Quality and Finance: The Stars Align
Friday the 13th
August, 2010
Jason Sanders, Budget and Reimbursement, Sisters of Charity Providence
Lori August, Director of Quality, Sisters of Charity Providence
Karen Reeves, VP Quality Compliance and Risk Management, SCHA
Barney Osborne, VP Finance, SCHA
Institute of Medicine and AHRQ
RHQDAPU and HCAHPS
Pay for Reporting
Never Events
Hospital Acquired Conditions
Quality and Finance:MSThe
Stars
Align
DRGs
ObamaCare…
ARRA HITECH Meaningful Use
Value Based Purchasing
Bundling
30 Day Readmissions
Medicaid HACs
American
Recovery and
Reinvestment
Act of 2009
(ARRA)
ARRA 2011 - 2012
• Facility base rate of hospital’s
Medicare/Medicaid percent of
$2,000,000
• $200 per discharge between 1,149
and 23,000
BASED ON: HEALTH REFORM IMPLEMENTATION TIMELINE, THE HENRY J. KAISER FAMILY FOUNDATION
ARRA 2011 - 2012
The criteria for meaningful use will
be staged in three steps over the
course of the next five years
– Stage 1 sets the baseline for
electronic data capture and
information sharing.
– Stage 2 (est. 2013) and Stage 3 (est.
2015) will continue to expand on this
baseline and be developed through
future rule making.
BASED ON: HEALTH REFORM IMPLEMENTATION TIMELINE, THE HENRY J. KAISER FAMILY FOUNDATION
ARRA 2011 - 2012
For Eligible Professionals, there are a
total of 25 meaningful use objectives.
20 of the objectives must be completed
to qualify for an incentive payment. 15
are core objectives that are required,
and the remaining 5 objectives may be
chosen from the list of 10 menu set
objectives.
For Eligible Hospitals, there are a total
of 23 meaningful use objectives. 14 are
core objectives that are required, and
the remaining 5 objectives may be
chosen from the list of 10 menu set
objectives.
https://www.cms.gov/EHRIncentivePrograms/35_Meaningful_Use.asp
ARRA 2011 - 2012
The Recovery Act specifies three
main components of Meaningful Use
in Stage 1:
– The use of a certified EHR in a
meaningful manner (e.g.: ePrescribing);
– The use of certified EHR technology
for electronic exchange of health
information to improve quality of
health care; and
– The use of certified EHR technology
to submit clinical quality and other
measures.
BASED ON: HEALTH REFORM IMPLEMENTATION TIMELINE, THE HENRY J. KAISER FAMILY FOUNDATION
BASED ON: HEALTH REFORM IMPLEMENTATION TIMELINE, THE HENRY J. KAISER FAMILY FOUNDATION
BASED ON: HEALTH REFORM IMPLEMENTATION TIMELINE, THE HENRY J. KAISER FAMILY FOUNDATION
The Patient
Protection and
Affordable
Care Act
(PPAC)
Health Care Reform Act
2013
Senate Committee Apr.
29, 2009, Page 4
Hospitals that meet or
exceed performance
standards would receive
value-based “bonus”
payments. The incentive
payments would apply to
all MS-DRGs under
which a hospital provides
services.
PPAC 2010
• Support comparative effectiveness
research by establishing a non-profit
Patient-Centered Outcomes Research
Institute.
• Reauthorize and amend the Indian
Health Care Improvement Act.
BASED ON: HEALTH REFORM IMPLEMENTATION TIMELINE, THE HENRY J. KAISER FAMILY FOUNDATION
PPAC 2011
• Prohibit federal payments to states for
Medicaid services related to health
care acquired conditions.
• Develop a national quality
improvement strategy that includes
priorities to improve the delivery of
health care services, patient health
outcomes, and population health.
• Prohibit federal payments to states for
Medicaid services related to health
care acquired conditions.
BASED ON: HEALTH REFORM IMPLEMENTATION TIMELINE, THE HENRY J. KAISER FAMILY FOUNDATION
PPAC 2011
• Rewards physicians for participation in
the Physician Quality Reporting
Initiative (PQRI).
BASED ON: HEALTH REFORM IMPLEMENTATION TIMELINE, THE HENRY J. KAISER FAMILY FOUNDATION
PPAC 2012
• Allow providers organized as
accountable care organizations (ACOs)
that voluntarily meet quality
thresholds to share in the cost savings
they achieve for the Medicare program.
• Reduce Medicare payments that would
otherwise be made to hospitals by
specified percentages to account for
excess (preventable) hospital
readmissions.
BASED ON: HEALTH REFORM IMPLEMENTATION TIMELINE, THE HENRY J. KAISER FAMILY FOUNDATION
PPAC 2012
• Reduce annual market basket updates
for home health agencies, skilled
nursing facilities, hospices, and other
Medicare providers based on VBP
program protocol.
• Establish an acute hospital valuebased purchasing program in
Medicare on or after October 1, 2012.
– The baseline data for the initial FFY 2013
calculation in 2013 is April 1, 2010 to March
31, 2011.
– The measurement data for FFY 2013
calculations is April 1, 2011 to March 31,
2012.
BASED ON: HEALTH REFORM IMPLEMENTATION TIMELINE, THE HENRY J. KAISER FAMILY FOUNDATION
PPAC 2012
• Develop plans to implement valuebased purchasing programs for
skilled nursing facilities, home health
agencies, and ambulatory surgical
centers.
• Establish VBP demonstration
programs for CAHs and hospitals
excluded from the VBP program
because of insufficient volumes.
BASED ON: HEALTH REFORM IMPLEMENTATION TIMELINE, THE HENRY J. KAISER FAMILY FOUNDATION
PPAC 2012
• Develop plans to implement valuebased purchasing programs for
skilled nursing facilities, home
health agencies, and ambulatory
surgical centers.
• Establish VBP demonstration programs
for CAHs and hospitals excluded from
the VBP program because of
insufficient volumes.
BASED ON: HEALTH REFORM IMPLEMENTATION TIMELINE, THE HENRY J. KAISER FAMILY FOUNDATION
PPAC 2012
…the law includes a new hospital readmission policy to
address the fact that nearly 20% of Medicare patients
are readmitted within 30 days.
More than half of these readmitted patients have not
seen their physician between discharge and
readmission, and a recent study suggests that better
coordination of care can reduce readmission rates for
major chronic illness.
The policy provides $500 million over 5 years to manage
care for 30 days after hospital discharge and also
imposes payment penalties on hospitals with high riskadjusted readmission rates for certain conditions.
The New England Journal of Medicine
Posted by NEJM • June 16th, 2010
Peter R. Orszag, Ph.D., and Ezekiel J. Emanuel, M.D., Ph.D.
South Carolina Medicaid
• HACs structured by MS-DRG, SC
Medicaid still codes by Medicare
DRG codes. Since FFS pays per
diem, current MMIS could not simply
remove the HAC and recalculate the
DRG.
• Plan is for a third party to crosswalk
the DRG to a MS-DRG, recalculate
without the HAC and take a percent
of total to the original total and apply
that percentage to the per diem.
• Mandatory MCOs will not completely
solve the problem. MHNs remain
FFS.
BASED ON: HEALTH REFORM IMPLEMENTATION TIMELINE, THE HENRY J. KAISER FAMILY FOUNDATION
The South Carolina Hospital Association
Value Based Care Pilot Project
Funding provided by
The University of South Carolina
Arnold School of Public Health
Centers for Health Policies and Policy Research
A²HA Finance Spring Meeting, March 22, 2010
A²HA Quality Spring Meeting, May 24, 2010
Barney Osborne and Karen Reeves
Observations
Lack of “actionable data”
– MySCHospital.org and HospitalCompare data is too old to
be used to resolve real-time problems
– High cost of quality data tracking systems
– No cooperation from vendors
– No peer comparisons outside of purchased reports or multihospital systems
Observations
“Ahead of your time”
Michael T. Rapp, MD, JD, FACEP
Office of Clinical Standards and Quality
Centers for Medicare & Medicaid Services
Department of Health & Human Services
Baltimore, MD
michael.rapp@cms.hhs.gov
The South Carolina Hospital Association
Value Based Care Pilot Project
Funding provided by
The University of South Carolina
Arnold School of Public Health
Centers for Health Policies and Policy Research
Outcomes
SCHA
White
Paper
New Quarterly
VBP Reports
RHQDAPU Scores
HCAHPS Scores
CMS Model
Assumes No Distribution of Excess Pool Dollars
Piedmont Medical Center
FFY 2013
FFY 2014
FFY 2015
FFY 2016
FFY 2017
1% Carve-Out
1.25% CarveOut
1.5% CarveOut
1.75% CarveOut
2% CarveOut
Dollars Contributed to VBP
$564,000
$728,000
$728,000
$876,000
$1,033,000
Expected Payment from VBP
$506,961
$654,375
$654,375
$787,408
$928,530
Excess Pool Dollars
($57,039)
($73,625)
($73,625)
($88,592)
($104,470)
Process Measures
82%
Score:
HCAHPS Score: 33%
Overall VBP Score: 67%
Payment Percentage: 90%
South Carolina State
Process Measures
84%
Score:
HCAHPS Score: 34%
Overall VBP Score: 69%
Payment Percentage: 91%
Dollars Contributed to VBP
FFY 2013
FFY 2014
FFY 2015
FFY 2016
FFY 2017
1% Carve-Out
1.25% CarveOut
1.5% CarveOut
1.75% CarveOut
2% CarveOut
$18,722,000
$24,152,000
$24,152,000
$29,050,000
$34,263,000
Expected Payment from VBP $17,057,667
$22,004,955
$22,004,955
$26,467,536
$31,217,115
Excess Pool Dollars
($2,147,045)
($2,147,045)
($2,582,464) ($3,045,885)
($1,664,333)
Senate Model
Problems with current reports
• Age of data-No longer actionable
• Only preparing and reporting quarterly
• Hospitals are not tracking and trending
concurrently
• Hospitals with purchased software have
data available but don’t use it
• Small hospitals can’t afford software
VBC Pilot Reports
Actual Chart Extracted Data
Base Period
National Scores
(CMS Data)
Scoring
Hospital Base
Period Scores
(CMS Data)
Actual Scores for
ScoreScoring Period
Higher of
Period
Achieved From
Improvement
Attainment or
(From your worksheet)
Scoring Period
from Base
Improvement
Period
Data
Case count < 100 is not computed
Improvement does not apply once Attainment is maxed out at 10
Higher of Attainment or Improvement
Attainment Score
Reeves-Osborne Memorial
Process Measures Score Details
Base Period: April 2007 - March 2008
National
Indicator
Heart Attack Patients
Given ACE Inhibitor or
ARB for Left Ventricular
Systolic Dysfunction
(LVSD)
Hospital - Base Year
Hospital - Scoring Year
Benchmark Threshold
Case Count
Performance
Case Count
Performance
Attainment
Score
Improvement Score
Final Score
90.0% 60.0%
95
67%
120
77%
6
4
6
Scoring Period Performance
National Threshold
77
-60
National Benchmark
National Threshold
17
90
-60
27
17 / 30 = .57
.57 x 10 = 5.7
Rounds to 6
(Period Performance - Threshold) / (Benchmark-Threshold) x 10
The amount you exceeded the threshold compared to the amount the national
benchmark exceeded the threshold
Improvement Score
Reeves-Osborne Memorial
Process Measures Score Details
Base Period: April 2007 - March 2008
National
Indicator
Heart Attack Patients
Given ACE Inhibitor or
ARB for Left Ventricular
Systolic Dysfunction
(LVSD)
Hospital - Base Year
Hospital - Scoring Year
Benchmark Threshold
Case Count
Performance
Case Count
Performance
Attainment
Score
Improvement Score
Final Score
90.0% 60.0%
95
67%
120
77%
6
4
6
Scoring Period Performance
Base Period Performance
77
-67
National Benchmark
Base Period Performance
10
90
-63
27
10 / 27 = .37
.37 x 10 = 3.7
Rounds to 4
(Period Performance – Base Period Performance) / (Benchmark-Threshold) x 10
The amount of your improvement from base compared to the amount the national benchmark
exceeded your base period
Percentage recovery of 2% Withhold
CMS Model
Translating Performance Score into
Incentive Payment: Example
100%
90%
80%
Penalties
Hospital A
70%
Percent
Of VBP
Incentive
Payment
Earned
Full
Incentive
Earned
60%
57% performance
50%
76% Reimbursement
40%
30%
20%
10%
0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Hospital Performance Score: % Of Points Earned
Source: CMS’ Progress Toward Implementing Value-Based Purchasing: Lisa Graberth
18
Neutrality
TranslatingBudget
Performance
Score into
Incentive Payment: Example
Full
Incentive
Earned
100%
90%
Savings due
to penalties
80%
70%
Percent
Of VBP
Incentive
Payment
Earned
No Bonuses ?
60%
50%
40%
30%
20%
10%
0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Hospital Performance Score: % Of Points Earned
Source: CMS’ Progress Toward Implementing Value-Based Purchasing: Lisa Graberth
18
Percentage recovery of 2% Withhold
Senate Model
Neutrality
TranslatingBudget
Performance
Score into
Incentive Payment: Example
Full Incentive
Earned
100%
90%
80%
No Bonuses ?
70%
Savings due
to penalties
60%
Percent
Of VBP
Incentive
Payment
Earned
50%
40%
30%
20%
10%
0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Hospital Performance Score: % Of Points Earned
Source: CMS’ Progress Toward Implementing Value-Based Purchasing: Lisa Graberth
18
Benefits of Pilot Reports
•
•
•
•
•
•
•
Easy to use
Minimum time and effort
Real-time tracking
Real-time score estimations
Real-time reporting
Basic core measure evaluation tool
Financial impact estimations
Problems with Pilot Reports
• Manual input
• Lack of final CMS protocol:
– Can only track RHQDAPU data as HCAHPS is
unavailable to the hospitals
– Can’t establish exact financial protocol
Jason’s Sanders, Reimbursement and Budget Analyst
The VBP time bomb...
…the clock is already ticking.
Data Application
Baseline Period
For Comparative data to use
as a based for measuring
improvement
Measurement
Period
Application
Period
For determination of current
score
Calculated adjustment
applied to reimbursement
Data Application
Measurement Data: 2011
U.S. Department of Health and Human Services
REPORT TO CONGRESS:
Plan to Implement a Medicare Hospital
Value-Based Purchasing Program
November 21, 2007
Score Determinations: 2012
2013 Application
South Carolina
Rankings
RHQDAPU: Heart Attack
Hospital Compare 10/01/2008 to 09/30/2009
RHQDAPU: Heart Attack
Hospital Compare 10/01/2008 to 09/30/2009
RHQDAPU: Heart Failure
Hospital Compare 10/01/2008 to 09/30/2009
RHQDAPU: Pneumonia
Hospital Compare 10/01/2008 to 09/30/2009
RHQDAPU: Surgical Care
Hospital Compare 10/01/2008 to 09/30/2009
RHQDAPU: Surgical Care
Hospital Compare 10/01/2008 to 09/30/2009
HCAHPS
Hospital Compare 10/01/2008 to 09/30/2009
HCAHPS
Hospital Compare 10/01/2008 to 09/30/2009
Full APU: August 15 Deadline!
• As of July 27, 30% of hospitals had not
submitted form indicating:
– Registry participation (cardiac surgery,
stroke, nursing sensitive measures)
– Attestation of accuracy and completeness
of quality data
• 2% APU at risk; participation in registry
not required, but form must be
submitted through QNet Exchange
New Measures and Changes
(total = 46 for FY 2011 APU)
•Participation in registries (stroke, cardiac surgery)
•Re-admissions: 30-day readmissions for heart attack, heart failure and
pneumonia.
• Re-admission payment reductions start in 2013 and will apply to all
Medicare discharges
•Beginning in FY 2015, the Secretary is able to expand the list of
conditions to include chronic obstructive pulmonary disorder and
several cardiac and vascular surgical procedures, as well as any other
condition or procedure the Secretary chooses.
•2015 Hospitals in top quartile for Hospital-acquired conditions will have
payment reduction for all Medicare discharges. Will be posted to CMS
Hospital Compare website before 2015.
•Physician Quality Reporting System-$ incentive for reporting through
2014. Penalty of 1.5% in 2015, and 2% penalty in 2016.
Distribution of AMI Readmission by HRR
Distribution of HF Readmission by HRR
Distribution of Pneumonia Readmission by
HRR
SCHA
White
Paper
Patients Given Ace Inhibitors or ARB for LVSD
300
250
Manhours per
Adjusted Discharge
CMI Neutral
Manhours per
Adjusted Discharge
Man-hours
200
Score
150
100
50
0
NM AR KY MS CT WY HI
KS SD VT
IL
NC VA CA LA SC
State Ranking
ID
RI
NE MI NH OR IA
NJ ME CO
Measurement / Comparison
Internally
• Staffing has usually been “negotiated” in budget based on
history and demands rather than justified like all other expenses.
• There is little measurement of how staffing relates to outcomes
in order to require accountability
• No predefined standards for data or calculations
• Difficult to measure and evaluate because of variance in staffing
needs for sicker patients: Severity is a determinate of staffing
intensity
Challenge: New Ways to Think
About Staffing
• Quality outcomes are now a part of
productivity measurements
• Ways of comparing to other facilities
• Ways of comparing to other distinct
units
Example
Actual
350
300
Acuity
250
Mnhrs/APD
Quality
200
Actual
Acute 1
Acute 2
Acute 2
Oncology
ICU
Average
150
160
175
260
330
154
150
100
50
0
Acute 1
Acute 2
Acute 2 Oncology
ICU
Average
Neutralize Severity
Medicare Case Mix index
• Average of DRG weights
• Used to apply cost of care based on
severity of the “average” patient based
on extensive national reviews
• Adjusting by CMI can convert the
denominator to a relative amount for
both acute and specialties
Mnhrs
per
Patient Day
CMI
Mnhrs
Per
Adjusted
Patient Day
Acute 1
150
0.96
156
Acute 2
160
1.02
157
Acute 2
175
1.15
152
Oncology
260
1.60
163
ICU
330
2.10
157
Average
154
156
Net of Severity
Adjusted
No correlation: Investigate
productivity and process
Adjusted
164.00
Mnhrs
per
APD
Acute 1
Acute 2
Acute 2
Oncology
ICU
Average
150
160
175
260
330
154
CMI
0.96
1.02
1.15
1.60
2.10
Adjusted
Mnhrs
Per
Apd
156
156
152
162
157
156
162.00
160.00
158.00
156.00
154.00
152.00
150.00
148.00
146.00
Acute 1
There may be a correlation:
Investigate staffing level
Acute 2
Acute 2 Oncology
ICU
Average
Compare
350
300
250
200
Actual
CMI Adjusted
150
100
50
0
Acute 1
Acute 2
Acute 2
Oncology
ICU
Average
The Next Level: Quality as a Component of
Productivity
Put on your big girl panties and deal with it.
Use of results
• Identify productive and less-productive departments
• Review strengths and weaknesses of each notable
variances to identify focus areas to either reduce cost
by improved productivity and/or improve quality
outcomes
• Highlight focus areas for monitoring and evaluation
through use of value stream mapping (LEAN, Toyota,
Six Sigma) or other technology/functional approaches
• Maintain routine measurements to identify
successes, failures and new potential improvements
Internal Approaches
• Cost Accounting / Reporting
– Never Events and HACs
• Lost reimbursement (net)
• Cost of initial visit/procedure
– Cost of corrective visit/procedure
• Cost of increasing quality compared to
the potential lost reimbursement
Internal Approaches
• Include quality as a component of
productivity
– Comparing costs not only to volume and
charges but to quality outcomes.
– Does quality suffer if cost (staff/supplies) is
reduced?
• Re-evaluate the value of your quality
department – now is a revenue
department.
Lean and Related Trends
Waste Reduction Targets (National
Priorities Partnership)
• Inappropriate medication use
• Unnecessary laboratory tests
• Unwarranted maternity care interventions
• Unwarranted diagnostic procedures
• Unwarranted procedures
Waste Reduction Targets (National
Priorities Partnership)
•Preventable emergency department
visits and hospitalizations
• Inappropriate non-palliative services
at end of life
• Potentially harmful preventive
services with no benefit
CMS: Don Berwick
Per Capita Cost
Population
Health
Experience of
Care
Any questions before we close?
Closing
• The time is now: 2011 quality results will be a
component of the first VBP adjustments in 2013
• Tracking real-time is imperative to intercept problems
and reduce the length of impact
• Quality is now a component of productivity
• New quality focused approach to cost accounting
• Quality Department as a financial function
• Quality Department as a revenue department
Closing
• Beware of contradictions
• Preventative medicine – CPT reimbursement
• Defensive medicine – VBP waste reduction
• Tort reform – Defensive medicine
• Bundling – Starke law
• Outcomes - ALOS
• Readmissions – ALOS
• This is just the beginning of a new era.
Thank
you.
Bonus
Everything You Always Wanted To Know
About Hospital Finance But Were Afraid
To Ask Your CFO.