Leading the Value Journey: Value Based Purchasing “What should you be focused on?”

1. Leading the Value Journey: Value Based Purchasing“What should you be focused on?” Melinda S. Hancock, FHFMA, CPA Secretary/Treasurer HFMA HFMA Western Pennsylvania Chapter Winter Education Event February 18, 2014

3. Waste in the System

4. The New Construct Evolving Population Health in a Fee for Service Era Healthcare Reform

5. Goals of Payment Reform 2 Key Components of Payment Reform This will include establishing measures to (1) establish performance based payment incentives and (2) protecting against unintended consequences of cost containment. Source: Rand, Payment Reform: Analysis of Models and Performance Measurement Implications, 2011

6. Current Reform Landscape OCT2011 OCT 2012 OCT2013 OCT2014 OCT2015 OCT2016 OCT2017 OCT2018 OCT2019 OCT2020 Value-Based Purchasing 1.0% 1.25% 1.5% 1.75% 2.0% 30-day readmissions 2.0% 1.0% 3.0% 1% 2% Hospital-acquired conditions 1.0% Market basket reductions 0.1% 0.1% 0.3% 0.2% 0.75% Multifactor Productivity Adj* 0.7% 0.9% 0.65% 0.5% 1.0% 0.7% 0.5% 0.5% 0.4% Documentation and Coding Adj(DCA)** 2.1% 2.1% 2.1% 4.9% 1.9% 2.1% Across the board cuts to finance debt *** 2.0% 10.6% 9.4% 8.7% 6.0% 10.5% 6.7% 8.1% 11.4% 9.3% 8.9% TOTAL IMPACT 10% % = % of medicare inpatient operating payments *The Multifactor Productivity Adjustment is an estimate generated by the CMS Office of the Actuary **DCA, also known as the behavioral offset, shown here does not show the future affects of these cuts on baseline spending. Estimates FY 2014-FY 2017 impact of the American Taxpayer Relief Act of 2012*** If Congress has not adopted the Joint Committee’s report to reduce the deficit by at least $1.2 trillion, the 2% cut will be implemented April 2013

7. Timeline of Performance

8. Reform Readiness Amount at Risk a: Represents a worst case scenario and a ceiling of the maximum penalties b: Represents a withhold of payment that can be earned back based on quality metrics

9. The Medicare DRG Formula Standard Federal Rate Labor Portion X Wage Index Non Labor Portion Adjusted Base Rate Case Mix/DRG Weight Generic Base Rate DSH Adjustment + IME Adjustment Payment

10. Facts about FY 14 VBP LESS REIMBURSEMENT A total of 1,451 hospitals got paid less in FY 14 vs FY 13 for VPB. 1,231 got paid more. Largest Decrease 1.14% $1.1B at play in FY 14 VBP Change from FY 13 VBP Largest increase .88%

11. Pennsylvania Hospital Performance Value Based Purchasing Readmissions For FFY 2014

12. VBP Shifting of Domain Weights • Patient Experience • Core Measures • Outcomes • Efficiency (MSPB)

13. New NQS Based Domains in FY 17 Note: The Clinical Care Component is split 25% Outcomes and 10% Process Per August 13, 2013 Federal Register

14. What Determines Reimbursement? • Reimbursement Determined Two Ways • Improvement • Achievement • Improvement • How we measure against ourselves • Did we do better than last year • Achievement • How we compare to Top Decile • Must Meet or Exceede the Mean Scores of Top Decile Performers (350 Hospitals)

15. Clarification of Definitions • In the Final Rule: August 19, 2013 • “Achievement Threshold (or achievement performance standard) means the median (50th percentile) of hospital performance on a measure during a baseline period with respect to a fiscal year, for Hospital VBP Program measures other than the Medicare Spending Per Beneficiary measure and the median (50th percentile) of hospital performance on a measure during the performance period with respect to a fiscal year, for the Medicare Spending per Beneficiary measure” • “Benchmark means the arithmetic mean of the top decile of hospital performance on a measure during the baseline period with respect to a fiscal year, for Hospital VBP Program measures other than the Medicare Spending per Beneficiary measure, and the arithmetic mean of the top decile of hospital performance on a measure during the performance period with respect to a fiscal year, for the Medicare Spending Per Beneficiary measure” Per August 13, 2013 Federal Register

16. Scenario on Scoring AMI 7a- Fibrinolytic Therapy .6548 Achievement Threshold .9191 Benchmark Score .4287 Baseline Score .8163 Performance Achievement Range (1-10) Improvement Range (0-9) Sourced: 2010 August Federal Register

17. FY 16 Clinical Process of Care 10% Per August 13, 2013 Federal Register

18. FY 16 Outcome Measures 40% Per August 13, 2013 Federal Register

19. FY 16 Patient Experience of Care 25% Per August 13, 2013 Federal Register

20. 30 Day Risk-Standardized Mortality Rate Calculation = Measure (AMI, HF, PN) National Crude Rate Facility PredictedDeaths X Facility ExpectedDeaths This is 30 days post admission: the majority of these may be post discharge.

21. HF Mortality Formula Numerator & Denominator Description The measure cohort consists of admissions for Medicare Fee-for-Service (FFS) and Veterans Health Administration (VA) beneficiaries aged 65 years and older discharged from non-federal acute care hospitals or VA hospitals, respectively, having a principal discharge diagnosis of heart failure (HF). The hospital-specific risk-standardized mortality rate (RSMR) is calculated as the ratio of the number of "predicted" deaths to the number of "expected" deaths, multiplied by the national unadjusted mortality rate. The "denominator" is the number of deaths expected on the basis of the nation's performance with that hospital's case mix. The "numerator" of the ratio component is the number of deaths within 30 days predicted on the basis of the hospital's performance with its observed case mix. It conceptually allows for a comparison of a particular hospital's performance given its case mix to an average hospital's performance with the same case mix. Thus, a lower ratio indicates lower-than-expected mortality or better quality, and a higher ratio indicates higher-than-expected mortality or worse quality. Source: http://www.qualitymeasures.ahrq.gov/content.aspx?id=35573

22. Heart Failure Risk Adjustments The final set of risk-adjustment variables included: Source: http://www.qualitymeasures.ahrq.gov/content.aspx?id=35573

23. Trend of Mortality Source: Medicare Hospital Quality Chartbook, 2013

24. Distribution of Mortality Source: Medicare Hospital Quality Chartbook, 2013

25. Efficiency Definition • Medicare Spending Per Beneficiary (MSPB) • Captures total Medicare spending per beneficiary, relative to a hospital stay, bundling hospital sources (Part A) with post acute care (Part B). • Bundles the cost of care delivered to a beneficiary for an episode of care across the continuum of care. • 3 days prior to admission and 30 days post discharge • Indexed by the discharging hospital regardless of who provides services in the 3 days prior and 30 days post • The first performance period ended 12/31/13 for FFY 15 and the second one started 1/1/14 for FFY 16.

26. Medicare Spending Per Beneficiary Lists percent of spending for the hospital vs. state and national statistics by provider type.

27. By MDC for each Hospital Lists all 25 MDCs with state and national averages Three additional reports along with the summary on Qnet: index admission file, beneficiary risk score file and an MSPB episode file.

28. What should I be looking for next? Watch for the flags… On Hospital Compare

29. Heads Up: Stroke Source: Medicare Hospital Quality Chartbook, 2013

30. Timeline of Performance

31. Reform Readiness Amount at Risk a: Represents a worst case scenario and a ceiling of the maximum penalties b: Represents a withhold of payment that can be earned back based on quality metrics

32. Hospital Acquired Conditions: Final Rule for FFY 2015 1% Medicare Reimbursement at risk Lowest performing quartile will be penalized

33. HAC Domain Weightings DOMAIN 1: 35% DOMAIN 2: 65% Pressure Ulcer Rate: 8.33% CLABSI: 32.5% Foreign Object Left In Body: 8.33% CAUTI: 32.5%

34. Proposed Future Measures: Domain 2

37. Why is patient financial communication important now? • The U.S. health care system is inherently complex—even for healthcare professionals • Today, more people are covered by high- deductible health plans • Consumers want to know exactly how much they will be expected to pay • Media coverage has raised public awareness of issues around healthcare costs and prices

38. Donna Shalala Former U.S. Secretary of Health and Human Services October 2013 “There’s never been a more important time in our history for very clear communication between healthcare professionals and our patients.”

39. What do the best practices cover? • Where and when to have financial discussions • Who participates • What topics to address • Discussion parameters • Assessment framework

40. How were the best practices developed? • These best practices reflect the consensus of a steering committee of experts across many fields, including • Patients • Hospitals • Physicians • Payers …advised by a team of leading national policymakers

41. How can we demonstrate our commitment to excellence in patient financial communication? Become an Adopter of the best practices. • Adopters receive acknowledgement on the HFMA website and in hfm magazine. • Adopters may use the phrase “Supporter of the Patient Financial Communications Best Practices” in marketing materials. • No fees involved • All healthcare provider organizations are eligible.

42. hfma.org/communications

43. Price Transparency Task Force

44. Medical Debt Collection Task Force

45. “The challenges that we face… will require leadership from everybody in this room.” Steve Rose 2013-2014 Chair, HFMA CFO, Conway Regional Health System Speaking at ANI 2013

46. Thank you!