1. VALUE BASED PERFORMANCE: UNDERSTAND YOUR SCORECARD AND BOOST YOUR REIMBURSEMENT MARCH 06, 2013

2. MARSH 1 May 2, 2015 INTRODUCTIONS ROBIN KISH Vice President +1 813.220.6868 robin.kish@marsh.com robin.kish@marsh.com SUZANNE HOLBACH Vice President +1 865.274.9729 suzanne.holbach@marsh.com suzanne.holbach@marsh.com DONNA JENNINGS Senior Vice President +1 404.539.8018 donna.jennings@marsh.com donna.jennings@marsh.com

3. MARSH 2 May 2, 2015 AGENDA VBP and Its Impact Healthcheck-2014 and Beyond Risk & Finance: Impact Points Unhealthy Hospitals (Collateral Risks) “Healthy Hospital Solutions”

4. VBP AND ITS IMPACT

5. MARSH 4 May 2, 2015 VBP AND ITS IMPACT WHAT IS VBP?

6. MARSH 5 May 2, 2015 VBP AND ITS IMPACT WHAT IS VBP? Incentive for quality outcomes and efficiency: Required by the Affordable Care Act. Quality incentive program built on the Hospital Inpatient Quality Reporting (IQR) measure reporting infrastructure. Next step in promoting higher quality care for Medicare; pays for care that rewards better value and patient outcomes, instead of just volume of services. Funded by a 1% reduction from participating hospitals’ base operating diagnosis-related group (DRG) payments for FY 2013, increasing to 2% by FY 2017. Uses measures that have been specified under the Hospital IQR Program and results published on Hospital Compare for at least one year.

7. MARSH 6 May 2, 2015 VBP AND ITS IMPACT WHAT IS VBP? Incentive for quality outcomes and efficiency: The VBP program design includes: –Measuring Quality Performance and Patient Experience ­Total Performance Score (TPS) ­20 performance measures for FY 2013 ­24 performance measures for FY 2014 –Reimbursement based on Quality Outcomes –Funded by withholding 1% of the CMS reimbursement –Reimbursement is based on performance scores Pay for Performance vs. Pay for Reporting

8. MARSH 7 May 2, 2015 VBP AND ITS IMPACT FY 2013 MEASURES Source: CMS official VBP web site. 12 Clinical Process of Care Measures 1.AMI-7a Fibrinolytic Therapy received within 30 minutes of hospital arrival. 2.AMI-8 primary PCI recevied with 90 minutes of hospital arrival. 3.HF-1 discharge instructions. 4.PN-3b blood cultures performed in the ED prior to initial antibiotic received in hospital. 5.PN-6 initial antibiotic selection for CAP in immunocompetent patient. 6.SCIP-Inf-1 prophylactic antibiotic received within one hour prior to surgical incision. 7.SCIP-Inf-2 prophylactic antibiotic selection for surgical patients. 8.SCIP-Inf-3 prophylactic antibiotics discontinued within 24 hours after surgery. 9.SCIP-Inf-4 cardiac surgery patients with controlled 6AM postoperative serum glucose. 10.SCIP-Card-2 surgery patients on a beta blocker prior to arrival that received a beta blocker during the perioperative period. 11.SCIP-VTE-1 surgery patients with recommended venous thromboembolism prophylaxis ordered. 12.SCIP-VTE-2 surgery patients who received appropriate venous thromboembolism prophylaxis within 24 hours. 1.Nurse communication. 2.Doctor communication. 3.Hospital staff responsiveness. 4.Pain management. 5.Medicine communication. 6.Hospital cleanliness and quietness. 7.Discharge information. 8.Overall hospital rating. 8 Patient Experience of Care Dimensions 70% 30%

9. MARSH 8 May 2, 2015 VBP AND ITS IMPACT VBP 2013

10. MARSH 9 May 2, 2015 VBP AND ITS IMPACT HOW ARE HOSPITALS EVALUATED? Hospitals are awarded points for Achievement and Improvement for each measure or dimension, with the greater set of points used. Points are added across all measures to reach the Clinical Process of Care and Outcome domain scores. Points are added across all dimensions and are added to the Consistency Points to reach the Patient Experience of Care domain score. Source: CMS official VBP web site.

11. MARSH 10 May 2, 2015 VBP AND ITS IMPACT HOW ARE HOSPITALS EVALUATED? Source: CMS official VBP web site. Achievement points: awarded by comparing an individual hospital's rates during the performance period with all hospitals’ rates from the baseline period. –Rate at or above the benchmark: 10 points. –Rate less than the achievement threshold: 0 points. –Rate equal to or greater than the achievement. –Threshold and less than the benchmark: 1-10 points. Time All HospitalsMe! Achievement Threshold Benchmark One Hospital’s Performance 12345678910 SCORE 0.70 Achievement Range All Hospitals’ Baseline

12. MARSH 11 May 2, 2015 Time Me! VBP AND ITS IMPACT HOW ARE HOSPITALS EVALUATED? Source: CMS official VBP web site. Improvement points: awarded by comparing a hospital's rates during the performance period to that same hospital's rates from the baseline period. –Rate at or above the benchmark: 9 points –Rate less than or equal to baseline period rate: 0 points –Rate between the baseline period rate and the benchmark: 0-9 points Achievement Threshold Benchmark One Hospital’s Performance 12345678910 SCORE 0.70 Achievement Range One Hospital’s Baseline 1234567890 Improvement Range SCORE 0.21

13. MARSH 12 May 2, 2015 VBP AND ITS IMPACT AVERAGE VBP SCORES – OWNERSHIP Source: CMS official VBP web site.

14. MARSH 13 May 2, 2015 VBP AND ITS IMPACT QUALITY MEASURES HEALTHCHECK Source: iVantage

15. MARSH 14 May 2, 2015 VBP AND ITS IMPACT HCAHPS HEALTHCHECK Source: iVantage

16. MARSH 15 May 2, 2015 VBP AND ITS IMPACT WHAT IS THE FINANCIAL IMPACT OF VBP? Withholding CMS reimbursement The VBP initiative is funded by withholding reimbursement from participating hospitals’ Diagnosis Related Group (DRG) payments –FY 2013 - 1.0% –FY 2014 - 1.25% –FY 2015 - 1.5% –FY 2016 - 1.75% –FY 2017 – 2.0% CMS estimates that in FY 2013, 50% of participating hospitals will receive a net increase in payments and 50% will receive a net decrease in payments 1% of DRG payments withheld from eligible hospitals is estimated at $850 million.

17. HEALTHCHECK-2014 AND BEYOND

18. MARSH 17 May 2, 2015 HEALTHCHECK-2014 AND BEYOND FY 2014 MEASURES AND ITS IMPACT Source: CMS official VBP web site. 1.Nurse communication. 2.Doctor communication. 3.Hospital staff responsiveness. 4.Pain management. 5.Medicine communication. 6.Hospital cleanliness and quietness. 7.Discharge information. 8.Overall hospital rating. 8 Patient Experience of Care Dimensions13 Clinical Process of Care Measures 1.AMI-7a Fibrinolytic Therapy received within 30 minutes of hospital arrival. 2.AMI-8 primary PCI received with 90 minutes of hospital arrival. 3.HF-1 discharge instructions. 4.PN-3b blood cultures performed in the ED prior to initial antibiotic received in hospital. 5.PN-6 initial antibiotic selection for CAP in immunocompetent patient. 6.SCIP-Inf-1 prophylactic antibiotic received within one hour prior to surgical incision. 7.SCIP-Inf-2 prophylactic antibiotic selection for surgical patients. 8.SCIP-Inf-3 prophylactic antibiotics discontinued within 24 hours after surgery. 9.SCIP-Inf-4 cardiac surgery patients with controlled 6AM postoperative serum glucose. 10.SCIP-Inf-9 postoperative urinary catheter removal on postoperative day 1 or 2. 11.SCIP-Card-2 surgery patients on a beta blocker prior to arrival that received a beta blocker during the perioperative period. 12.SCIP-VTE-1 surgery patients with recommended venous thromboembolism prophylaxis ordered. 13.SCIP-VTE-2 surgery patients who received appropriate venous thromboembolism prophylaxis within 24 hours. 1.MORT-30-AMI Acute Myocardial Infarction (AMI) 30-day mortality rate. 2.MORT-30-HF Heart Failure (HF) 30-day mortality rate. 3.MORT-30-PN Pneumonia (PN) 30-day mortality rate. 3 Mortality Measures Represents a new measure for the FY 2014 program not in the FY 2013 program. 45% 30% 25%

19. MARSH 18 May 2, 2015 HEALTHCHECK-2014 AND BEYOND VBP 2014

20. MARSH 19 May 2, 2015 HEALTHCHECK-2014 AND BEYOND ED QUALITY INDICATORS Data collection began January 2012 –ED-1: Median time from ED arrival to ED departure for admitted ED patients –ED-2: Admit decision time to ED departure time for admitted patients For more information on the ED Measures, go to: http://medicare.gov/hospitalcompare/Data/emergency-wait-times.aspx http://medicare.gov/hospitalcompare/Data/emergency-wait-times.aspx Reimbursement Impact! Source: CMS Specifications Manual 4.0c

21. MARSH 20 May 2, 2015 HEALTHCHECK-2014 AND BEYOND COMING SOON TO AN ED NEAR YOU "A patient's experience in an emergency department is an essential component of their overall healthcare experience in a hospital, and we believe that a patient survey evaluating such care will further support the HHS's goals and priorities.“ - CMS statement on patient satisfaction surveys Source: Fierce Healthcare. ED Patient Satisfaction. The Future of Reimbursement. December 10, 2012 –Pain control –Wait Times –Communication with Provider

22. RISK & FINANCE: IMPACT POINTS

23. MARSH 22 May 2, 2015 RISK & FINANCE: IMPACT POINTS WHAT IS THE VBP CONNECTION? Patient throughput and flow issues Medication reconciliation Patient complaints Efficiencies of Ancillary Departments (lab, pharmacy) Individualization of patient care/treatment plans, including discharge plan and education Rapid Response and Emergency Care Claims & Liability Medical Errors, Reporting, & Disclosure Health Information Management (EMR, HIPAA, HI-TECH) ER Efficiencies and Turn Around Times Transition of Care Delays Readmissions (Preventable) Hospital Acquired Conditions Sentinel Events Patient Complications Regulatory Audits/Surveys/Sanctions Mortality Review Medical Record Gaps or Lack of Documented Medical Necessity

24. MARSH 23 May 2, 2015 RISK & FINANCE: IMPACT POINTS STAYING STRONG IN THE MIDST OF REFORM

25. UNHEALTHY HOSPITALS “COLLATERAL RISKS”

26. MARSH 25 May 2, 2015 UNHEALTHY HOSPITALS “COLLATERAL RISKS” Financial Risks (Noted Previously) Operational and Reputational Risks Medical Malpractice/Litigation Underwriter / Carrier Issues Regulatory and Accreditation Impact Public Consumer Opinions Adverse Events/Mandatory Reportable Events Mortality and Morbidity Employees, Physicians, Residents, Students Satisfaction Scores Impact on Managed Care Contracting, Hospital Rating & Business Partner Relationships

27. HEALTHY HOSPITAL SOLUTIONS

28. MARSH 27 May 2, 2015 HEALTHY HOSPITAL SOLUTIONS Value Based Purchasing Solutions ED throughput Readmissions reduction and management Revenue cycle and clinical documentation improvement Programs

29. MARSH 28 May 2, 2015 HEALTHY HOSPITAL SOLUTIONS CLINICAL HEALTHCARE CONSULTING SERVICES Customer Service – Door to Departure Arrival, Registration and Triage WaitingTest and TreatObservation, Reassessment and Admission or Discharge ED Intake Quick Registration Triage –Bypass –Protocols –Med Reconciliation MSE D2D Waiting Room –Rounding ED Throughput MSE Testing – Radiology/Laboratory Case Management Diversions Direct Admits ED Output Barriers to A/D/T Consultants Orders Boarders Diversions

30. MARSH 29 May 2, 2015 HEALTHY HOSPITAL SOLUTIONS CLINICAL HEALTHCARE CONSULTING PROGRAMS Readmissions Reduction and Management The last readmission group is considered as preventable – or avoidable – readmission. There is a great potential to reduce the number of this type of readmission by identifying causes and developing preventable strategies in hospitals and community settings. DRG Penalty CalculationsHFAMIPNE Number of Patients Treated with MS-DRGs500200800 Number of Readmissions (Risk Adjusted)14044162 Risk-Adjusted Readmit Rate28.5%22.5%20.8% US 30-Day Readmission Rate24.5%19.9%18.2% Predicted/Expected Ratio1.16321.13061.1428 P/E Ratio – 1.1632.1306.1428 Total Medicare Payments$1,500,000$775,000$2,150,000 Excess Payment Amount$245,000$101,000$307,000 Total Penalty Payment653,000 Source: CMS official VBP web site.

31. MARSH 30 May 2, 2015 HEALTHY HOSPITAL SOLUTIONS READMISSIONS REDUCTION & MANAGEMENT STRATEGIES Facility and provider practice risk impact analysis Technology Pre-admission Hospital admission Care transition coordination

32. MARSH 31 May 2, 2015 HEALTHY HOSPITAL SOLUTIONS CLINICAL HEALTHCARE CONSULTING PROGRAMS Revenue Cycle and Clinical Documentation Improvement Programs –Operations Review –ED Case Management –ED Throughput –Denial Management –Billing, Coding and Clinical Documentation Improvement –RACS/MICS/ZPICS/Medical Necessity

33. QUESTIONS

34. MARSH 33 May 2, 2015 VBP RESOURCES CMS official VBP web site: http://www.cms.gov/Medicare/Quality-Initiatives-Patient- Assessment-Instruments/hospital-value-based-purchasing/index.html CMS VBP fact sheet: http://www.cms.gov/Medicare/Quality-Initiatives-Patient- Assessment-Instruments/hospital-value-based-purchasing/Downloads/FY-2013- Program-Frequently-Asked-Questions-about-Hospital-VBP-3-9-12.pdf Refer to the Hospital VBP Final Rule for more information on the Hospital VBP quality measures: http://www.gpo.gov/fdsys/pkg/FR-2011-05-06/pdf/2011- 10568.pdf. For detailed information on the Hospital VBP program, refer to: http://www.cms.gov/Hospital-Value-Based-Purchasing. For further details about scoring for the FY 2013 Hospital VBP program, refer to the July 2011 Open Door Forum: http://www.cms.gov/Hospital-Value-Based- Purchasing/Downloads/HospVBP_ODF_072711.pdf.

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