Quality Based Impacts to Medicare Inpatient Payments

Quality Based Impacts to Medicare Inpatient Payments Brian Herdman Operations Manager, CBIZ KA Consulting Services, LLC July 30, 2015 Overview How did we get here? Summary of IPPS Quality Programs Hospital Acquired Conditions Readmissions Sociodemographic status 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 2 1

History of Quality Measures Inpatient measures Many measures developed by Agency for Healthcare Research and Quality (AHRQ) starting in the 1990s. Prevention Quality Indicators Inpatient Quality Indicators Patient Safety Indicators Pediatric Quality Indicators Reported by government agency but not integrated with CMS 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 3 History of Quality Measures Inpatient measures (con t) Quality Initiative launched by CMS in November 2001 as a voluntary program to empower consumers with quality of care information and to encourage providers and clinicians to improve the quality of health care. This led to the Hospital Compare website. Hospital Inpatient Quality Reporting (IQR) Program Deficit Reduction Act of 2005 Imposed a penalty for not reporting quality data lose 2% of market basket update each year 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 4 2

Affordable Care Act Quality Measures Hospital-Acquired Conditions Penalty Readmission Reduction Program Hospital 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 5 National Quality Strategy (2011) Source: 2015 National Impact Assessment of CMS Quality Measures Report 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 6 3

January 2015 Comments on Paying for Quality HHS Secretary Sylvia Mathews Burwell Public goals 30% of payments fee-for-service Medicare via alternative payment models by end of 2016 50% by end of 2018 85% of payments tied to quality or value measures by end of 2016 90% by end of 2018 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 7 Source: http://www.cms.gov/newsroom/mediareleasedatabase/fact-sheets/2015-fact-sheets-items/2015-01-26-3.html 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 8 4

End of 2014: 20% of payments through alternative payment models (Categories 3-4). 80% of payments in programs linked to quality (Categories 2-4). Source: http://www.cms.gov/newsroom/mediareleasedatabase/fact-sheets/2015-fact-sheets-items/2015-01-26-3.html 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 9 Source of Performance Data Medicare claims are a significant source of data used in benchmarking CMS often links claims data from other sources (e.g. physician office) Introduces additional context to consider when auditing HIM activity 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 10 5

Quality Program Hospital-Acquired Conditions Impact of Inpatient Quality Individual Hospital Impact Programs Hospital Readmission Reduction 1% penalty for all IPPS payments for worst performing quartile 0-3% penalty (most under 1%) 1.5% penalty to approx. 1.5% gain (most between - 0.75% and +0.75%) CMS Impact (FFY 2015 factors, FFY 2013 reimbursement) $73,000,000 direct savings, plus indirect $556,000,000 direct savings, plus indirect Indirect savings only According to CMS Between 7,000 10,000 lives saved via inpatient heart failure process measures Between 4,000 7,000 infections were averted via inpatient surgical process measures 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 11 Hospital-Acquired Conditions 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 12 6

Hospital-Acquired Conditions HACs new penalty in FFY 2015 Composite score from three sources of infection tracking Composite Medicare safety indicators Two types of CDC hospital-acquired infection measures (Medicare and non-medicare) 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 13 Hospital-Acquired Conditions 1% reduction in payment for hospitals in the top quartile. This is an all-or-nothing penalty. 99 percent of the amount of payment that would otherwise apply. Reduction applies to add-on payments such as outliers, DSH, uncompensated care, and IME 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 14 7

Hospital-Acquired Conditions Two domains Domain 1 AHRQ Patient Safety Indicators (PSI): 35% Domain 2 CDC National Healthcare Safety Network (NHSN) measures: 65% If volume minimums met, 1 through 10 score based on percentile of performance. 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 15 Hospital-Acquired Conditions Domain 1 AHRQ Patient Safety Indicators (PSI) PSI-90 composite measure Claim extracted measure Present on admission indicators N/U 11 components Examples: pressure ulcer rate, post-op hip fracture, postop sepsis, accidental puncture/laceration FFY 2015 period: July 2011 June 2013 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 16 8

Hospital-Acquired Conditions Domain 2 CDC National Healthcare Safety Network (NHSN) measures Standardized Infection Ratio (SIR) for each Healthcare associated infection (HAI) Measure counts if SIR predicts at least one HAI event. Chart abstracted measures FFY 2015 period: CY 2012 & 2013 Sample includes Medicare and non-medicare 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 17 Hospital-Acquired Conditions Domain 2 Measures FFY 2015 Central line associated blood stream infection Catheter associated urinary tract infection 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 18 9

Hospital-Acquired Conditions Domain 2 Measures FFY 2016 FFY 2015 measures, and Colon surgery surgical site infection Abdominal hysterectomy surgical site infection FFY 2017 FFY 2016 measures, and MRSA infection rate C. Diff infection rate 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 19 Hospital-Acquired Conditions For CDC hospital-acquired infections, sample size matters Score based on performance relative to predicted number of infections (risk adjusted) For 12 month period, if only 10 infections projected, impact of a few infections: 0 infections: 100 th percentile (higher is better) 4 infections: ~60 th percentile 10 infections: ~39 th percentile 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 20 10

Hospital-Acquired Conditions Final scores published annually with IPPS regulations in Table 17 New Jersey rate of HAC penalty exceeds nation 36% of NJ providers qualify for HAC penalty 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 21 Hospital Readmission Reduction Program 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 22 11

Hospital Readmission Reduction Program Providers with high numbers of readmissions in targeted areas will have reduced reimbursement Max of 1% in FFY 2013, 2% in FFY 2014 and 3% in FFY 2015 All Cause, though risk adjusted Based on three-year rolling averages 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 23 Hospital Readmission Reduction Program Targeted areas for FFY 2015 Heart attack (AMI) Heart failure (HF) Pneumonia (PN) Total hip/knee arthroplasty (HK) (new) Chronic obstructive pulmonary disease (COPD) (new) 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 24 12

Hospital Readmission Reduction Program For FFY 2017, new measure: Coronary Artery Bypass Graft (CABG) Annual cost of readmissions: $151 million Isolated CABG procedures only. Patients with other cardiac procedures in same encounter are excluded. Unlike other measures, CABG readmission methodology includes cases transferred to acute care hospital after procedure. Presumption is that provider who is transferring the case will be encouraged by this measure to work closely with the institutions they transfer patients to, to provide optimal continuity of care for their patients 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 25 Hospital Readmission Reduction Program Excess readmission ratio = Predicted Readmission Rate Expected Readmission Rate Excess readmission ratio greater than one means too many readmissions per CMS metrics Large excess readmission ratio does not mean huge penalty. Penalty is proportional to excess readmissions * volume 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 26 13

Hospital Readmission Reduction Program CMS applies the excess readmission ratio to reimbursement for given conditions to identify excess reimbursement Excess reimbursement i = (Excess readmission ratio i - 1) * Reimbursement i or zero if excess readmission ratio is below 1 Excess reimbursement / Total reimbursement = Percentage of excess reimbursement 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 27 Effect of Hospital Mix on Penalty Readmission Target Excess Readmission Ratio Hospital A IPPS Operating Payments Hospital A Excessive Payments Hospital B IPPS Operating Payments Hospital B Excessive Payments AMI 1.08 $6,000,000 $480,000 $80,000 $6,400 HF 0.99 $6,500,000 $0 $800,000 $0 PN 1.12 $3,500,000 $420,000 $600,000 $72,000 Others $135,000,000 $18,000,000 Total $151,000,000 $900,000 $19,480,000 $78,400 Excess Pay as % Total 0.596% 0.402% Although both hospitals have the same excess readmission ratios, the mix of services ultimately determines the percentage of excess payments (and therefore the readmission penalty). 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 28 14

Hospital Readmission Reduction Program Planned Readmission Algorithm Identifies procedures that are always considered planned (and therefore not an unplanned readmission) Identified primary discharge diagnoses that are always planned Procedures considered planned unless accompanied by an acute (or unplanned) primary diagnosis For example, ongoing treatments such as maintenance chemotherapy for cancer or cardiac device placement for cardiovascular disease patients are excluded from the calculation Clinical Classification Software (CCS) used 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 29 Hospital Readmission Reduction Program Change to v3.0 from v2.1 did not significantly change readmission rates; however, introduction of v2.1 reduced the readmission rates by ~1% for AMI, HF, & PN in FFY 2014 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 30 15

Percent Distribution 50% 40% 30% 20% 10% Distribution of Readmission Reduction Penalties (NJ Providers) Percent Distribution 60% 50% 40% 30% 20% 10% 0% 0.0% Distribution of Readmission Reduction Penalties (All US Providers) 0% 0.0% -0.4% -0.8% -1.2% -1.6% -0.4% -2.0% -0.8% -2.4% -1.2% -2.8% -1.6% -2.0% -2.4% FFY 2013 FFY 2014 FFY 2015-2.8% FFY 2013 FFY 2014 FFY 2015 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 31 Hospital Readmission Reduction Program Reimbursement Impact Factors for Readmission Reduction Program in Table 15 of IPPS Final Rule Penalty is proportional to volume in risk areas Even though cap remains 3%, each additional readmission condition increases penalty for most providers Medicare HMOs are taking action to deny payment for readmissions Looks like QIO program, but applies different standards 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 32 16

Hospital Readmission Reduction Program Conditions associated with readmissions (high risk coefficients) AMI, HF, PN, COPD ESRD / Renal problems COPD Metastatic Cancer Blood disorders TKA/THA History of joint procedures Obesity 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 33 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 34 17

CMS goal: Pay for value Incentivize providers to meet quality standards by tying reimbursement to performance metrics Achieve quality scores OR Improve score quality Performance Period ( Current period) Baseline Period (Two years prior to Performance) 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 35 Reimbursement impact Revenue neutral program for CMS All hospitals will see a reduction in the operating payment, then add back based on performance 1.5% for FFY 2015 1.75% in FFY 2016 2% in FFY 2017 and beyond. CMS has no plans to increase financial impact. 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 36 18

FFY 2013 FFY 2014 FFY 2015 FFY 2016 Clinical Process of Care 70% 45% 20% 10% Patient Experience of Care 30% 30% 30% 25% Outcomes 25% 30% 40% Efficiency 20% 25% CMS believes that domains need not be given equal weight, and that over time, scoring methodologies should be weighted more towards outcomes, patient experience of care, and functional status measures (for example, measures assessing physical and mental capacity, capability, well-being and improvement). 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 37 In FFY 2017 domains will change in order to align with the National Quality Strategy. No significant change to components in measure. National Quality Strategy Safety Patient and Caregiver experience and outcomes Care coordination Clinical Care Population Health Efficiency and Cost Reduction Current VBP Outcomes Patient Experience of Care / Outcomes Efficiency Clinical Process of Care Outcomes Efficiency 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 38 19

Realignment of Measures Safety Clinical Care Outcomes Clinical Care Processes Efficiency and cost reduction Patient experience FFY 2017 Measures 20%CAUTI, CLABSI, C. difficile, MRSA, PSI-90, SSI (All were in Outcomes Measure) 25%Mortality (AMI, HF, PN) 5%AMI-7a, IMM-2, PC-01 25%MSPB 25%HCAHPS 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 39 Clinical process of care Clinical measures historically reported through the IQR program National standard is near 100% compliance for many measures Weight of this component is decreasing, very little separation in scores across providers 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 40 20

Patient Experience of care 8 dimensions in the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS). For example, Communications with Nurses, Doctors Responsiveness of staff Communication about medicines Cleanliness & quietness Only Top-box responses count 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 41 Outcomes Measures FFY 2014: Three 30-Day mortality measurements: AMI, HF & PN FFY 2015: Add AHRQ Patient Safety Indicators (PSI) composite and CDC Central Line Associated Blood Stream Infections (CLABSI) FFY 2016: Add CDC catheter associated urinary tract infections (CAUTI) and Surgical Site Infection (SSI) for Colon and Abdominal Hysterectomy 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 42 21

Outcomes Measures Mortality measure scoring similar to readmissions Patient safety indicators use same criteria as HAC Penalty Scoring for infections based on Standardized Infection Ratios used in HAC Penalty Usually different time periods used in scoring 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 43 Efficiency Domain Only one measure: Medicare Spending per Beneficiary Comparison of the Medicare spending related to inpatient encounters 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 44 22

Medicare Spending per Beneficiary Three time periods: Three days prior to admission, the inpatient encounter, and 30 days after discharge Standardized payment that removes IME, DSH, and any wage related factors Includes all spending: physicians, hospital readmissions, DME, and most importantly, post-acute care providers 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 45 Medicare Spending per Beneficiary Spending per episode is risk adjusted across 95 risk factors Expected spending for an average episode based on nationwide data for each DRG Expected spending then adjusted +/- for each risk factor 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 46 23

Medicare Spending per Beneficiary Comparative Benchmarks New Jersey U.S. Average Spending per Episode $21,388 $20,025 MSPB Amount (Avg. Risk-Adjusted Spending) $21,368 $19,679 U.S. National Median MSPB Amount $20,017 Average MSPB Measure 1.07 0.98 Note: Medicare Spending refers to funds spent by Medicare to treat patients having an index admission in a hospital setting. This does NOT refer to provider s cost to treat the patient. 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 47 Spending by segment and provider type MSPB 2014 Data New Jersey Average Spending per Episode Percent of Spending per Episode Nation Average Spending per Episode Percent of Spending per Episode 3 Days Prior to Admission $599 2.8% $681 3.4% Inpatient Admission $10,416 48.7% $10,653 53.2% Inpatient Hospital $8,598 40.2% $9,111 45.5% Carrier (Professionals) $1,797 8.4% $1,522 7.6% Others $21 0.1% $20 0.1% 30 Days Post Discharge $10,352 48.4% $8,691 43.4% Home Health Agency $642 3.0% $781 3.9% Hospice $86 0.4% $120 0.6% Inpatient Hospital* $2,759 12.9% $2,663 13.3% Outpatient $663 3.1% $701 3.5% Skilled Nursing Facility $4,620 21.6% $3,244 16.2% DME $86 0.4% $100 0.5% Carrier (Professionals) $1,476 6.9% $1,081 5.4% Total $21,388 $20,025 *Includes LTACH, IRF, IPF CBIZ KA Consulting Services, LLC for NJ HFMA 48 24

Number of Providers (All US) 500 450 400 350 300 250 200 150 100 50 0 Distribution of VBP Net Impacts (FFY 2014) 20 18 16 14 12 10 8 6 4 2 0 Number of Providers (NJ Only) All US NJ Only 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 49 VBP factors published in Table 16 of IPPS Final Rule Other VBP Programs in planning or implementation phases for nearly all Medicare delivery settings Of note, Physician Value-Based Modifier will soon be in effect 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 50 25

New Developments in Quality Based Reimbursement 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 51 Socioeconomic Status Many comments to CMS about the lack of socioeconomic status (SES) [or sociodemographic status (SDS)] CMS has continued to push back against comments that SES makes a significant difference risk scoring 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 52 26

CMS comments on socioeconomic factors (2013) Our analyses also show that adding socioeconomic status to the risk-adjustment has a negligible impact on hospitals riskstandardized [readmission] rates. The riskadjustment for clinical factors likely captures much of the variation due to socioeconomic status, therefore leading to more modest impact of socioeconomic status on hospitals results than stakeholders expect 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 53 2014 IPPS Final Rule, VBP comments We routinely monitor the impact of socioeconomic status on hospitals results and have consistently found that hospitals that care for large proportions of patients of low socioeconomic status are capable of performing well on our measures - CMS 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 54 27

2013 Medicare Hospital Quality Chartbook 2011 Data Hospital wide Risk-standardized Readmission Rate High proportion of Medicaid (>= 28%) (solid line) Low proportion of Medicaid (<= 5%) (dashed line) 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 55 Socioeconomic Status CMS comments on SES adjustment We continue to believe that the same care protocols and processes that are successful in caring for non-low-ses patient populations may also be successful in caring for low-ses patient populations. We continue to have concerns about holding hospitals to different standards for the outcomes of their patients of low SES we do not want to mask potential disparities or minimize incentives to improve the outcomes of disadvantaged populations. 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 56 28

Socioeconomic Status CMS is committed to working with NQF and other stakeholder communities to continuously refine our measures and to address the concerns associated with SES and risk adjustment. 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 57 Socioeconomic Status National Quality Forum (NQF) Technical Report: Risk Adjustment for Socioeconomic Status or Other Sociodemographic Factors Released August 15, 2014 Important because NQF initiatives drive the data collection used by CMS for quality reporting 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 58 29

Socioeconomic Status NQF sees measures used for accountability programs and pay-forperformance and responds: Getting the measures right is important given that they are being used to determine which providers to include in networks, how to determine financial rewards or penalties, where to go for healthcare services, and where to focus improvement efforts 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 59 Socioeconomic Status Some of the recommendations in the report SES factors should be included in risk adjustment unless conceptual reason or empirical evidence to indicate such adjustment is inappropriate. Transition period should include periods of reporting both SES adjusted and unadjusted scores Consensus Standards Approval Committee recommended, and the NQF Board of Directors approved, a trial period that lifts restrictions against SES adjustments Created a Disparities Committee 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 60 30

Socioeconomic Status From the NQF Report, traits of a sociodemographically challenged patient: Poverty Low income and/or no liquid assets Low levels of formal education, literacy, or health literacy Limited English proficiency Minimal or no social support not married, living alone, no help available for essential health-related tasks Poor living conditions homeless, no heat or air conditioning in home or apartment, unsanitary home environment, high risk of crime No community resources social support programs, public transportation, retail outlets 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 61 Socioeconomic Status NQF has concerns that are similar to CMS if performance measurement fails to recognize sociodemographic complexity, then it may create a disincentive for healthcare providers and health plans to serve disadvantaged patients, decreasing access to healthcare if performance measurement adjusts for sociodemographic factors, then it may create a disincentive for healthcare providers and plans to improve care to disadvantaged patients. 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 62 31

Socioeconomic Status Where will SES data come from? Many unanswered questions. Patient specific? Dual eligibility varies with Medicaid Expansion Population based? Mortality and cancer incidence found to correlate better to Census Tracts than Zip Codes Employment Status? Stay-at-home parent or unemployed job seeker? 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 63 Socioeconomic Status Where will SES data come from? Race and Ethnicity Race and ethnicity are not and should not be used as proxies for SES Education / Literacy / Language How to measure Health Literacy? Patient Living Environment Marital Status Community/Family Support 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 64 32

Socioeconomic Status Report on All-Cause Admissions and Readmissions Measures, April 2015 NQF participants ranked adjustment for sociodemographic status (SDS) as the highest priority issue for readmission measures. All-Cause Admissions and Readmissions Standing Committee will re-evaluate for consideration of SDS adjustment 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 65 Brian Herdman Questions? bherdman@cbiz.com (609) 918 0990 x131 07/30/2015 CBIZ KA Consulting Services, LLC for NJ HFMA 66 33