 0.9968 SCIP-Inf-4 Cardiac Surgery Patients with Controlled 6AM Postoperative Serum Glucose 0.9428 0.9963 SCIP-VTE-1 Surgery Patients with Recommended Venous Thromboembolism Prophylaxis Ordered 0.95 1.00 SCIP-VTE-2 SCIP- Card-2 Surgery Patients Who Received Appropriate Venous Thromboembolism Prophylaxis Within 24 Hours Prior to Surgery to 24 Hours After Surgery Surgery Patients on a Beta Blocker Prior to Arrival That Received a Beta Blocker During the Perioperative Period 0.9307 0.9985 0.9399 1.00 21 Example of Compression Problem Example Measure Threshold Benchmark SCIP-Inf-2.98 1.0 If a hospital s score drops from 1.0 to.97, points drop from 10 to 0 Problem is intensified for hospitals with fewer cases per measure (min. is 10) 22 11

2013 Clinical Process of Care Measures- 100% Compliance 6 of the 12 measures require 100% compliance to receive the full 10 points No room for error Increases possibility of losing 10 points for missing just one or two cases Compliance with a measure is not always medically indicated or feasible (e.g., if a patient is discharged against doctor s orders). 23 HCAHPS Scores Must report minimum of 100 surveys Eight dimensions are weighted equally Achievement - 0-10 points Improvement - 0-9 points Formulas are similar to process scores Can also achieve up to 20 points for consistency Total = sum larger of achievement or improvement for each measure + consistency score 24 12

HCAHP Floor, Threshold and Benchmark Scores (76 Fed. Reg. 26490, 26519) 25 New York Times Op-Ed, March 15, 2012 13

Range of HCAHPS Scores by Bed Size Source: DataGen 27 Calculating Total Score Will only use measures that apply to the hospital Convert to percentage of total points available For FY 2013, Total Performance Score is weighted 70% clinical process of care 30% HCAHPS 28 14

2013 Hospital VBP Domains and Measures 12 Clinical Process of Care Measures Weighted Value of Each Domain 8 Patient Experience of Care Dimensions Source: CMS 29 The Payment The payment works as an adjustment to base operating DRG per discharge payment Remains unclear how VBP interacts with payments for DSH, IME, outliers Budget neutral Payment Exchange Function CMS looked at several possibilities (linear, cube, logistic) and decided on linear 30 15

Payment Impact CMS s impact analysis shows that: top 95 th percentile hospitals will receive as much as 1.575% in VBP payment 5 th percentile hospitals will receive as little as 0.434% in VBP payment 31 IV. VBP Dry Run Reports CMS conducted a dry run of the Hospital VBP Program to simulate the FY 2013 Program reports Hospital-specific reports can be accessed through a hospital s QualityNet account on February 28, 2012 The Simulated Hospital Report uses a different time period than used to compute Hospital VBP scores for FY 2013: - Baseline Period: April 1, 2008 December 31, 2008 - Performance Period: April 1, 2010 December 31, 2010 The Report does not indicate how your hospital will actually perform in FY 2013 or whether your hospital will be eligible for the 2013 Program, and has no financial implications to hospitals 32 16

Simulated Hospital Report Content Source: CMS 33 Simulated Hospital Report Estimated TPS Summary Source: CMS 34 17

Simulated Hospital Report Estimated Value-Based Incentive Payment Percentage Source: CMS 35 Simulated Hospital Report Source: CMS 36 18

V. Other Matters Publication Notice of estimated incentive payment through QualityNet at least 60 days prior to October 1, 2012 Score released on November 1, 2012 with 30 days for review Actual VBP payment amount not entered into claims processing system until January 2013 Aggregate VBP program info published on HospitalCompare 37 Hospital VBP Program Critical Dates and Milestones You Are Here Source: CMS 38 19

Other Matters (cont.) Appeals Very limited review rights May appeal calculation of hospital s own score and performance assessment Left for future rulemaking New Measures Proposed subregulatory process for adding and retiring measures Rejected (preserves notice-and-comment) Measures may be adopted for IQR and VBP at the same time 39 VI. VBP in FY 2014 and beyond CMS initially finalized a policy to have 4 domains in 2014, 1) clinical process of care domain (20%), 2) HCAHP survey results domain (30%), 3) outcome domain (30%), and 4) efficiency domain (20%) For the outcome domain, CMS initially planned to add three types of outcome measures - 3 30-day mortality measures (AMI, HF, Pneumonia), 2 AHRQ composite measures, 8 HAC measures 40 20

VBP in FY 2014 and beyond As initially proposed, the efficiency domain would have consisted of a single measure: Medicare spending per beneficiary CMS proposed using claims data to measure all Medicare Part A and Part B payments for each beneficiary discharge during an episode. Episode = 3 days prior to an inpatient PPS hospital admission through 30 days post hospital discharge. Base period = May 15, 2010 - Feb. 14, 2011 Performance period = May 15, 2012 - Feb 14, 2013. 41 Changes to VBP in FY 2014 made by CY 2012 OPPS Final Rule CMS revised its finalized policy, however. Effective dates of the HAC, AHRQ, and Medicare spending per beneficiary measures are suspended Rationale: data on these measures will not have been made publicly available on Hospital Compare for at least one year prior to these dates Policy: CMS will publicly post hospital performance on all candidate measures on Hospital Compare for at least one year prior to the time when the performance period for those measures would start, in order to give hospitals an opportunity to become familiar with their performance on a measure before the measure is included in the VBP Program. 42 21

Final 2014 Domains and Measures Per CMS s revisions, 2014 will now have only 3 domains weighted as follows: 1) clinical process of care domain (45%), 2) HCAHP survey results domain (30%), and 3) outcome domain (mortality) (25%) The specific measures included in each domain, along with the threshold and benchmark scores, for 2014 follow. 43 2014 Measures & Scores (76 Fed. Reg. 42170, 42359) 44 22

2014 Measures & Scores (cont.) (76 Fed. Reg. 74122, 74536) 45 2014 Baseline and Performance Periods (76 Fed. Reg. 74122, 74535) 46 23

Hospital VBP Program for CY 2012 Critical Dates and Milestones You Are Here Courtesy of CMS47 VII. Practical Advice Know where your hospital stands on each selected measure for the baseline period and identify which measures have the best rate of return. For example, if a hospital was at the benchmark for a compressed measure in its baseline period, then a slight percentage change in score on that measure for the performance period could cause the hospital to lose 10 points (if it drops below the compressed threshold) On the other hand, it could take a very large percentage improvement to pick up less than 9 points, as an improvement score, on a measure where the hospital was well below the threshold for the benchmark period In that scenario, it may make sense to play defense first, before devoting resources to improvement on the latter measure 48 24

Practical Advice Understand how discharge volume by measure factors into the VBP score Each clinical performance measure has an equal weight. An orthopedic hospital s great performance on clinical process indicators in hundreds of surgical cases could, therefore, be offset by missing performance indicators in a handful of heart failure cases. 49 Questions? 50 25

Thank You Daniel J. Hettich, Washington, D.C., (202) 626-9128, dhettich@kslaw.com 51 26