Value-Based Purchasing

1. Value-Based Purchasing PowerHour April 2012

2. Goals of PowerHour • What is Value Based Purchasing • Review of the FFY 2013 VBP program • Data Sources • Data Collection Timeframes • Measures • VBP Scoring Methodology • Unresolved Issues • Review of the FFY 2014 Domains • GHA VBP Reports • Questions

3. What is Value-Based Purchasing? • Implementation is required by the Affordable Care Act of 2010 • Begins October 1, 2012 (FY 2013) • Redistributes inpatient payments • Budget neutral

4. What is Value-Based Purchasing? • Transition hospitals from P4R to P4P under Medicare • Medicare payment incentives/penalties to promote • Achievement of high quality care • Improvement in care quality • Adjusts Medicare IPPS payments starting Oct. 1, 2012 (FFY 2013) based on quality performance

5. Review of VBP Who is Subject to the Hospital VBP Program? • Acute care hospitals participating in the IQR Program • Excluded hospitals: • CAHs • Specialty hospitals (psychiatric, rehabilitation, children’s, cancer, LTCH) • Hospitals cited for “immediate jeopardy” • Hospitals not participating in the IQR program • Hospitals with small numbers of applicable measures/cases as determined by CMS

6. Review of VBP What’s at Stake Under VBP? • Program is self-funded by hospital “contributions” • Contribution based on Medicare FFS payments* • 1.0% reduction in FFY 2013 • Reduction increased by 0.25% each year • 2.0% reduction for FFY 2017 and beyond • VBP performance determines P4P amount • Budget-neutral • Redistributive • Best performers win, others break even or lose • VBP payments are netted against contributions

7. Review of VBP VBP’s Quality Measures • Law requirements • Must be measures reported under IQR program • Measures must be publicly available Hospital Compare for at least one year prior to use in VBP • CMS must publish measures and national performance standards for each measure 60 days before start of the performance measurement period • Must categorize measures (domains) • CMS discretion • What measures to include/exclude

8. Review of the FFY 2013 VBP program Data Source: • Analysis utilizes hospital quality measure database provide by CMS on Hospital Compare Website • Will assess hospital Quality performance using two domains: • Process of Care (70%) • Patient Experience (30%)

9. Review of the FFY 2013 VBP program Data Collection Timeframes: • Baseline Period • Used to establish performance standards and to measure performance improvement • July 1, 2009 – March 31, 2010 (9 months) • Data already reported to CMS • Performance Period • Used to measure/calculate VBP scores • July 1, 2011 – March 31, 2012 (9 months) • Just started and will continue into Spring • Applies to both Process and HCAHPS measures

10. VBP Domains * Only some aspects of 2014 program are final

11. Process Domain Measures – FFY 2013 Program

12. HCAHPs Domain Measures – FFY 2013 Program • Modifications to HCAHPS on Hospital Compare: • “cleanliness and quietness” – combined • “would you recommend this hospital?”- not included

13. VBP National Performance Standards – FFY 2013 Program • National Benchmarks • Highest achievement levels • Average performance score for the top 10% of all hospitals • National Thresholds • Minimum achievement levels • Median performance score for all hospitals • Established from baseline period data • Vary by measure:

14. VBP Scoring Methodology • Hospital performance for each measure is compared to national performance standards • Points are awarded for: • Achieving high quality goals • Improving towards high quality goals • Maximum = 10 points / measure • Points scored for each measure are used to calculate domain scores • Domain scores are weighted to calculate a Total Performance Score

15. VBP Scoring – FFY 2013 Program

16. VBP Scoring Methodology • Program is budget neutral. This means: • All monies contributed to the VBP must be paid out within the same period • Will be funded with 1% of hospitals Medicare IPPS operating dollars for 2013 • Total payments into and out of the pool must be equal

17. VBP Scoring Methodology Scoring • Hospitals must have sufficient data for calculating achievement points in order for an individual measure’s score to be included in the overall domain score • When there are both achievement and improvement points for a measure, the higher of the two is taken as final points for that measure

18. VBP Scoring Methodology A hospital’s Total Performance Score (TPS) will be calculated: • Calculating Overall Domain Score (all domains): For each domain, the overall domain score will be the sum of the final points earned for the domain divided by the maximum possible points for all useable measures in the domain • Domain Weighting and Calculating a TPS: • 2013: Process Measures 70% Patient Outcomes 30%

19. VBP Scoring Methodology • CMS has established the following formulas to calculate VBP points:

20. Process Score Calculation – FFY 2013 VBP Program

21. HCAHPS Score Calculations – FFY 2013 Program

22. Concerns with Process and HCAHPS Measures • Process measures • The full range of Achievement is not possible • Minimum case size is 10 • Small hospitals may fall in and out of the program from year to year • CMS exclusion method for “topped out” measures • HCAHPS measures • Bias based on region, hospital size and type • Weight is too high • Resulting scores are not evenly distributed, skewed low

23. Value Based Purchasing 2014

24. New Measures/Domains for the FFY 2014 VBP Program * Only some aspects of 2014 program are final

25. Outcomes Domain Measures – FFY 2014 Program

26. Proposed Efficiency Domain Measures – FFY 2014 • Medicare Spending per Beneficiary • ACA requires use of efficiency measures in FFY 2014 or thereafter • Must include total Part A and Part B spending per beneficiary • Must include Medicare spending per beneficiary adjusted for age, sex, race, severity, and other factors as determined by the Secretary • CMS is also considering measures of hospital internal efficiency

27. Concerns with Proposed Efficiency Measure • Does proposal satisfy ACA mandate for a measure of “spending per beneficiary”? • Holds hospitals accountable for all providers’ practice patterns • Should consider future IOM report and proposal for Medicare bundling demonstrations • Methodology cannot be replicated • No-one can check/audit CMS’ calculations • Industry does not have access to the data

28. Data Collection Timeframes – FFY 2014 Program • Process of Care and Patient Experience of Care Domains * • Baseline Period: April 1, 2010 through December 31, 2010 (9-months) • Performance Period: April 1, 2012 through December 31, 2012 (9-months) • Outcomes Domain – Mortality Measures • Baseline Period: July 1, 2009 through June 30, 2010 (12-months) • Performance Period: July 1, 2011 through June 30, 2012 (12-months) • Outcomes Domain – AHRQ composite and HAC Measures * • Baseline Period: March 3, 2010 through September 30, 2010 (7-months) • Performance Period: March 3, 2012 through September 30, 2012 (7-months)  • Efficiency Domain * • Baseline Period: May 15, 2010 through 90 days prior to February 14, 2011 (9-months) • Performance Period: May 15, 2012 through February 14, 2013 (9-months) * Proposed

29. GHA Reports

30. GHA Reports • GHA reports are based off of HANY’s VBP reports

35. Finding your GHA Report • Go to www.gha.org • Click on “Quality and Health” • Click on “Hospital Data” • Click on the “click here” button • You will need your GHA log-in and password • Only PRC (Peer Review Contacts) can view the reports and CEO’s

36. Questions?