Florida Health Care Association 2013 Annual Conference The Westin Diplomat Resort & Spa Session #49 – Value-Based Reimbursement Update Wednesday, August 7 – 4:30 to 5:30 p.m. Regency 1 Upon completion of this presentation, the learner will be able to: review Value Based Reimbursement (VBR), a key component of health care reform designed to reduce costs and achieve desired outcomes; compare the old and new quality metrics and consider what their organization will need to do differently to meet the expectations of hospitals and health care systems; and examine how key metrics are calculated so they can be established within the organization to tell their performance story. Seminar Description: Accountable Care Organizations (ACO) and Value-Based Reimbursement (VBR) are the major trends affecting health care today. ACOs are meant to redistribute the risk in managing episodes of care. Concurrently, VBR is being introduced as an approach in which regulators inspect post-discharge care and how patients are managed. For years, employers and governmental entities have pushed for the measurement of the efficiency, effectiveness and quality of care to guide purchasing decisions and evolve reimbursement mechanisms that support VBR. Value, by definition, is in the eye of the beholder and efforts are underway to better define value from a patient/consumer perspective. This presentation will review the current thinking on VBR, compare the past with the present and the likely future and discuss key metrics that can help providers prepare for and excel in this new environment. Presenter Bio(s): Sue Bunevich is a health care principal with CliftonLarsonAllen, specializing in prospective financial reporting and operational consulting for senior housing providers and other healthcare providers. She guides clients through all of the financial aspects involved in the research, development and construction of new or expansion facilities by first developing strategic plans, annual budgets and multi-year financial projections. Sue prepares short and long term feasibility projections for development or expansion, prior to their submission to credit committees. Additionally, she assists clients in estimating the cost of sales and establishing sale prices for new housing units by performing analyses of construction and development costs. Gregory Hathorne, CPA, CHFP, is a health care principal with CliftonLarsonAllen, specializing in audit and reimbursement services to the health care industry. He has over 15 years of experience as a financial consultant in the health care industry. He has extensive third-party reimbursement experience, including the preparation of Medicare and Medicaid cost reports for nursing homes. Gregg received his Bachelor of Science in finance from the University of South Carolina. He is a Certified Public Accountant in three states, a Certified Healthcare Financial Planner and a member of the AICPA and Florida Institute of CPAs.
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Florida Health Care Association 2013 Annual Conference
The Westin Diplomat Resort & Spa
Session #49 – Value-Based Reimbursement Update
Wednesday, August 7 – 4:30 to 5:30 p.m.
Regency 1
Upon completion of this presentation, the learner will be able to:
review Value Based Reimbursement (VBR), a key component of health care reform designed to reduce costs and achieve desired outcomes;
compare the old and new quality metrics and consider what their organization will need to do differently to meet the expectations of hospitals and health care systems; and
examine how key metrics are calculated so they can be established within the organization to tell their performance story.
Seminar Description: Accountable Care Organizations (ACO) and Value-Based Reimbursement (VBR) are the major trends affecting health care today. ACOs are meant to redistribute the risk in managing episodes of care. Concurrently, VBR is being introduced as an approach in which regulators inspect post-discharge care and how patients are managed. For years, employers and governmental entities have pushed for the measurement of the efficiency, effectiveness and quality of care to guide purchasing decisions and evolve reimbursement mechanisms that support VBR. Value, by definition, is in the eye of the beholder and efforts are underway to better define value from a patient/consumer perspective. This presentation will review the current thinking on VBR, compare the past with the present and the likely future and discuss key metrics that can help providers prepare for and excel in this new environment. Presenter Bio(s): Sue Bunevich is a health care principal with CliftonLarsonAllen, specializing in prospective financial reporting and operational consulting for senior housing providers and other healthcare providers. She guides clients through all of the financial aspects involved in the research, development and construction of new or expansion facilities by first developing strategic plans, annual budgets and multi-year financial projections. Sue prepares short and long term feasibility projections for development or expansion, prior to their submission to credit committees. Additionally, she assists clients in estimating the cost of sales and establishing sale prices for new housing units by performing analyses of construction and development costs. Gregory Hathorne, CPA, CHFP, is a health care principal with CliftonLarsonAllen, specializing in audit and reimbursement services to the health care industry. He has over 15 years of experience as a financial consultant in the health care industry. He has extensive third-party reimbursement experience, including the preparation of Medicare and Medicaid cost reports for nursing homes. Gregg received his Bachelor of Science in finance from the University of South Carolina. He is a Certified Public Accountant in three states, a Certified Healthcare Financial Planner and a member of the AICPA and Florida Institute of CPAs.
The Foundation: Value‐Based Payment Value Based Payment: “a reform initiative whereby health care providers will receive payment for service based on their performance or the potential outcomes of the service”
Tying payment to performance is perhaps the most significant aspect of health care reform.
The de facto definition of “value” in health care reform is the intersection of lower cost and improved quality.
Providers who can lower costs and deliver quality will be measured as “value‐based providers”
“Pay‐For‐Performance,” Health Affairs, October 11, 2012http://www.healthaffairs.org/healthpolicybriefs/“Pay‐For‐Performance,” Health Affairs, October 11, 2012; http://www.healthaffairs.org/healthpolicybriefs/
Medicare Value‐Based Purchasing Programs• For Hospitals (FY2013): Ties a percentage of hospital
Medicare payment to performance on quality measures for common, high‐cost conditions but not include a readmissions measure.
• For SNFs and Home Health: The HHS Secretary must submit a plan to Congress by FY2012 for transitioning skilled nursing facilities and home health agencies to a value‐based payment system.
• For physicians: Beginning by 2015 a budget‐neutral payment system that adjusts Medicare payments for physicians based on the quality and cost of care they deliver will be phased‐in over a two‐year period.
llen LLPIP Value‐Based Purchasing Program (cont’d)
• VBP Program Summary:– Performance evaluated over two domains, with multiple measures in each
domain:◊ Clinical Process of Care: 12 Measures◊ Patient Experience of Care from measures reported in HCAHPS
– Scoring based on “achievement” & “improvement”◊ Points awarded based on achievement scores compared to other hospitals◊ Points also awarded for improvement over prior period
– Scores from domains will be combined into a “Total Performance Score” weighted 70% clinical domain 30% patient satisfaction domain.
llen LLPIP Value‐Based Purchasing Program (cont’d)
• In FFY 2013 final IPPS rule, CMS outlines policies for calculating a hospital specific “value‐based incentive payment adjustment factor”
• In general, this payment adjustment factor is the result of the following:– VBP Total Performance Score compared to other hospitals nationwide
results in a “VBP Percentage”.– Multiplied by the 1% withhold from each hospital– Scores of < 1% = decrease in payments (i.e. “Net Funder”)– Scores of > 1% = increase in payments (i.e. “Net Recipient”)
• Range of payment adjustments is 0.9922 to 1.0091, and will be applied to the based DRG operating payment beginning 1/1/13
The variances by region will continue even as new payment systems are developed. The ACO shared savings calculation uses national comparisons for purposes of calculating the savings compared to expected costs which should benefit the low Medicare cost states.
There are currently 41 demonstration types underway that include new payment models designed to reduce costs, improve care and speed the implementation of best practices:
– The Medicare Shared Saving including the Pioneer and the Advanced Payment ACO Model
– The Primary Care Incentive Payment
– Patient‐Centered Medical Home/Independence at Home
– Multi‐payer Advance Practice Primary Care Model
– Federally Qualified Health Center Advanced Primary Care Practice Demonstration
Wisconsin is one state that has made significant progress on reducing both admissions and readmissions to acute care.
Wisconsin was one of the demo states for Value Based Payments in SNF. The payout was contingent on reducing the total admissions and meeting defined performance measures.
During the demo admissions and readmissions declined allowing substantial payouts.
Keys to SuccessThese key success factors have not changed:
1. Volume2. Marketshare3. Strong, diverse referral network4. Low cost, high quality provider5. High customer satisfaction6. Strong, positive reputation
New changes:1. New performance metrics2. Specialty services3. Physician engagement and leadership4. Incorporating health preservation and recovery into senior living5. Relationship cultivation6. Negotiation skills
1. Medicare Advantage – 50 metrics – 5 Stars – Up to 5% bonus based on:– Customer service on responsiveness– Prevention services and vaccinations– Health outcomes– Complaints, appeals and voluntary disenrollment– Call center patient satisfaction– Managing chronic care
2. Private Health Plans – Negotiated Separately
3. Managed Medicaid – similar to Medicare Advantage – State insurance regulations may define payment options
So what to do…..New Data and Information1. Hospital acquired conditions resulting in readmissions are important.
• 90% of readmissions that are Hospital acquired conditions involves mediastinitis, post‐orthopedic surgery infection, or a fall related injury.
2. Establishing Best Practices and care models become important.• Payments based on clinical performance require common understanding
and recognition of outliers.• Defining conservative care becomes important.
3. Predictive modeling is in its early stages of development.• Understand the metrics on which payments are set.• Managing by data takes on new meaning.• Monitor best practice compliance.
HFMA has established a taskforce to evaluate the implications of performance measures and value based reimbursement on financial statement reporting. One discussion point has been whether to engage an accrediting body to assess the accuracy of and definition of uniform performance measures..