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Panacea Healthcare Solutions, Inc.The Impact of Value-Based Purchasing in theHealthcare IndustryKim Charland, BA, RHIT, CCS

Senior Vice President Clinical Innovation, Panacea Healthcare Solutions andEditor of VBPmonitor

• Panacea Healthcare Solutions, Inc. has prepared this seminar using official Centers for Medicare andMedicaid Services (CMS) documents and other pertinent regulatory and industry resources. It is designed toprovide accurate and authoritative information on the subject matter. Every reasonable effort has been madeto ensure its accuracy. Nevertheless, the ultimate responsibility for correct use of the coding system and thepublication lies with the user.

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Disclaimer

© 2015 Panacea Healthcare Solutions, Inc.

• Discuss the current healthcare environment

• Review what the healthcare quality initiative is

• Discuss the impact of quality outcomes data onproviders and the impact on financialreimbursement

• Discuss what we should be doing


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Today’s Objectives

CURRENT HEALTHCAREENVIRONMENT

• Financial pressures

• Reduction in payments due to MS-DRGs and RACinitiatives (medical necessity, coding, and clinicalsignificance)

• Reduction in outpatient payments due to APC bundlingand regulatory audit initiatives (medical necessity andcoding)

• Increase in Pay for Performance (Quality) initiatives /Value-Based Purchasing (increase quality of care andpatient experience while reducing healthcare costs)


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Factors Influencing Healthcare

• Peer review organizations publishing qualityscores

• Healthcare consumerism

• Managed care and third party payor contractimplications

• Data Mining

• ICD-10 implementation on October 1st, 2015

• Healthcare reform


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Factors Influencing Healthcare

WHAT IS THE QUALITYHEALTHCARE INITIATIVE(VALUE-BASED PURCHASING)?

• “Value-Based Purchasing” is a term for initiativesaimed at improving the quality, efficiency andoverall value of healthcare.

• Value-Based Purchasing includes financialincentives that reward providers for:

– Delivery of care efficiencies

– Submission of data and measures

– Improved quality of care

– Patient safety


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Value-Based Purchasing

• Based on reported outcomes:– Diagnoses and procedures

– Severity of Illness (SOI)

– Risk of Mortality (ROM)

– Morbidity

– Length of Stay (LOS)

– Resource Consumption

– Cost per patient

– Case Mix Index (CMI)

– Readmission rates

– Patient Satisfaction


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How Is Quality Measured?

• Many are reported by ICD-9 codes (soon to beICD-10 codes)

• Patient care data generated by medical recorddocumentation (EHRs)

• Cost / charge data

• Patient surveys


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How Is Quality Measured?

• Payors

• Medicare Administrative Contractors (MACs)

• Office of Inspector General (OIG)

• State agencies

• Quality Improvement Organizations (QIOs)

• RACs and other Regulatory Audit Agencies

• Healthcare facilities

• Beneficiaries / patients

• Centers for Medicare and Medicaid (CMS)

• EVERYONE!


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Who’s Looking at the Data?

• Quality measures used for Value-BasedPurchasing fall into four categories:

– Process measures

– Outcome measures

– Patient experience

– Structure measures


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Medicare Goals of Value-Based Purchasing

Financial Viability Ensure the traditional Medicare fee-for-service program isprotected

Payment Incentives Link payment to the value (quality and efficiency) of care

Joint Accountability Providers share clinical and financial accountability forhealthcare

Effectiveness Care is evidence based and account driven to bettermanage diseases

Ensuring Access Ensure access to high quality affordable care

Safety and Transparency Beneficiaries receive information on the quality, cost, andsafety of their care

Smooth Transitions Payment systems support well-coordinated care acrossproviders and settings

Improved Technology EHRs help providers deliver high quality, efficient andcoordinated care


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• Hospital Value Based Purchasing (HVBP)

• Hospital Inpatient Reporting Program (IQR)

• Hospital Readmissions Reduction Program

• Hospital Acquired Conditions ReductionProgram (HACs)

• Hospital Outpatient Reporting Program (OQR)

• Physician Quality Reporting System (PQRS)

• Ambulatory Surgery Center Quality Reporting(ASCQR)


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CMS Quality Initiatives

• Inpatient Rehabilitation Facility Quality ReportingProgram (IRFQRP)

• Long-term Care Hospital Quality Reporting Program(LTCHQR)

• PPS-Exempt Cancer Hospital Quality Reporting Program(PCHQR)

• Inpatient Psychiatric Facility Quality Reporting Program(IPFQR)

• Home Health Quality Reporting Program (HH QRP)

• Hospice Quality Reporting Program

• End-Stage Renal Disease Quality Initiative


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CMS Quality Initiatives

• Facilities and Physicians are profiled by variousagencies, examples include:

– Thomson Reuters: www.100tophospitals.com

– Health Grades: www.healthgrades.com

– Joint Commission: www.jcaho.com

– Leap Frog Group: www.leapfroggroup.org

– Hospital Quality Report: www.hospital-quality.com

– Physician Compare:www.medicare.gov/PhysicianCompare


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Examples of Reporting Agencies

Worse thanAverage

AverageBetter than

Average

Death in procedureswhere mortality is usuallyvery low

X

Pressure sores or bedsores acquired in thehospital

X

Death following a seriouscomplication after surgery

X

Collapsed lung due to aprocedure or surgery in oraround the chest

X

Catheter-relatedbloodstream infectionsacquired at the hospital

X


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Health Grades: Sample Hospital(Patient Safety Indicator Reporting)

Worse thanAverage

AverageBetter than

Average

Deep blood clots in thelungs or legs followingsurgery

X

Bloodstream infectionfollowing surgery

X

Breakdown of abdominalincision site

X

Accidental cut, puncture,perforation or hemorrhageduring medical care

X

Foreign objects left inbody during a surgery orprocedure

3 Events


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Health Grades: Sample Hospital(Patient Safety Indicator Reporting)

• Dr. “Name” Specialties

• Cardiology

• View specialty

• Procedures Dr. “Name” Performs

• Cardiac Catheterization (incl. Coronary Angiography)

• Cardiac Imaging

• See all 9 procedures

• Conditions Dr. “Name” Treats

• Aneurysm and Dissection of Heart

• Angina and Acute Coronary Syndrome

• See all 27 conditions

• More About Dr. “Name” Background

• Sanctions

• Malpractice

• Board Actions

• Education & Training

• Languages Spoken


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Health Grades: Sample Physician(Patient Safety Indicator Reporting)

• All ICD-9-CM codes have established Severity ofIllness and Risk of Mortality

– 1 Minor

– 2 Moderate

– 3 Major

– 4 Extreme

• Once all diagnoses and procedures are coded, acomplicated algorithm is used to determine theAPR-DRG SOI/ROM scores for the patient


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Severity of Illness (SOI) and Risk ofMortality (ROM)

• CMS uses these scores to determine theaverage SOI and ROM for the patients of ahospital or Physician

• CMS determines the Mortality Index, based onrisk adjustment, to determine the ratio of actualdeaths to expected deaths

• MS-DRGs have a geometric length of stay(LOS) which can be compared to the actual LOS


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SOI and ROM

• Higher SOI/ROM scores support medicalnecessity for admission and longer length ofstays

• Each MS-DRG has a relative weight whichreflects average hospital resources used to treatthe patient and establishes reimbursement

• CMS is able to compare actual costs toexpected costs


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SOI and ROM

• Relative weights are also used to determine theCase Mix Index which is another way to reflecthow sick your patients are

• This data is used to profile both the hospital andPhysician

• When the patient’s SOI and ROM is notaccurately reflected by Physician documentationand a poor outcome occurs, it appears asthough complications are occurring in healthypatients


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SOI and ROM

Clinical Documentation Codes to……… SOI / ROM

“acute renal insufficiency”593.9 Disorder of kidneyand ureter

1/1

“acute renal failure”584.9 Acute kidney failure,unspecified

3/3

“acute kidney injury”584.9 Acute kidney failure,unspecified

3/3

“chronic renal insufficiency”585.9 Chronic kidneyfailure, unspecified

1/1

“CKD, stage III”585.3 Chronic kidneydisease, stage III

1/2

“end stage renal disease”585.6 End stage renaldisease

2/2


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SOI and ROM Example

• Case Mix

• Mortality rates

• Contract negotiations– Stop MS-DRG reductions

– Improved E/M professional fee arrangements

– Quality data metric reporting (medical necessity)

• Validate care delivered

• Prevention of random audits by regulatory agencies

• Value-Based Purchasing


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SOI / ROM Impact

IMPACT IN THEPROVIDER SETTING

• Incomplete, ambiguous, and/or clinicallyincongruent documentation

• Incorrect or incomplete coding

• Sequencing of coded data

• Understanding complexity (SOI and ROM)

• Conflicting documentation requirements toproviders – coding vs. quality vs. clinicaldefinitions


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Issues that ImpactQuality Data and Financial Performance

Physician and OtherProvider

Documentation

ClinicalDocumentationImprovement

(Concurrent Queries)

Quality MeasuresData Collection

(? Prior to completemedical record)

HIM RetrospectiveQueries and FinalCode Assignment

DRG Assignment,Severity-Level

Profiles, and Risk-Adjusted Profiles)


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Documentation Impact onQuality Data Reporting

• Lack of coordinated system for flagging,reviewing and correcting quality concerns

• Lack of knowledge by team members related tocoding and quality definitions

• Identification of issues retrospectively resultingin compliance risk


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Issues that ImpactQuality Data and Financial Performance

• P4P moves into higher gear, significant updates finalized– FY 2015 marks the first year that three pay-for-performance

(P4P) programs—value-based purchasing, readmissions, andhospital-acquired-conditions—will apply for inpatient payments.Collectively, these programs place 5.5% of inpatientreimbursement at risk for hospitals, with only VBP having anypotential financial upside for good performance.

(Advisory Board, Aug 5, 2014 article (“Early takeaways from thefinal FY 2015 inpatient rule”)


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P4P Financial Impact – IPPS 2015

• Hospital-Acquired Conditions Reduction Program– Acute care hospitals that report the most hospital-acquired

conditions will see Medicare reimbursement reductions of 1% inFY 2015.

• Readmission Reduction Program– Of the three P4P programs, the readmissions penalties are the

most significant for inpatient payments in FY 2015. Hospitalsmay now lose up to 3% of reimbursement moving forward,depending on their readmissions performance.

(Advisory Board, Aug 5, 2014 article (“Early takeaways from thefinal FY 2015 inpatient rule”)


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P4P Financial Impact – IPPS 2015

VBP Program 2013 2014 2015 2016 2017

Hospital ValueBased Purchasing

1% 1.25% 1.5% 1.75% 1.75%

HospitalReadmissions

Reduction Program

1% 2% 3% 3% 3%

Hospital AcquiredConditions

1% 1% 1%

Total 2% 3.25% 5.5% 5.75% 5.75%


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2015 HVBP CMS Reimbursement Impact

• In FY 2015, general acute-care hospitals will see a 1.4percent rate increase if they successfully participate inthe Hospital IQR Program and are meaningful electronichealth record (EHR) users. Hospitals that do notsuccessfully participate in the Hospital IQR Program anddo not submit the required quality data electronically willbe subject to a one-fourth reduction of the market basketupdate (previously these hospitals received a 2percentage point reduction).


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Hospital IQR Program – IPPS 2015

• Currently, the Hospital IQR Program includes thefollowing:

– Chart-abstracted measures, such as heart attack andsurgical care improvement measures

– Claims-based measures such as mortality andreadmissions

– Healthcare-associated infections measures

– Survey-based measures, such as patient experienceof care

– Structural measures that assess features of hospitalsto assess their capacity to improve quality of care.


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Hospital IQR Program – IPPS 2015

• The Department of Health and Human Services (HHS) announcedin January a new set of goals and a timeline for tying Medicarepayments to quality or value through alternative payment models.

– Tie 30% (up from 20%) of traditional Medicare payments by the end of2016 thru ACO’s (Accountable Care Organizations) and bundledpayments

– Tie 50% by the end of 2018

• HHS also set a goal of tying 85% of all traditional Medicarepayments to quality or value by 2016 and 90% by 2018 throughprograms such as Hospital Value-Based Purchasing and HospitalReadmission Reduction Programs.


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Future Value-Based Purchasing Impact


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HHS Delivery System Reform Goals

Press, Matthew. “CMS Innovation and Health Care Delivery System Reform.” April 2015.Available from http://www.allhealth.org/briefingmaterials/1-RESSPRESENTATION_J9.PDF

• Passage of the Medicare Access and CHIPReauthorization Act of 2015 (MACRA), whichpermanently repealed the sustainable growthrate (SGR) formula for physician reimbursementin the Medicare program.

• Two provisions of the legislation that haveattracted attention include:

– Merit-Based Incentive Payment System (MIPS); and

– Support for transition to alternative payment methods(APMs).


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• Beginning in 2019, bonuses will be available for eligibleprofessionals who score well in MIPS, which will becomethe new pay-for-performance program underthe Medicare system.

• The current penalty calculations under the PhysicianQuality Reporting System (PQRS), electronic healthrecords/meaningful use (EHRs/MU) and the value-basedpayment modifier (VBM) would end at the close of 2018.

• MIPS will gauge program performance based on fourcategories: quality, resource use, meaningful use, andclinical practice improvement activities.


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• MIPS is intended to build upon and improve currentquality measures and concepts in effect now for PQRS,MU and VBM. The next step will be publication ofregulations on the details of how MIPS will beimplemented.

• MACRA also provides incentives for physicians todevelop and participate in new models of healthcaredelivery/payment. Professionals who receive asignificant share of their revenues through an APM areslated to receive bonuses each year from 2019-2024.


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• Many, many more VBP / Quality initiatives, we’vediscussed only a few today…….


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WHAT SHOULD WE DO?

• Know where your hospital stands on eachselected measure for the baseline period andidentify which measures have the best rate ofreturn

• Understand how discharge volume by measurefactors into the VBP score

• Ensure pricing is competitive – especially in theoutpatient market


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Financial Strategies to ImproveVBP Performance

• Must have C-suite buy-in – lead by CEO

• Multi-disciplinary team – clinical, quality, financialand IT

• Promote a culture of transparency and integrity

• Two important areas to address:

– Clinical data

– Technology


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Strategies to ImproveQuality Outcomes and Reporting

• Assess inefficient areas of the hospital

• Cross organizational governance

• IT involvement is critical

• Investment in comprehensive data collectionand reporting systems

• Patient satisfaction

• Sharing of quality scores (ongoing)


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• Review of all reporting and audit mechanisms toassess for duplication of efforts and conflictingmessages

• Focused review of cases with quality issues byan external auditor

• Development of multidisciplinary task force todevelop workflow and shared processes withsingle point reference for providers


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• Use of quality tracking tool

• Determine problem quality issues and develop afocused corrective action plan

• Education for entire multidisciplinary team

• Run, use and share reports – look at your data– Severity of Illness

– Risk of Mortality

– PSI (Patient Safety Data)

– Length of Stay

– Readmissions


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• Accurate Clinical Documentation Impacts:– Coding– Severity of Illness (SOI)– POA/HAC– Case Mix Index (CMI)– Core measures– Patient safety– Outcome measures– Profiling– Compliance– Audits– And more……


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Ensuring Clinical DocumentationIntegrity

• A CDI Program should be viewed as anecessary aspect to the provision of patient careand overall operational performance resulting in:– Higher quality patient care

– Better treatment outcomes

– Higher quality scores and reporting

– Better patient safety indicator scores

– Accurate reimbursement (facility and Physician)

– Sustained CMI

– Decreased recovery audit contractor (RAC) denials


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CDI Program Impact

• CDI activities must resonate with all clinicians asan organizational strategy critical to the longevityand survival of the organization

• The physician concurrent query process is thecore operational component of every CDIProgram – key is timely query response

• Good documentation saves time and money,and improves communication among providersas well as the overall quality of care provided tothe consumer


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Role of Medical Staff

• CDI Program Objectives:

– Improve MS-DRG assignment to sustain Case MixIndex and prevent erosion due to regulatory changes

– Improve SOI and ROM classifications

– Maintain high quality clinical documentation

– Support internal quality initiatives

– Report valid and reliable data

– Influence external quality measurements

– Support ICD-10 implementation


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Recommendations for a CDI Program

“And then the documentation is gone, and all that isleft is a set of numbers.”

PAMELA P. BENSEN MD

Kim [email protected]

CONTACT THE SPEAKER:

• VBPmonitor.com (register now and receive a freewhite paper – What Value Are We Gaining fromValue-Based Purchasing?”)

• Quality Documentation Improvement Audits

• Quality Reporting Process Improvement Analysis

• Staff Education

• Strategic Pricing

• For more information contact Julie @ 800-252-1578,Ext. 3437

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Panacea VBP Products


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