friday the 13 th august, 2010 quality and finance: the stars align jason sanders, budget and...
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Friday the 13th August, 2010
Quality and Finance: The Stars Align
Jason Sanders, Budget and Reimbursement, Sisters of Charity ProvidenceLori August, Director of Quality, Sisters of Charity ProvidenceKaren Reeves, VP Quality Compliance and Risk Management, SCHABarney Osborne, VP Finance, SCHA
Institute of Medicine and AHRQ
RHQDAPU and HCAHPS
Pay for Reporting
MS DRGs
Never Events
Medicaid HACs
Value Based Purchasing
ARRA HITECH Meaningful Use
Hospital Acquired Conditions
Bundling
30 Day Readmissions
Quality and Finance: The Stars Align
ObamaCare…
American Recovery
and Reinvestme
nt 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 - 2012For 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.: e-Prescribing);
– 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 Act2013
Senate Committee Apr. 29, 2009, Page 4Hospitals 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 value-based 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 value-based 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 value-based 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 risk-adjusted readmission rates for certain conditions.
The New England Journal of MedicinePosted 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 AssociationValue Based Care Pilot Project
Funding provided byThe University of South CarolinaArnold School of Public Health
Centers for Health Policies and Policy Research
A²HA Finance Spring Meeting, March 22, 2010A²HA 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 multi-
hospital systems
Observations
“Ahead of your time”
Michael T. Rapp, MD, JD, FACEPOffice of Clinical Standards and QualityCenters for Medicare & Medicaid ServicesDepartment of Health & Human ServicesBaltimore, [email protected]
The South Carolina Hospital AssociationValue Based Care Pilot Project
Funding provided byThe University of South CarolinaArnold School of Public Health
Centers for Health Policies and Policy Research
Outcomes
SCHA White Paper
New QuarterlyVBP 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
Process Measures Score:
82% 1% Carve-Out1.25% Carve-
Out1.5% Carve-
Out1.75% Carve-
Out2% Carve-
Out
HCAHPS Score: 33% Dollars Contributed to VBP $564,000 $728,000 $728,000 $876,000 $1,033,000
Overall VBP Score: 67% Expected Payment from VBP $506,961 $654,375 $654,375 $787,408 $928,530
Payment Percentage: 90% Excess Pool Dollars ($57,039) ($73,625) ($73,625) ($88,592) ($104,470)
South Carolina State
FFY 2013 FFY 2014 FFY 2015 FFY 2016 FFY 2017
Process Measures Score:
84% 1% Carve-Out1.25% Carve-
Out1.5% Carve-
Out1.75% Carve-
Out2% Carve-
Out
HCAHPS Score: 34% Dollars Contributed to VBP $18,722,000 $24,152,000 $24,152,000 $29,050,000 $34,263,000
Overall VBP Score: 69% Expected Payment from VBP $17,057,667 $22,004,955 $22,004,955 $26,467,536 $31,217,115
Payment Percentage: 91% Excess Pool Dollars ($1,664,333) ($2,147,045) ($2,147,045) ($2,582,464) ($3,045,885)
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
ScoringBase Period National Scores
(CMS Data)
Hospital Base Period Scores
(CMS Data)
Actual Scores for Period
(From your worksheet)
Score Achieved From Scoring Period
Data
Scoring Period Improvement
from Base Period
Higher of Attainment or Improvement
Improvement does not apply once Attainment is maxed out at 10
Higher of Attainment or Improvement
Case count < 100 is not computed
Scoring Period Performance 77 National Benchmark 90National Threshold -60 National Threshold -60
17 27
17 / 30 = .57
.57 x 10 = 5.7Rounds to 6
(Period Performance - Threshold) / (Benchmark-Threshold) x 10The amount you exceeded the threshold compared to the amount the national
benchmark exceeded the threshold
Reeves-Osborne MemorialProcess Measures Score Details
Base Period: April 2007 - March 2008
National Hospital - Base Year Hospital - Scoring Year
Indicator Benchmark Threshold Case Count Performance Case Count PerformanceAttainment
Score Improvement Score Final Score
Heart Attack Patients Given ACE Inhibitor or ARB for Left Ventricular Systolic Dysfunction (LVSD)
90.0% 60.0% 95 67% 120 77% 6 4 6
Attainment Score
(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
Reeves-Osborne MemorialProcess Measures Score Details
Base Period: April 2007 - March 2008
National Hospital - Base Year Hospital - Scoring Year
Indicator Benchmark Threshold Case Count Performance Case Count PerformanceAttainment
Score Improvement Score Final Score
Heart Attack Patients Given ACE Inhibitor or ARB for Left Ventricular Systolic Dysfunction (LVSD)
90.0% 60.0% 95 67% 120 77% 6 4 6
Scoring Period Performance 77 National Benchmark 90Base Period Performance -67 Base Period Performance -63
10 27
10 / 27 = .37
.37 x 10 = 3.7Rounds to 4
Improvement Score
Percentage recovery of 2% Withhold
CMS Model
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Translating Performance Score into Incentive Payment: Example
Percent Of VBP
Incentive Payment Earned
Hospital Performance Score: % Of Points Earned
Hospital A
57% performance
76% Reimbursement
18Source: CMS’ Progress Toward Implementing Value-Based Purchasing: Lisa Graberth
Penalties
Full Incentive Earned
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Translating Performance Score into Incentive Payment:
Example
Percent Of VBP
Incentive Payment Earned
Hospital Performance Score: % Of Points Earned
Full Incentive Earned
18Source: CMS’ Progress Toward Implementing Value-Based Purchasing: Lisa Graberth
Budget Neutrality
No Bonuses ?
Savings due to penalties
Senate Model
Percentage recovery of 2% Withhold
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Translating Performance Score into Incentive Payment:
Example
Percent Of VBP
Incentive Payment Earned
Hospital Performance Score: % Of Points Earned
Full Incentive Earned
18Source: CMS’ Progress Toward Implementing Value-Based Purchasing: Lisa Graberth
Budget Neutrality
No Bonuses ?
Savings due to penalties
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
…the clock is already ticking.
The VBP time bomb...
Baseline PeriodFor Comparative data to use
as a based for measuring improvement
Measurement Period
For determination of current score
Application Period
Calculated adjustment applied to reimbursement
Data Application
2013 ApplicationScore Determinations: 2012Measurement 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
Data Application
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
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
Mnhrs/APD
Acute 1 150Acute 2 160Acute 2 175Oncology 260ICU 330Average 154
Acuity Quality
Example
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
MnhrsPer
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
Mnhrs perAPD CMI
Adjusted Mnhrs
PerApd
Acute 1 150 0.96 156Acute 2 160 1.02 156Acute 2 175 1.15 152Oncology 260 1.60 162ICU 330 2.10 157Average 154 156
Net of Severity
There may be a correlation: Investigate staffing level
No correlation: Investigate productivity and process
Compare
Put on your big girl panties and deal with it.
The Next Level: Quality as a Component of Productivity
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
• 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
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
Population Health
Experience of Care
Per Capita Cost
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.