Centers for Medicare & Medicaid Services Update Hospital Value Based Purchasing

1. Centers for Medicare & Medicaid Services UpdateHospital Value Based Purchasing Howard Shaps, MD, MBA Medical Director Health Care Excel August 7, 2013

2. Agenda • History • Background • Measures • Past Present Future • Conclusions and Questions

3. Core Measure • An evidenced-based performance measure • The basic core measure principles • Every patient with the given diagnosis…. • Will receive the baseline (core) care • Scientific research • Diagnosis • High volume • High cost • Increased rate of morbidity or mortality

4. Quality Measures • Evidence based • Measure or quantify • Healthcare processes • Outcomes • Patient perceptions • Organizational structure and/or systems • Goal: Provide care that is….. • Effective Patient Centered • Safe Equitable • Efficient Timely

5. Hospital Quality Initiative • 2003 • Goals and Objectives • National public reporting activities – Quality Measures • Private and public purchasers of healthcare • Oversight and accrediting entities • Providers of hospital care • Empower consumers • To make more informed decisions about their healthcare • Encourage providers and clinicians • To improve the quality of healthcare

7. Hospital Compare • 2005 • A Website developed to publicly report information: • Valid • Credible • User-friendly • 4,000 Medicare-certified Hospitals • Displays quality information • Can help make decisions about where patients obtain health care • Encourages hospitals to improve the quality of care they provide http://www.medicare.gov/hospitalcompare

8. Hospital Quality Initiative: Data Sets Clinical Data • Centers for Medicare & Medicaid Services (CMS) aligned with the National Quality Forum (NQF) • Evidence-based hospital quality measures • Research and evidenced-based medicine affects: • Mortality and morbidity • Disability • Length of stay • Readmissions

10. Hospital Quality Initiative: Data Sets Patient Perspectives • CMS worked with the Agency for Healthcare Research and Quality (AHRQ) • Hospital-Consumer Assessment of Healthcare Provider and Systems (HCAHPS) survey

11. Inpatient Quality Reporting (IQR) Program • Medicare Prescription Drug, Improvement and Modernization Act (MMA) of 2003 • Section 5001(a) of Pub. 109-171 of the Deficit Reduction Act (DRA) of 2005 • Requirements for the Hospital IQR program • Built on the Hospital Quality Initiative • This section of the MMA authorized CMS to… • Pay hospitals that successfully report designated quality measures a higher annual update to their payment rates as part of the Inpatient Prospective Payment System (IPPS)

12. Inpatient Quality Reporting (IQR) Program • Requires "sub-section (d)" hospitals to submit data for specific quality measures for health conditions common among people with Medicare • Quality Measure Data found on Hospital Compare • Targets consumers • Encourage hospitals and clinicians • Improve the quality of inpatient care • 2.0 percentage point reduction • If do not participate

13. CMS Payment Reduction Programs • Hospital Value Based Purchasing • Hospital Readmission Reduction Program • Higher than expected readmission rates • Lower payments • Payment Adjustment for Hospital Acquired Conditions • Bottom quartile affected

15. Hospital Value Based Purchasing

19. Hospital Value-Based Purchasing Program • Hospital Inpatient Quality Reporting Program • Authorized by Section 501(b) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 • Affordable Care Act • Congress authorized the Hospital inpatient Value-Based Purchasing (VBP) program in Section 3001(a) • Next step in promoting higher quality care for Medicare • Pays for care that rewards better value and patient outcome • Instead of just volume of services • Measures specified under the Hospital IQR Program • Results published on Hospital Compare for at least one year

20. Intentions • Promote better clinical outcomesfor hospital patients • Improve patient’s experience of care during hospital stays • Encourage hospitals to improve the quality and safety of care • Eliminating or reducing the occurrence of adverse events • Adopting evidence-based care standards and protocols • Re-engineering hospital processes • Improve patients’ experience of care • Improve clinical outcomes

21. Concepts • Buyers should hold providers of health care accountable for both cost and quality of care • Value-based purchasing brings together • Information on the quality of health care • Patient outcomes • Health status • Data on the dollar outlays going towards health • Managing the use of the health care system • Reduce inappropriate care • Identify and reward the best performing providers

23. End Point • CMS is changing the way it pays hospitals • Rewarding hospitals for the quality of care they provide to Medicare patients, not just the quantityof procedures they perform • Hospitals are rewarded • How closely they follow best clinical practices – core or quality measures • How well hospitals enhance patients’ experiences of care • Patient outcomes • When hospitals follow proven best practices, patients receive higher quality care and see better outcomes

25. Eligibility • How is “hospital” defined for this program? • The Hospital VBP Program applies to subsection (d) hospitals: • Statutory definition of subsection (d) hospital found in Section 1886(d)(1)(B) of the Social Security Act • Hospitals in all 50 states, the District of Columbia • Acute Care Hospitals • Including Maryland • More than 3,000 hospitals across the country are eligible to participate

26. Who is Excluded? • Exclusions Under Section 1886(o)(1)(C)(ii): • Payment reductions under Hospital IQR Program • Excluded from the Inpatient Prospective Payment System (IPPS) • Deficiencies during the Performance Period that pose immediate jeopardy to the health or safety of patients • Without the minimum number of cases, measures, or surveys in the performance period • Exemption from the Secretary of the Department of Health and Human Services (HHS) • Maryland received a waiver for the FY 2013 Program Year Hospitals excluded from the Hospital VBP Program will not be subject to the base operating DRG reduction for the applicable fiscal year

27. Funding • Via regular fees Medicare pays hospitals through its Diagnosis-Related Group (DRG) system • DRG payments for each patient discharge across all hospitals reduced each year • Money will be used to fund incentive payments • Roughly half of participating hospitals will receive a net increase in payments • The rest will receive a net decrease in payments • Possible increases depend on the distribution of hospitals’ performance scores Budget Neutral

28. Base Operating DRG Percent Reduction Percent Reduction

29. So…… Where are we? Where are we going?

30. Key Terms Domains Measures Time Periods Points Floors Thresholds Benchmarks Percentages Achievement Performance Total Performance Score

31. Patient Experience of Care 30%

34. Baseline Performance Data

35. Baseline and Performance Periods Fiscal Year 2014 Clinical Process of Care and Patient Experience of Care Baseline: April 1, 2010 to December 31, 2010 Performance: April 1, 2012 to December 31, 2012 Outcome Baseline: July 1, 2009 to June 30, 2010 Baseline: July 1, 2011 to June 30, 2012

38. Achievement Points • Achievement Points are awarded by comparing an INDIVIDUAL hospital’s rates during the Performance Period with ALL hospitals’ rates from the Baseline Period • How are Achievement Points awarded? • Hospital rate at or above the Benchmark: 10 Achievement Points • Hospital rate less than the Achievement Threshold: 0 Achievement Points • If the rate is equal to or greater than the Achievement Threshold and less than the Benchmark: 1-9 Achievement Points

39. Improvement Points • Improvement Points are awarded by comparing one hospital’s rates during the Performance Period to that same hospital’s rates from the Baseline Period • How are Improvement Points awarded? • Hospital rate at or above the Benchmark: 9 Improvement Points • Hospital rate less than or equal to Baseline Period Rate: 0 Improvement Points • If the hospital’s rate is between the Baseline Period Rate and the Benchmark: 0-9 Improvement Points

40. Consistency Points: How My Hospital Compares to the Floor Eligible to earn between 0 to 20 possible points Based on the hospital’s lowest dimension score in Performance Period Relative to the lowest performing hospital on this dimension (floor)

41. How are Hospitals Measured? • Points for Achievementand Improvementfor each measure or dimension • Greater number used • Points are added across all measures to reach the Clinical Process of Care and Outcome domain scores • Points are added across all dimensions and are added to the Consistency Points to reach the Patient Experience of Care domain score • Fiscal Year 2014 • 45% of Total Performance Score based on Clinical Process of Care measures • 25% of Total Performance Score based on Outcome measures • 30% of Total Performance Score based on Patient Experience of Care dimensions Total Performance Score

42. Normalized • Occurs when the total number of cases for a measure was not met • Total Performance Score is adjusted to account for missing measures CMS will normalize a domain score by converting the hospital’s points earned to a percentage of possible points

43. Who is eligible in FY 2014? • Clinical Process of Care domain score • If they have at least 10 casesfor each of at least 4 applicable measures during the Performance Period • Patient Experience of Care domain score • At least 100 completed Hospital Consumer Assessment Healthcare Providers and System (HCAHPS) surveys during the Performance Period • Outcome domain score • Need 10 cases in two of three measures to be scored For FY 2014 providers must have had a score for all three domains to be eligible

44. Fiscal Year 2014

45. Fiscal Year 2014

46. Fiscal Year 2014

47. Reports and Calculations

50. Consistency Points Apply Here