Overview of Maryland’s
Quality Programs and
Performance Based Payment
Methodologies
Alyson Schuster, Associate Director, Health Services Cost
Review Commission
Traci La Valle, Vice President, Maryland Hospital Association
August 21, 2015
Presentation Overview
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Introduction
Current Programs and Year 1 Progress
HSCRC Current Priorities/Future Direction
Maryland Quality Approach Compared to National Medicare
MHA Quality Strategy and Rate Year 2018 Priorities
ICD-10 Transition and Grouper Versions
1
Maryland Hospitals are Exempt from
CMS Quality Programs
• All-payer demonstration agreement provides exemptions from CMS
Hospital Acquired Conditions policy and CMS readmissions
policies provided that Maryland meets annual performance targets.
• Exemption from CMS Value Based Purchasing (VBP) program
requires annual exemption request and performance evaluation.
• Failure to meet quality tests does not result in loss of waiver, but
may lead to loss of exemption from national quality programs.
2
Introduction
• Maryland’s hospital quality initiatives are part of overall efforts in
the State to achieve the three-part aim of better care for individuals,
better health for populations, and reduced costs for all patients.
• Since 2008, Maryland has steadily expanded the magnitude and
scope of its quality payment reform initiatives to ensure they remain
consistent in design and intent with Medicare’s quality programs.
• In addition, the HSCRC has implemented several payment strategies
designed to reduce utilization and readmissions, and improve the
efficiency and effectiveness of hospital care in the State.
• The HSCRC performance-based payment methodologies,
magnitudes “at risk”, and global payment arrangements are
important policy tools for to promote hospital quality improvement.
3
New Waiver Model
• The new waiver contract requires that the breadth and
impact of Maryland’s quality programs must meet or exceed
Medicare’s quality programs in terms of measures and
aggregate revenue at-risk.
• The new waiver contract also sets specific targets for
complications, readmissions, and overall cost-savings:
– 30% reduction in hospital-acquired conditions across 65 PPCs
– Reduction in Medicare readmissions rate to at or below national
rates
– $330M in Medicare savings under the national Medicare trend
4
Maryland Quality-Based Payment Programs
QBR
MHAC
(Quality Based Reimbursement)
(Maryland Hospital-Acquired
Conditions)
• Clinical Process of
Care Measures
• Patient Experience of
Care (HCAHPS)
• Mortality, Outcomes
Additional PerformanceBased Payment Adjustments
• 65 Potentially
Preventable
Complications
Readmission
Shared Savings
Readmissions
Reduction
Incentive
Program
30-day, all-cause, all
hospital readmissions
GBR Efficiency
Adjustments
5
Quality Programs for FY 2017 Rates
• QBR (2% penalty, 1% reward)
– Changes in domain weighting, addition of more infection measures,
and emphasis on HCAHPs
– Relative scaling eliminated; predictable payment adjustments linked to
score
• MHAC (3% penalty, 1% reward)
– Updated thresholds and benchmarks; CY2015 performance compared
to FY2014 base period
– 7% minimum statewide improvement target
• Readmissions (2% penalty, 1% reward)
– Added scaled penalties of up to 2% and rewards of up to 1%
– 9.3% minimum reduction comparing CY2013 to CY2015
6
Potentially Avoidable Utilization (PAU)
Definition: “Hospital care that is unplanned and can
be prevented through improved care coordination,
effective primary care and improved population health.”
Readmissions/
Revisits
Components of PAU
Potentially
Avoidable
Admissions
Hospital
Acquired
Conditions
PAU
HSCRC Calculates Percent of Revenue Attributable to PAU
7
Year 1 Progress
8
Monthly Risk-Adjusted PPC Rates
2.00
All-Payer
1.80
New Waiver
Start Date
1.60
Medicare FFS
Linear (All-Payer)
1.40
1.20
1.00
0.80
0.60
Risk Adjusted PPC
Rate
Dec. 13 YTD
Dec. 14 YTD
Percent Change
All-Payer
Medicare
1.25
0.93
-25.97%
1.44
1.02
-29.07%
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
0.40
Note: Based on final data for January 2013 - December 2014.
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Monthly Risk-Adjusted Readmission Rates
14.50%
All-Payer
14.00%
Medicare FFS
13.50%
Linear (All-Payer)
13.00%
12.50%
12.00%
11.50%
11.00%
Risk Adjusted
Readmission Rate
Dec. 13 YTD
Dec. 14 YTD
Percent Change
All-Payer
Medicare
12.52%
12.00%
-4.16%
13.25%
12.95%
-2.25%
New Waiver
Start Date
10.50%
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
10.00%
Note: Based on final data for January 2013 - December 2014, and preliminary data through January 2015.
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HSCRC Current Priorities
• Readmissions: Modify payment methodology to measure both
improvement and attainment.
– Socio-demographic factors, Out-of-State Readmissions
• MHAC: Update benchmarks, thresholds, and normative values
based on FY2015 base period.
– 3M Clinical Criteria Subgroup, Coding audits, ICD-10
• QBR: QBR Subgroup meeting to review FY18 measures and
domain weighting.
– PSI-90 may be suspended due to ICD-10, efficiency measure, patient and
caregiver-centered experience of care/care coordination measures
• PAU: Consider additional measures for PAU methodology
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Future Direction:
Patient Centered Outcomes
• Measures specific to certain patient population
– Cancer, Orthopedic Surgery, Colonoscopy, Deliveries etc.
• Composite measures with different domains (e.g., STAR Rating)
– Episode cost, quality outcomes, satisfaction, efficiency
• Population based
– Population health, provider alignment, cost per capita
– Electronic Medical Records- clinical outcomes (Diabetes, hypertension
control, etc.)
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Maryland P4P Risk Compared to the Nation
•
All-payer demonstration contract language
The state must ensure that the aggregate percentage of regulated revenue at risk for quality programs…is
equal to or greater than the aggregate…at risk under national Medicare quality programs.
•
Compares the Maryland all-payer percent of inpatient revenue to the national
Medicare inpatient revenue
•
Includes readmissions reduction policy and readmissions shared savings;
complications; QBR/VBP; and for Maryland, PAU in the demographic adjustment
•
Federal regulators interpret this language to require 3 separate ways of evaluating
amount at risk
– Percent at risk for all programs, including readmissions, complications, and QBR/VBP is
equivalent. Currently at 6 percent.
– “Realized risk” or the percent of inpatient revenue actually awarded or penalized is
equivalent to the nation. In this measure, it’s the absolute value of the risk, so a 1 percent
reward and a 1 percent penalty add up to 2 percent. Currently, Maryland is estimated to
be 0.23 percent above nation.
– Cumulative percent at risk beginning with FY 2014. Currently Maryland risk is
2.72 percent above national
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Maryland Quality Program
Performance Expectation
National Quality Program
Performance Expectation
Penalties
10
9
8
7
6
5
4
3
2
1
0
Number of hospitals
Number of hospitals
Maryland Quality Approach Compared to National
Lowest
quartile
1
25
50
Performance Scores
75
100
Rewards
Penalties
Lowest quartile
1
25
50
75
100
Performance Scores
•
Maryland sets performance expectations tied to specific, pre-determined payment
consequences. National quality programs do not attempt to define performance targets,
instead they penalize the lowest quartile of hospitals, regardless of score
•
All Maryland programs include penalties and rewards with the possibility that all hospitals
achieving performance expectations can receive payment rewards. In Maryland, quality
programs are designed to improve performance at all hospitals; not explicitly for the
purpose of cost savings
•
Nationally, only the VBP program provides rewards; national HAC and readmissions
programs are penalty-only and count penalties as “cost savings” to the system
•
Maryland performance targets are clear, predictable, and prospective
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MHA Quality-Related Policy Strategy
• Focus on the complications that really make a difference in health
care outcomes, health care costs and people’s lives
• Sharpen focus on Medicare readmissions and continue to measure
all-payer readmissions
• Structure payment policies to support good performance on those
metrics
• Continue to build on progress in reducing complications and
readmissions, where it is appropriate and beneficial to patient
outcomes
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MHA Quality Priorities for FY 2018
(CY 2016 Measurement)
• Readmission payment policies
• Recognize attainment and improvement
• Important to consider other factors in evaluating actual readmission rate
 Consider: payer-mix, presence of a behavioral health or substance abuse diagnosis,
patient’s age and socioeconomic status, and possibly others in addition to variation
by case-mix and severity of illness
 Coordinate with HSCRC socio-demographic sub-group and other work HSCRC
may be doing separately to revise readmissions policy
 Maintain incentive to address health disparities
• Hospitals must be able to monitor status with monthly data
• Complications
• Maryland hospitals have met the 30% MHAC reduction target
• Focus on PPCs with greatest clinical opportunity to improve patient outcomes
and cost savings
• Continue to work with hospitals and 3M on MHAC definitions
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Enhance Readmissions Policy
The goals of the MHA recommendations are to:
• Develop a readmissions policy that provides additional incentives beyond
global budgets to lower the statewide readmission rate to the national rate
• Take into account factors that hospitals can control and recognize other
factors, especially sociodemographic, that are harder to influence
• Ensure hospitals that have achieved a clinically optimal number of
readmissions are not penalized by the program
Validating the measurement of Maryland Medicare readmission rate
compared to the nation is a separate, but related, work effort.
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Enhance Readmissions Policy
• Barriers:
 Data limitations, especially on the social factors that influence
readmissions, such as support at home, health literacy, family income
 If this was easy, it would already have been done
Threshold question: do we think we can improve on existing methodology?
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Enhance Readmissions Policy
Patient Level Risk
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Age
Prior utilization
SNF resident
Economic
Health literacy
Family and
social support
Environmental Risk
• Resources
available in
community
• Proximity to
state border
(some
readmissions
not counted)
Hospital Composite
Risk
• A composite
score may be
a qualitative
risk category
(high,
medium,
low) or an
index of risk
Hospitals with similar composite risks (category or percentile range)
• Similar readmission policy targets
• Evaluate risk-adjusted readmission rates within broad ranges
• Adjust penalties based on composite risk
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MHAC and Readmissions Policy Timeline
July
August
September
October
• Data available through April
• Joint Quality Finance meets August 26
• Share recommendations with Council on Financial Policy on
September 17
• Joint Quality Finance meets October 6
• Share recommendations with CCQI on October 13
• Share recommendations with HSCRC staff
November
• HSCRC staff proposes draft recommendations
December
• Commissioners approve final recommendations
January 1
New performance year begins
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ICD-10 Transition: Timing and Grouper Versions
Payment methodologies relay on APR and PPC software
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•
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APR-DRG, SOI and PPC assignment directly impact HSCRC market shift and MHAC
payment methodologies
APR-DRG, SOI, and Risk of Mortality assignment is used to risk adjust measurement of
readmission rates and mortality rates (within QBR)
CPT assignment also affects PQI identification, which is included in the HSCRC’s
demographic adjustment to Global Budgets
Facts about 3M software versions
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Version 33, available October 2015, only accepts I-10; there is no I-9 version 33 grouper.
Version 33 maps to version 32 in I-9.
Version 33 will include the most updated ICD-10 codes. Version 32 will not be maintained
after October 2015
Version 34 available October 2016, incorporates new logic
There will be new PPC inclusions and exclusions to learn in version 34
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ICD-10 Transition: Timing and Grouper Version Options
FY 2014
Base Year
Version 32
I-9
Version 32 logic
CY 2015
(1Q in I-10)
Performance Year
Version 32 (Jan-Sept)
Version 33 (Oct-Dec)
I-9 (Jan-Sept)
I-10 (Oct-Dec)
FY 2015 (I-9)
Base Year
Version 32
I-9
Version 32 logic
CY 2016 (I-10)
Performance Yr
Version 33
I-10
Version 32/33 logic
*FY 2016
(1Q in I-9)
Likely to modify
Base Year
Version 33 or 34 with
modified base period
*(Oct 2015-Sept 2016)
I-10
CY 2017
Performance Yr
Version 33 or 34, TBD
based on review of data
grouped under each
version
I-10
FY 2017 (I-10)
Base Year
Most current version
I-10
CY 2018
Performance Yr
Most current version
I-10
Version 32/33 logic
Version 32/33 logic
or Version 34 logic
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Speaker Biographies
•
Alyson Schuster, PhD, MPH, MBA is the Associate Director of Performance Measurement
at the Health Services Cost Review Commission. In this role, Alyson oversees hospital
quality-based payment initiatives designed to improve hospital quality and reduce costs. Prior
to joining the HSCRC, she managed a team of analysts responsible for implementing and
evaluating care management interventions at a managed care organization. Alyson has a
doctorate in health services research from Johns Hopkins Bloomberg School of Public Health.
•
Traci La Valle is Vice President, Rate Setting, at the Maryland Hospital Association where
she advocates for Maryland's hospitals, health systems, communities, and patients primarily
before state regulatory bodies. In her role, she works to ensure fair and reasonable hospital
payment policies that provide appropriate incentives to improve quality and reduce avoidable
costs. In her twelve years at MHA, she has held progressively responsible roles covering a
range of issues that affect Maryland hospitals’ finances. Most recently, she worked with
hospital representatives and state regulators to restructure the incentives to reduce hospital
complications and is currently revising policies related to readmission measurement and
related payment incentives. Traci has a Master of Public Health and a Certificate in Health
Finance and Management from Johns Hopkins School of Public Health, and a Bachelor of
Science in Physical Therapy from Temple University.
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Appendix
24
Inpatient Revenue at Risk on Quality
Amount at Risk
Program
HSCRC FY 16
CY 2014 Performance
CMS FFY 16
HSCRC FY 17
CY 2015 Performance
CMS FFY 17
1%
All-payer scaling
1.75%
Medicare scaling (positive
and negative adjustments
possible)
+1% to -2%
Pre-set targets linked to
payment adjustments
2%
+1 to -4%
All-payer pre-set
targets linked to
payment adjustments
1%
Medicare penalty (lowest
quartile of hospitals are
penalized; no credit for
improvement)
+1% to -3% proposed
1%
Readmissions
Reduction Policy
0.5% All-payer reward
potential
3%
Medicare penalty for “excess
readmissions” (negative
adjustments only; no
credit for improvement)
HSCRC policy
proposed +1% to - 2%
to based on pre-set 2year improvement
target
3%
*Readmissions
Shared Savings
-0.33% incremental
increase from prior
year
All-payer
QBR/VBP
Complications
Total
(1)Individual
5.83%
-0.2% incremental risk
5.75%
7.0% (1)
hospital risk / maximum penalty limited to 3.5% of total revenue
6.0%
25
*Readmissions shared savings amounts are permanent adjustments, however, the statewide average amount from the prior year
is added back in the annual payment update calculation. The annual statewide incremental increase is 0.33% of inpatient
revenue.
Maryland Hospitals’ Pay for Performance Risk is
Higher Compared to the Nation
•
For Maryland, penalties affect all inpatient revenue under global budgets
•
For hospitals in the rest of the nation, penalties only affect Medicare inpatient
revenue
Example Maryland Hospital With $200M in Annual Revenue*
Example National Hospital With $200M in Annual Revenue*
$120M in Inpatient Revenue
$120M in Inpatient Revenue
$48M (40% of Inpatient Revenue) from Medicare
$29M (~60% of Medicare inpatient Revenue) from base MS-DRG
*Readmission penalties apply to full Medicare payment
2017
Program
2017
% at Risk
Dollar Value
MHAC
3.00%
$3.6M
Readmissions
2.00%
QBR
Total
Program
% at Risk
Dollar Value
HAC
1.00%
$0.3M
$2.4M
Readmissions*
3.00%
$1.4M
2.00%
$2.4M
VBP
2.00%
$0.6M
7.00%
$8.4M
Total
6.00%
$2.3M
When the dollar value of potential penalties is considered against total annual revenue, the Maryland
hospital in this example would have $8.4 million or 4.2 percent of total revenue at risk versus $2.3
million or 1.2 percent of revenue at risk for the same hospital located elsewhere in the nation
The 3.5 percent of total revenue cap would limit the risk to $7.0 million--still a substantially higher
amount of risk compared to hospitals under national Medicare programs.
*Revenues are hypothetical and roughly based on known proportions of inpatient revenue, Medicare
inpatient revenue and base MS-DRG revenue relative to total hospital revenue
26
Increased Revenue At Risk for Quality
• Under new waiver, aggregate at-risk based on quality must
meet or exceed CMS programs.
Maryland - Potential Inpatient Revenue at Risk absolute values
% Inpatient Revenue
MHAC
FY 2014
2.0%
FY 2015
3.0%
RRIP
QBR
FY2016
FY2017
4.0%
3.0%
0.5%
2.0%
0.50%
0.50%
1.00%
2.0%
Shared Savings
0.41%
0.86%
0.86%*
0.86%*
Global Budget Revenue Potentially
Avoidable Utilization:
MD Aggregate Maximum At Risk
0.50%
3.41%
0.86%
5.22%
0.86%*
7.22%
0.86%*
8.72%
*Estimated numbers based on current policy.
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