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2010-2011 SC HFMA - Annual Institute
Embassy Suites HotelColumbia, SC
July 30, 2010
Quality and Finance: The Stars Align
Jason Sanders, Budget and Reimbursement, 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
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
Quality or Finance
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 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?
What are the simple rules for the 21st Century Healthcare System
Never Events1. Wrong Surgical or Other Invasive Procedure 2. Surgical or Other Invasive Procedure
Performed on the Wrong Body Part3. 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 Surgery2. Air Embolism3. Blood Incompatibility4. 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 Infection9. 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.
•N Indicates that the condition was not present on admission.•U Indicates that the documentation is insufficient to determine if
the condition was present at the time of admission.•1 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
Source: Federal Register
CMS Example
MS-DRG Assignment(Examples for a single secondary
diagnosis)
POA Status of Secondary
DiagnosisAverage Payment
Principal Diagnosis: Stroke Without CC/MCC
-- $5,347.98
Principal Diagnosis: Stroke With secondary CC Injury due to a fall
(code 836.4)
Y
Y$6,177.43
Principal Diagnosis: Stroke• With secondary CC - Injury due to a fall
(code 836.4)
Y
N $5,347.98
Source: CMS’ Progress Toward Implementing Value-Based Purchasing: Lisa Graberth
Baseline
(829.45)
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 repairDiagnoses: POA POAVentral hernia w/ obstruction Y YInfection and inflammatory rcn due to indwelling catheter (CC) Y NUTI (CC) Y NDiabetes mellitus w/o complication Y YEssential hypertension Y YUnspecified hypothyroidism Y YOther unspecified hyperlipidemia Y YCoronary atherosclerosis of unspecified type vessel Y YVenous insufficiency, unspecified Y YSpondylosis w/o myelopathy Y YOverweight Y YOther chronic non alcoholic liver disease Y YConstipation Y YEsophageal reflux Y YGout, unspecified Y YMSDRG weight 1.4092 1.0147
Base rate $4,990.60 $4,990.60 $ 7,032.75 $ 5,063.96
Impact: $ (1,968.79)
Source: SC ORS28%
Primary Procedure: Other EnterostomyDiagnoses: POA POAPneumonitis due to inhalation of food/vomitus Y YToxic encephalopathy (CC) Y Y
Decubitis ulcer, lower back (CC) (MCC) Y N HACGrand mal status (CC) Y YOther protein-calorie malnutrition (CC) Y YUTI (CC) Y Y
Deep vein thrombosis (CC) Y NMechanical complication of vascular device (CC) Y NDsphagia Y YHypotension, unspecified (MCC) Y Y
Dehydration (CC) Y NMental d/o due to conditions classified elsewhere Y YParkinson's Y YElectrolyte and fluid d/0 (CC) Y YS. aureus Y Y HAC
MSDRG weight 1.8444 1.8444Base rate $4,990.60 $4,990.60
$9,204.66 $9,204.66
Source: SC ORS
SC Example With Many MCC/CCs
No Impact
Y
Y
Y
Primary Procedure: Other EnterostomyDiagnoses: POA POAPneumonitis due to inhalation of food/vomitus Y YToxic encephalopathy (CC) Y Y
Decubitis ulcer, lower back (CC) (MCC) Y N HACGrand mal status (CC) Y YOther protein-calorie malnutrition (CC) Y YUTI (CC) Y Y
Deep vein thrombosis (CC) Y N HACMechanical complication of vascular device (CC) Y N HACDsphagia Y YHypotension, unspecified (MCC) Y Y
Dehydration (CC) Y N HACMental d/o due to conditions classified elsewhere Y YParkinson's Y YElectrolyte and fluid d/0 (CC) Y YS. aureus Y Y HAC
MSDRG weight 1.8444 1.8444Base rate $4,990.60 $4,990.60
$9,204.66 6136.44
Hypothetical With Many HACs
$3,068.22
Pay-for-ReportingQuality Measurements
Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU)
and
Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS)
RHQDAPU: Heart Attack
Hospital Compare 10/01/2008 to 09/30/2009
RHQDAPU: Heart Attack
Hospital Compare 10/01/2008 to 09/30/2009
RHQDAPU: Heart Failure
Hospital Compare 10/01/2008 to 09/30/2009
RHQDAPU: Pneumonia
Hospital Compare 10/01/2008 to 09/30/2009
RHQDAPU: Surgical Care
Hospital Compare 10/01/2008 to 09/30/2009
RHQDAPU: Surgical Care
Hospital Compare 10/01/2008 to 09/30/2009
HCAHPS
Hospital Compare 10/01/2008 to 09/30/2009
HCAHPS
Hospital Compare 10/01/2008 to 09/30/2009
Full APU: August 15 Deadline!
• As of July 27, 30% of hospitals had not submitted form indicating:– Registry participation (cardiac surgery,
stroke, nursing sensitive measures)– Attestation of accuracy and completeness
of quality data
• 2% APU at risk; participation in registry not required, but form must be submitted through QNet Exchange
New Measures and Changes (total = 46 for
FY 2011 APU)•Participation in registries (stroke, cardiac surgery)•Re-admissions: 30-day readmissions for heart attack, heart failure and pneumonia.
• Re-admission payment reductions start in 2013 and will apply to all Medicare discharges•Beginning in FY 2015, the Secretary is able to expand the list of conditions to include chronic obstructive pulmonary disorder and several cardiac and vascular surgical procedures, as well as any other condition or procedure the Secretary chooses.
•2015 Hospitals in top quartile for Hospital-acquired conditions will have payment reduction for all Medicare discharges. Will be posted to CMS Hospital Compare website before 2015. •Physician Quality Reporting System-$ 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 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.
• 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
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 set-
aside to be earned back as a “reward”.– Budget Neutral
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
Savings due to penalties
Budget Neutrality
No Bonuses ?
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
Budget Neutrality
Madness to the Method
VBP Math
Actual Chart Extracted Data
ScoringBase Period National Scores
Base Period Hospital Scores for Improvement
Comparisons
Actual Scores for Period
Score Calculated From Scoring Period
Data
If Score < 10, Scoring Period Improvement
from Base Period
Higher of Attainment or Improvement
Improvement does not apply once Attainment is maxed out at 19
Higher of Attainment or Improvement
Case count < 100 is not computed
(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 78% 6 5 6
Performance 78 Benchmark 90Threshold -60 Threshold -60
18 30
18 / 30 = .6
.6 x 10 = 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 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 63% 120 78% 6 5 6
Performance 78 Benchmark 90Base Period -63 Threshold -60
15 30
15 / 30 = .5
.5 x 10 = 5
Improvement Score
Combining Clinical Process and
HCAHPS Scoresfor a Total Performance Score
CMS EXAMPLE Hospital A
Performance Score on RHQDAPU Process Measures (PSPM)
58%
Performance Score on Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) (PSH)
54%
Total Performance Score (TPS)(.7*PSPM) + (.3*PSH)
57%
17
Source: CMS’ Progress Toward Implementing Value-Based Purchasing: Lisa Graberth
PSPM 58% X .7 = 0.406
PSH 54% X .3 = 0.162
TPS 0.568
The Proration:
Percentage recovery of 2% Withhold
CMS Model
Senate Model
Percentage recovery of 2% Withhold
Time to share the sandbox.
Current SCHA Reports
Annual Clinical ResultsHCAHPS
HCAHPS MeasuresCMS National Averages
Hospital Specific Scores
State Comparatien DataUrban/Rural, Teaching/Non-teaching, Bed Size
Hospital, State Top 10 Percentile, US Top 10 Percentile
Annual Clinical ResultsHACs
Actual Occurrences
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
1.69 of every 1000 patients are at risk of some HAC
Falls & Trauma Catheter Associated UTI Surgical Site Infection Total
Medicare HACs Reported Using POA Indicator (Numerator) 8 1 1 10
Medicare Discharges Related to the HAC Category (Denominator) 5,902 5,902 161 5,902
All Cases All Cases Certain Ortho Procedures, Bariatric Surgery and CABG Cases All Cases
Estimated Medicare HAC Rate per 1,000 Discharges 1.36 0.17 6.21 1.69
Discharges Subject to Reduced Medicare Payment Because the HAC Reported was the Only Qualifying CC/MCC
1 0 0 1
Occurrences
Risk
Cost
This worksheet was reduced to
show just categories with occurrences for simplicity’s sake
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)
Risk(Cases pr Thousand)
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
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• 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 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
The South Carolina Hospital AssociationValue Based Care Pilot Project
March, 2010
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
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 multi-
hospital 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 multi-hospital 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
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
• 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) is
reduced?
• Re-evaluate the value of your quality department – now is a revenue department.
The Next Level: Quality as a Component of
Productivity
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
Mnhrs/APD
Acute 1 150Acute 2 160Acute 2 175Oncology 260ICU 330Average 154
Acuity Quality
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
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
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 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 QualityMichael 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/091014p4.pdf
Hospital Acquired Conditions: Projected Costs savings
•Savings estimates for the next 5 fiscal years are shown below:
Year Savings (in millions)FY 2009 ...................................$21FY 2010 .................................... 21FY 2011 .................................... 21FY 2012 .................................... 22FY 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
