1. Overview of Quality Reporting, Payments and Penalties October 9, 2012 Presenter: Kimberly Rask, MD PhD Medical Director

2. Coordinated Federal Focus on Quality ► National Quality Strategy ► DHHS Action Plan ► Partnership for Patients ► CMS Quality Improvement Organization (QIO) program priorities

3. Partnership for Patients Two Goals 1.Decrease by 40 percent preventable hospital-acquired conditions (HACs) by 2013  60,000 lives saved, 1.8 million fewer injuries to patients and $20 billion in health care costs avoided 2.Reduce 30-day hospital readmissions by 20 percent by 2013  1.6 million fewer readmissions and $15 billion in health care costs avoided National Campaign to Align Priorities and Resources

4. Multiple Quality Reporting Programs Impact the Bottom Line

5. Three Essential Questions … 1.What “triggers” the penalty/incentive? 2.What is its “size”? 3.How is it applied?

6. Hospitals Paid to Report Quality Data ProgramDataFinancial impact Annual Payment Update Inpatient Quality Reporting- core measures 2% Outpatient Quality Reporting- core measures 2% Value Based Purchasing Patient satisfaction, core measures, mortality, cost, infections 1% withhold; can lose the 1%, get some back or even receive > 1% for excellent performance 2 % withhold in FY 2017 Readmissions Reduction Program Excess readmission rate Up to 1% in 2012-13 Up to 2% in 2013-14 Up to 3% after 2014 Preventable health care acquired conditions (HACs) Claims for HACs No payment unless condition noted on admission

7. “Pay for Reporting” Programs ► Participation is “voluntary” ► Those who choose NOT to participate will have 2% reduction in their Medicare Annual Payment Update (APU) for the following CMS fiscal year for each program ► Focus on timely, complete and accurate reporting

8. What data is collected? ► 2004: Hospitals voluntarily report 10 measures; agree to public reporting of data reported to receive incentive APU ► 2005-2012: New measures added yearly: – AMI patients, congestive heart failure patients, pneumonia patients – Surgical patients (Surgical Care Improvement Project or SCIP) – Children’s asthma ► 2007: Added mortality rates ► 2008: Added patient satisfaction survey

9. What data is collected? ► 2009: Added readmission rates ► 2011: Added hospital acquired infection rates ► 2012: Composite patient safety measure ► 2013: Permutations on previous measures ─ Hospital-wide all-cause unplanned admissions ─ Hospital-level readmission rate following elective total hip or total knee arthoplasty ─ Hospital-level complication rate following elective total hip or total knee arthoplasty

10. Healthcare-Associated Infections (HAI) ► Data is submitted to the CDC’s National Healthcare Safety Network (NHSN) – Central-Line Associated Bloodstream Infection (CLABSI) – Surgical Site Infection (SSI) – Catheter-Associated Urinary Tract Infection (CAUTI)

11. Quality Measures Reporting ► Each measure’s specific data can be collected either retrospectively or concurrently ► The same data is submitted to The Joint Commission and CMS – used for quality improvement and public reporting – Quarterly – Hospital Compare website – Validation

12. Quality Reporting

13. Pay for Performance ProgramDataFinancial impact Annual Payment Update Inpatient Quality Reporting- core measures 2% Outpatient Quality Reporting- core measures 2% Value Based Purchasing Patient satisfaction, core measures, mortality, cost, infections 1% withhold; can lose the 1%, get some back or even receive > 1% for excellent performance 2 % withhold in FY 2017 Readmissions Reduction Program Excess readmission rate Up to 1% in 2012-13 Up to 2% in 2013-14 Up to 3% after 2014 Preventable health care acquired conditions (HACs) No payment unless condition noted on admission

14. Value-based Purchasing ► Moving from Pay for Reporting to Pay for Performance ► Authorized under the Affordable Care Act ► Funded by a 1% withhold from hospital DRG payments ► Minimum of 10 cases for process and outcome measures over 9 month performance period ► Minimum of 100 satisfaction surveys

15. Hospital Total Performance 12 clinical processes of care ► 2 AMI measures ► 1 HF measure ► 2 pneumonia measures ► 7 SCIP measures Antibiotic selection, given within 1 hour, discontinued Controlled 6 a.m. glucose Beta blocker continued VTE prophylaxis ordered and given 8 patient experience measures ► Nurse communication ► Doctor communication ► Staff responsiveness ► Pain management ► Medication communication ► Cleanliness and quiet ► Discharge information ► Overall hospital rating 70%30%

16. How will hospitals be evaluated? Achievement Current hospital performance compared to ALL HOSPITALS baseline rates Improvement Current hospital performance compared to OWN BASELINE rates ► Minimum thresholds to receive any points ► Benchmarks to receive full points

17. No “trigger” ► Program will be budget neutral overall ► Some hospitals will not earn back everything that they had withheld for the pool and some hospitals will earn back more than what they had withheld – 2% of hospitals projected to earn bonus >0.5% – 2% will lose >0.5% ► Penalty or incentive applied to base operating DRG payment for each discharge

18. And looking forward to the next year…

19. Penalty for Excess Readmissions ProgramDataFinancial impact Annual Payment Update Inpatient Quality Reporting- core measures 2% Outpatient Quality Reporting- core measures 2% Value Based Purchasing Patient satisfaction, core measures, mortality, cost, infections 1% withhold; can lose the 1%, get some back or even receive > 1% for excellent performance 2 % withhold in FY 2017 Readmissions Reduction Program Excess readmission rate Up to 1% in 2012-13 Up to 2% in 2013-14 Up to 3% after 2014 Preventable health care acquired conditions (HACs) No payment unless condition noted on admission

20. Hospital Readmission Reduction Program ► Authorized under §3025 of the Affordable Care Act ► Reduces IPPS payments to hospitals for excess readmissions after October 2012 ► In rule-making for 2 years

21. CMS Implementation ► Selected 3 conditions – Acute Myocardial Infarction (AMI) – Heart Failure (HF) – Pneumonia (PN) ► Calculated “Excess Readmission Ratios” using the National Quality Forum (NQF)-endorsed 30-day risk-standardized readmission methodology ► Set a 3-year rolling time period for measurement with a minimum of 25 discharges ► October 1, 2012 penalty determination period was July 2008 to June 2011

22. Excess Readmission Ratio ► The ratio compares Actual number of risk-adjusted readmissions from Hospital XX to the Expected number of risk-adjusted admissions from Hospital XX based upon the national averages for similar patients ► Ratio > 1 means more than expected readmissions < 1 means fewer than expected readmissions

23. Risk Adjustment ► The number of readmissions IS adjusted for ─ Age ─ Gender ─ Coexisting diseases based upon 1-year review of all inpatient and outpatient Medicare claims for that patient ► The number of readmissions is NOT adjusted for: ─ Poverty level in surrounding community ─ Proportion of uninsured patients ─ Racial/ethnic mix of patients “Many safety-net providers and teaching hospitals do as well or better on the measures than hospitals without substantial numbers of patients of low socio-economic status.”

24. Trigger and Size of Penalty ► A n Excess Readmission ratio of >1 for any of the 3 measures (AMI, HF, PN) triggers penalty ► Size of penalty is intended to reflect relative cost of excess readmissions from Hospital XX ─ Claims data used to calculate aggregate Medicare payments for those 3 conditions and total Medicare payments for all cases at Hospital XX ─ Calculated over same time period as readmission ratio ─ Calculate percentage of Hospital XX’s total Medicare payments that result from excess readmissions for the 3 conditions ─ Final penalty is that raw % or 1%, whichever is smaller

25. Applying the Penalty ► Applied to base-DRG payment for all fee-for-service Medicare discharges during the fiscal year (FY) – Wage-adjusted DRG payment amount including transfer adjustment plus new technology payment if applicable – Add-on payments (IME, DSH, outlier, low volume) not reduced ► No bonus for excellent performance ► For FY 2013, maximum penalty is 1% – Impacting more than 2000 hospitals nationally – Expected to cost hospitals $280 million or 0.3% of the total Medicare revenue to hospitals

26. Excess Standardized Readmission Ratio (SRR) posted on Hospital Compare Similar but not identical to IQR readmission measure Similarities ► Same NQF-endorsed 3 risk-adjusted condition-specific measures ► Same data source ► Same types of discharges and exclusions Differences ► How the measures are displayed and reported ► SRR calculated on a subset of readmissions

27. Impact of Reporting on Bottom Line ProgramDataFinancial impact ProgramDataFinancial impact Annual Payment Update Inpatient Quality Reporting- core measures 2% Outpatient Quality Reporting- core measures 2% Value Based Purchasing Patient satisfaction, core measures, mortality, cost, infections 1% withhold; can lose the 1%, get some back or even receive > 1% for excellent performance 2 % withhold in FY 2017 Readmissions Reduction Program Excess readmission rate Up to 1% in 2012-13 Up to 2% in 2013-14 Up to 3% after 2014 Preventable health care acquired conditions (HACs) Claims for HACs No payment unless condition noted on admission

28. Hospital-acquired Conditions (HAC) or “Never Events” CMS identified conditions that: ► Were high cost, high volume or both ► Result in the assignment to a DRG that has a higher payment when present as a secondary diagnosis ► “Could reasonably have been prevented through application of evidence ‑ based guidelines ”

29. HAC Reporting is Changing ► Most individual HACs have been removed from public reporting ► §3008 of Affordable Care Act requires public reporting of HACs – CMS is proposing an all-cause harm measure with potential to “drill down” on Hospital Compare ► Studies show financial impact from current HAC nonpayment policy is negligible for most hospitals

30. Potential New Penalty ► §3008 of the Affordable Care Act also creates a penalty for lowest performing hospitals based upon HAC rates by 2015 ─ Reduction applied to hospitals in the top quartile of hospital acquired conditions using “an appropriate” risk-adjustment methodology ─ Those hospitals will have payments reduced to 99% of amount that would otherwise apply to such discharges

31. Questions? This material was prepared by Alliant GMCF, the Medicare Quality Improvement Organization for Georgia, under contract with the Centers for Medicare & Medicaid Services (CMS), an agency of the U.S. Department of Health and Human Services. The contents presented do not necessarily reflect CMS policy. Publication No. 10SOW-GA-IIPC-12-233 Physician Quality Reporting System (PQRS) Program Hospital Outpatient Quality Reporting (OQR) Program Hospital Value-Based Purchasing (VBP) Program Hospital Readmissions Reduction Program Hospital -Acquired Conditions (HAC) Program Electronic Health Record (EHR) Incentive Program Long-Term Care Hospitals Quality Reporting (LTCH QR) Program Ambulatory Surgical Centers Quality Reporting (ASCQR) Program Inpatient Rehabilitation Facility Quality Reporting (IRFQR) Program Inpatient Psychiatric Facility Quality Reporting (IPFQR) Program PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program Hospice Quality Reporting (HQRP) Program End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP) Hospital Inpatient Quality Reporting (IQR) Program