TRANSFORMATIONAL CHANGE

The Physician Value-Based Payment Modifier (VBM)

Georgia Partnership for Telehealth

Fifth Annual Spring Conference

March 19-22, 2014

Raymond Paul Tew

Medicus Innovation

Peter Drucker

What do we have to do today to be ready for an uncertain tomorrow?

Center for Medicaid and Medicare Services

• Largest payer of healthcare in the world

• Provides medical care to 30% of the US population

• $800,000,000,000.00 per year - $120,000,000,000.00 Part B

• $433,000,000,000.00 per year – Total Yearly GDP Georgia

CMS Transition:From a “passive” payer of services

To an “active” purchaser of value (quality and cost)

History of Value Based Reimbursement A Decade in the Making

2001 First Step - The CMS Quality Initiative - ensuring high quality health care through published consumer information on the performance of health care providers,

2002 Initial Quality Initiative Focus - CMS partnered with the Agency for Healthcare Research and Quality (AHRQ), to develop and test the HCAHPS (Hospital Consumer Assessment of Healthcare Providers and Systems) Survey

2003 Hospital Quality of Care Reporting - CMS began collecting data voluntarily submitted for 10 “core “process of care measures.

2004 The Hospital Quality Alliance - hospitals nationwide report data to the CMS on indicators of the quality of care measures.

2005 Deficit Reduction Act (DRA) of 2005 - The Secretary of HHS to was required to “make outcome and efficiency measures publically available

2006 CMS implemented the HCAHPS Survey in October 2006,

2007 Incorporation of HCAHPS and Readmission Measures into IQR

2008 Initial Discussion of Value-Based Purchasing for Physicians and Other Professional Services

2009 First public reporting of HCAHPS results and HHS Directed development of VBP for all providers

2010 Introduction of the Affordable Care Act which mandates transformation of reimbursement models

Value vs Quality

Quality = A predetermined benchmark or score that provides evidence of achievement – 1100 different measures used by CMS to measure quality and that impact provider reimbursement

Value = Quality and Efficiency (COST)

Characteristics of Transformational Change in Healthcare

• A shift in the underlying forces of an industry segment (financial incentives via value based reimbursement + mandated accessibility)

• It affects the entire value network

• The change is irreversible, not cyclical

• Causes a shift to different business models for the future – Telehealth, RCO’s, PCMH, ACO’s, IDS, CEO, Clinic Model for Acute Care Hospitals

CENTER FOR MEDICARE AND MEDICAID INNOVATION WITHIN CMS. TITLE III, PART III—ENCOURAGING DEVELOPMENT OF NEW PATIENT CARE MODELS - SEC. 3021.

(2) SELECTION OF MODELS TO BE TESTED.—

(B) OPPORTUNITIES.

i. Promoting broad payment and practice reform in primary care, including patient-centered medical home models for high-need applicable individuals, medical homes that address women’s unique health care needs, and:

Models that transition primary care practices away from fee-for-service based reimbursement and toward comprehensive payment or salary-based payment.

ii. Contracting directly with groups of providers of services and suppliers to promote innovative care delivery models:

Such as through risk-based comprehensive payment or salary-based payment.

The Transition

Traditional FFS

Pay for Performanc

e

Bundled Payments

Shared Savings (ACO’s)

Partial Risk Full Risk

LITTLE MARGINAL SIGNIFICANT SUBSTANTIAL

Cost Accountability

LITTLE MARGINAL SIGNIFICANT SUBSTANTIALSavings Potential for Health Plans and Customers?

LITTLE MARGINAL SIGNIFICANT SUBSTANTIAL

Enhanced Revenue for Health Care

Providers?

Headwinds - Transformational Changes

• Vast amount of new information to learn and assimilate into tangible strategies for providers

• Information is fragmented, located in multiple government sources, changes often and is often contradictory.

• New capabilities, working relationships across silos, treatment protocols, infrastructure investments have to be made in advance

• Requires a new “mindset” in healthcare from “let’s study it, prove it and then implement it” to one of experimentation, quick decision making, quick wins, quick failures and readjustment

• New cultures will have to be created that stress and reward collaboration and experimentation

• Leadership skills are critical for success, though historically there has been very limited investment in developing the leadership skills of healthcare providers – IM = 7 years/2 hours – Why?

• Worlds biggest Change Management initiative

CMS Disclaimer

This presentation was prepared as a tool to assist providers and is not intended to grant rights or impose obligations. Although every reasonable effort has been made to assure the accuracy of the information within these pages, the ultimate responsibility for the correct submission of claims and response to any remittance advice lies with the provider of services.

The Centers for Medicaid and Medicare Services (CMS) employees, agents, and staff make no representation, warranty, or guarantee that this compilation of Medicare information is error-free and will bear no responsibility or liability for the result or consequences of the use of this guide.

This presentation is a federal summary that explains certain aspects of the Medicare Program, but is not a legal document. The official Medicare Program provisions are contained in the relevant laws, regulations, and rulings.

Transformational Change: Physician Value-Based Payment Modifier Program

Objectives:

Understand the alignment of incentives and penalties of the VBM Program with those of other value based reimbursement programs for physicians and hospitals

Summarize the components of the Value Based Modifier Program for Physicians

Describe the timeline for physician participation in the VBM Program

Learn the quality and cost performance benchmarks that impact Physician Medicare Reimbursement under the VBM Program

Understand the potential financial impact of the Value Based Modifier for Physicians

Describe potential practice options for how physicians can respond if faced with reimbursement penalties under the VBM program

Value Based Reimbursement Policies and Provisions in the PPACA

Hospitals: Inpatient Quality Reporting System (IQR)

Value-Based Purchasing (VBP)

Hospital Readmission Reduction Program (HRRP)

Hospital Acquired Condition Reduction Program (HACRP)

Physicians: Physicians Quality Reporting System (PQRS)

Value-Based Modifier (VBM)

Electronic Health Records (EHR)

Emerging Care Models Endorsed by PPACA: Accountable Care Organizations (ACO)

Patient-Centered Medical Homes (PCMH)

HOSPITAL IPPS Inpatient Prospective Payment

System

DATACLINICAL QUALITY COST

PHYSICIANS Physician Fee Schedule

DATACLINICAL QUALITY COST

Strategic Alignment of Value Based Reimbursement Regulations

• IQR Inpatient Quality Reporting

• Efficiency Ratio

• Value-based Purchasing

• Readmission Prevention

• Hospital Acquired Conditions

• PQRS (Physician Quality Reporting System)

• Electronic Health Records

• eRx

• Efficiency Ratio

• Value-based Modifier

Financial Impact of Value Based Reimbursement Policies and Provisions in the PPACA

PROVIDERS 2013

2014 2015 2016

HOSPITALSInpatient Quality Reporting System (IQR) (Market basket Update Reduction)

-2% -2% - 25% Annual Increase

-25% Annual Increase

Value-Based Purchasing (VBP) (withhold percentage on Base Operating DRG Amounts)

+-1.0%

+-1.25%

+-1.50%

+-1.75%

Hospital Readmission Reduction Program (HRRP) (Penalty-Only Program, Reduction in Base Operating DRG amounts)

-1.0% -2.0% -3.0% -3.0%

Hospital Acquired Condition Reduction Program (HACRP) (Penalty-Only Program, Reduction in TOTAL Medicare Reimbursements, Top 25%)

2015 Data

Period

2016 Data Period -1.0% -1.0%

TOTALS -2.0% +1.0

%

-3.25%

+1.25%

-5.50%

+1.5%

-5.75% +1.75

%

PHYSICIANSPhysicians Quality Reporting System (PQRS) * includes +.5 for participation in a Maintenance of Certification (MOC) Program

+1.0%*

+1.0%*

-1.5% -2.0%

Value-Based Modifier (VBM) (2015- 100+EPs Optional; 2016 – 10+EPS incentive only) (Budget neutral – Incentives will offset penalties)

+-1.0% +-2.0X%

Electronic Health Records (EHR) Fixed $$ Fixed $$ Fixed $$ -1.0%/-

2.0%

Fixed $$ -2.0%

Electronic Prescribing (ERx) +.5% -1.5%

-2.0% 0% 0%

TOTALS +-1.5%

-2.0%+1.0%

-4.5% +1.0%

-6.0% +2.0%

Value Based Modifier Program for PhysiciansWhat is it?

Value-Based Modifier assesses both the quality of care furnished and the cost of that care under Medicare FFS

Began phase-in: CY2013 (2015 Program Year) for groups 100+ EPsCY2014 (2016 Program Year) for groups 10+ EPsCY2015 (2017 Program Year) 1+ (all physicians)

Eligible professionals:

VBM Metrics: Summary

3 outcome measures

Clinical Quality - 284 PQRS quality measures to choose from

6 cost measures

Patient Experience of care

Outcome Measures:All Cause Readmission

all-cause risk-adjusted readmissions for attributed Medicare beneficiaries occurring within 30 days of discharge from an index admission, expressed as a percentage of total attributed beneficiary admissions during a reporting period

COMPOSITE OF ACUTE PREVENTION QUALITY INDICATORS (PQIs)

Bacterial Pneumonia - number of admissions for bacterial pneumonia per 100,000 population

Urinary Tract Infections - number of discharges for UTI per 100,000 population age 18 years and older in a one-year period

Dehydration - number of admissions for dehydration per 100,000 population

COMPOSITE OF CHRONIC PREVENTION QUALITY INDICATORS (PQIs)Uncontrolled Diabetes - number of discharges for uncontrolled diabetes per 100,000 population age 18 years and older in a one-year period

Short-Term Diabetes Complications - number of discharges for short-term diabetes complications per 100,000 population age 18 years and older in a one-year period

Long-Term Diabetes Complications - number of discharges for long-term diabetes complications per 100,000 population age 18 years and older in a one-year period

Lower Extremity Amputations for Diabetes - number of discharges for lower-extremity amputation among patients with diabetes per 100,000 population age 18 years or older in a one-year period

Congestive Obstructive Pulmonary Disease (COPD) - number of admissions for COPD per 100,000 population

Congestive Heart Failure (CHF) - percent of the population with admissions for CHF

Value Based Modifier Program for Physicians

2016 Program Metrics (2014 Reporting)

Clinical Quality - 284 PQRS quality measures aligned with one of the 6 Domains of the NQS*

• Effective Clinical Care -182• Patient Safety - 30• Communication and Care Coordination/Clinical Outcome -35

(includes 3 Outcome Measures)• Person and Caregiver- Centered Experience and Outcomes - 10• Efficiency and Cost Reduction - 15• Community/ Population Health -12

*Measures selected are reflective of patient population and reporting option selected for PQRS.

Value Based Modifier Program for Physicians2016 Program Metrics

Cost Measures- Each of the 6 cost measures are assigned to one of two domains:

• Cost Domain 1: Total per capita costs for all attributed beneficiaries (one measure) and the Medicare Spending Per Beneficiary (MSPB) measure (one measure)3 days prior to, during inpatient admission and 30 days post discharge (Part A and B)

• Cost Domain 2: Total per Capita Costs associated with the four chronic conditions: (A and B)

• COPD • Coronary Artery Disease• Heart Failure • Diabetes

NOTE: Patients with more than one of the targeted conditions will be included in EACH of the targeted conditions grouping for cost evaluation

Patient Experience of Care Measures

NOTE: Attribution - whoever provides the “plurality of of Part A and B allowed charges

Physician Value-Based Reimbursement Programs

Interdependency and ImpactPhysicians Who Choose Not To participate at all in 2014:

PQRS: -2%EHR: -2%*

VBM: -2% **-6.0%

*ACA legislation give the Secretary of HHS the authority up to 5% if not meeting target of 75% of MD’s achieving MU by 2017. Current CMS estimates are 69% meet MU requirements by 2019.

** ACA legislation gives the Secretary of HHS wide discretion and the authority to raise the penalty for the VBM Program if needed to encourage participation. The is NO CAP on how high the Secretary of HHS can raise the VBM penalty.

Value Based Modifier

Value Based Modifier

Value Based Modifier

Quality Measures – Quality Tiering

VBM First Year Results: 400,000 Physicians in Groups of 100 Eligible Professionals or larger

Based on the 2013 VBM reporting metrics: 

80.7 percent of all groups scored average in quality and cost and would not have received a payment adjustment.

8 percent of all groups would have received an upward VBM reimbursement adjustment.

 11 percent of all groups would have received a downward VBM reimbursement adjustment.

Conclusion: Physicians Who Participated in 2013 - 1st Year VBM

Incentives and Risk - Low (+ – 1-2% Medicare Part B)

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American Academy of Family Practice:Three Physician Group:• Revenue: 1.5mm• 20% Medicare case mix• $300,000.00 Medicare Reimbursements• 6% Penalty = $18,000.00

Options:• Reduce Costs by $18,000.00

• Increase Revenue by $45,000.00* (45k x .40 = $18k) *Care delivered and Costs incurred two years prior!!!

• Improve participation and quality scoring in Value Based Reimbursement Programs

What does this mean to non-participating Family Physicians?

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The “Doc Fix”: Changing the Sustainable Growth Rate

(SGR) Put in place to control physician rate increases, the SGR has had 17 temporary

“patches “ put on it. The current SGR adjustment stands at -23.7%.

With great fanfare, the House and Senate advanced a bi-partisan bill to replace the SGR. Bill must be signed and funded by March 31, 2014 or SGR cuts go into effect.

Components of Proposal:

In 2017, VBM, PQRS and EHR programs will “sunset” as separate programs. Components will be combined into a SINGLE program in 2018 (for 2018 – 2023) with the Merit-Based Incentive Payment System (MIPS)

All physicians will receive a composite score (0-100) based on their performance against thresholds and benchmarks in 4 domains: Quality ((includes measures in the current PQRS, VBM, and MU programs) Resource Use (includes measures in the current VBM program) Meaningful Use (meaningful use of a certified EHR would continue to apply) Clinical Practice Improvement Activities (a new reporting requirement)

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The “Doc Fix”: Changing the Sustainable Growth Rate

(SGR)

Physicians receiving a “significant portion” of their revenues as part of a PCMH are exempt from MIPS assessment and may receive a 5% bonus from 2018 – 2023.

To further recognize exceptional MIPs performance, $500 million is earmarked for distribution based on scoring attainment.

The Path Forward – Collaboration Everything is Connected to Everything

Value-based Reimbursement

Hospital Patients

Needs created

Opportunities For transformation of clinical processes of care that Maximize Quality and Reimbursement

WHAT WHY HOW WHO

PhysiciansHome

HealthcareRehabilitation &Skilled Nursing

Hospice and Palliative Care

Implications to: Implications to:

Charles Darwin

“It’s not the strongest of the species who survive, nor even the most intelligent, but the ones most responsive to change”

The Path Forward – Must Do!

1. Ensure individual and organizational understanding of quality reimbursement policies and provisions contained in the PPACA – IF YOU WAIT TO ENGAGE YOU LOSE.

2. The solutions to challenges created by value-based Medicare reimbursement have yet to be created

3. Maximize quality based reimbursement – Play to your strengths. Continuous improvement of clinical processes of care that to align with commercial and federal quality reimbursement initiatives.

4. Improve the Patient Experience – Physician Compare Website Fall of 2014. Your patients will be surveyed! For hospitals this was the biggest contributor to VBP penalties and still struggle with this metric.

5. Break down the silo’s – internal/external and intellectual

6. Transference of skills from highly trained, but also expensive personnel to more affordable providers including technology based care ex. Telemedicine

7. Shift away from certain high cost healthcare venues like hospitals into clinics and office settings, and, in some cases, into patients’ own homes. (Ortho rehab)

8. Explore partnership opportunities with emerging care models endorsed by the PPACA

9. Align the analytics (QRUR Data) with your analytical skills to enhance your value proposition to payers