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History and Future Outlooks for Hospital P4P
Richard A. Norling
President and CEO
Premier Inc.
Bringing Nationwide Knowledge to Improve Local Healthcare
Local healthcare
Owners
Affiliates
• Owned by 200 not-for-profit hospitals and health systems• Serving more than 2,100 hospitals and 54,000 other providers • Sharing of clinical, labor and supply chain data for benchmarking• $33 billion in group purchasing volume – largest in U.S.• Highest ethical standards - leading Code of Conduct• Diversity, safety and environmental programs• Recipient of 2006 Malcolm Baldrige National Quality Award
National alliance
Shared goals:
Better outcomes
Safely reducing cost
Overview of Premier/CMS P4P project
Premier is leading the first national CMS pay-for-performance demonstration for hospitals. More than 260 Premier hospitals participate voluntarily.
Findings• Financial incentives did focus hospital executive attention on measuring
and improving quality. • Hospitals performance has improved continuously over time.
Financial incentives / transparency improve hospital quality & performanceHypothesis
Hospital Quality Incentive Demonstration (HQID)Key Facts
• Three year demo (2003-2006); extended for three additional years through Oct. 2009
• 250 hospitals in 37 states
• Quality measures
– First 3 years: 33 nationally recognized measures in five clinical conditions:
• Heart attack (Acute myocardial infarction (AMI))• Heart bypass surgery (Coronary artery bypass graft (CABG))• Heart failure (HF)• Community acquired pneumonia (PN)• Hip and knee replacement surgery (Hip/Knee)
– Second three years: 41 nationally recognized measures in multiple clinical conditions
• Financial incentives
– First three years: Top 2 deciles in each condition rewarded; Penalties for hospitals still in the bottom 2 deciles in each condition (set in year 2)
– Second three years: Awards paid for threshold attainment, most improvement, and top performer; similar penalty methodology
More Patients Are Reliably Receiving Evidenced-based Care
Evidence-based Care ImprovementsAvg. improvement from
4Q03 to 2Q08 in all clinical areas(19 quarters)
55.05%
Clinical Area
Improvement(percentage points)
AMI 23.7%
CABG 66.5%
Pneumonia 65.1%
Heart Failure 54.9%
Hip & Knee 65.1%
Ap
pro
pri
ate
Ca
re S
co
re
CMS/Premier HQID Project Participants Appropriate Care Score:
Trend of Quarterly Median (5th Decile) by Clinical Focus AreaOctober 1, 2003 - June 30, 2008 (Year 1, 2, and 3 Final Data; Year 4 and 5 Preliminary)
70
.7%
30
.0%
22
.3%
34
.7%
27
.8%
72
.7%
34
.1%
28
.0%
43
.6%
34
.1%
75
.7%
45
.8%
34
.7%
50
.0%
41
.2%
80
.0%
48
.7%
39
.0%
53
.8%
53
.6%
80
.9%
68
.5%
43
.8%
58
.5%
63
.6%
80
.6%
77
.3%
44
.3%
62
.6%
72
.1%
85
.0%
82
.9%
50
.7%
64
.6%
78
.6%8
7.0
%
84
.2%
53
.8%
68
.0%
81
.3%87
.8%
86
.6%
60
.9%
72
.3%
85
.7%
88
.2%
91
.9%
62
.8%
75
.8%
85
.9%
89
.6%
93
.3%
67
.6%
78
.1%
89
.5%
88.6
%
91.7
%
70.3
%
78.3
%
87.1
%
90
.0%
91
.7%
82
.6%
79
.2%
90
.0%
90
.0%
93
.3%
82
.8%
82
.5%
86
.4%92
.1%
94.1
%
87.0
%
85.2
%
86.2
%92
.8%
95
.5%
87
.0%
86
.0%
87
.0%93
.5%
92.7
%
77.1
%
85.5
%
86.9
%
76.7
%
93.8
%
96.0
%
82.7
% 87.9
%
89.3
%
84.0
%
94.4
%
96.5
%
87.4
%
89.7
%
92.9
%
84.0
%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
AMI CABG PN HF Hip and Knee SCIP
Clinical Focus Area
4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07
1Q08 2Q08
Dramatic and Sustained Improvement
HQ
ID C
om
po
sit
e Q
ua
lity
Sc
ore
Avg. improvement across all 5 clinical
areas for median CQS (19 quarters)
18.66%
Clinical Area
Improvement (percentage points)
AMI 8.9%
CABG 14.1%
Pneumonia 25.9%
Heart Failure 31.4%
Hip & Knee 13.0%
CMS HQID Composite Quality Score
CMS/Premier HQID Project Participants Composite Quality Score:
Trend of Quarterly Median (5th Decile) by Clinical Focus AreaOctober 1, 2003 - June 30, 2008 (Years 1, 2, & 3 Final Data; Years 4 and 5 Preliminary Data)
89
.6%
85
.1%
70
.0%
64
.0%
85
.1%
90
.0%
85
.9%
73
.1%
68
.1%
86
.7%
91
.5%
89
.4%
78
.1%
73
.1%
88
.7%
92
.5%
90
.6%
80
.0%
76
.1%
90
.9%93
.5%
93
.7%
82
.5%
78
.2%
91
.6%
93
.4%
94
.9%
82
.7%
81
.6%
93
.4%
95
.1%
96
.2%
84
.8%
83
.0%
95
.2%
95
.77
%
97
.01
%
86
.30
%
84
.38
%
95
.92
%
96
.0%
96
.8%
88
.5%
86
.7%
96
.6%
96
.1% 98
.3%
89
.3%
88
.8%
97
.1%
96
.8%
98
.4%
90
.1%
90
.0%
97
.8%
96
.8%
98
.4%
91
.4%
89
.9%
97
.9%
97% 98
%
92%
90%
98%
97.0
%
97.7
%
92.4
%
91.6
%
97.9
%
97.6
%
97.8
%
93.5
%
93.2
%
98.0
%
97.5
%
98.4
%
93.4
%
93.4
%
98.1
%
98.3
%
98.5
%
94.2
%
94.2
% 97.4
%
92.3
%
98.2
7%
99.0
1%
94.8
5%
94.9
0% 97.4
6%
94.1
1%
98.5
4%
99.1
9%
95.9
0%
95.3
8% 98.1
6%
95.2
7%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
AMI CABG Pneumonia Heart Failure Hip and Knee SCIP
Clinical Focus Area
4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07
1Q08 2Q08
A composite of 19 measures shared in common between HQID and Hospital Compare shows P4P hospitals performing above the nation as a whole
In Broader Comparison, HQID Hospitals Excel
National Leaders in Quality Performance
• HQID participants avg. 6.5% higher than Non-Participants
• Avg. improvement for HQID participants = 7.8%
• Avg. improvement for Non-participants = 5.6%
New England Journal of Medicine publication by Lindenauer et al. (February 2007) found that hospitals engaged in P4P achieved quality scores 2.6 to 4.1 percentage points above other hospitals due solely to the impact of P4P incentives.
HQID hospitals have higher quality ratings* than national hospitals overall *CMS process score
Premier Performance Pays Research
Hospital Costs for Pneumonia Patients
6,000
8,000
10,000
0 to 50% 51 to 99% 100%
Ave
rage
Hos
pita
l Cos
ts
Premier’s Performance Pays study demonstrated that when evidence-based care is reliably delivered, quality is higher and costs are lower.
The recently updated study using all payors and three years of data(over 1.1 million patients), confirms this result.
Mortality Rate for CABG Patients (%)
0%
2%
4%
6%
0 to 49% 50 to 74% 75-100%
Mor
talit
y R
ate
(%)
Patient Process Measure Patient Process Measure
Study finds higher reliable care yields lower mortality rates for heart bypass surgery patients
Study finds higher reliable care yields lower hospital costs for patients with pneumonia
Improvement and Savings Over Three Years
Avg. cost improvement per patient across all clinical areas
$1,063
If all hospitals in the nation were to achieve this improvement, the estimated cost savings would be greater than $4.5 billion annually with estimated 70,000 lives saved per year
Avg. improvement in mortality across four clinical areas
1.87%
Clinical Area Improvement
Heart Attack $1,599
Heart Bypass Surgery
$1,579
Pneumonia $811
Heart Failure $1,181
Hip Replacement $744
Knee Replacement $463
Clinical Area Starting Score
Ending Score
Improve-
ment
Heart Attack 8.86% 6.59% 2.27%
Heart Bypass Surgery
2.51% 1.55% 0.95%
Pneumonia 9.28% 6.89% 2.39%
Heart Failure 4.84% 2.99% 1.86%
International Portability of P4P
UK North West “Advancing Quality” Program
England’s largest health authority using Premier/Medicare P4P project as a model for improving patient care
– 40 hospitals across the NW region– Measured in five clinical areas– Program initiated on Oct 1– Expected savings = £17M each year in
reduced LOS, re-admissions
Overview of Advancing Quality
• Value creation is the objective• Measurement is systematic• Measurement supports the objective• Sound logic underlies each performance measure• Selection of measures unambiguous• A measurement culture exists• Clear rationale for incentive compensation• Management encourages open communication of results• Measurement system is simple to use• Measures processes (inputs) and outcomes
Next-Generation of P4P is QUEST: A Focus on Quality, Efficiency, Safety, with Transparency
• A collaborative of more than 160 hospitals treating approximately 2.3 million patients annually, QUEST is designed to help springboard hospitals to a new level of performance.
• QUEST is not theory and rhetoric. It’s about benchmarking, implementing, measuring and scaling innovative solutions to the complex task of caring for patients.
• QUEST’s multidimensional approach is unlike any other attempted.
• QUEST represents a promise for measurable improvements in quality, safety and cost of care for patients and shared results to benefit all in healthcare.
Optimizing Quality, Efficiency and Safety: Moving to High Performance Healthcare Delivery
14
QUEST Advisory Panel
• Agency for Healthcare Research and Quality (AHRQ)
• Alliance for Nursing Informatics, University of Minnesota
• American Board of Internal Medicine • American College of Surgeons • American Health Information
Management Association • American Heart Association• American Hospital Association • American Society for Healthcare Risk
Management (ASHRM) • Blue Cross Blue Shield Association
(BCBSA) • Centers for Disease Control and
Prevention (CDC)• Centers for Medicare & Medicaid
Services (CMS)
• Institute for Healthcare Improvement (IHI)
• International Center for Nursing Leadership University of Minnesota
• John D. Stoeckle Center for Primary Care Innovation, Massachusetts General Hospital
• National Business Coalition on Health • National Patient Safety Foundation
(NPSF) • National Quality Forum • Office of the National Coordinator for
Health Information Technology • The Commonwealth Fund • The Joint Commission• The Rand Corporation
Aggressive, Three-Year Improvement Goals
• Save Lives – Achieve a mortality rate that is 17 percent less than expected.
• Improve efficiency – Reduce inpatient costs below the mid point among participating hospitals.
• Deliver the most reliable and effective care – Deliver every recommended evidence-based care measure for each patient.
• Improve patient safety (year 2 measure) – Prevent incidents of harm in more than 20 categories, including healthcare-acquired infections and birth injuries.
• Increase Satisfaction (year 2 measure) – Dramatically improve the patient care experience.
QUEST Analysis
• If all QUEST hospitals attained the project’s quality goals over the three-year period:
– Patient mortality could be reduced by 17 percent, or 8,628 lives saved a year;
– Reliability of care could improve by nearly 13 percent, or 22,364 more patients receiving all evidence-based appropriate care a year.
0.25
0.50
0.75
1.00
1.25
1.50
1.75
2.00
2.25
2.50
-10 -8 -6 -4 -2 0 2 4 6 8 10
*This Distribution Graph shows the range of variation for the Mortality Ratio of the QUEST charter members. Each dot represents one hospital. The plotted values are based on rounded values.
Distribution of QUEST Hospitals on Observed vs. Expected Mortality RatioBaseline Period: July 1, 2006 through June 30, 2007
QUEST Mortality Goal: Move Hospitals over the Top Performance Threshold (O/E = 0.82)
Top Performance Threshold: 0.82
Our Mortality Measure and Potential Components
QUEST Baseline Performance ResultEvidence-Based Care (TPT 84%)
30%
40%
50%
60%
70%
80%
90%
100%
Top Performance Threshold: 84%
Distribution of QUEST Hospitals on Evidence-Based Care RatesAll-or-None Composite Score
Our Evidence Based Care Performance Measure: “All or Nothing Score”
> 375 Beds + < 375 Beds -
TEACHING
NONTEACHING
> 175 Beds + < 175 Beds -
QUEST Baseline: Distribution of Hospitals on Total Inpatient Cost per Case Mix Adjusted Discharge
Baseline Period: July 1, 2006 through June 30, 2007
Distribution of QUEST Hospitals on Total Inpatient Cost per Case Mix Adjusted Discharge Teaching and 375 beds or more
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
$11,000
$12,000
-10 -8 -6 -4 -2 0 2 4 6 8 10
Distribution of QUEST Hospitals on Total Inpatient Cost per Case Mix Adjusted Discharge Teaching and less than 375 beds
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
$11,000
$12,000
-10 -8 -6 -4 -2 0 2 4 6 8 10
Distribution of QUEST Hospitals on Total Inpatient Cost per Case Mix Adjusted Discharge Non-teaching and 175 beds or more
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
$11,000
$12,000
-10 -8 -6 -4 -2 0 2 4 6 8 10Distribution of QUEST Hospitals on Total Inpatient Cost per Case Mix Adjusted Discharge
Non-teaching and less than 175 beds
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
$11,000
$12,000
-10 -8 -6 -4 -2 0 2 4 6 8 10
Top Performance Threshold: $5,460
Top Performance Threshold: $5,570
Top Performance Threshold: $6,520
Top Performance Threshold: $5,550
Our Efficiency Measure (Cost of Care) and Components
Our Harm Measure and Potential Components
Patient Experience: Global Measure Composite Score
Distribution of HCAHPS Top Box Global Measures Composite ScoreQUEST Hospital Compare Facilities
3Q06 - 2Q07
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
-10 -8 -6 -4 -2 0 2 4 6 8 10
Top QuartileThreshold: 72%Mean: 68%Std. Dev: 6.2%N = 124
Our Patient Experience Measure and Potential Components
QUEST Participants Show Improvement Through Second Quarter 2008 (Preliminary Results)
• 7.98% increase in avg EBC Rate of participants from baseline to preliminary 1q08-2q08 data
• 0.11 reduction in the avg Observed to Expected Mortality Ratio among participants from baseline to preliminary 1q08-2q08 data
• $297 decrease in the avg Cost of Care for participants from baseline to preliminary 1q08-2q08 data
Trend of Average Evidence Based Care Rate
for QUEST ParticipantsBaseline and 1q08 Final Data; 2q08 Preliminary Data
77.57% 83.81% 85.55%
0%
20%
40%
60%
80%
100%
Baseline (N=153) Final 1q08 (N=158) Preliminary 1q08-2q08 (N=149 )
Evi
denc
e B
ased
Car
e R
ate
(%)
Trend of Average Observed to Expected Mortality
Ratio for QUEST ParticipantsBaseline and 1q08 Final Data; 2q08 Preliminary Data
0.99 0.93 0.88
0.00
0.25
0.50
0.75
1.00
1.25
1.50
Baseline (N=160) Preliminary 1q08 (N=158) Preliminary 1q08-2q08 (N= 157)
Obs
erve
d to
Exp
ecte
d M
orta
lity
Rat
io
Trend of Average Cost of Care
for QUEST ParticipantsBaseline and 1q08 Final Data; 2q08 Preliminary Data
$5,831$5,585 $5,534
$4,000
$4,500
$5,000
$5,500
$6,000
Baseline (N=162) Preliminary 1q08 (N=155) Preliminary 1q08-2q08 (N=139 )
Cos
t of C
are
($)
Observations on Collaborative Execution
• Transparency and Healthy Competition is Key– Everyone likes being held up as a best performer; no one wants to see
their institution at the bottom of the list
• Trust in each other and in a partner are critical– Data must be credible – not perfect– Since the group is entirely open with results, both good and bad, there
needs to be a trust that information won’t be misused
• Focusing on a “higher purpose” can excite and motivate and makes competitive concerns less important– By constantly focusing on the improved health of the patient and the
community, the group engages in true collaboration
• All change is local but some problems are universal– We have found a small number of “usual suspects” account for many of the
avoidable deaths in the population– Finding best performers in these problem areas can uncover success
strategies that can be shared among all participants
What to Expect From Washington in 2009and Beyond
Blair Childs
Senior Vice President,
Public Affairs
Premier Inc.
2007
2007 and 2008 are additional “building” years for quality: continuing past work
1990s 2000 2001 2002 2003 2004 2005 2006
Pharmacy Quality Alliance launched
Hospital Quality Alliance launched
Ambulatory Quality Alliance launched
Creation of The Leapfrog Group
Creation of Bridges to Excellence
Deficit Reduction Act mandates expansion of measurement and sets precedent for lack of add-on payment for errors
Medicare Modernization Act ties hospital market basket updates to quality reporting for 10 measures
IOM ReportPerformance
Measurement Accelerating
Improvement IOM ReportCrossing the Quality Chasm • Focused on a redesign of
health care delivery • Called for creation of
performance-based payment
IOM ReportTo Err is Human: Building a Safer Health System
JCAHO launches the core measures initiative
National Quality Forum constituted
CMS Roadmap to Quality launched
CMS Nursing Home Compare launched
CMS Home Health Compare launched
AQA - HQA Steering Committee Formed
AHIC Quality Workgroup Approved
Executive Order Issued on Promoting Quality
Alliance for Pediatric Quality launched
Hospital Compare expanded to payment and volume information and HCAHPS patientexperience data
JCAHO launches the ORYX Initiative
Value-Based PurchasingReport to Congress on the Plan to Implement a Medicare Hospital VBP Program
2008
Premier Hospital Quality Incentive Demo launched
Hospital Compare launched
CMS Preventable Events
Value-Based Purchasing
• Twin tools:
– Transparency to facilitate patient awareness and choice, as well as performance improvement by providers; and
– Differential payment to further incentivize providers to change practices, and reduce healthcare spending.
More Quality Measurement
• To get full market basket update for FY 2010:– (1) Surgical Care Improvement Project (SCIP) – (1) Hospital readmissions – (5) Patient Safety Indicators (AHRQ)– (4) Inpatient Quality Indicators (AHRQ) – (1) Cardiac surgery measure (STS)
• Retires pneumonia oxygenation assessment • Total of 43 quality measures
– AMI 30-Day Risk Standardized Readmission Measure (Medicare patients)– Pneumonia 30-Day Risk Standardized Readmission Measure (Medicare
patients)
• AMI 30-Day Risk Standardized Readmission & Pneumonia 30-Day Risk Standardized Readmission Measure (Medicare patients) in Final Outpatient Rule
Pride or Prejudice,Payers Driving Transparency
• May 21 ad to promote the Hospital Compare Web site
• CMS ads in 58 major dailies
• Featured hospitals in each market and their performance on two measures (clinical process measure and HCAHPS measure)
CMS Publicly Reporting Risk-standardized, 30-day Mortality Measures for AMI, HF and PN
• The August 20, 2008 posting of mortality measures to Hospital Compare is the second annual posting for AMI and HF mortality and the first public reporting for PN mortality.
• All three measures will be refreshed annually, and hospital-specific reports will be distributed to all participating hospitals for each annual preview period.
• CMS is contemplating additional changes for displaying 30-day mortality measures.
Source: CMS Presentation Barry Straube 6/4/2008; Quality Net http://www.qualitynet.org/dcs/ContentServer?cid=1163010398556&pagename=QnetPublic%2FPage%2FQnetTier2&c= Page; Hospital Compare; Booz Allen Analysis
Display of risk-adjusted hospital 30-day mortality rates The number of
eligible cases for each hospital
An estimate of the rate’s certainty (also known as the interval estimate)
Hammer: Hospital-acquired Conditions
• As of October 1, hospitals will not receive higher payment for:
1. Object left in during surgery (acute reaction to foreign substance);
2. Air embolism;
3. Blood incompatibility;
4. Catheter-associated urinary tract infections;
5. Pressure ulcers (Stages III/IV);
6. Surgical site infections, e.g., Vascular catheter-associated infections;
7. Mediastinitis after coronary artery bypass graft;
8. Hospital-acquired falls leading to injuries (including fractures, dislocations, intracranial injury, crushing injury and burns).
9. Venous Thromboembolism after hip and knee replacement*;
10.Poor Glycemic control (Ketoacidosis & Coma- hypoglycemic & hyporosmolar); and
Hidden Agenda: Government spending on healthcare is unsustainable – Impact???
Percent of GDP
1966 1972 1978 1984 1990 1996 2002 2008 2014 2020 2026 2032 2038 2044 2050
0
5
10
15
20
25Actual Projection
2.5 Percentage Points
1 Percentage Point
Zero
Differential of:Tax rates 2050:10% 26%25% 66%35% 92%
Total Federal Spending for Medicare and Medicaid Under Assumptions About the Health Cost Growth Differential
Healthcare spending as a portion of GDP is projected to take the largest one year climb ever from16.6% in 2008 to 17.6% in 2009. CMS Actuaries, 2/27/09
Obama FY 2010 Budget proposalMore details in the Spring
• 10-year $1.7 trillion healthcare budget blueprint with few details – $630 B “reserve fund” to jump-start health reform efforts
– Difference of $1 trillion to fund (more $?; more savings?: deficit?; more taxes?)
• Savings include hospital payment reform (10-yr savings):– Hospital P4P programs ($12 billion)
– Bundled payments for inpatient stay and 30-day post-acute care ($17.6B)
– Reduce payments to hospitals with high readmission rates ($8.4B)
• Other proposals contained in the budget:– Reform of Medicare physician payment formula, including performance-based
payments for coordinated care
– Address financial conflicts of interest in physician-owned specialty hospitals
– Increase CMS budget to attack fraud, waste and abuse
– Increase Medicaid drug rebate for brand-name drugs from 15.1% to 22.1% of AMP
– Prohibit anticompetitive agreements between brand and generic manufacturers
– $330MM for healthcare providers in medically underserved areas
Rep. Altmire VBP bill – Quality FIRST Act
• Rep. Altmire (D-PA) introduced Quality FIRST Act 9/25/08 (expected to reintroduce in 111th Congress)
• Incentive payments based on hospitals’ performance on evidence-driven, consensus-based quality measures– AMI, HF, PN, SCIP (clinical areas to be expanded in subsequent years)
• Hospitals rewarded for attainment of threshold announced 2 years in advance, as well as for improvement
• Establishes reasonable thresholds based on what all hospitals can achieve in a realistic timeframe
• Hospitals receive separate scores—and are rewarded—for each clinical area, rather than one single score for all measures
• Budget neutral, with up to 2% of hospital payments at stake
Baucus-Grassley VBP Bill Discussion Draft
• Senate Finance Committee Chairman Baucus & Ranking Member Grassley released discussion draft of VBP legislation 11/19/08
• Phased in over 5 yrs, beginning in FY 2012 • Incentive payments based on hospitals’ performance on evidence-
driven, consensus-based quality measures– AMI, HF, PN, SCIP, overall patient satisfaction (clinical areas to be
expanded in subsequent years)
• Hospitals rewarded for attainment of threshold, as well as for improvement
• HHS to develop methodology of determining performance score that results in appropriate distribution to all hospitals
• Incentive payment applied to all DRGs after 3-yr transition period• Budget neutral, with 2% of hospital payments at stake, once fully
phased-in
Thank youQuestions? Comments?
www.premierinc.com