A CFO’s Perspective on Quality. CMS QUALITY IMPROVEMENT ROADMAP EXECUTIVE SUMMARY VISION: The right care for every person every time. CMS believes that.

A CFO’s Perspective on Quality

CMS QUALITY IMPROVEMENT ROADMAP

EXECUTIVE SUMMARY

VISION: The right care for every person every time.

CMS believes that this vision is realistic and substantially achievable and that recent developments create unprecedented opportunities and need for that achievement:

• 1. A growing body of evidence shows that there are major opportunities to improve care with major potential benefits for patients.

• 2. The growing complexity of medical knowledge and the growing number of participants, technologies, and specialties create both enormous rewards for better care and enormous challenges in continuing our current path.

• 3. Stakeholders from many sides are showing a new willingness to come together in partnerships to achieve improvement and are looking to CMS for leadership and broadening recognition that highest quality care is the only care anyone can afford.

CMS’ New Focus on Quality

VBP Program Goals• Improve clinical quality• Reduce adverse events and improve patient safety• Encourage more patient-centered care• Avoid unnecessary costs in the delivery of care• Stimulate investments in effective structural components or systems• Make performance results transparent and comprehensible • To empower consumers to make value-based decisions about their health care• To encourage hospitals and clinicians to improve quality of care

QualityOriented

The CMS Quality Improvement Roadmap represents a major, agency-wide effort to use the new Medicare law and other new opportunities to work in partnership with the rest of the health care system to achieve major improvements in the quality of health care. This is a shared mission. It is up to all of us – government officials and health care stakeholders, and especially patients and health professionals – to work together to achieve the major quality improvements that should be possible today.

Mission / Vision / Values ?

CMS Quality Initiatives:Wolf in Sheep's Clothing?

ImprovedQualitymay be awelcomedbyproduct.

Currently the only industry where you payfor a product/service with no regard

for product/results

Also the only industry where $ =/= $

Medicare 50%Medicaid 20%

Third Part Contract 20%Private (nothing) 10%

Medicare’s History

Social Security Act Amendments of 1983

1997 Balanced Budget Act

2003 Medicare Modernization Act

2005 Deficit Reduction Act

OPPSFee Schedule-BlendedFee schedule-Fixed

IPPS DRG ReimbursementCost Adjusted, Blended, Fixed

Post Acute Transfer PolicyIntroduced for 10 in 99Increased to 29 in 2004Increased to 182 in 2006

MS-DRGs

Marketbasket Reductions

Medical Necessity

SNF RUGs

RACsCore

Measures

APCs

24 Hour Observation

Hospital AcquiredConditions

IPPS 09 43 new Quality Indicators

Outliers

DSH Reductions

Medicare Advantage Plans

OP 09Quality Measures 7-11

NeverEvents

IPPS 099 new HACs

SNF 09$770m Recalibration

VALUE BASED PURCHASING

Net of inflation, all producedreimbursement reductions

DRGCongress’ Intention

Vs.CMS Interpretation

RACs5 Years Later

Medicareprepares

for theboomers

Boomers

Charts by CalculatedRisk (http://calculatedrisk.blogspot.com)

652Mil

1920

Many

Few

Pay For

Boomers1920 1940 1960

1980 2000 2005

Charts by CalculatedRisk (http://calculatedrisk.blogspot.com)

Boomers

Charts by CalculatedRisk (http://calculatedrisk.blogspot.com)

652.8Mil

2005

Boomers

Charts by CalculatedRisk (http://calculatedrisk.blogspot.com)

65Yearsold in2025

2005

Fewer

More

Pay For

Boomers

More enrollees times more spending per recipient

Medicare’s Future

Medicare Enrollment and Workers per Enrollee (By selected calendar year)

1975 1985 1995 2005 2010 2030

Enrollment (Millions) 24.2 30.2 37.1 42.5 46.7 75.1

Taxed Workers per Enrollee (fund contributors) 4.1 4.0 3.8 3.6 3.4 2.2

SOURCES: Congressional Budget Office and Medicare Board of Trustees (using the intermediate assumptions).

ProgramDeficitGrows

Medicare’s Future

Medicare Trustees estimate that it would require a gradual tripling of the payroll tax, a reduction in Part A

expenditures by one-third, or some combination of the two approaches to restore the solvency of the Medicare Trust Fund over the very long run (75

years)

No Hope For Survival Under the Current Approach

Quality As A New Approach

• Core Measures – data mining

• Hospital Acquired Conditions (HACs) and Present on Arrival (POA)

• Never Events

• Value Based Purchasing

Hospital Acquired Conditions (HAC) Reporting

2009 CMS Proposed Rule•Core Measures

•Initially defined as a bonus program based on performance in 10 core measures•The “bonus” was to simply allow you to keep your annual 3% Market Basket (inflation) increase.

•Quality Indicators•Adds 43 new IP conditions for 2010 bringing the total to 73•Adds 4 OP conditions bringing total to 11

•HACs Present on Admission•8 conditions in 2008•9 additional proposed for 2009

•No payment for “U”s•Value Based Purchasing

•Payments to high-performing hospitals would be larger than those to lower performing hospitals.

•Financial incentives to drive improvements in clinical quality, patient-centeredness, and efficiency.

Note: See SCHA comments online.

The Medicare Hospital Value-Based Purchasing (VBP) Plan

Section 5001(b) of the Deficit Reduction Act (DRA) of 2005 (P.L.109-171) authorizes the Secretary of Health and Human Services to develop a plan to implement a value-based purchasing program for payments under the Medicare program to subsection (d) hospitals beginning with Fiscal Year 2009.

By statute, the plan must include consideration of at least the following design issues: 1. The on-going development, selection, and modification process for

measures of quality and efficiency in hospital inpatient settings.

2. The reporting, collection, and validation of quality data.

3. The structure of value-based payment adjustments, including the determination of thresholds or improvements in quality that would substantiate a payment adjustment, the size of such payments, and the source of funding for the value-based payments.

4. The disclosure of information on hospital performance.

Note: IP Proposed Rule addresses no plans for the implementation of VBP .

Value Based Medicine Case Study

Conclusions  Among hospitals participating in a voluntary quality-improvement initiative, the pay-for-performance program was not associated with a significant incremental improvement in quality of care or outcomes for acute myocardial infarction.

Conversely, we did not find evidence that pay for performance had an adverse association with improvement in processes of care that were not subject to financial incentives. Additional studies of pay for performance are needed to determine its optimal role in quality-improvement initiatives.

Vol. 297 No. 21, June 6, 2007

CoreMeasures

HAC/POA

NeverEvents

Overview of a Potential Performance Assessment Model

1. A hospital must submit data for all VBP measures that apply to its patient population and service mix. The measures could be used for incentive payment, public reporting, or measure development.

2. A hospital receives a performance score on each measure for incentive payment for which it has a minimum number of cases.

3. Measures are grouped into “domains” a score is calculated for each domain by combining the measure scores within that domain, weighting each measure equally.

4. A hospital’s VBP Total Performance Score is determined by aggregating the scores across all domains. Domains could be weighted equally or unequally.

5. The Total Performance Score is translated into the percentage of VBP incentive payment earned using an “exchange function,”

VBP DRG Example

Hospital A Hospital B

Payment for DRG 498 $14,713.85 $14,713.85

At-Risk VBP Portion of DRG Payment (5%) $735.69 $735.69

% of VBP Incentive Payment Earned 100.0% 82.0%

Hospital-Specific Earned VBP Portion $735.69 $603.27

VBP Payment for DRG 498 $14,713.85 $14,581.43

SOURCE: CMS

For the purpose of this example, the VBP incentive payment amount is set at 5 percent of the base operating DRG payment, clinical process measuresare weighted at 0.7, and HCAHPS is weighted at 0.3 in calculating the Total Performance Scores, and we assume that Hospital B and Hospital A both have

a wage index of 1. The hospital-specific incentive payment earned by each hospital is taken from the Figure 1 table in the VBP Plan. Hospital B earns 100 percent of the incentive payment; as a result, its VBP payment for DRG 498 is the same as the base operating payment for the DRG. Hospital A earns 82 percent

of the incentive payment; as a result, its VBP payment for DRG 498 is $132.42 less than the base operating payment for the DRG.

http://www.aishealth.com/Compliance/ResearchTools/RMC_CMS_DRG_Reimbursement.html

More Details on the CMS VBP Plan

U.S. Department of Health and Human Services

REPORT TO CONGRESS: Plan to Implement a Medicare Hospital

Value-Based Purchasing Program

November 21, 2007

http://www.cms.hhs.gov/CouncilonTechInnov/downloads/qualityroadmap.pdf

“Not Billing” for Never Events

•“Not charging” vs. “not billing”•Other third parties (e.g.. Aetna) not paying for never events•Other third parties expanding their lists•Carriers not paying by ICD-9•Related CPTs•Misrepresentation of the bill•Legal risk of “not billing”•Accounting and finance•Compliance

SCHA Response: “…please ensure that the new quality incentives are not utilized by carriers of lesser value and intention as a new vehicle used to deny or reduce payments.”

Fear of the Unknown

If no one bills for never events already, why is CMS so

interested?$13,662,632,508

Is Quality the Next RAC Encounter?

• Recovery Audit Contractors

• $30,000,000 in SC recoveries– Medically necessity– No Appeals– Statewide lawsuit

What’s Next?Value Based Purchasing

“These Premier results show that Value-Based Purchasing can achieve excellent results in Medicare,” said CMS Acting Administrator Kerry Weems.  “Given these results, it is time to take the next step and implement hospital Value-Based Purchasing for the Medicare program, so that citizens across the nation can benefit from improved safety and quality get the right care, every time.”

K erry WeemsCMS Acting Director

What’s Next?• HACs that are not clinically avoidable• Increased “never event” listing that may not be

distinguishable as the hospital’s fault• Physician RACs? (already have data from hospital

charts)• Outpatient RACs? • Clinical result RACs?• Quality RACs?• Penalties, fines, accreditation risks….

How to Prepare

• IMPROVE DOCCUMENTATION– Facility and Physician– Train nursing Staff on increased importance

of documentation– Avoid “U”s (CMS is tracking)

• Have coders request additional documentation

– Sample documentation (Quality Team)

• Track current POAs (Ns and Us)

How to Prepare

• Reevaluate quality team membership

• Educate CEO• Educate Physicians (Now’s the time, July payment delay and 10.5% decrease )

• Educate Quality Team

• Involve CFO

• Involve HIM

• Involve PAS

Barney Osborne

VP of Finance and Reimbursement

(803) 744-3544

[email protected]

Help SCHA maximize the potential quality improvements while

minimizing the financial risks.