1. Leading the Value Journey: Value Based Purchasing “What should you be focused on?” Melinda S. Hancock, FHFMA, CPA Secretary/Treasurer HFMA HFMA Western Pennsylvania Chapter Winter Education Event February 18, 2014

4. The New Construct Evolving Population Health in a Fee for Service Era Healthcare Reform 4

5. 2 Key Components of Payment Reform Goals of Payment Reform This will include establishing measures to (1) establish performance based payment incentives and (2) protecting against unintended consequences of cost containment. Source: Rand, Payment Reform: Analysis of Models and Performance Measurement Implications, 2011

6. 0.75% 1%2% 0.1% 1.0%0.7% TOTAL IMPACT % = % OF MEDICARE INPATIENT OPERATING PAYMENTS Value-Based Purchasing 30-day readmissions Hospital-acquired conditions Market basket reductions Multifactor Productivity Adj* Documentation and Coding Adj (DCA)** Across the board cuts to finance debt *** OCT 2014 OCT 2011 OCT 2018 OCT 2019 OCT 2020 OCT 2017 OCT 2013 OCT 2016 OCT 2015 OCT 2012 1.0%1.25%1.5%1.75% 2.0 % 3.0% 1.0% 0.3% 0.5% 1.9%4.9% 2.0% 6.7% 10.6% 10% 6.0% *The Multifactor Productivity Adjustment is an estimate generated by the CMS Office of the Actuary **DCA, also known as the behavioral offset, shown here does not show the future affects of these cuts on baseline spending. Estimates FY 2014-FY 2017 impact of the American Taxpayer Relief Act of 2012 *** If Congress has not adopted the Joint Committee’s report to reduce the deficit by at least $1.2 trillion, the 2% cut will be implemented April 2013 0.2% 8.1%11.4% 9.4% 10.5% 9.3% 8.7% 8.9% 1.0% 2.0% Current Reform Landscape 0.4% 2.1% 0.65%0.9% 0.7%

7. Timeline of Performance

8. Reform Readiness Amount at Risk 20132014201520162017 Readmission Program (a)1.0%2.0%3.0% Value Based Purchasing (b)1.0%1.25%1.5%1.75%2.0% Hospital Acquired Conditions (a) 1.0% Total Potential Rates at Risk2.0%3.25%5.5%5.75%6.0% a: Represents a worst case scenario and a ceiling of the maximum penalties b: Represents a withhold of payment that can be earned back based on quality metrics

9. The Medicare DRG Formula Standard Federal Rate 9 Labor Portion X Wage Index Non Labor Portion Adjusted Base Rate Case Mix/DRG Weight Generic Base Rate DSH Adjustment + IME Adjustment Payment

10. Facts about FY 14 VBP Bonuses Pennsylvania Average.24% US Average,24% Penalties Pennsylvania Average -.20% US Average -.26% % With Bonuses Pennsylvania Average 45% US Average 45% LESS REIMBURSEMENT A total of 1,451 hospitals got paid less in FY 14 vs FY 13 for VPB. 1,231 got paid more. $1.1B at play in FY 14 VBP Largest increase.88% Largest Decrease 1.14% Change from FY 13 VBP

11. Pennsylvania Hospital Performance Value Based Purchasing Readmissions For FFY 2014

12. VBP Shifting of Domain Weights Outcomes Patient Experience Efficiency (MSPB) Core Measures

13. New NQS Based Domains in FY 17 Note: The Clinical Care Component is split 25% Outcomes and 10% Process Per August 13, 2013 Federal Register

14. What Determines Reimbursement? Reimbursement Determined Two Ways – Improvement – Achievement Improvement – How we measure against ourselves Did we do better than last year Achievement – How we compare to Top Decile Must Meet or Exceede the Mean Scores of Top Decile Performers (350 Hospitals) 14

15. Clarification of Definitions In the Final Rule: August 19, 2013 – “Achievement Threshold (or achievement performance standard) means the median (50 th percentile) of hospital performance on a measure during a baseline period with respect to a fiscal year, for Hospital VBP Program measures other than the Medicare Spending Per Beneficiary measure and the median (50 th percentile) of hospital performance on a measure during the performance period with respect to a fiscal year, for the Medicare Spending per Beneficiary measure” – “Benchmark means the arithmetic mean of the top decile of hospital performance on a measure during the baseline period with respect to a fiscal year, for Hospital VBP Program measures other than the Medicare Spending per Beneficiary measure, and the arithmetic mean of the top decile of hospital performance on a measure during the performance period with respect to a fiscal year, for the Medicare Spending Per Beneficiary measure” Per August 13, 2013 Federal Register

16. Scenario on Scoring AMI 7a- Fibrinolytic Therapy.6548 Achievement Threshold.9191 Benchmark Baseline Performance Score.4287 Score.8163 Achievement Range (1-10) Improvement Range (0-9) Sourced: 2010 August Federal Register

17. FY 16 Clinical Process of Care 10% Measure IDDescription Achievement ThresholdBenchmark AMI-7a Fibrinolytic Therapy received within 30 min of hospital arrival.911541.0000 IMM-2 Influenza Immunization.90607.98875 PN-6 Initial antibiotic selection for CAP in Immunicompetent pt.965521.0000 SCIP-Inf-2 Prophylatic Antibiotic Selection for Surgical Pts.990741.0000 SCIP-Inf-3 Prophylatic Antibiotics discontinued 24 hrs after surgery end time.980861.0000 SCIP- Inf-9 Urinary catheter removed on post op day 1 or 2.970591.0000 SCIP- Card-2 Surgery patients on beta blocker therapy prior to arrival who received a beta blocker during perioperative period.977271.0000 SCIP-VTE-2 Surgery patients who received appropriate VTE prophylaxes within 24 hours prior to surgery to 24 hours after surgery.982251.0000 Per August 13, 2013 Federal Register

18. FY 16 Outcome Measures 40% Measure IDDescription Achievement ThresholdBenchmark CAUTICatheter Associated Urinary Tract Infection.801.000 CLABSICentral Line Associated Blood Stream Infection.465.000 SSISurgical Site Infection Colon Abdominal Hysterectomy.668.752.000 Mort-30-AMIAMI 30 day Mortality rate.847472.862371 Mort- 30-HFHF 30 day Mortality rate.881510.900315 Mort- 30-PNPN 30 day Mortality rate.882651.904181 PSI-90Complication/patient safety for selected indicators (composite).622879.451792 Per August 13, 2013 Federal Register

19. FY 16 Patient Experience of Care 25% Description Floor Achievement ThresholdBenchmark Communication with Nurses53.9977.6786.07 Communications with Doctors57.0180.4088.56 Responsiveness of Hospital Staff38.2164.7179.76 Pain Management48.9670.1878.16 Communication about Medicines34.6162.3372.77 Hospital Cleanliness & Quietness43.0864.9579.10 Discharge Information61.3684.7090.39 Overall Rating of Hospital34.9569.3283.97 Per August 13, 2013 Federal Register

20. 30 Day Risk-Standardized Mortality Rate Calculation 20 Facility Predicted Deaths Facility Expected Deaths X Measure (AMI, HF, PN) National Crude Rate = This is 30 days post admission: the majority of these may be post discharge.

21. HF Mortality Formula Numerator & Denominator Description The measure cohort consists of admissions for Medicare Fee-for-Service (FFS) and Veterans Health Administration (VA) beneficiaries aged 65 years and older discharged from non-federal acute care hospitals or VA hospitals, respectively, having a principal discharge diagnosis of heart failure (HF). The hospital-specific risk-standardized mortality rate (RSMR) is calculated as the ratio of the number of "predicted" deaths to the number of "expected" deaths, multiplied by the national unadjusted mortality rate. The "denominator" is the number of deaths expected on the basis of the nation's performance with that hospital's case mix. The "numerator" of the ratio component is the number of deaths within 30 days predicted on the basis of the hospital's performance with its observed case mix. It conceptually allows for a comparison of a particular hospital's performance given its case mix to an average hospital's performance with the same case mix. Thus, a lower ratio indicates lower-than-expected mortality or better quality, and a higher ratio indicates higher-than-expected mortality or worse quality. Source: http://www.qualitymeasures.ahrq.gov/content.aspx?id=35573

22. Heart Failure Risk Adjustments Demographics Age-65 (years above 65, continuous) Male Cardiovascular History of percutaneous transluminal coronary angioplasty (PTCA) History of coronary artery bypass grafting (CABG) Congestive heart failure Acute myocardial infarction (AMI) Other acute/subacute forms of ischemic heart disease Chronic atherosclerosis Cardio-respiratory failure and shock Valvular and rheumatic heart disease Comorbidity Hypertension Stroke Renal failure Chronic obstructive pulmonary disease (COPD) Pneumonia Diabetes and diabetes mellitus (DM) complications Protein-calorie malnutrition Dementia and senility Hemiplegia, paraplegia, paralysis, functional disability Peripheral vascular disease Metastatic cancer, acute leukemia, and other severe cancers Trauma in the last year Major psychiatric disorders Chronic liver disease The final set of risk-adjustment variables included: Source: http://www.qualitymeasures.ahrq.gov/content.aspx?id=35573

23. Trend of Mortality Source: Medicare Hospital Quality Chartbook, 2013

24. Distribution of Mortality Source: Medicare Hospital Quality Chartbook, 2013

25. Efficiency Definition Medicare Spending 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 of care across the continuum of care. 3 days prior to admission and 30 days post discharge Indexed by the discharging hospital regardless of who provides services in the 3 days prior and 30 days post – The first performance period ended 12/31/13 for FFY 15 and the second one started 1/1/14 for FFY 16.

26. 26 Medicare Spending Per Beneficiary Lists percent of spending for the hospital vs. state and national statistics by provider type.

27. By MDC for each Hospital 27 Lists all 25 MDCs with state and national averages Three additional reports along with the summary on Qnet: index admission file, beneficiary risk score file and an MSPB episode file.

28. What should I be looking for next? Watch for the flags… On Hospital Compare

29. Heads Up: Stroke Source: Medicare Hospital Quality Chartbook, 2013

30. Timeline of Performance

31. Reform Readiness Amount at Risk 20132014201520162017 Readmission Program (a)1.0%2.0%3.0% Value Based Purchasing (b)1.0%1.25%1.5%1.75%2.0% Hospital Acquired Conditions (a) 1.0% Total Potential Rates at Risk2.0%3.25%5.5%5.75%6.0% a: Represents a worst case scenario and a ceiling of the maximum penalties b: Represents a withhold of payment that can be earned back based on quality metrics

32. Hospital Acquired Conditions: Final Rule for FFY 2015 First Domain 35% : PSIs Performance Period: 7/1/11-6/30/13 Second Domain 65%: CDC Performance Period: CY 2012 & 2013 Pressure Ulcer RateCLABSI Foreign Object Left in BodyCAUTI Iatrogenic Pneumothorax Rate Postoperative Physiologic and Metabolic Derangement Rate Postoperative Pulmonary Embolism and Deep Vein Thrombosis Rate Accidental Puncture and Laceration Rate 1% Medicare Reimbursement at risk Lowest performing quartile will be penalized

33. HAC Domain Weightings 33 CLABSI: 32.5% CAUTI: 32.5% Pressure Ulcer Rate: 8.33% Foreign Object Left In Body: 8.33% DOMAIN 1: 35% DOMAIN 2: 65%

34. Proposed Future Measures: Domain 2 First Domain: PSIsSecond Domain: CDC Pressure Ulcer RateCLABSI Foreign Object Left in BodyCAUTI Iatrogenic Pneumothorax RateSSI Following Colon Surgery (FY 2016) Postoperative Physiologic and Metabolic Derangement Rate SSI Following Abdominal Hysterectomy (FY 2016) Postoperative Pulmonary Embolism and Deep Vein Thrombosis Rate Methicillin-Resistant Staphylococcus Aureus (MRSA) Bacteremia (FY 2017) Accidental Puncture and Laceration RateClostridium Difficile (FY 2017)

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37. Why is patient financial communication important now? 37 The U.S. health care system is inherently complex—even for healthcare professionals Today, more people are covered by high- deductible health plans Consumers want to know exactly how much they will be expected to pay Media coverage has raised public awareness of issues around healthcare costs and prices

38. Donna Shalala Former U.S. Secretary of Health and Human Services October 2013 “There’s never been a more important time in our history for very clear communication between healthcare professionals and our patients.”

39. 39 What do the best practices cover? Where and when to have financial discussions Who participates What topics to address Discussion parameters Assessment framework

40. 40 How were the best practices developed? These best practices reflect the consensus of a steering committee of experts across many fields, including Patients Hospitals Physicians Payers …advised by a team of leading national policymakers

41. 41 How can we demonstrate our commitment to excellence in patient financial communication? Adopters receive acknowledgement on the HFMA website and in hfm magazine. Adopters may use the phrase “Supporter of the Patient Financial Communications Best Practices” in marketing materials. No fees involved All healthcare provider organizations are eligible. Become an Adopter of the best practices.

42. 42 hfma.org/communications

43. Price Transparency Task Force 43

44. Medical Debt Collection Task Force 44

45. “The challenges that we face… will require leadership from everybody in this room.” Steve Rose 2013-2014 Chair, HFMA CFO, Conway Regional Health System Speaking at ANI 2013

46. Thank you!