1 Everything's Impossible Until It's Done Sheila L. Seal MBA,FHFMA,CTS-BI Director Business Intelligence MWHC Venson Wallin Managing Director BDO.

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Everything's Impossible Until It's Done

Sheila L. Seal MBA,FHFMA,CTS-BI Director Business Intelligence MWHC

Venson Wallin Managing Director BDO

THE UNDERLYING FACTORS OF THE MOVE TO QUALITY-BASED REIMBURSEMENT

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U.S. Healthcare Quality

In 1999, The Institute of Medicine reported that as many

98,000 people per year die in hospitals from preventable

errors.

In 2013, Patient Safety America (in Houston) estimated that as

many as 440,000 preventable adverse events occur annually

in hospitals.

To err is human. Institute of Medicine. November 1999. James J. A new evidence-based estimate…Journal of Patient Safety: September 2013. 9(3).

U.S. Healthcare Quality• Commonwealth Fund Surveys and Analyses indicate US is 11th out of 11

Mahon M. Us health system ranks last... The Commonwealth Fund. June 16 2014

U.S. Healthcare Quality

These negative rankings have been challenged. CONCORD Cancer Survival in Five Continents: US first for breast, prostate,

and colon cancers.

American Enterprise Institute: Remove fatal injuries and US ranking goes to

first.

Researchers at U Penn: Low life expectancy in US not likely due to health

care system.

Perception remains that quality is too low and cost is too high.

The myth of Americans’ poor life expectancy. Forbes. Nov 2011. Coleman MP et al. CONCORD… Lancet. Aug 2008Ohsfeldt R and Schneider J. The business of health… American Enterprise institute. 2006. Preston S and Ho J. Low life expectancy in the US… PSC Working Papers. July 2009.

EVIDENCE OF SHIFT TO QUALITY-BASED REIMBURSEMENT

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Hospital Inpatient Quality Reporting (Hospital IQR)

Mandated by section 501b of the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003

Initially, the MMA reduced by 0.4% the annual market basket update for hospitals that failed to report metrics.

Deficit Reduction Act of 2005 increased the penalty to 2%. The quality of care data is available to consumers at

www.hospitalcompare.hhs.gov

Hospital Outpatient Quality Reporting (OQR) Program

Mandated by the Tax Relief and Health Care Act of 2006

Hospitals are subject to a 2 percentage point reduction in the annual payment update (APU) under the Outpatient Prospective Payment System (OPPS) if reporting requirements are not met.

Approximately 30 quality metrics covering: Process of care Imaging efficiency patterns Care transitions ED throughput efficiency Use of Health Information Technology (HIT) care coordination Patient safety and volume

Physician Quality Reporting System (PQRS) Began in 2007 as PQRI with incentives that continued through

2014 to encourage quality metric reporting regarding Medicare FFS part B services.

Now penalties of 1.5% in 2015 if metrics were not reported in 2013; going to 2% in 2016 if not reported in 2014.

51% participation in 2015 with 470,000 physicians receiving 1.5% penalty.

www.cms.gov

Medicare and Medicaid EHR Incentive Program

Began in 2011 with incentive payments up to $43,720 for Medicare and $63,750 for Medicaid

Stage 1: data capture and sharing Stage 2: advanced clinical processes Stage 3 coming 2017: improved outcomes; reduced

complexity

Readmission Reduction Program

Established by Section 3025 of the ACA Began with discharges in October 2012 Hospitals penalized with reduced

payments for all DRGs if 30 day readmissions exceed risk-adjusted anticipated levels for Initially acute MI, heart failure, and

pneumonia. In 2015, COPD and THA/TKA.

Penalty has increased from 1% in 2013 to 3% in 2015.

Hospital Value Based Purchasing (VBP)

Authorized by section 3001(a) of the ACA

Uses data from Hospital Inpatient Quality Reporting Program.

Began in 2013 with 12 clinical process measures and 8 patient experience measures from HCAPS

In 2014, 30 day outcome mortality measures added (AMI, HF, PN)

For 2015, PSI-90, CLABSI, MSBP For 2016, CAUTI and surgical site

infection

Hospital Value Based Purchasing (VBP)

Shifting emphasis from process measures to outcomes

2015 2016 2017Clinical Process of Care 20% 10% 5%

Patient Experience of Care 30% 25% 25%Efficiency 20% 25% 25%Outcomes 30% 40% 45%

Hospital Value Based Purchasing (VBP)

Increasing redistribution of payments from lowest performers to highest performers

Fiscal Year

Percent Reduction

2013 12014 1.252015 1.52016 1.752017 2

Hospital Value Based Purchasing (VBP)

2015 Payment Adjustment factorshttps://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/hospital-value-based-purchasing/index.html?redirect=/hospital-value-based-purchasing/

3089 hospitals 1375 receive penalties up to -1.24% 1714 receive bonus up to 2.09%

Medicare Shared Savings Program (MSSP) and Pioneer Accountable Care Organizations Established by section 3022 of the ACA; began in 2012 Participation through Accountable Care Organizations

(ACO) Providers coming together to serve fee-for-service Medicare beneficiaries

www.cms.gov

MSSP shared savings/losses % share Cap ParticipantsTrack 1       401     year 1-2 shared savings only 52.50% 7.5%       year 3 savings and losses 60% 10%  Track 2       3     all 3 years savings and losses 60% 10%  

Pioneer ACO       32     →    19

     year 1 savings and losses 60% 10%       year 2 savings and losses 70% 15%       year 3 savings and losses up to 100%  15%  

Medicare Shared Savings Program: Results

7.3 M beneficiaries as of January 2015

Year 1 58 of the 243 initial MSSP’s earned a bonus ($705 M in

savings leading to $315 M in bonuses). One shared in losses ($10M loss with $4M penalty). 30 of 33 quality measures improved.

www.cms.gov

Pioneer ACO results

620,000 beneficiaries as of January 2015

Year 1 Saved Medicare $117 per participating beneficiary per year

and a total of $118 million the first year.And savings was similar between ACOs that have dropped out versus those that have remained.

Year 2 Saved Medicare $96 M and 11 earned bonuses totaling $68

M. 3 generated losses. 28 of 33 quality measures improved.

McWilliams JM et al. Performance differences in year 1 of pioneer ACOs. JAMA. April 15, 2015www.cms.gov

Value Payment Modifier (VPM)

Mandated by section 3007 of ACA Adjusts payments based on quality and cost metrics

2015: Physicians in groups of 100 or more Eligible Professionals (EPs) based on 2013 performance.

2016: Physicians in groups of 10 or more EPs based on 2014 performance.

2017: all Physicians including those participating in Shared Savings, ACOs, and Comprehensive Primary Care Initiative.

2018: extended to non-physician EPs.

Value Payment Modifier (VPM)Performance Metrics in 2013 impacting payment in 2015:

14 Process measures; examples: Follow-up after hospitalization for mental illness Spirometry testing to confirm COPD Lipid profile within 3 months of starting lipid lowering med

3 Outcome measures: Composite of acute prevention: PN, UTI, dehydration Composite of chronic prevention: DM, COPD, HF All cause readmission

Cost Total per capita cost Per capita cost for each of COPD, HF, CAD, and DM

www.cms.gov

Value Payment Modifier (VPM)

VPM adjustment for 2015 Physician groups could have elected Quality Tiering by Oct

15, 2013. 127 groups elected tiering.

No groups earned the 2x% upward adjustment based on high quality and low cost.

14 groups get an upward adjustment of 1x%. 11 groups get downward adjustment of -0.5-1%.

For those who did not report got an automatic 1% penalty. The x “adjustment factor” above is based on the available

funds from the groups that had a downward adjustment.

Value Payment Modifier (VPM)

VPM adjustment for 2015 For 2015 the adjustment factor is 4.89, increasing

payments by 4.89% to the 14 groups that earned 1x%.

CMS: “We also anticipate that we would propose to increase the amount of payment at risk for the Value Modifier as we gain additional experience with the methodologies used to assess the quality of care, and the cost of care, furnished by physicians and groups of physicians.”

www.cms.gov.

Value Payment Modifier (VPM)

VPM adjustment for 2016 In 2016 (based on 2014) data the downward adjustment

goes to 2%. It’s too late to change your payment status for 2016.

In 2017, all physicians impacted and quality tiering becomes mandatory!

www.cms.gov.

Value Payment Modifier (VPM)Coming in 2017

To avoid the downward adjustment of 2% in 2017 (for groups up to 9) or 4% for groups of 10 or more:

Option 1 Participate in Group Practice Reporting Option (GPRO):

Qualified PQRS registry HER Web interface for those with 25+ EPs Consumer Assessment of Health Providers and

Systems (CAHPS) for PQRS survey (mandatory for groups with 100+ EPs)

**Must register on cms.gov between April 1 and June 30, 2015.

Value Payment Modifier (VPM)

Coming in 2017 (cont’d) To avoid the downward adjustment of 2% in 2017 (for

groups up to 9) or 4% for groups of 10 or more:

Option 2 At least 50% of group participates in PQRS as

individuals Medicare Part B Claims Qualified PQRS registry EHR Qualified Clinical Data Registry

Penalties for Hospital Acquired Infections (HAI)

Introduced by Section 3008 of the ACA 35% of score is composite safety measure with 8 indicators

from AHRQ. 65% of score from 2 HAI measures from data reported to

the National Healthcare Safety Network and the CDC’s online infection reporting system.

Beginning in 2015, 1% of payments subtracted from hospitals with the highest quartile rates of HAIs.

724 hospitals penalized in 2015.

McKinney M. Hospital-acquired conditions mean Medicare penalties…Modern Healthcare. Dec 18, 2014.

Medicare Shifting to a Focus on Value

Burwell S. Setting value-based payment goals… NEJM. January 26, 2015.Japsen B. White House plans to shift Medicare… Forbes. January 26, 2015.

Goal to have 50% of all Medicare payments and 90% of fee-for-service Medicare tied to value by 2018

Develop and test new payment models. Encourage greater integration, coordination among providers, and

attention to population health.

Accelerate availability of EHR information and interoperability. ACA established Patient-Centered Outcomes Research

Institute with goals of research findings being disseminated in part through EHRs.

Medicare website allows consumers to compare data on costs and

quality.

Medicare Shifting to a Focus on Value

The Sustainable Growth Rate (SGR) “Doc-fix” includes greater emphasis on payment for value

Merit-based payment incentive system (MIPS) coming in 2020

Will consolidate current incentive programs including PQRS

4 categories of metrics:

Quality

Resource use / efficiency

EHR use

Clinical improvement activities

Up to 9% of pay will be at risk Wynne B. Health Affairs Blog. April 14, 2015

Medicare Shifting to a Focus on Value

Fiscal year 2016 IPPS Proposed Rule Hospitals that are meaningful users of EHRs and report

quality through IQR data get a 1.1% increase in their operating rates

2.7% market basket update

-0.8% multi-factor productivity and ACA adjustment

-0.8% recoupment by American Taxpayer Relief Act of 2012

1.1%

Others will experience a decline in rates -(0.5x 2.7%) if not meaningful use compliant

-(0.25x 2.7%) if not participating in IQR

Overall, a 0.3% increase in IPPS payments is expected.

www.cms.gov

Commercial Payers also Shifting to Value

Japsen B. UnitedHealth’s $43B exit… Forbes. Jan 23, 2015. Funk M. Humana’s approach to value-based reimbursement. Jan 24, 2014.

2013 Aetna Investor Conference. Dec 12, 2013.

United Health Initiated value-based contracting in 2012. Claims it has saved 1-6% by value based initiatives. Plans to increase valued based payments to doctors and hospitals by 20% in

2015 to $43 Billion and to $65 B by 2018.

Aetna Claims 8-15% savings first year in transition to ACO model and $1,600 per member

over 3 years. Predicts increased value-based spend to triple from 2013-2017.

Humana Claims full accountability (per member per month payment) reduces Medicare

costs by 22% compared with no provider incentives.

KEY HEALTH CARE MARKET TRENDS

The Paradigm Shift in U.S. Healthcare

Rising Costs and Suboptimal

QualityRegulatory

Reform

Aging Population & Chronic

Disease Burden

Reduced Number of Hospitals

DATA & TECHNOLOGY

Value-based reimbursement to providers

Emphasis on chronic care management

Shift to lower-cost care settings

Increased M&A among providers and payers

www.cms.gov and Hartman M et al. National Health Spending in 2013. Health Affairs. 34 No. 1 (2015)

CASE STUDY

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ToolsTools

Cost Accounting

SAPDashboards

SAPDashboards

Web Publishing

Web Publishing

SAP Web Intelligence/HQ

SAP Web Intelligence/HQ

OMS Email DistributionOMS Email

DistributionDatapump Email

and FTP Distribution

Datapump Email and FTP

Distribution

Healthcare Intelligence/DSSData Warehouse

Healthcare Intelligence/DSSData Warehouse

Business User (i.e. Executive, Director, Manager, Analyst)

Business User (i.e. Executive, Director, Manager, Analyst)

Cerner Supported Interfaces

Cerner Supported InterfacesExternal Applications/SystemsExternal Applications/Systems

MidasQuality and

Patient SafetyAllscripts

Physicians

Advantx Ambulatory

Surgery Center

McKesson Freestanding

Radiology Center

SyngoRadiology

Sunquest Laboratory

Tele- TrackingBed Placement

Lotus NotesPosition

Requisition

Press GaneyPt

Satisfaction

T-SystemEmergency

Room

OrmisOperating Room-Old

CentricityOperating

Room

API LaborworxTime and

Attendance

Lawson Stats

Soarian Financials

Soarian Scheduling

LAWSON GL/Payroll

INVISION

Soarian Clinicals

XceleraEcho

Kaufman Hall

Budget

PremierProductivity

Move It

Move It

Lawson HR

Cerner RX

Lawson Materials

Management

IDashboardsIDashboards

CPNLabor and Delivery

HR DataMart

BPCI iVantageClinical

Benchmarks

MedAssetsExpected

Reimbursement

Readmissions Dashboard – 30 Days

Readmissions Dashboard – 90 Days

LACE Census

Falls Dashboard

Status of the Two-Midnight Rule• Final 2016 IPPS rule postpones action until issuance

of 2016 OPPS final rule• Proposed 2016 OPPS rule allows for inpatient

reimbursement of shorter stays if medical record documentation supports the stay

• Recovery Auditor review moratorium on short-stays to continue through the end of the year

• OPPS rule proposes that Livanta and KEPRO, Quality Improvement Organizations, assume responsibility for Probe and Educate and review short stay medical necessity

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ECDNo MRN Last Clin Svc

Discharge Disposition

Admitting MD Patient Name Org Enc Status Payer Group

Prim Enc Type

IP LOS

IP Start Date IP Stop Date ED Start Date IP and ED LOS Min ED and IP LOS Days

MED Routine Akbarzadeh, Manijeh . MWH Checked out Mcare IP 1 44 2

MED Routine Baig, Mirza M. MD MWH Checked out Mcare IP 2 62 2

MED Routine Mahmood, Asif . MD MWH Checked out Mcare IP 2 55 2

MED Routine Akbarzadeh, Manijeh . MWH Checked out Mcare IP 2 44 2

MED Routine Akbarzadeh, Manijeh . MWH Checked out Mcare IP 1 ^^^ ^^

MED Routine Clay, Tokzhan K. MD SHC Checked out Mcare IP 1 ^^^ ^^

MED Routine Yacoub, Karim . MD SHC Checked out Mcare IP 1 ^^^ ^^

Medicare 2 Midnight Rule

Monitoring Cost Savings Versus Quality

Midlines

BPCI

BPCI

PREPARATION AND RISK REDUCTION

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Recognize that Fee-For-Service is Diminishing Both through CMS and Commercial Payers

If you are going to participate with third party payers, you are going to have to participate in value-based payment systems.

Evaluate your options

Identify programs that are mandatory or that result in penalties for non-participation.

Identify optional programs for which the organization or provider may qualify.

Compare the costs of compliance and potential risks with the revenue lost by not participating.

Develop a plan for maximizing revenue and margins in the current and projected regulatory and payer environment.

If fully prepared for risk, a health system may benefit from launching its own Medicare Advantage plan.

Understand Your Costs of Care

Map out the costs of each component of an episode of care Identify the average costs per patient in various categories This information will be particularly beneficial in:

Identifying opportunities for savings Negotiating bundled payment scenarios Medicare Share Savings Plan and ACOs Launching a Medicare Advantage plan

Engage physicians, other clinicians, and staff throughout the process, beginning before the hospital or physician group makes changes to processes and compensation.

Make Sure Your Physicians and Staff are Informed and Prepared

Provide Appropriate Incentives for Physicians and Staff

Develop compensation systems that link income to individual and team performance on the same quality metrics used by the payers.

Ensure that physicians and staff understand the metrics on which they are evaluated and that they have guidance on how to improve those metrics and their income.

Develop or Improve Quality Data Capture and Reporting

Consider having an internal audit done to assess the completeness and accuracy of your reporting and the opportunities for improvement in metrics.

Develop Efficiencies and Lower Cost Care Settings

From hospitals to clinics and community settings

Emphasis on reducing ER use, unnecessary hospitalizations, and readmissions.

Payments increasingly less about location and more about the outcomes.

Provide Care Management for Patients with Chronic Disease Has been shown to have an ROI as

high as 3.8* Patients with 2 or more chronic

conditions are eligible for Medicare Chronic Care Management Services Must provide access to care

management 24/7 and meet several criteria including minimum of 20 minutes per month of clinical time

Payment to physician of about $40/per patient per month

Subject to patient deductible and co-insurance

* Mattke S et al. Do workplace wellness programs save employers money? RAND Research Brief; 2014.