The “Value” in Value Based Purchasing

Michael F. Parry, MD, FACP, FIDSA, FSHEA

Director of Infectious Diseases and Microbiology

Stamford Hospital

Disclosures

Dr Parry is a paid consultant of Ethicon, Inc.

Additional Disclosures

Research support from Glaxo

Consultant for Durata Pharmaceuticals

Agenda

• Changing healthcare landscape

• Affordable Care Act

• Impact of HAIs

• Using evidence-based solutions

• Next steps – fully aligning to “Goal Zero”

What is “value based purchasing”?The Government’s Argument

• Healthcare is too expensive

• You can’t control healthcare costs so I will help

• Quality of healthcare needs to be improved

• I’m only going to pay for improved quality (which I will define)

• My goal is to pay less and get better quality

• Higher quality = Greater Value (i.e., value based purchasing) Lower cost

Top Concerns of Hospital CEOs

Issue 2013 2012 2011

Financial challenges 2.4 2.5 2.5

Healthcare reform implementation 4.3 4.7 4.5

Governmental mandates 4.9 5.0 4.6

Patient safety and quality 4.9 4.4 4.6

Care for the uninsured 5.6 5.6 5.2

Patient satisfaction 5.9 5.6 5.6

Physician-hospital relations 6.0 5.8 5.3

Population health management 7.6 7.9 —

Technology 7.9 7.6 7.2

Personnel shortages 8.0 8.0 7.4

Creating an accountable care organization 8.6 8.6 8.4

The third-party trademarks used herein are trademarks of their respective owners.

Affordable Care Act

• CMS readmission penalties 3

• Non payment of Healthcare Acquired Conditions (HACs) 1

• Value-based purchasing 2

• Reportable quality metrics 2,3,4

• Measured patient outcomes 2,4

• Patient satisfaction reporting 2,4

• Evidence-based medicine practices/protocols

Affordable CareAct

Regulatory Requirements

Provider Opportunities in Changing Landscape

• Lower/eliminate readmissions

• Eliminate healthcare acquired infections

• Increase patient satisfaction

• Improve patient outcomes

1 – Medicare Program: Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2009 Rates; Payments for Graduate Medical Education in Certain Emergency Situations; Changes to Disclosure of Physician Ownership in Hospitals and Physician Self-Referral Rules; Updates to the Long-Term Care Prospective Payment System; Updates to Prospective Payment System; Updates to Certain IPPS-Excluded Hospitals; and Collection of Information Regarding Financial Relationship Between Hospitals; Final Rule, Federal Register, Volume 73, Volume 161, Tuesday, August, 19, 2008.2 – Medicare Program: Hospital Inpatient Value-Based Purchasing Program, Federal Register, Volume 76, Number 88, Friday, May 6, 2011.3 - Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and FY2012 Rates; Hospitals’ FTE Resident Caps for Graduate Medical Education Payment, Federal Register, Volume 76, Number 160, Thursday, August 18, 2011.4 – Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations, Federal Register, Volume 76, Number 212, Wednesday, November, 2, 2011.

Changing Healthcare Landscape

The Affordable Care Act

1. Readmission Reduction Program

The Advisory Board Company, Healthcare Industry Committee. Hospital Readmissions Reduction Program. C-Suite Cheat Sheet Series. August 2013.

The Affordable Care Act

2. (HAC) Hospital Acquired Condition Program• Set to start in FY 2015, the (HAC) Reduction Program is another

pay for performance initiative under the Affordable Care Act

• The HAC Reduction Program will work in tandem with the Value Based Purchasing Program (VBP) and Readmissions Reduction Program to incentivize higher quality hospital care at a lower cost

• CMS has created a list of reasonably preventable HACs including:– Foreign objects retained after surgery

– Air embolisms

– Blood incompatibility

– Pressure ulcers, falls/trauma

– Manifestations of poor glycemic control

– Infections

– Thrombosis

The Advisory Board Company, Healthcare Industry Committee. Hospital-Acquired Condition Reduction Program. C-Suite Cheat Sheet Series. August 2013.

The Affordable Care Act

2. Hospital Acquired Condition (HAC) Program• The HAC penalty will be enforced after

a hospital’s Value Based Purchasing and Readmissions Reduction adjustments are made and could decrease all inpatient payments by 1% for an institution

• In FY 2015, the HAC Reduction Program will rank hospitals based on their HAC rates, and those in the top 25% for HAC rates will receive a 1% reduction in their overall Medicare reimbursement rate

• Hospitals will be judged on their performance in two domains

Metric FY2015 FY 2016 FY 2017

CLABSI ✓ ✓ ✓CAUTI ✓ ✓ ✓SSI – Colon ✓ ✓SSI –  Abdominal Hysterectomy

✓ ✓

MRSA ✓C. Difficle ✓

Upcoming Changes to HAC Program

The Advisory Board Company, Healthcare Industry Committee. Hospital-Acquired Condition Reduction Program. C-Suite Cheat Sheet Series. August 2013.

The Affordable Care Act

2. Hospital Acquired Condition (HAC) Program

Domain 1(AHRQ Measure)

Association of American Medical Colleges presentation. https://s3.amazonaws.com/public-inspection.federalregister.gov/2013-18956. Accessed February 2014.

AHRQ PSI-90 Composite

This measure consists of:PSI-3: pressure ulcerPSI-6: latrogenic pneumothoraxPSI-7: central venous catheter-related

blood stream infection ratePSI-8: hip fracture ratePSI-12: postoperative PE/DVT ratePSI-13: sepsis ratePSI-14: wound dehiscence ratePSI-15: accidental puncture

Weighted 35%

Domain 2(CDCMeasure)

Weighted 65%

2015 (2 measures):CAUTICLABSI

2016 (1 additional measure):Surgical Site Infection (Colon Surgery and Abdominal Hysterectomy

2017 (2 additional measures):MRSAC Diff

As part of the Affordable Care Act, congress has authorized the inpatient Value Based Purchasing Program, which provides a data reporting infrastructure for hospitals to help ensure quality patient outcomes

http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/hospital-value-based-purchasing/index.html?redirect=/hospital-value-based-purchasing/ Accessed on April 26, 2013

The Affordable Care Act

3. Value Based Purchasing

• CMS will implement Value Based Purchasing to Inpatient Prospective Payment System which affects 3,500 hospitals, representing largest share of Medicare spending

• Hospitals will pay a percent withholding on the front end and will either earn money back, lose percent paid in, or earn additional dollars

• Funding of Value Based Purchasing program will be through the reduction of hospitals DRG payments for each discharged (Inpatient Protective Payment System)

Fiscal YearMS-DRG Operating Payment Reduction

FY 2013 1%

FY 2014 1.25%

FY 2015 1.50%

FY 2016 1.75%

FY 2017 and Beyond 2%

CMS redistributes the percent withheld across hospitals with highest achievement

• Redistribution is based on performance• Best performers win others break even or lose

So what does that mean?

Your hospital’s 1-2% could be redistributed to other hospitals with better performance, or you could receive other underperforming hospital’s 1-2%

http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/hospital-value-based-purchasing/index.html?redirect=/hospital-value-based-purchasing/ Accessed on April 26, 2013

The Affordable Care Act

How Does Value Based Purchasing Impact You?

Unlike the HAC and RR Program, VBP is budget neutral, CMS will not keep any portion of the percent withheld nationally

• Hospitals will be assessed on how much their current performance changes from their own baseline period performance

• Points will be awarded based on how much distance they cover between that baseline and the benchmark score

VS

VS

Improvement (self)

Achievement (others)

• Hospitals measured based on how much their current performance differs from all other hospitals’ baseline period performance

• Points will be awarded based on hospital’s performance compared to threshold and benchmark scores for all hospitals 

The Affordable Care Act

Value Based Purchasing Scoring

Total Performance Score (TPS)

• TPS calculated by combining the greater of the hospital’s achievement or improvement points on each measure to determine a score for each domain, multiplying each domain score by the proposed domain weight and adding the weighted scores together

http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/hospital-value-based-purchasing/index.html?redirect=/hospital-value-based-purchasing/ Accessed on April 26, 2013

Eric Fontana, “The Future of Value Based Purchasing” Advisory Board Webinar http://www.advisory.com/Research/Physician-Executive-Council/Events/Webconferences/2013/The-Future-of-Value-Based-Purchasing May 23, 2013

The Affordable Care Act

Value Based Purchasing Domains

Eric Fontana, “The Future of Value Based Purchasing” Advisory Board Webinar http://www.advisory.com/Research/Physician-Executive-Council/Events/Webconferences/2013/The-Future-of-Value-Based-Purchasing May 23, 2013

The Affordable Care Act

Value Based Purchasing – Clinical Process Domain

Eric Fontana, “The Future of Value Based Purchasing” Advisory Board Webinar http://www.advisory.com/Research/Physician-Executive-Council/Events/Webconferences/2013/The-Future-of-Value-Based-Purchasing May 23, 2013

The Affordable Care Act

Value Based Purchasing – Patient Experience Domain

HCAHPS (Hospital Consumer Assessment of Healthcare Providers and Systems)

• Composite Topics – Nurse Communication (Question 1, Q2, Q3)

– Doctor Communication (Q5, Q6, Q7)

– Responsiveness of Hospital Staff (Q4, Q11)

– Pain Management (Q13, Q14)

– Communication About Medicines (Q16, Q17)

– Discharge Information (Q19, Q20)

• Individual Items – Cleanliness of Hospital Environment (Q8)

– Quietness of Hospital Environment (Q9)

• Global Items – Overall Rating of Hospital (Q21)

– Willingness to Recommend Hospital (Q22)

The Affordable Care Act

Value Based Purchasing – Outcomes Domain

Patient Safety for Selected Indicators (Composite) PSI 03 – Pressure Ulcer Rate PSI 06 – Iatrogenic Pneumothorax Rate PSI 07 – Central Venous Catheter-Related Bloodstream Infection Rate PSI 08 – Postoperative Hip Fracture Rate PSI 12 – Postoperative Pulmonary Embolism or Deep Vein Thrombosis Rate PSI 13 – Postoperative Sepsis Rate PSI 14 – Postoperative Wound Dehiscence Rate PSI 15 – Accidental Puncture or Laceration Rate

https://www.cms.gov/Outreach-and-Education/Outreach/NPC/Downloads/HospVBP_FY15_NPC_Final_03052013_508.pdf Accessed February 2014.

Medicare Spending per Beneficiary

The Affordable Care Act

Value Based Purchasing – Efficiency Domain

• An MSPB Episode includes all Part A and Part B claims between 3 days prior to index admission to 30 days after the hospital discharge

• Claim inclusion in episode based on from date (or admission date for inpatient claims)

• By 2016 this one measure will account for 25% of all Value Based Purchasing Dollars

http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/Downloads/NPC-MSPB-09Feb12-Final508.pdf Accessed February 2014.

The Affordable Care Act

Value Based Purchasing – Efficiency Domain

Hospital Name State Period Claim TypeAvg Spending PerEpisode (Hospital)

Avg Spending PerEpisode (State)

Avg Spending PerEpisode (Nation)

SOUTHEAST ALABAMA MEDICAL CENTER AL 1 to 3 days Prior to Index Hospital Admission Home Health Agency $11.00 $14.00 $13.00SOUTHEAST ALABAMA MEDICAL CENTER AL 1 to 3 days Prior to Index Hospital Admission Hospice $4.00 $2.00 $1.00SOUTHEAST ALABAMA MEDICAL CENTER AL 1 to 3 days Prior to Index Hospital Admission Inpatient $9.00 $5.00 $5.00SOUTHEAST ALABAMA MEDICAL CENTER AL 1 to 3 days Prior to Index Hospital Admission Outpatient $71.00 $51.00 $63.00SOUTHEAST ALABAMA MEDICAL CENTER AL 1 to 3 days Prior to Index Hospital Admission Skilled Nursing Facility $1.00 $2.00 $2.00SOUTHEAST ALABAMA MEDICAL CENTER AL 1 to 3 days Prior to Index Hospital Admission Durable Medical Equipment $11.00 $10.00 $10.00SOUTHEAST ALABAMA MEDICAL CENTER AL 1 to 3 days Prior to Index Hospital Admission Carrier $160.00 $145.00 $162.00SOUTHEAST ALABAMA MEDICAL CENTER AL During Index Hospital Admission Home Health Agency $0.00 $0.00 $0.00SOUTHEAST ALABAMA MEDICAL CENTER AL During Index Hospital Admission Hospice $0.00 $0.00 $0.00SOUTHEAST ALABAMA MEDICAL CENTER AL During Index Hospital Admission Inpatient $8872.00 $8294.00 $8534.00SOUTHEAST ALABAMA MEDICAL CENTER AL During Index Hospital Admission Outpatient $0.00 $0.00 $0.00SOUTHEAST ALABAMA MEDICAL CENTER AL During Index Hospital Admission Skilled Nursing Facility $0.00 $0.00 $0.00SOUTHEAST ALABAMA MEDICAL CENTER AL During Index Hospital Admission Durable Medical Equipment $36.00 $32.00 $25.00SOUTHEAST ALABAMA MEDICAL CENTER AL During Index Hospital Admission Carrier $1850.00 $1735.00 $1840.00SOUTHEAST ALABAMA MEDICAL CENTER AL 1 through 30 days After Discharge from Index Hospi Home Health Agency $925.00 $862.00 $733.00SOUTHEAST ALABAMA MEDICAL CENTER AL 1 through 30 days After Discharge from Index Hospi Hospice $143.00 $154.00 $119.00SOUTHEAST ALABAMA MEDICAL CENTER AL 1 through 30 days After Discharge from Index Hospi Inpatient $3170.00 $2485.00 $2532.00SOUTHEAST ALABAMA MEDICAL CENTER AL 1 through 30 days After Discharge from Index Hospi Outpatient $616.00 $536.00 $624.00SOUTHEAST ALABAMA MEDICAL CENTER AL 1 through 30 days After Discharge from Index Hospi Skilled Nursing Facility $1775.00 $2243.00 $2924.00SOUTHEAST ALABAMA MEDICAL CENTER AL 1 through 30 days After Discharge from Index Hospi Durable Medical Equipment $123.00 $133.00 $112.00SOUTHEAST ALABAMA MEDICAL CENTER AL 1 through 30 days After Discharge from Index Hospi Carrier $884.00 $920.00 $1005.00SOUTHEAST ALABAMA MEDICAL CENTER AL Complete Episode Total $18663.00 $17622.00 $18704.00

20%

30%

30%

20%

Clinical Process of Care Patient Experience of Care Outcome Domain Efficiency

The Future of VBP Domains

45%

30%

25%

FY 2014 FY 2015

http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/hospital-value-based-purchasing/index.html?redirect=/hospital-value-based-purchasing/ Accessed on April 26, 2013

Clinical process gives way to outcomes and efficiency over time as the model becomes more Pay for Performance

The Affordable Care Act

Value Based Purchasing Timeline

FY 2016 Value Based Purchasing Domains Baseline Period

Performance Period

Clinical Process of Care

Jan. 1, 2012 – Dec. 31, 2012

Jan. 1, 2014 – Dec. 31, 2014

Patient Experience of Care

Jan. 1, 2012 – Dec. 31, 2012

Jan. 1, 2014 – Dec. 31, 2014

Outcome: MortalityOct. 1, 2010 – June 30, 2011

Oct. 1, 2012 – June 30, 2014

Outcome: AHRQ PSI-90Oct. 15, 2010 – June 30, 2011

Oct. 15, 2012 –June 30, 2014

Outcome: CAUTI / CLABSI/ SSI

Jan. 1, 2012 – Dec. 31, 2012

Jan. 1, 2014 – Dec. 31, 2014

EfficiencyJan. 1, 2012 – Dec. 31, 2012

Jan. 1, 2014 – Dec. 31, 2014

The Advisory Board Company, Healthcare Industry Committee. Hospital Value-Based Purchasing. C-Suite Cheat Sheet Series. August 2013.

Percent of CMS Dollars at Stake by FY 2017

6%Value Based Purchasing

2%

Readmission Reduction Program

3%

Healthcare Acquired Condition Program

1%

The Advisory Board Company, Healthcare Industry Committee. Hospital Value-Based Purchasing. C-Suite Cheat Sheet Series. August 2013.

The Advisory Board Company, Healthcare Industry Committee. Hospital-Acquired Condition Reduction Program. C-Suite Cheat Sheet Series. August 2013.

The Advisory Board Company, Healthcare Industry Committee. Hospital Readmissions Reduction Program. C-Suite Cheat Sheet Series. August 2013.

The third-party trademarks used herein are trademarks of their respective owners.

CLABSI Impact

8 Ways CLABSIs Can Impact Reimbursement

1. In 2008 CMS stopped payment of 10 hospital acquired conditions including VASCULAR CATHETER RELATED INFECTIONS

2. 2015 HAC Program: Domain 1 – PSI 90

3. 2015 HAC Program: Domain 2 – CLABSI

4. VBP: Outcomes Domain (VBP)-CLABSI specific line item

5. VBP: Outcomes Domain (VBP)-CLABSI is one of 8 items making up composite score for PSI-90 which is a subset of VBP outcomes domain

6. VBP: Efficiency Domain (VBP)-CLASBI can potentially elevate Medicare spending per beneficiary

7. VBP: Potential Impact to Patient Satisfaction

8. Readmission Program

http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalAcqCond/downloads/HACFactSheet.pdf

Your CLABSI Data and Outcome Measures

Hospital Compare

Joint Commission National Patient Safety Goal #7

Hospitals implement policies and practices aimed at reducing the risk

of central line-associated bloodstream infections that meet regulatory

requirements and are aligned with evidence-based standards

The Joint Commission: Comprehensive Accreditation Manual for Hospitals: The Official Handbook. Oak Brook, IL: Joint Commission Resources, 2011

The third-party trademarks used herein are trademarks of their respective owners.

Getting to Zero

2011 CDC Guidelines

• Intended to provide evidence-based recommendations for preventing intravascular catheter-related infections

• 5 major areas of emphasis:1. Education of healthcare professionals

2. Use maximal sterile precautions (MSP)

3. Use of CHG skin prep

4. Site selection and avoiding routine replacement

5. Use antiseptic/antibiotic impregnated catheters and CHG impregnated sponge dressing (If rate of infection not decreasing despite adherence to above 4 strategies)

6. Checklist

• Targets elimination of CRBSI from all patient-care areas

O’Grady NP, Alexander M, et al., Guidelines for the prevention of intravascular catheter-related infections. Centers for Disease Control and Prevention. MMWR Recomm Rep 2011 April 1.

• “strongly recommended for implementation and supported by some experimental, clinical, or epidemiologic studies and a strong theoretical rationale”

• CHG impregnated sponge dressings are the only form of CHG dressing recommended in new CDC guidelines- “No recommendation is made for other

types of chlorhexidine dressings (Unresolved Issue)”

CHG impregnated sponge dressings received a Category 1B recommendation for reducing the risk of CLABSIs

Next Steps – “Goal Zero” CDC – Target elimination of CLABSIs from all patient-care areas

1 – Medicare Program: Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2009 Rates; Payments for Graduate Medical Education in Certain Emergency Situations; Changes to Disclosure of Physician Ownership in Hospitals and Physician Self-Referral Rules; Updates to the Long-Term Care Prospective Payment System; Updates to Prospective Payment System; Updates to Certain IPPS-Excluded Hospitals; and Collection of Information Regarding Financial Relationship Between Hospitals; Final Rule, Federal Register, Volume 73, Volume 161, Tuesday, August, 19, 2008.2 – Medicare Program: Hospital Inpatient Value-Based Purchasing Program, Federal Register, Volume 76, Number 88, Friday, May 6, 2011.3 - Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and FY2012 Rates; Hospitals’ FTE Resident Caps for Graduate Medical Education Payment, Federal Register, Volume 76, Number 160, Thursday, August 18, 2011.4 – Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations, Federal Register, Volume 76, Number 212, Wednesday, November, 2, 2011.

Readmission Rates

Peripheral IVLines

Surgical Drains

Home Infusion

Arterial Lines

Staff Compliance = Kits

CVC Lines &

PICC Lines

Dialysis Patients

LVADs

Conclusion

The Patient Protection & Affordable Care Act is predicated on IMPROVING, more specifically continually IMPROVING PATIENT SATISFACTION and continually IMPROVING OUTCOMES over time. The hospitals that can achieve that going forward will be the most successful.

Questions?

© 2014 Ethicon US, LLC. 010613-140221