Mandatory Elements of Healthcare Reform Walter Coleman. healthcare consulting

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1 Mandatory Elements of Healthcare Reform Walter Coleman 1

2 Agenda ACA Mandatory Elements of Reform Value Based Purchasing Readmission Reduction Program Hospital Acquired Conditions Best practices to analyze current and previous performance Opportunities for Revenue Maximization Questions 2

3 Revenue Industry Tipping Point Time How do local market conditions impact timing considerations? Can market-changing events create an urgent paradigm shift? What is my step-change business model risk? Do I have the financial tools to adequately analyze relevant states? 3

4 Hierarchy of Risk and Payment Models 4

Alignment of Strategy and Metrics Questions to Ask How many metrics am I tracking? How many metrics are duplicated? Do they have the same numerator and denominator? Source?

5 Alignment of Strategy and Metrics Questions to Ask How many metrics am I tracking? How many metrics are duplicated? Do they have the same numerator and denominator? Source? Are they aligned with our results and strategic goals? What contracts are coming up for renewal that should have new metrics or should be at risk (mgd care, medical directorships, PMAs, etc.) What are we focused on? 5

6 Timeline of Reform 6

7 Mandatory Elements of Reform Value Based Purchasing VALUE BASED PURCHASING 7

8 Value Based Purchasing Outcomes = Income Mandatory Pay for Performance Program 3,500 hospitals are included in this program across the country Reimbursement Determine Two Ways: Achievement How we compare to National Top Decile (350 Hospitals) Improvement How we measure against ourselves Did we do better than a previously measured baseline period 8

9 Value Based Purchasing Percent of Medicare Reimbursement at Risk FY % FY % FY % FY % FY % FY % FY % FY 20xx refers to the Federal Fiscal Year (Oct. 1 Sep. 30) when DRG payments will be affected 9

10 VBP FY 2017 New Measures Patient Experience No Change Same HCAHPS Measures Clinical Care Core Measures 6 Dropped; 1 New Mortality (formerly Outcomes) AMI, HF, PN Safety (Formerly Outcomes) 4 Existing; 2 New Efficiency No Change 10

11 VBP FY 2017 Patient Experience Communication with Nurses Communication with Doctors Responsiveness of Hospital Staff Pain Management Communication about Medicines Cleanliness and Quietness of Hospital Discharge Information Overall Rating of Hospital **For answers to count, patients must give hospitals a score of 4 or Always 11

12 VBP FY 2016 Core Measures AMI-7a SCIP-Inf-9 PN-6 SCIP-Inf-2 SCIP-Inf-3 SCIP-Card-2 SCIP-VTE-2 IMM-2 12

13 VBP FY 2017 Clinical Care: Process AMI-7a IMM-2 PC-01 PC-01 = Elective Delivery Prior to 39 Completed Weeks Gestation 13

14 VBP FY 2016 Outcomes Outcomes 30 Day Mortality AMI 30 Day Mortality HF 30 Day Mortality PN AHRQ PSI-90 CLABSI CAUTI SSI-Colon SSI-Abdominal Hyster. 14

15 VBP FY 2017 Clinical Care and Safety Clinical Care- Outcomes 30 Day Mortality AMI 30 Day Mortality HF 30 Day Mortality PN AHRQ PSI-90 CLABSI CAUTI SSI-Colon SSI-Abdominal Hyster. Safety MRSA C. Diff 15

16 Timeline of Reform 16

17 Outcomes 30 Day Mortality Currently in 3 Performance Periods FY 2016 ended June 30, 2014 FY 2019 began July 1, Day Mortality Measures Assess deaths: AMI, HF, and PN that occur within 30 days after admission; which, depending on the length of stay, may occur post-discharge. 17

18 Mortality Deaths w/in 30 Days and Outside of Facility Total # of Patients who Died w/in 30 Days # of Patients who Died w/in 30 Days Outside of Facility % of Patients who Died w/in 30 Days Outside of Facility Facility A % Facility B % Facility C % Facility D % Facility E % Facility F % Facility G % Facility H % Facility I % Facility J % Facility K % TOTAL 1, % 18

19 CMS 30 Day Risk-Standardized Mortality Rate Calculation Facility Predicted Deaths Facility Expected Deaths = X Measure (AMI, HF, PN) National Crude Rate 19

20 VBP FY Efficiency Medicare Spend 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 across the continuum of care: 3 Days Prior Hospital Inpatient Stay 30 Days post Discharge 20

21 PROPOSED MSPB Measures Additional Efficiency Measures proposed to be added Medical Kidney/Urinary Tract Infection Cellulitis Gastrointestinal hemorrhage Surgical Hip replacement/revision Knee replacement/revision Lumbar spine fusion/refusion Risk Adjusted similarly to MSPB Proposed to facilitate alignment with the Physician Value Based Payment Modifier program Includes Part A and B and 3 days prior to admission and 30 days post discharge SOURCE: May 1, 2014 Federal Register 21

22 VBP Shifting of Domain Weights FY 2014 FY 2015 FY 2016 FY 2017 Mortality Clinical Care Patient Experience Safety - Outcomes Efficiency (MSPB) 22 22

23 VBP FY13 Domain Weights Performance Period: July 1, 2011 March 31, 2012 Reimbursement Period: October 1, 2012 September 30, 2013 Core Measures = 70% 23

24 VBP FY14 Domain Weights Performance Period: April 1, 2012 December 31, 2012 Reimbursement Period: October 1, 2013 September 30, 2014 Outcomes = 25% Core Measures = 45% 24

25 VBP FY15 Domain Weights Performance Period: January 1, 2013 December 31, 2013 Reimbursement Period: October 1, 2014 September 30, 2015 HCAHPS = 30% Core Measures = 20% Outcomes = 30% MSPB = 20% One Measure!! 25

26 VBP FY16 Domain Weights Performance Period: January 1, 2014 December 31, 2014 Reimbursement Period: October 1, 2015 September 30, 2016 HCAHPS = 25% Core Measures = 10% MSPB = 25% Outcomes = 40% 26

27 VBP FY17 Domain Weights Performance Period: January 1, 2015 December 31, 2015 Reimbursement Period: October 1, 2016 September 30, 2017 Clinical Care - Process = 5% HCAHPS = 25% Clinical Care - Outcomes = 25% Safety = 20% MSPB = 25% 27 27

28 VBP FY'15 TOTAL PERFORMANCE Earned Back Unearned Available $$ % Earned System $4,925,357 $6,187,541 $11,112, % $4,925,357 Breakeven Point: $5,301,360 $0 $11,112,898 Overall Performance System was penalized $376,003 in FY 15 VBP Program Must acknowledge the amount UNEARNED Of the programs dollars made available: System did not capitalize on $6,187,541 28

29 Core Measures Earned Back Unearned Measure Value % Earned Facility $381,643 $218,077 $599, % Outcomes Earned Back Unearned Measure Value % Earned Facility $539,763 $359,837 $899, % Breakeven Point: $232,525 $381,643 Breakeven Point: $348,788 $539,763 $0 $599,720 $0 $899,600 HCAHPS Earned Back Unearned Measure Value % Earned Facility $278,896 $620,704 $899, % $278,896 Breakeven Point: $348,788 Efficiency Earned Back Unearned Measure Value % Earned Facility $59,974 $539,746 $599, % Breakeven Point: $232,535 $59,974 $0 $899,600 $0 $599,720 29

30 Facility Bonus / (Penalty) Total Score State Average National Average National Δ Facility A $97, Core Measures HCAHPS Measure Score Amount Earned by Measure Amount Unearned by Measure % of Measure Earned AMI-8a 6 $ 32,712 $ 21, % SCIP-Inf-1 9 $ 49,068 $ 5, % SCIP-Inf-2 7 $ 38,164 $ 16, % SCIP-Inf-3 5 $ 27,260 $ 27, % SCIP-Inf-4 9 $ 49,068 $ 5, % SCIP-Inf-9 5 $ 27,260 $ 27, % HF-1 8 $ 43,616 $ 10, % PN-3b 5 $ 27,260 $ 27, % PN-6 8 $ 43,616 $ 10, % SCIP-Card-2 3 $ 16,356 $ 38, % SCIP-VTE-2 5 $ 27,260 $ 27, % Core Measures TOTAL $ 381,643 $ 218, % Comm. w/ Nurses 2 $ 17,994 $ 71, % Comm. w/ Doctors 1 $ 8,998 $ 80, % Resp. of Hosp. Staff 2 $ 17,994 $ 71, % Pain Management 2 $ 17,994 $ 71, % Comm. Re: Medicines 1 $ 8,998 $ 80, % Clealiness & Quietness 2 $ 17,994 $ 71, % Discharge Information 3 $ 26,990 $ 62, % Overall Rating 1 $ 8,998 $ 80, % Consistency Score 17 $ 152,933 $ 26, % HCAHPS TOTAL $ 278,896 $ 620, % Outcomes Efficiency AMI 10 $ 179,920 $ (0) % HF 3 $ 53,980 $ 125, % PN 8 $ 143,934 $ 35, % AHRQ PSI-90 9 $ 161,928 $ 17, % CLABSI 0 $ 0 $ 179, % Outcomes TOTAL $ 539,763 $ 359, % MSPB 1 $ 59,974 $ 539, % Efficiency TOTAL $ 59,974 $ 539,746 Facility TOTAL $ 1,260,277 $ 1,738, % 30

31 Mandatory Elements of Reform Readmission Reduction Program READMISSION REDUCTION PROGRAM 31

32 Timeline of Reform 32

Readmission Reduction Program 9% of Current and Future Medicare Reimbursement at Risk 3% penalty of Medicare Reimbursement at risk each program year Measured Populations 30 days from DISCHARGE AMI,

33 Readmission Reduction Program 9% of Current and Future Medicare Reimbursement at Risk 3% penalty of Medicare Reimbursement at risk each program year Measured Populations 30 days from DISCHARGE AMI, HF, PN, COPD, THA & TKA August 2014: CABG Added to FY 2017 Performance Periods: 3 Year Rolling Program FY 15: July 1, 2010 June 30, % FY 16: July 1, 2011 June 30, % FY 17: July 1, 2012 June 30, % FY 18: July 1, 2013 June 30, % FY 19: July 1, 2014 June 30, % Currently participating in 3 performance periods simultaneously 33

34 PAC Readmits DHG- Healthcare RRP Approach RRP Success 34

35 How are Readmissions Measured? Scoring Index based at 1.0 Calculate Excess Readmission Ratio Facility Predicted Value Facility Expected Value Excess Readmission Ratio > 1 = BAD Excess Readmission Ratio < 1 = GOOD 35

36 RRP Penalty Breakdown RRP Adj. Factor: DRG Reimb. $ 30,747,194 RRP Penalty $ 654,915 RRP Penalty Per Penalized Read. $ 9,396 AMI COPD HF PN THA / TKA RRP Penalty $ 85,953 $ 263,139 $ 96,016 $ 88,508 $ 121,300 % of Penalty 13.1% 40.2% 14.7% 13.5% 18.5% Pen. Patients % of RRP Pats. 6.8% 35.3% 30.4% 22.2% 5.3% 36

37 Penalized RRP Patients Breakdown Measure Number of Eligible Discharges at Your Hospital Number of Readmissions at Your Hospital # of Penalized Patients Per Year Improvement Penalized Patients as % of Readmissions Penalized Patients as % of Total AMI % 6.8% COPD % 4.0% HF % 1.8% PN % 1.8% THA/TKA % 5.4% TOTAL 2, TOTAL 14.3% 3.2% Per YEAR Per YEAR 4.8% 1.1% 37

38 Readmissions by Measure Last 3 Years AMI COPD HF PN THA / TKA 38

39 FY 16 RRP Performance Dropped AMI Readmissions July 2 1 August 1 September 1 2 October 1 November December 2 1 January 1 1 February 3 1 March 2 1 April May 1 June COPD Reamissions July August September October November December January February March April May June HF Readmissions July August September October November December January February March April May June PN Readmissions July August September October November December January February March April May June THA / TKA Readmissions July August September October November December January February March April May June

40 FY 16 RRP Performance Dropped AMI Readmissions July 2 1 August 1 September 1 2 October 1 November December 2 1 January 1 1 February 3 1 March 2 1 April May 1 June COPD Reamissions July August September October November December January February March April May June HF Readmissions July August September October November December January February March April May June PN Readmissions July August September October November December January February March April May June THA / TKA Readmissions July August September October November December January February March April May June

41 Length of Inpatient Stay and Readmissions Trends AMI Readmission Rate Avg. LOS Readmission 6.52 Avg. LOS Non Read COPD Readmission Rate Avg. LOS Readmission 6.97 Avg. LOS Non Read HF Readmission Rate Avg. LOS Readmission 6.54 Avg. LOS Non Read PN Readmission Rate Avg. LOS Readmission 8.23 Avg. LOS Non Read THA/TKA Readmission Rate Avg. LOS Readmission 4.62 Avg. LOS Non Read

COPD Readmissions by Discharge Destination % of Total Readmissions 0% 11% 0% 1% 5% 16% % of Penalized Readmissions 0% 0% 0% 11% 10% 11% 67% 68% Facility that Provides Custodial or Supportive Care

42 COPD Readmissions by Discharge Destination % of Total Readmissions 0% 11% 0% 1% 5% 16% % of Penalized Readmissions 0% 0% 0% 11% 10% 11% 67% 68% Facility that Provides Custodial or Supportive Care Home Health Home or Self Care (Routine Discharge) Hospice - Home Long Term Care Hospital Psychiatric Hospital or Unit SNF Facility that Provides Custodial or Supportive Care Home Health Home or Self Care (Routine Discharge) Hospice - Home Long Term Care Hospital Psychiatric Hospital or Unit SNF 42

350 Skilled Nursing Facility (SNF) Analysis Note: *21 SNF s with only 1 Patient* 300 250 200 223 150 100 50 0 104 83 55 104 8 9 9 27 30 36 35 1 5 19 14 8 6 10 3 4 7 5 6

43 350 Skilled Nursing Facility (SNF) Analysis Note: *21 SNF s with only 1 Patient* Facility A Facility B Facility C Facility D Facility E Facility F Facility G Facility H Facility I Facility J Facility K Facility L Readmitted Pateints Not Readmitted Patients 43

44 Mandatory Elements of Reform Hospital Acquired Conditions HOSPITAL ACQUIRED CONDITIONS 44

45 Timeline of Reform 45

46 Hospital Acquired Conditions (1% at Risk*) 12 Hospital Acquired Conditions Identified Divided in to 2 Domains If a hospital is in the BOTTOM QUARTILE (worst performing 25% in the country), it will be penalized a FULL 1% of Medicare Reimbursement Penalties will begin FY 15 (beginning October 1, 2014) *1% After DSH, Uncompensated Care, and IME 46

47 Hospital Acquired Conditions: FY 2015 First Domain: PSIs Performance Period: 7/1/11-6/30/13 Pressure Ulcer Rate Iatrogenic Pneumothorax Rate Second Domain: CDC Performance Period: CY 2012 & 2013 CLABSI CAUTI Central Venous Catheter-Related Bloodstream Infections Postoperative Hip Fracture Postoperative Pulmonary Embolism and Deep Vein Thrombosis Rate Postoperative Sepsis Postoperative Wound Dehiscence Accidental Puncture or Laceration 47

48 HAC Domain Weightings: FY 15 DOMAIN 1: 35% DOMAIN 2: 65% Postop. Sepsis 4.375% CLABSI 32.5% Pressure Ulcer 4.375% CAUTI 32.5% 48

49 Hospital Acquired Conditions: FY 2016 First Domain: PSIs 25% Second Domain: CDC 75% Pressure Ulcer Rate Iatrogenic Pneumothorax Rate Central Venous Catheter-Related Bloodstream Infections Postoperative Hip Fracture CLABSI CAUTI SSI Following Colon Surgery (FY 2016) SSI Following Abdominal Hysterectomy (FY 2016) Postoperative Pulmonary Embolism and Deep Vein Thrombosis Rate Postoperative Sepsis Postoperative Wound Dehiscence Accidental Puncture or Laceration 49

50 HAC Domain Weightings: FY 16 DOMAIN 1: 25% DOMAIN 2: 75% Postop. Sepsis 3.125% CLABSI 25% Pressure Ulcer 3.125% SSI 25% CAUTI 25% 50

51 Hospital Acquired Conditions: FY 2017 First Domain: PSIs 25% Second Domain: CDC 75% Pressure Ulcer Rate Iatrogenic Pneumothorax Rate Central Venous Catheter-Related Bloodstream Infections Postoperative Hip Fracture Postoperative Pulmonary Embolism and Deep Vein Thrombosis Rate CLABSI CAUTI SSI Following Colon Surgery (FY 2016) SSI Following Abdominal Hysterectomy (FY 2016) Methicillin-Resistant Staphylococcus Aureus (MRSA) Bacteremia (FY 2017) Postoperative Sepsis Clostridium Difficile (FY 2017) Postoperative Wound Dehiscence Accidental Puncture or Laceration 51

52 How the Scoring Worked Scenario: what it could have looked like to score under a

53 Penalties & Your DRG Payment SAMPL IPPS Reimbursement Letter PPS EFFECTIVE 10/1/2014 DRG Weight 1.00 Facility CMI 1.54 OPERATING INFORMATION Federal National Standardized Labor Rate 3, Wage Index Labor Rate x Wage Index 2, Federal National Standardized Non-Labor Rate 2, PPS Blended Rate 5, FY 2015 Hospital Readmissions Reduction (HRR) Adjustment Factor , ($3.02) RRP Reduction FY 2015 Value-Based Purchasing (VBP) Adjustment Factor , ($28.44) VBP Reduction ($31.46) Per DRG Reduction ($31.46) x 1.54 ($48.45) VBP & RRP Per DRG Red. CMI Adj Disproportionate Share Adjustment (Operating) (Empirically Justified Amount 25%) , Disproportionate Share Adjustment (Operating) (Uncompensated Care Amount) , Fully Loaded Operating Rate adjusted for CMI 8, FY 2015 Hospital Acquired Condition (HAC) Adjustment Factor , ($83.47) HAC Per DRG CMI Adjusted ($131.92) Total Per DRG Reduction 53

54 Mandatory Elements of Reform: Opportunities OPPORTUNITIES 54

55 Clinical Care - Process = 5% HCAHPS = 25% Clinical Care - Outcomes = 25% Safety = 20% MSPB = 25% 55

56 Clinical Care - Outcomes = 25% MSPB = 25% 56

57 Opportunities Sample Analysis Efficiency - Medicare Spend Per Beneficiary Outcomes - Mortality-PN Outcomes - AHRQ PSI-90 FY15 FY15 FY15 Performance Performance 87.09% Performance Baseline Baseline 87.18% -0.09% Baseline Threshold Threshold 88.27% -1.18% Threshold Benchmark Benchmark 90.42% -3.33% Benchmark Score 0 Score 0 Score 3 Improvement Dollar Value Score Improvement Dollar Value Score Improvement Dollar Value Score 0.05 $ 97, % $ 14, $ 29, $ 244, % $ 58, $ 102, $ 342, % $ 102, $ 102, $ 488, % $ 146, $ 102, $ 488, % $ 146, $ 102, $ 488, % $ 146, $ 102, $ 488, % $ 146, $ 102, $ 488, % $ 146, $ 102, $ 488, % $ 146, $ 102,

58 VBP CMS Proposed Future Measures FY 2018 Program (Performance Period: CY 2016) Patient Experience: Care Transition 58

59 VBP Other Possible Metrics to Follow Emergency Department Care Preventative Care Pneumonia Vaccine Children s Asthma Care Stroke Care Blood Clot Prevention Care Preventative Care 59

60 FY 19 New Measure Added THA/TKA for 30 month performance period. January 1, 2015-June 30, 2017 Baseline of July 1, 2010-June 30, 2013 Risk standardized measure for complications after Total Hips and Knees surgeries for up to 90 days post surgery One of eight complications: AMI, pneumonia, sepsis, SSI, PE, death, mechanical complication or periprosthetic joint infection/wound infection. Each has a defined time frame Each is a Yes or No Risk adjusted for patient age, sex and comorbidities 60

61 Readmissions Proposed Future Measures Percutaneous Coronary Intervention (PCI) Stroke 61

62 Mandatory Elements of Reform: Current Dollars at Risk CURRENT DOLLARS AT RISK 62

63 VBP FY 2017 Sample $$ at Risk $65,000,000 Medicare Reimbursement Facility VBP FY 2017 Domain Weight At Risk On the Table Medicare Spend Per Beneficiary 25% $ 325,000 $ 681,200 Safety 20% $ 260,000 $ 544,960 Patient Experience 25% $ 325,000 $ 681,200 Clinical Care - Outcomes 25% $ 325,000 $ 681,200 Clinical Care - Core Measures 5% $ 65,000 $ 136,240 TOTAL 100% $ 1,300,000 $ 2,724,800 63

64 VBP Sample Total Current $$ at Risk $65,000,000 Medicare Reimbursement Facility VBP Current Dollars At Risk (Active Performance Periods) Domain Weight At Risk On the Table FY 2016 Value Based Purchasing COMPLETE FY 2017 Medicare Spend Per Beneficiary 25% $ 325,000 $ 681,200 Safety 20% $ 260,000 $ 544,960 Patient Experience 25% $ 325,000 $ 681,200 Clinical Care - Outcomes 25% $ 325,000 $ 681,200 Clinical Care - Core Measures 5% $ 65,000 $ 136,240 FY 2018* Clinical Care - Outcomes 25% $ 325,000 $ 681,200 Safety - AHRQ 3.75% $ 48,750 $ 102,180 FY 2019* Clinical Care - Outcomes: Mortality 18.75% $ 243,750 $ 510,900 Clinical Care - Outcomes: THA/TKA 6.25% $ 81,250 $ 170,300 TOTAL $ 1,998,750 $ 4,189,380 *Performance Periods are finalized; however weightings are not and reflect current finalized adjustments 64

65 All Reform Sample Current $$ at Risk $65,000,000 Medicare Reimbursement Facility All Active Mandatory Reform Domain On the Table FY 2016 Value Based Purchasing COMPLETE Readmissions COMPLETE Hospital Acquired Conditions COMPLETE FY 2017 Value Based Purchasing $ 2,724,800 Readmissions $ 1,950,000 Hospital Acquired Conditions $ 650,000 FY 2018 Value Based Purchasing** $ 783,380 Readmissions $ 1,950,000 FY 2019 Value Based Purchasing* $ 681,200 Readmissions $ 1,950,000 TOTAL $ 10,689,380 *VBP Weightings are not finalized 65

66 Thank You! Contact Information: Walter Coleman (804)

Measure Applications Partnership. Hospital Workgroup In-Person Meeting Follow- Up Call

Measure Applications Partnership Hospital Workgroup In-Person Meeting Follow- Up Call December 21, 2016 Feedback on Current Measure Sets for IQR, HACs, Readmissions, and VBP 2 Previously Identified Crosscutting