2010-2011 SC HFMA - Annual Institute
Quality and Finance:
Stars Align
Embassy Suites The
Hotel
Columbia, SC
July 30, 2010
Jason Sanders, Budget and Reimbursement, 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
ARRA HITECH Meaningful Use
Value Based Purchasing
Bundling
30 Day Readmissions
Medicaid HACs
Quality or Finance
Quality or Finance
• The DRG and Case Management
– Case management: clinical
– Medical Records: clinical
– Forced hospitals manage physicians
• Counterbalance
– Hospital’s risk: physician discharge
• Value Based Purchasing
– Hospitals manage physicians and hospital
– Shared risk
Before the math, a brief summary of VBP
… just in case you haven’t heard
A Brief History of Pay for
Performance (P4P)
• 1980s and 1990s
– Increase in HMOs and managed care
• Capitated payment models
– Physician incentives based on financial performance
• 2000-Present
– Institute of Medicine reports
• To Err is Human and Crossing the Quality Chasm
• Rewarding provider Performance
– Physician and hospital incentives based on clinical
performance
– Legislated changes
– Pay for Reporting (2% penalty)
– Senate and CMS models for value-based purchasing
What are the simple rules for the
21st Century Healthcare System
What Patients Should Expect (IOM
Crossing the Quality Chasm, p. 67)
What Patients Sometimes Receive
Care is beyond the patient visits,
wherever you need it
Care is fragmented
Individualization
Care can be confusing and repetitive
Transparency
Communication and information
sometimes minimal
Information is a record and yours to know
Integrated Electronic Health Records
rarely exist; minimal and disjointed
information given to patients
Decision-making is based on science
Is care based on evidence-based
practices?
“Do no harm”
Is patient safety at the core of quality?
Never Events
1. Wrong Surgical or Other Invasive Procedure
2. Surgical or Other Invasive Procedure
Performed on the Wrong Body Part
3. Surgical or Other Invasive Procedure
Performed on the Wrong Patient
Medicare will not cover hospitalizations and other
services related to these non-covered
procedures. All services provided in OR when an
error occurs are considered related and therefore
not covered. All providers in OR who could bill
individually are not eligible for payment. All
related services provided during same
hospitalization are not covered.
http://www.cms.gov/transmittals/downloads/R101NCD.pdf
Hospital-Acquired Conditions
These are conditions that are: high cost/volume, resulting
in higher paying DRG when present as a secondary
diagnosis, and which could reasonably have been
prevented
1. Foreign Object Retained After Surgery
2. Air Embolism
3. Blood Incompatibility
4. Pressure Ulcers (Stage III and IV)
5. Falls and Trauma
(Fractures, Dislocations, Intracranial Injuries, Crushing
Injuries, Burns, Electric Shock)
Hospital-Acquired Conditions
6. Manifestations of Poor Glycemic Control
(Diabetic Ketoacidosis, Nonketotic Hyperosmolar Coma,
Hypoglycemic Coma, Secondary Diabetes with
Ketoacidosis, Secondary Diabetes with Hyperosmolarity)
7. Catheter-Associated Urinary Tract Infection (UTI)
8. Vascular Catheter-Associated Infection
9. Surgical Site Infection Following:
Coronary Artery Bypass Graft (CABG), Bariatric Surgery,
Certain Orthopedic Procedures
10. Deep Vein Thrombosis (DVT)/Pulmonary Embolism (PE)
Following total hip/knee replacement
POA Indicator Descriptor
•Y
Indicates that the condition was present on admission.
•W
Affirms that the provider has determined based on data
and clinical judgment that it is not possible to document
when the onset of the condition occurred.
Indicates that the condition was not present on
admission.
Indicates that the documentation is insufficient to determine if
the condition was present at the time of admission.
Signifies exemption from POA reporting. CMS established
this code as a workaround to blank reporting on the
electronic 4010A1. A list of exempt ICD-9-CM diagnosis
codes is available in the ICD-9-CM Official
•N
•U
•1
Source: Federal Register
CMS Example
MS-DRG Assignment
(Examples for a single secondary
diagnosis)
Principal Diagnosis: Stroke
 Without CC/MCC
POA Status of
Secondary
Diagnosis
Average
Payment
-Baseline
$5,347.98
Principal Diagnosis: Stroke
 With secondary CC Injury due to a fall
(code 836.4)
Y
Principal Diagnosis: Stroke
• With secondary CC - Injury due to a fall
(code 836.4)
Y
Y
N
$6,177.43
$5,347.98
(829.45)
Source: CMS’ Progress Toward Implementing Value-Based Purchasing: Lisa Graberth
Payment Implications
• More impact on accounts where the HAC
was a CC/MCCs
• More impact on accounts with few
CC/MCCs
– Heavier impact on small/rural facilities
– Less impact on accounts with many other
CC/MCCs
• Impact on large facilities will increase as
more CC/MCCs become HACs
SC Example With Few MCC/CCs
Primary Procedure: Incisional hernia repair
Diagnoses:
Ventral hernia w/ obstruction
Infection and inflammatory rcn due to indwelling
catheter (CC)
UTI (CC)
Diabetes mellitus w/o complication
Essential hypertension
Unspecified hypothyroidism
Other unspecified hyperlipidemia
Coronary atherosclerosis of unspecified type vessel
Venous insufficiency, unspecified
Spondylosis w/o myelopathy
Overweight
Other chronic non alcoholic liver disease
Constipation
Esophageal reflux
Gout, unspecified
MSDRG weight
POA
Y
POA
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
N
N
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
1.4092
1.0147
Base rate
$4,990.60
$ 7,032.75
$4,990.60
$ 5,063.96
Impact:
Source: SC ORS
$ (1,968.79)
28%
SC Example With Many MCC/CCs
Primary Procedure: Other Enterostomy
Diagnoses:
Pneumonitis due to inhalation of food/vomitus
Toxic encephalopathy (CC)
Decubitis ulcer, lower back (CC) (MCC)
Grand mal status (CC)
Other protein-calorie malnutrition (CC)
UTI (CC)
Deep vein thrombosis (CC)
POA
Y
Y
Y
Y
Y
Y
Y
POA
Y
Y
Mechanical complication of vascular device (CC)
Dsphagia
Hypotension, unspecified (MCC)
Y
Y
Y
Y
Dehydration (CC)
Mental d/o due to conditions classified elsewhere
Parkinson's
Electrolyte and fluid d/0 (CC)
S. aureus
Y
Y
Y
Y
Y
MSDRG weight
Base rate
Source: SC ORS
N
Y
Y
Y
HAC
N
N
Y
Y
Y
N
Y
Y
Y
Y
Y
1.8444
$4,990.60
$9,204.66
1.8444
$4,990.60
$9,204.66
No Impact
HAC
Hypothetical With Many HACs
Primary Procedure: Other Enterostomy
Diagnoses:
Pneumonitis due to inhalation of food/vomitus
Toxic encephalopathy (CC)
Decubitis ulcer, lower back (CC) (MCC)
Grand mal status (CC)
Other protein-calorie malnutrition (CC)
UTI (CC)
Deep vein thrombosis (CC)
Mechanical complication of vascular device (CC)
Dsphagia
Hypotension, unspecified (MCC)
Dehydration (CC)
Mental d/o due to conditions classified elsewhere
Parkinson's
Electrolyte and fluid d/0 (CC)
S. aureus
MSDRG weight
Base rate
POA
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
POA
Y
Y
1.8444
$4,990.60
$9,204.66
1.8444
$4,990.60
6136.44
N
Y
Y
Y
HAC
N
N
Y
Y
HAC
HAC
N
Y
Y
Y
Y
HAC
$3,068.22
HAC
Pay-for-Reporting
Quality Measurements
Reporting Hospital Quality Data for
Annual Payment Update (RHQDAPU)
and
Hospital Consumer Assessment of
Healthcare Providers and Systems
(HCAHPS)
RHQDAPU: Heart Attack
Hospital Compare 10/01/2008 to 09/30/2009
RHQDAPU: Heart Attack
Hospital Compare 10/01/2008 to 09/30/2009
RHQDAPU: Heart Failure
Hospital Compare 10/01/2008 to 09/30/2009
RHQDAPU: Pneumonia
Hospital Compare 10/01/2008 to 09/30/2009
RHQDAPU: Surgical Care
Hospital Compare 10/01/2008 to 09/30/2009
RHQDAPU: Surgical Care
Hospital Compare 10/01/2008 to 09/30/2009
HCAHPS
Hospital Compare 10/01/2008 to 09/30/2009
HCAHPS
Hospital Compare 10/01/2008 to 09/30/2009
Full APU: August 15 Deadline!
• As of July 27, 30% of hospitals had not
submitted form indicating:
– Registry participation (cardiac surgery,
stroke, nursing sensitive measures)
– Attestation of accuracy and completeness
of quality data
• 2% APU at risk; participation in registry
not required, but form must be
submitted through QNet Exchange
New Measures and Changes
(total = 46 for FY 2011 APU)
•Participation in registries (stroke, cardiac surgery)
•Re-admissions: 30-day readmissions for heart attack, heart failure and
pneumonia.
• Re-admission payment reductions start in 2013 and will apply to all
Medicare discharges
•Beginning in FY 2015, the Secretary is able to expand the list of
conditions to include chronic obstructive pulmonary disorder and
several cardiac and vascular surgical procedures, as well as any other
condition or procedure the Secretary chooses.
•2015 Hospitals in top quartile for Hospital-acquired conditions will have
payment reduction for all Medicare discharges. Will be posted to CMS
Hospital Compare website before 2015.
•Physician Quality Reporting System-$ incentive for reporting through
2014. Penalty of 1.5% in 2015, and 2% penalty in 2016.
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.
• 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
ARRA HITECH 2011-2015
• Meaningful Use
– Ability to retrieve and accumulate new
patient data electronically
•
•
•
•
ePrescriptions
Patient demo
Lab results
Patient conditions
– Ability to communicate quality measures
electronically
– Additional Quality Measures
BASED ON: HEALTH REFORM IMPLEMENTATION TIMELINE, THE HENRY J. KAISER FAMILY FOUNDATION
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
2013 Implementation
• “Bonus”
– 2% of annual Marketbasket Update setaside to be earned back as a “reward”.
– Budget Neutral
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
Budget Neutrality
How will savings be distributed?
• Reimburse above 100% to high ranking
hospitals
• Fund programs for underachieving
hospitals
• Fund CMS expansion of the VBC
program
• Other
Madness to the Method
VBP
Math
Actual Chart Extracted Data
Base Period
National Scores
Scoring
Base Period Actual Scores for
ScoreIf Score <Higher
10, of
Hospital Scores
Period
CalculatedScoring
From Attainment
Period
or
for Improvement
Scoring Period
Improvement
Improvement
Comparisons
Data
from Base Period
Case count < 100 is not computed
Improvement does not apply once Attainment is maxed out at 19
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
78%
6
5
6
Performance
Threshold
78
-60
18
Benchmark
Threshold
90
-60
30
18 / 30 = .6
.6 x 10 = 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
63%
120
78%
6
5
6
Performance
Base Period
78
-63
15
Benchmark
Threshold
90
-60
30
15 / 30 = .5
.5 x 10 = 5
(Period Performance – Base Period Performance) / (Benchmark-Threshold) x 10
The amount of your improvement from base compared to the amount the national benchmark
exceeded the threshold
Combining Clinical Process and HCAHPS Scores
for a Total Performance Score
CMS EXAMPLE
The Proration:
Hospital A
Performance Score on RHQDAPU
Process Measures (PSPM)
58%
PSPM 58% X .7 = 0.406
Performance Score on Hospital
Consumer Assessment of Healthcare
Providers and Systems (HCAHPS)
(PSH)
54%
PSH
54% X .3 = 0.162
Total Performance Score (TPS)
(.7*PSPM) + (.3*PSH)
57%
TPS
0.568
Source: CMS’ Progress Toward Implementing Value-Based Purchasing: Lisa Graberth
17
Percentage recovery of 2% Withhold
CMS Model
Percentage recovery of 2% Withhold
Senate Model
Time to share the sandbox.
Current SCHA Reports
Annual Clinical Results
HCAHPS
Hospital, State Top 10 Percentile, US Top 10 Percentile
HCAHPS Measures
CMS National Averages
Hospital Specific Scores
State Comparatien Data
Urban/Rural, Teaching/Non-teaching, Bed Size
Annual Clinical Results
HACs
Actual
Occurrences
1.69 of every
1000 patients
are at risk of
some HAC
Potential Cases
Rate per Thousand
(Actual/potential X 1000)
1.36 of every
1000 patients
are at risk of a
fall/trauma
6.21 of every
1000 patients
are at risk of
surgical site
infection
Risk
This worksheet
was reduced to
show just
categories with
occurrences for
simplicity’s sake
Medicare HACs Reported Using POA Indicator
(Numerator)
Falls & Trauma
Catheter Associated UTI Surgical Site Infection
Total
8
1
1
10
5,902
5,902
161
5,902
All Cases
All Cases
Certain Ortho Procedures,
Bariatric Surgery and CABG Cases
All Cases
1.36
0.17
6.21
1.69
1
0
0
1
Occurrences
Medicare Discharges Related to the HAC
Category (Denominator)
Estimated Medicare HAC Rate per 1,000
Discharges
Cost
Discharges Subject to Reduced Medicare
Payment Because the HAC Reported was the
Only Qualifying CC/MCC
This indicates the number of
occurrences that not only impacted
your quality score, but the HAC was
the only paying diagnosis, so no
payment was made for the entire
account
Occurrences
(Percent of Total)
Distribution of Medicare HACs by DRG Product Line, Top Cases:
Back & Spine
10.0%
Gastroenterology
10.0%
Orthopedics
40.0%
Other
20.0%
Thoracic Surgery
10.0%
Vascular Surgery
10.0%
Risk
(Cases pr Thousand)
2.5
2
Estimated Medicare HAC Rates
Rate per 1,000 Discharges
1.59
1.69
US
Average
Sample
Hospital
1.5
1
0.5
0
Quarterly Outcomes and
Financial Impact
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
•
•
•
•
•
Only preparing and reporting quarterly
Hospitals are not tracking and trending
Age of data
No longer actionable
Hospitals with purchased software have
data available but don’t use it
• Small hospitals can’t afford software
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
The South Carolina Hospital Association
Value Based Care Pilot Project
March, 2010
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
Purpose
To help our members prepare for
healthcare reform and VBP, we established
the SCHA finance-quality pilot. VBP will
require hospital finance departments and
hospital clinical quality staff to work closely
together. The Workgroup had three
primary goals:
Purpose
The Workgroup had three primary goals:
• Identify best practices and models in S.C. hospitals that promote
the alignment of finance and quality,
• Develop a model financial-quality dashboard to be used by
hospitals to track monthly quality outcomes.
• Identify the data report elements that all S.C. hospitals can
easily utilize in their finance-quality work.
End Products
• Document on Characteristics and Best Practices at
Hospitals with Quality-Finance-Clinical Alignment for
VBP
• Compilation of best practices, policies and
procedures
• Computer program to model and project data linking
quality and finance on a monthly basis
• Sample dashboards which include statewide
benchmark data
• Educational program collateral
Expected Outcomes
• Pilot sites adopt dashboards, computer program
• 10 additional hospitals implement improvement
activities (adopting tools, establishing joint quality and
finance team meetings)
• Surveys show improvement and identified needs met.
Opportunities for future activities identified.
• Positive financial impact of implemented changes
occurred.
Observations
Lack of “actionable data”
– MySCHospital.org and HospitalCompare data is too old to
be used to resolve real-time problems
– “Ahead of your time” – Michael T. Rapp, MD, JD, FACEP
CMS Director. Quality Measurement and Health
Assessment Group
– High cost of quality data tracking systems
– No cooperation from vendors
– No peer comparisons outside of purchased reports or multihospital systems
Observations
CFOs are unaware of the financial risk of VBP
– No joint efforts between the quality and finance departments
– Most quality teams do not include a financial specialist
– Most CFOs do not attend quality meetings and have little
coordination with the clinical departments except for issues
relating to finance
– Few cost accounting departments evaluate the additional
cost of care due to quality errors – added LOS, higher level
of care for corrective measures, legal risks
– Little comparison of hospital staffing levels outside of multihospital systems
Observations
Quality directors are uninformed about the financial
risks of VBP
– Few directors had knowledge of the Medicare cost reporting
structure
– Few had an understanding of how CMS proposes to
penalize for non-compliance
– Few had communicated the need for additional attention to
quality results during the budgeting process
Observations
Small and rural hospitals have the greatest risk of
non-compliance
– The lack of funds to purchase the necessary software and
support services
– Dependency on paper records and totally manual
gathering quality measures data
– Lack of budgetary allocations to provide the staff necessary
to perform analysis, recognize weaknesses and create
recovery plans
– The lack of built-in edits of reported data
– Dependency on CMS data results which are no longer
actionable because of their age.
The Reports
• Real-time actionable data
• Brainless, seamless and effortless
Jason’s Sanders, Reimbursement and Budget Analyst
The Next Level
Put on your big girl panties and deal with it.
Implementation
CMS
Quality as a Key Component of Finance
• Component of reimbursement
– Determines annual increases
• Component of cost
– Poor quality has a defined cost
Must measure costs relative to quality
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) is
reduced?
• Re-evaluate the value of your quality
department – now is a revenue
department.
The Next Level: Quality as a
Component of Productivity
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
Find New Approaches
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 of Thinking
• Comparing to other distinct units
• Comparing to other facilities
Actual
Mnhrs/APD
Acute 1
Acute 2
Acute 2
Oncology
ICU
Average
150
160
175
260
330
154
350
300
Acuity
250
Quality
200
Actual
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
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
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 contractions
• 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.
Value Based Purchasing: Combining Cost and Quality
Michael T. Rapp, MD, JD, FACEPDirector, Quality
Measurement and Health Assessment GroupOffice of
Clinical Standards & Quality Centers for Medicare &
Medicaid Services
http://www.ncvhs.hhs.gov/09101
4p4.pdf
Hospital Acquired Conditions: Projected Costs savings
•Savings estimates for the next 5 fiscal years are shown below:
Year Savings (in millions)
FY 2009 ...................................$21
FY 2010 .................................... 21
FY 2011 .................................... 21
FY 2012 .................................... 22
FY 2013 .................................... 22
Distribution of AMI Readmission
by HRR
Distribution of HF Readmission
by HRR
4
Distribution of Pneumonia
Readmission by HRR
43
CMS’ ultimate goal is to shift the
curve