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"Begin with the end in mind" was one mantra that emerged from the acclaimed book by Stephen Covey in The Seven Habits of Highly Effective People. As the health reform debate rages on, many opinions have emerged about what the end model, health care system should ultimately look like especially as providers are being placed under increased scrutiny to become more efficient and cost-effective. However, one thing is quite clear - any provider who wishes to provide health care in the future must comprehensively embrace and integrate quality into every part of the organization's operations and culture.
Hospitals are, and have been, in the midst of a sea of change as Medicare has placed a renewed emphasis on quality to redefine the financing and provision of health care. As one of the largest purchasers of health care goods and services, CMS has made it clear that over the next few years it intends to move to a new payment model which will be the cornerstone for reimbursement - value-based purchasing ("VBP"). CMS has defined the general goals of value-based purchasing as follows:
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Financial viability - ensuring traditional Medicare fee-for-service is protected for beneficiaries and taxpayers;
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Payment incentives - linking payment to value of care provided;
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Joint accountability - physicians and providers share financial and clinical accountability for health care in their communities;
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Effectiveness - care is evidence-based and outcomes-driven to better manage disease processes and prevent complications;
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Ensuring Access - equal access to high quality, affordable care;
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Safety and Transparency - beneficiaries will be provided information on quality, cost and safety of their health care;
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Smooth Transitions - payment systems will support coordinated care across different providers and settings; and
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Electronic Health Records - information technology will support all care leading to quality, efficient and well coordinated care.
With VBP set to become the standard, CMS is quickly moving from a stance of simply identifying and promoting quality-based measures, to requiring and demanding participation by all providers. Further, many of the demonstrations are now under serious consideration for integration into future health reform legislation. The goal of this memo is to acquaint health care providers and leaders with the various quality CMS demonstration projects so that further consideration can be given to their organization's current care models and payment structures.
Hospital and Physician Alignment
CMS realizes that in order to implement a comprehensive VBP program new legislation will be needed to properly align physicians and hospitals both financially and philosophically. VBP will ultimately require physicians and providers restructure their relationships in order to effectively work together to achieve the quality goals touted by CMS. This movement to realignment between physicians and hospitals is exemplified in the following projects:
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Gain-sharing Demonstration - This demonstration will allow gain-sharing payments to physicians from hospitals for savings resulting from collaborative efforts to improve quality and efficiency - this demonstration began October 1, 2008, and will end December 31, 2009.
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Physician Hospital Collaboration Demonstration - This three-year project is another gain-sharing demonstration beginning in 2009 which will closely evaluate patient care beyond a single hospital episode to determine if hospitals and physicians are effective at preventing short and long-term complications.
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Acute Care Episode Demonstration - As of January 2009, five hospitals in Texas, Oklahoma, New Mexico and Colorado are participating in a hospital-based demonstration that will examine the use of bundled payments for hospital and physician services for certain inpatient care - largely focused on surgical services. A single global fee will be paid combining Part A and Part B costs for all physician services and for hospital care where gain-sharing will be permitted.
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Post-Acute Care Payment Reform Demonstration - This demonstration will examine cost and outcomes across different post-acute care sites. The demonstration is expected to examine health and functional status and assess resources and outcomes in the various settings mindful of case mix and acuity-based factors.
Additional CMS Demonstrations and Incentive Programs
CMS has also implemented a series of other demonstrations and incentive programs that are examining a comprehensive model of care based on quality. An overview of the major quality initiatives for hospitals and providers is discussed below.
Premier Hospital Quality Incentive Demonstration - In 2003, CMS began several performance-based demonstrations which include the Premier Demonstration involving 250 hospitals in 38 states. In the first three years, significant quality improvements were noted in patients receiving care for acute myocardial infarction, pneumonia, coronary artery by-pass graft surgery, heart failure and hip and knee replacement. In August, results were released that showed among the participating hospitals quality improved by an average of 17.2% on 30 selected measures. As a result, $12 million in bonuses will be distributed.
Pay-for-Reporting - Under the Hospital Quality Alliance initiative and the Reporting Hospital Quality Data for Annual Payment Update ("RHQDAPU"), hospitals are now required to report 30 quality measures for 2009 as part of CMS' plan to disseminate quality information to beneficiaries and to extrapolate data on which to base a VBP payment system. For 2010, 43 quality data measurements must be reported and 46 different measures have been requested for 2011 in the current proposed 2010 IPPS rules. A failure to participate will reduce hospital payments by 2.0 percentage points of their market basket share. Stiffer penalties are currently under consideration. Likewise, under the Physician Reporting Quality Initiative, physicians are incentivized to report 153 different quality measures for 2009. For satisfactorily reporting data, physicians can receive an additional 1.5 to 2.0 percent of their allowed charges for covered professional services.
Physician Group Practice Demonstration - The PGP Demonstration is a five-year project that rewards physicians for improving quality and efficiency with a focus on: improving the coordination of Part A and Part B health care services, process redesigns for physicians and their clinical care teams and improving health outcomes. Physicians who achieve specific benchmarks are eligible to earn up to 80 percent of any savings generated. In one instance, ten groups earned $16.7 million in incentive payments in one year of the demonstration while four other group practices earned $13.8 million. In a report released August, all ten of the participating physician groups hit at least 28 of the 32 measures in the third year of the pilot. As a result of their efforts, the physician group is sharing $25.3 million of the $32.3 million saved by the Medicare Trust Fund.
Hospital Acquired Conditions ("HAC") and Never Events - The HAC initiative along with the present on admission ("POA") indicator is a significant step by CMS in aligning payment with quality. Beginning October 1, 2008, if a specific condition is not properly noted as POA (or if a patient incurs a CMS identified HAC), then the higher paying Medicare-severity diagnosis-related group (MS-DRG) that results cannot be billed. The list of conditions includes: 1) object left in surgery; 2) air embolism; 3) incompatible blood administration; 4) urinary tract infections; 5) pressure ulcers (stages III and IV); 6) vascular catheter-associated infections; 7) surgical site infection (coronary by-pass graft); and 8) hospital-acquired injuries-falls/trauma. In the fiscal year 2009 rule-making, CMS added three new conditions to the list: 1) poor glycemic control; 2) surgical site infections (orthopedic surgeries); and 3) deep vein thrombosis or pulmonary embolism.
With respect to "never events," beginning January 15, 2009, CMS issued three national coverage determinations to establish uniform policies aimed at allowing CMS to deny payment for the following care incidents: 1) wrong surgical or other invasive procedure performed on a patient; 2) surgical or other invasive procedures performed on the wrong body part; and 3) surgical or other non-invasive procedures performed on the wrong patient. This is a new approach from CMS as these "events" were not added to the hospital acquired condition list and allows CMS to not only deny the hospital payment, but also deny payment to any provider or supplier associated with the event.
Re-admission Demonstration - CMS instituted a 14-city project designed to track hospital re-admissions and more intensively look at care coordination and care transitions between health care institutions as patients move between settings. The demonstration is unique because this marks one of the first studies by CMS to track care between organizations and to seek a more complete understanding of how patient movement between organizations affects quality. The project is set to officially begin in the spring of 2009 and will continue through 2011.
Medical/Health Care Home Demonstration - By 2010, the Medical Home Demonstration will be fully underway to study the effects of having a central primary care home as the centerpiece for coordinating care for patients, especially those with multiple chronic illnesses. Physicians participating in this model of care will receive a per-patient, monthly "care management fee" in addition to payment for Medicare services provided. The final eight states that will host the demonstration should be announced by the end of 2009.
Compare Site and Chartered Value Reporting - CMS has established the "compare" websites which were designed to foster transparency and provide the public with information to make more informed decisions about their health care. Posted on the CMS compare site are 27 inpatient measures associated with cost, quality and patient satisfaction with care.
E-Prescribing and Electronic Health Records - Physicians who successfully e-prescribe can earn an additional 2.0 percent incentive payment of total allowed Medicare charges for covered professional services in 2009. In addition, CMS has implemented a five-year project to help small to medium-sized practices acquire EHR capability. The American Recovery and Reinvestment Act has also increased access to capital to rapidly push EHR acquisition as part of the quality incentive to reduce medical errors and improve coordination.
Achieving Quality Success and Service Excellence
Although health care is a complex process whereby many moving parts must come together seamlessly to effectively provide patient care, CMS’ shift to a value-based purchasing model will force providers to re-think care processes and strategic relationships in order to maximize efficiencies and the patient experience at the bedside and beyond. A close examination of CMS' current demonstrations and policy initiatives will help providers and health care leaders adopt viable models of care that will soon be the basis for future payment systems and structures.
If you have questions about how the new demonstrations may affect your organization's future reimbursement or how you might consider structuring internal quality programs or aligning provider relationships, please contact Mark E. Douglas at 317.977.1485, mdouglas@hallrender.com or Neal A. Cooper at 317.977.1455, ncooper@hallrender.com.
Helpful Links:
CMS Overview of Quality Initiatives
Hospital Compare
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