Medicare Hospital Value-Based Purchasing Proposed Rule Reports and Analysis February 15, 2011

Mandatory Medicare Delivery System Reform Inpatient Readmissions Implemented October 1, 2012 (FFY 2013) Reduces Medicare reimbursement by $7 billion / 10 years nationwide; $1 to NYS. Inpatient Value-Based Purchasing Budget neutral; redistributive within PPS system. Health Care- Acquired Conditions Implemented October 1, 2015 (FFY 2014) Reduced Medicare inpatient hospital reimbursement by $ 1.4 billion / 10 years nationwide. EHR Meaningful Use (ARRA) Medicare payment penalties assessed against eligible hospitals and physicians that fail to be meaningful users by October 1, 2014 (FFY 2015). FFY 2013 FFY 2015

Voluntary Medicare Delivery System Reform 2012 2013 Centers for Medicare and Medicaid Innovation (CMMI) The “venture capital” entity of ACA launched November 2010. Will allocate $10 billion over 10 years nationwide to fund testing of innovative care delivery models that improve patient care, improve population health and reduce costs. RFPs to be released shortly. Shared Savings / ACO Program Implemented January 1, 2012. $5 billion in shared savings nationwide over 10 years. Three-year, primary care coordinating programs for 5,000+ Medicare FFS beneficiaries. Acute/Post-Acute Bundling Pilot Implemented January 1, 2013. Budget neutral. Five-year pilots for episode of care (3 days prior to inpatient stay, through 30 days post discharge).

Value-Based Purchasing Expansion to Other Payment Settings Implement VBP pilot programs for inpatient rehabilitation, inpatient psychiatric, LTC, cancer hospitals, and hospice Implement VBP for inpatient hospitals Submit plans for Ambulatory Surgical Centers VBP (Jan 1, 2011) Submit plans for SNF and Home Health VBP (Oct. 1, 2011/FFY 2012) FY 2011 2006 2012 2013 2015 2016 2017 2005 FY Text above the bar- Expansion and Escalation- continue to see new measures added quickly- Outpt and CAHs likely in future- these measures will likely be derivative of inpatient measures (e.g.- heart failure pt in ER not admitted- ASA and ACE) CMS is transitioning from a pay for reporting to a pay for performance strategy. It has selected 17 initial measures, from the current list of hospital quality reporting measures that may be used in a value based purchasing, or pay for performance, program. Not on here : Metrics will grow rapidly to include efficiency, coordination, patient safety, outcomes, emergency care efficiency, nurse-sensitive and disease-specific measures, structural measures as well as outpatient measures. CMS focus on leadership- hospital self assessment tool –NYS hospitals welcome to volunteer to pilot test over summer Move to text beneath the bar, CMS is implementing its physician quality reporting program. This is currently a voluntary program that provides a modest incentive for clinicians in outpatient settings to report on a series of quality measures. Some of these measures overlap with those included in the hospital reporting program, and thus offer an opportunity for aligning physician and hospital interests. IF the MD program follows the model used for other entities, we expect it will ultimately become mandatory and include a public reporting component. This slide represents when CMS quality reporting will impact payment. Associated data collection begins with cases at least one year prior. EG. Hospitals are now collecting 27 measures, payment will be impacted in 08. CMS is developing a hospital self-assessment tool with the University of Iowa to assess the actions of hospital executives and Board leadership in promoting quality and patient safety and linking the results with CMS quality data. HANYS has been invited to pilot test the instrument and provide input throughout the process. CMS is developing a more intense interest in this area and there is some discussion that CMS may fold this concept into pay for performance or 9th Scope of Work activities. No decisions have been made in this regard. Implement physician VBP modifier for specific physicians and physician groups Physician payment modifier applied to all physicians, groups and other eligible practitioners Establish a CAH and small volume rural hospital VBP demonstration 4

VBP Provisions of the ACA

Goal of Value-Based Purchasing Transition acute care hospitals from P4R to P4P under Medicare Medicare payment incentives/penalties to promote: Achievement of high quality care Improvement in care quality Program framework outlined by Congress in ACA Program details left to HHS Secretary/CMS

ACA Section 3001: Hospital Inpatient Value-Based Purchasing Incentive Program Effective beginning October 1, 2012 (FFY 2013) Applies only to PPS hospitals with the following exclusions: Critical Access Hospitals Specialty hospitals (psychiatric, rehabilitation, children’s, cancer, LTCH) Hospitals cited for “immediate jeopardy” Hospitals not participating in the P4R program (IQR, formerly RHQDAPU) Hospitals with small numbers of applicable measures/cases (TBD by CMS) Demonstration projects for CAHs and small hospitals

ACA – Funding of VBP Funded by Medicare IPPS payment reductions: 1.0% reduction in FFY 2013, increasing each year by .25% to 2.0% for FFY 2017 and beyond Budget-neutral: each year’s pool fully distributed to hospitals in that same year Payment adjustments applied to base operating amount: excluding IME, DSH, low-volume adjustments, and outliers Percent Carve-Out for VBP Pool

ACA – Required VBP Measures Must be P4R measures - measures reported under IQR program, formerly RHQDAPU) FFY 2013 must include measures covering: AMI Heart failure Pneumonia Surgical infection prevention (SCIP) Healthcare-associated infections (HAIs) Patient satisfaction (HCAHPS) Categories of measures must be weighted Measures must be on Hospital Compare for at least one year prior to use in VBP FFY 2014 may add efficiency measures Include Medicare spending per beneficiary adjusted for age, sex, race, severity, and other as determined by the Secretary

ACA – VBP Performance Standards Must establish VBP performance standards and a performance period Performance period must: Be announced 60-days prior to start of the period End prior to program FFY Must recognize BOTH achievement of quality standards and improvement in care quality

ACA – VBP Incentive Payments Determine VBP incentive payment adjustment based on total performance score Apply to base operating amount (excluding IME, DSH, low-volume adjustments, and outliers) Inform hospitals of carve-out and VBP payment adjustment at least 60 days prior to the start of FFY (August of each year) Provide an appeals process

ACA – Timeline for First-Year Implementation of VBP Proposed Baseline Period (reflects quality data from Dec. 2010 Hospital Compare release --most recent release)   Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept. FFY 2009 2008 2009 FFY 2010 2010 FFY 2011 2011 FFY 2012 2012 FFY 2013 Proposed Performance Period (will reflect quality data from Dec. 2012 Hospital Compare release) Release of Final Rule (by law, VBP performance standards must be published 60-days prior to start of performance period) Medicare IPPS payment adjusted based on hospital performance

CMS Value-Based Purchasing Proposed Rule Proposed Quality Measures

Proposed VBP Quality Measures FFY 2013 Clinical Process of Care Domain 17 process measures Patient Experience of Care Domain HCAHPS Survey (8 HCAHPS dimensions) FFY 2014 All of the above plus: Outcome of Care Domain Mortality, AHRQ measures, HACS Possible efficiency measures Medicare spending per beneficiary Internal hospital efficiency Others Possible nursing sensitive care measures

Proposed Weighting of Measures FFY 2013 30% HCAHPS 70 % PROCESS FFY 2014 HCAHPS PROCESS OUTCOME SCORE VBP To be determined

Proposed FFY 2013 VBP – Process Measures Acute Myocardial Infarction AMI-2 Aspirin Prescribed at Discharge AMI-7a Fibrinolytic Therapy Received Within 30 Minutes of Hospital Arrival AMI-8a Primary Percutaneous Coronary Intervention (PCI) Received Within 90 Minutes of Hospital Arrival Heart Failure HF-1 Discharge Instructions HF-2 Evaluation of Left Ventricular Systolic (LVS) Function HF-3 ACE Inhibitor or ARB for LVS Dysfunction Pneumonia PN-2 Pneumococcal Vaccination PN-3b Blood Cultures Performed in the Emergency Department Prior to Initial Antibiotic Received in Hospital PN-6 Initial Antibiotic Selection for CAP in Immunocompetent Patient PN-7 Influenza Vaccination Surgeries (as measured by Surgical Care Improvement (SCIP) measures) SCIP-Card-2 Surgery Patients on a Beta Blocker Prior to Arrival That Received a Beta Blocker During the Perioperative Period SCIP-VTE-1 Surgery Patients with Recommended Venous Thromboembolism Prophylaxis Ordered SCIP-VTE-2 Surgery Patients Who Received Appropriate Venous Thromboembolism Prophylaxis Within 24 Hours Prior to Surgery to 24 Hours After Surgery Healthcare-Associated Infections (as measured by SCIP measures) SCIP-Inf-1 Prophylactic Antibiotic Received Within One Hour Prior to Surgical Incision SCIP-Inf-2 Prophylactic Antibiotic Selection for Surgical Patients SCIP-Inf-3 Prophylactic Antibiotics Discontinued Within 24 Hours After Surgery End Time SCIP-Inf-4 Cardiac Surgery Patients with Controlled 6 AM Postoperative Serum Glucose

Measures Proposed for Exclusion from FFY 2013 VBP Surgical Care Improvement (SCIP) Urinary catheter removal Temperature management AHRQ IQI and PSI Measures Measures Deemed as “Topped Out” AMI: Aspirin at arrival, Beta blocker at discharge, ACEI/ARB at discharge, Smoking cessation Heart Failure: Smoking cessation Pneumonia: Smoking cessation SCIP: Surgery patients with appropriate hair removal

Proposed FFY 2013 VBP – Patient Experience of Care Measures Measured using the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey Patient Satisfaction Survey HCAHPS Eight Dimensions (using the most positive responses, “top box” responses for each question used within the HCAHPS dimension): • Communication with Nurses • Communication with Doctors • Responsiveness of Hospital Staff • Pain Management • Communication About Medicines • Cleanliness and Quietness of Hospital Environment • Discharge Information • Overall Rating of Hospital Modifications to HCAHPS on Hospital Compare: “cleanliness and quietness” – combined “would you recommend this hospital?”- not included

Proposed FFY 2014 VBP - Outcomes Measures Mortality Measures Mort-30-AMI AMI 30-day mortality (Medicare patients) Mort-30-HF HF 30-day mortality (Medicare patients) Mort-30-PN PN 30-day mortality (Medicare) AHRQ Patient Safety Indicators (PSIs), Inpatient Quality Indicators (IQIs), and Composite Measures PSI-06 Iatrogenic pneumothorax, adult PSI-11 Post Operative Respiratory Failure PSI-12 Post Operative PE or DVT PSI-14 Postoperative wound dehiscence PSI-15 Accidental puncture or laceration IQI-11 Abdominal aortic aneurysm (AAA) repair mortality rate (with or without volume) IQI-19 Hip fracture mortality rate Complication/patient safety for selected indicators (composite) Mortality for selected medical conditions (composite) Hospital Acquired Condition (HAC) Measures HACs • Foreign Object Retained After Surgery • Air Embolism • Blood Incompatibility • Pressure Ulcer Stages III & IV • Falls and Trauma: (includes fracture, dislocation, intracranial injury, crushing injury, burn, electric shock) • Vascular Catheter-Associated Infections • Catheter-Associated Urinary Tract Infection (UTI) • Manifestations of Poor Glycemic Control

Possible Measures for Future Program Years Nursing Sensitive Care Measures CMS indicates they will consider including nursing sensitive care measures in FFY 2014 or thereafter CMS requests comments Efficiency Measures ACA allows use of efficiency measures in FFY 2014 or thereafter Must include Medicare spending per beneficiary adjusted for age, sex, race, severity, and other factors as determined by the Secretary CMS is also considering measures of hospital internal efficiency

Proposed Process for Adding Measures to VBP Program CMS has the authority to add measures within parameters Measures are to be selected from those reported under the IQR program Measures must be published on Hospital Compare for at least one year prior to the start of the performance period CMS must provide notice to the industry of measures at least 60 days prior to the start of the performance period Readmissions cannot be included in VBP (separate program under ACA) CMS proposes a “sub-regulatory process” to expedite inclusion of new measures Once a measure has been published for a year, it could be included in VBP without need for official notification in the Federal Register CMS has the authority to retire measures CMS proposes to retire “topped out” measures

CMS Value-Based Purchasing Proposed Rule Proposed Scoring Methodology

Proposed Timeframes for FFY 2013 VBP Performance Period July 1, 2011 to March 31, 2012 A hospital’s performance in this period will determine its score First year of the program will have a shortened, 9-month performance period Future years will reflect at least a full year (12 months) Baseline Period July 1, 2009 to March 31, 2010 National data will determine standards for achievement scores Hospital data will determine improvement when compared to performance period Same nine months to avoid any seasonality issues

Proposed Standards for Process Domain Achievement Threshold - minimum score to receive achievement points on a measure National median score in the base period Zero points if below threshold Achievement Benchmark - performance to receive maximum points for a measure Average score for hospitals in the top decile in base period 10 points if at benchmark or above Improvement Range Based on comparison to hospital’s own performance in base period 0 to 9 points

Example of Process Domain Scoring Hospital score in performance period: 0.70 Hospital score in base period: 0.21 From CMS Proposed Rule

Sample Hospital VBP Process Domain Score Calculation

Sample Hospital VBP Process Score Calculation

Proposed Standards for Patient Satisfaction Domain Achievement Threshold - minimum score to receive achievement points on a measure 50th percentile ranking of scores in the base period Zero points if below threshold Achievement Benchmark - performance to receive maximum points for a measure 95th percentile ranking of scores in the base period 10 points if at benchmark or above Improvement Range Based on comparison to hospital’s own performance in base period 0 to 9 points

Example of Patient Satisfaction Domain Scoring Hospital score in performance period: 64th percentile Hospital score in base period: 42nd percentile From CMS Proposed Rule

HCAHPS Consistency Points an incentive for hospitals to perform well on all dimensions 20 points if all eight HCAHPS dimensions are at or above the 50th percentile If any HCAHPS score is below the 50th percentile, the single lowest percentile determines the points 0 points if the lowest percentile is 0

HCAHPS Consistency Examples

Sample Hospital VBP HCAHPS Calculation

Sample Hospital VBP HCAHPS Calculation

Exclusions Critical access hospitals Specialty hospitals (psychiatric, rehabilitation, children’s, cancer, long-term care) Hospitals with small numbers of applicable measures Fewer than 4 useable Process measures or Fewer than 100 HCAHPS survey responses Hospitals cited for “immediate jeopardy” Hospitals not participating in the Pay-for-Reporting program Hospitals in Maryland and Puerto Rico

Calculation of VBP Score Determine points for each measure Higher of achievement or improvement Combine each measure’s points into domain scores Sum of points earned divided by total possible points for domain Combine domain scores Weight clinical process by 70% Weight patient experience by 30% Determine VBP distribution based on Exchange Function Points for Each of the 17 process measures that apply to the hospital Each of the 8 HCAHPS measures plus consistency Scores for Clinical process of care domain Patient experience of care domain Total Performance Score Percent of contribution (through rate reduction) that will be returned as a VBP distribution

CMS’ Proposed Payout Function Linear function distributes funds across hospitals based on total VBP scores Not all hospitals will earn back everything they contribute to the pool Some hospitals will earn back more than they contribute to the pool Break-even score is approximately 42.63% All VBP pool dollars must be expended

Sample Hospital VBP Payment Incentive Calculation

Issues for Comments HCAHPS Domain Process Domain Subregulatory Process Weight for this domain is too high given that the survey is subjective Why the conversion to percentiles? Why consistency points and why only for HCAHPS? Process Domain Some measures have extremely high performance standards Subregulatory Process This is not adequate notification 2014 Measures Should exclude HACS Require adequate risk-adjust for outcome measures Mortality measures are very tightly arrayed Efficiency measures Do not implement in FFY 2014 Postpone pending development of equitable adjustments for patient demographics, socioeconomic factors, etc.

Contact your State Association or: Contact Information: Contact your State Association or: Gloria Kupferman gkupferm@hanys.org (518) 431-7968 Kevin Krawiecki kkrawiec@hanys.org (518) 431-7710