Fundamentals of Reform/ HFMA Update Melinda Hancock National Chair Elect West Virginia Chapter January 15, 2015

Fundamentals of Reform/HFMA Update

Melinda HancockNational Chair Elect

West Virginia ChapterJanuary 15, 2015

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Our Transformational Point of View

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Re

ven

ue

Time• How do local market conditions impact timing considerations?• Can market-changing events create an urgent paradigm shift?• What is my step-change business model risk?• Do I have the financial tools to adequately analyze relevant states?

Industry Transformation

Growth in Risk Based Contracts

The Advisory Board reported last summer that risk-based, total-cost-of-care contracts with large multi-hospital systems had more than doubled since 2011 from 14 to 35 percent. Similar results for bundled payments have occurred with commercial payers around the country.

United Healthcare, the nation’s largest health insurer, announced they will double their accountable care contracts by 2017 ($20 billion of United Healthcare’s 2013 payments were tied to quality and cost efficiency measures.)

Source:CBO and Joint Committee on Taxation, 2010 Projection

ACA Estimated Gains Through 2019:$64.4B

ACOs

CMMI

Readmission Penalties

Pt Centered Outcomes Research

HAC Penalties

Excise Tax on High Cost Ins Plans

Ind Pmt Advisory Bd

$0 $5 $10 $15 $20 $25 $30 $35

$4.9

$1.3

$7.1

$2.2

$1.4

$32.0

$15.5

Amounts in Billions

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The Continuum of Risk

Source: http://www.athenahealth.com/knowledge-hub/ACO/accountable-care-organizations.php

Source: Hancock, M., Hannah, B. “Determining Your Organization’s Risk Capability”, HFM, May 2014.

Alignment of Strategy and Metrics

Questions to Ask

• How many metrics am I tracking?

• How many metrics are duplicated? Do they have the same numerator and denominator? Source?

• Are they aligned with our results and strategic goals?

• What contracts are coming up for renewal that should have new metrics or should be at risk (mgd care, medical directorships, PMAs, etc.)

• What are we focused on?

VBP Shifting of Domain Weights

FY 2013 FY 2014 FY 2015 FY 2016

• Core Measures

• Patient Experience • Efficiency (MSPB)

• Outcomes

New NQS Based Domains for FY 2017

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HCAHPS = 25%

Safety = 20%

MSPB = 25%

Clinical Care - Process = 5%

Clinical Care - Outcomes = 25%

Reform Timeline

VBP FY 2017 – Patient Experience

• Communication with Nurses

• Communication with Doctors

• Responsiveness of Hospital Staff

• Pain Management

• Communication about Medicines

• Cleanliness and Quietness of Hospital

• Discharge Information

• Overall Rating of Hospital

VBP FY 2017 – Clinical Care: Process

• AMI-7a

• IMM-2

• PC-01

PC-01 = Elective Delivery Prior to 39 Completed Weeks Gestation

VBP FY 2017 – Clinical Care and SafetyClinical Care- Outcomes

• 30 Day Mortality – AMI

• 30 Day Mortality – HF

• 30 Day Mortality – PN

• AHRQ – PSI-90

• CLABSI

• CAUTI

• SSI-Colon

• SSI-Abdominal Hyster.

Safety

• MRSA• C. Diff

VBP FY 2017 - Efficiency

• Medicare Spend Per Beneficiary (MSPB)

– Captures total Medicare Spending Per Beneficiary relative to a hospital stay, bundling hospital sources (Part A) with post acute care (Part B)

– Bundles the cost of care delivered to a beneficiary for an episode across the continuum of care:

3 Days Prior

Hospital Inpatient Stay

30 Days post Discharge

VBP: MSPBSample US

VBP: MSPB

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PROPOSED MSPB Measures

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• Additional Efficiency Measures proposed to be added

• Risk Adjusted similarly to MSPB

• Proposed to facilitate alignment with the Physician Value Based Payment Modifier program

• Includes Part A and B and 3 days prior to admission and 30 days post discharge

Medical Surgical

Kidney/Urinary Tract Infection

Hip replacement/revision

Cellulitis Knee replacement/revision

Gastrointestinal hemorrhage

Lumbar spine fusion/refusion

SOURCE: May 1, 2014 Federal Register

Earned Back Unearned Available $$ % Earned

CGH $288,853 $540,406 $829,259 34.83%

$288,853

$0 $829,259 Chesapeake General Performance

VBP FY'13 TOTAL PERFORMANCE

Breakeven Point: $451,333

Earned Back Unearned Available $$ % Earned

System $4,925,357 $6,187,541 $11,112,898 44.32%

$0 $11,112,898Overall Performance

VBP FY'15 TOTAL PERFORMANCE

$4,925,357Breakeven Point: $5,301,360

Earned Back Unearned Measure Value % Earned

Facility $381,643 $218,077 $599,720 63.64%

$381,643

$0 $599,720


Facility $278,896 $620,704 $899,600 31.00%

$278,896

$0 $899,600

Core Measures

HCAHPS




Facility $539,763 $359,837 $899,600 60.00%

$539,763

$0 $899,600


Facility $59,974 $539,746 $599,720 10.00%

$59,974

$0 $599,720

Outcomes

Efficiency



Facility Bonus / (Penalty) Total Score State Average National Average National ΔFacility A $97,593 42.03 41.81933117 41.70169535 0.325577377

Measure Score

Amount Earned by Measure

Amount Unearned by

Measure

% of Measure Earned

Core Measures

AMI-8a 6 32,712$ 21,808$ 60.00%SCIP-Inf-1 9 49,068$ 5,452$ 90.00%SCIP-Inf-2 7 38,164$ 16,356$ 70.00%SCIP-Inf-3 5 27,260$ 27,260$ 50.00%SCIP-Inf-4 9 49,068$ 5,452$ 90.00%SCIP-Inf-9 5 27,260$ 27,260$ 50.00%HF-1 8 43,616$ 10,904$ 80.00%PN-3b 5 27,260$ 27,260$ 50.00%PN-6 8 43,616$ 10,904$ 80.00%SCIP-Card-2 3 16,356$ 38,164$ 30.00%SCIP-VTE-2 5 27,260$ 27,260$ 50.00%

Core Measures TOTAL 381,643$ 218,077$ 63.64%

HCAHPS

Comm. w/ Nurses 2 17,994$ 71,966$ 20.00%Comm. w/ Doctors 1 8,998$ 80,962$ 10.00%Resp. of Hosp. Staff 2 17,994$ 71,966$ 20.00%Pain Management 2 17,994$ 71,966$ 20.00%Comm. Re: Medicines 1 8,998$ 80,962$ 10.00%Clealiness & Quietness 2 17,994$ 71,966$ 20.00%Discharge Information 3 26,990$ 62,970$ 30.00%Overall Rating 1 8,998$ 80,962$ 10.00%

Consistency Score 17 152,933$ 26,987$ 85.00%

HCAHPS TOTAL 278,896$ 620,704$ 31.00%

Outcomes

AMI 10 179,920$ (0)$ 100.00%HF 3 53,980$ 125,940$ 30.00%PN 8 143,934$ 35,986$ 80.00%AHRQ PSI-90 9 161,928$ 17,992$ 90.00%CLABSI 0 0$ 179,920$ 0.00%

Outcomes TOTAL 539,763$ 359,837$ 60.00%

Efficiency

MSPB 1 59,974$ 539,746$ 10.00%

Efficiency TOTAL 59,974$ 539,746$

Facility TOTAL 1,260,277$ 1,738,363$ 42.03%

Drilldown on Outcomes…

Facility Bonus / (Penalty)Facility A $97,593 42.03 41.81933117 41.70169535 0.325577377

Core Measures

AMI-8a 6 32,712$ 21,808$ 60.00%SCIP-Inf-1 9 49,068$ 5,452$ 90.00%SCIP-Inf-2 7 38,164$ 16,356$ 70.00%SCIP-Inf-3 5 27,260$ 27,260$ 50.00%SCIP-Inf-4 9 49,068$ 5,452$ 90.00%SCIP-Inf-9 5 27,260$ 27,260$ 50.00%HF-1 8 43,616$ 10,904$ 80.00%PN-3b 5 27,260$ 27,260$ 50.00%PN-6 8 43,616$ 10,904$ 80.00%SCIP-Card-2 3 16,356$ 38,164$ 30.00%SCIP-VTE-2 5 27,260$ 27,260$ 50.00%

Core Measures TOTAL 381,643$ 218,077$ 63.64%

HCAHPS

Comm. w/ Nurses 2 17,994$ 71,966$ 20.00%Comm. w/ Doctors 1 8,998$ 80,962$ 10.00%Resp. of Hosp. Staff 2 17,994$ 71,966$ 20.00%Pain Management 2 17,994$ 71,966$ 20.00%Comm. Re: Medicines 1 8,998$ 80,962$ 10.00%Clealiness & Quietness 2 17,994$ 71,966$ 20.00%Discharge Information 3 26,990$ 62,970$ 30.00%Overall Rating 1 8,998$ 80,962$ 10.00%

Consistency Score 17 152,933$ 26,987$ 85.00%

HCAHPS TOTAL 278,896$ 620,704$ 31.00%

Outcomes

AMI 10 179,920$ (0)$ 100.00%HF 3 53,980$ 125,940$ 30.00%PN 8 143,934$ 35,986$ 80.00%AHRQ PSI-90 9 161,928$ 17,992$ 90.00%CLABSI 0 0$ 179,920$ 0.00%

Outcomes TOTAL 539,763$ 359,837$ 60.00%

Efficiency

MSPB 1 59,974$ 539,746$ 10.00%

Efficiency TOTAL 59,974$ 539,746$

Facility TOTAL 1,260,277$ 1,738,363$ 42.03%Variation within the Domain:

Maxed out on AMI Mortality and then got a 0 on CLABSI

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West Virginia VBP FFY 13-15

0.99000

0.99500

1.00000

1.00500

1.01000

1.01500

FFY 13 FFY 14 FFY 15

Penalty

Bonus

FY 19 New Measure

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• Added THA/TKA for 30 month performance period.

– January 1, 2015-June 30, 2017

– Baseline of July 1, 2010-June 30, 2013

• Risk standardized measure for complications after Total Hips and Knees surgeries for up to 90 days post surgery

– One of eight complications: AMI, pneumonia, sepsis, SSI, PE, death, mechanical complication or periprosthetic joint infection/wound infection.

– Each has a defined time frame

– Each is a ‘Yes’ or ‘No

– Risk adjusted for patient age, sex and comorbidities

SOURCE: August 2014 Proposed Rules Federal Register

Reform Timeline

Readmission Reduction Program• 9% of Current and Future Medicare Reimbursement at Risk

– 3% penalty of Medicare Reimbursement at risk each program year

– Measured Populations 30 days from DISCHARGE

• AMI, HF, PN, COPD, THA & TKA

• August 2014: CABG Added to FY 2017

• Performance Periods: 3 Year Rolling Program

– FY’15: July 1, 2010 – June 30, 2013 – 3%

– FY’16: July 1, 2011 – June 30, 2014 – 3%

– FY’17: July 1, 2012 – June 30, 2015 – 3%

– FY’18: July 1, 2013 – June 30, 2016 – 3%

– FY’19: July 1, 2014 – June 30, 2017 – 3%

Currently participating in 3 performance periods simultaneously

How are Readmissions Measured?

• Scoring Index based at 1.0• Calculate Excess Readmission Ratio

• Excess Readmission Ratio > 1 = BAD• Excess Readmission Ratio < 1 = GOOD

Facility Predicted Value

Facility Expected Value

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West Virginia RRP Penalties FFY 13-15

5100

62

5100

08

5100

71

5100

55

5100

85

5100

58

5100

22

5100

59

5100

30

5100

47

5100

02

5100

48

5100

24

5100

39

5100

12

5100

46

5100

70

5100

13

5100

31

5100

53

5100

07

5100

38

5100

82

5100

29

5100

06

5100

23

5100

86

5100

01

5100

72

5100

50

5100

770.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

FFY 13 FFY 14 FFY 15

Hospital Acquired Conditions

• 12 Hospital Acquired Conditions Identified

– Divided in to 2 Domains

• If a hospital is in the BOTTOM QUARTILE (worst performing 25% in the country), it will be penalized a FULL 1% of Medicare Reimbursement

• Penalties will begin FY’15 (beginning October 1, 2014)*1% After DSH, Uncompensated Care, and IME

Hospital Acquired Conditions: FY’15

First Domain: PSIsPerformance Period: 7/1/11-6/30/13

Second Domain: CDCPerformance Period: CY 2012 & 2013

Pressure Ulcer Rate CLABSI

Foreign Object Left in Body CAUTI

Iatrogenic Pneumothorax Rate

Postoperative Physiologic and Metabolic Derangement Rate

Postoperative Pulmonary Embolism and Deep Vein Thrombosis Rate

Accidental Puncture and Laceration Rate

HAC Domain Weightings: FY’15

CLABSI: 32.5%

CAUTI: 32.5%

Pressure Ulcer Rate: 8.33%

Foreign Object LeftIn Body: 8.33%

DOMAIN 1: 35% DOMAIN 2: 65%

Hospital Acquired Conditions: FY 2016

First Domain: PSIs25%

Second Domain: CDC75%



Iatrogenic Pneumothorax Rate SSI Following Colon Surgery (FY 2016)


SSI Following Abdominal Hysterectomy (FY 2016)



HAC Domain Weightings: FY’16

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CLABSI: 32.5%

CAUTI: 32.5%

Pressure Ulcer Rate: 5.83%

SSI: 32.5%

DOMAIN 1: 25% DOMAIN 2: 75%

Hospital Acquired Conditions: FY 2017

First Domain: PSIs Second Domain: CDC



Iatrogenic Pneumothorax Rate SSI Following Colon Surgery (FY 2016)


SSI Following Abdominal Hysterectomy (FY 2016)


Methicillin-Resistant Staphylococcus Aureus (MRSA) Bacteremia (FY 2017)


Clostridium Difficile (FY 2017)

Reform Timeline

SAMPL IPPS Reimbursement LetterPPS EFFECTIVE 10/1/2014 DRG Weight 1.00

Facility CMI 1.54OPERATING INFORMATION

Federal National Standardized Labor Rate 3,329.57Wage Index 0.8994Labor Rate x Wage Index 2,994.62Federal National Standardized Non-Labor Rate 2,040.71PPS Blended Rate 5,035.33FY 2015 Hospital Readmissions Reduction (HRR) Adjustment Factor 0.9994 5,032.30 ($3.02) RRP ReductionFY 2015 Value-Based Purchasing (VBP) Adjustment Factor 0.994348 5,003.86 ($28.44) VBP Reduction

($31.46) Per DRG Reduction

($31.46) x 1.54

($48.45)VBP & RRP Per DRG Red. CMI Adj

Disproportionate Share Adjustment (Operating) (Empirically Justified Amount 25%) 0.0691 0.02 5,090.43Disproportionate Share Adjustment (Operating) (Uncompensated Care Amount) 507.71 5,598.14Fully Loaded Operating Rate adjusted for CMI 8,346.97

FY 2015 Hospital Acquired Condition (HAC) Adjustment Factor 0.99 8,263.50($83.47)

HAC Per DRG CMI Adjusted

($131.92)Total Per DRG Reduction

Penalties & Your DRG Payment

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West Virginia HAC Scores: FFY 15

0

1

2

3

4

5

6

7

8

9

10

Penalized

Maximize portfolio reimbursement to

foster financial success

Risk management in an efficient and profitable organization

Integrated provider network

that enhances the continuum of care

and creates value

Best practices for patient-centered care

Educated patients with accountability who utilize services appropriately

Provider criteria with defined metrics to

ensure compliance

Incentivized providers that manage quality and costs

The Risk Capable Health Organization

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Risk Capability

Thoughts from John Glaser, CEO

“Under payment models that reward efficiency and high-quality care, if a hospital or health system is losing money due to inadequate

clinical performance, it cannot afford to wait one or more months to find out the problem. Healthcare

leaders should understand how their organizations are performing today so they can take corrective

action before revenue loss becomes a hemorrhage. “

-May 2014 HFM Magazine

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Policy and PerspectivesHFMA Resources

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Healthcare Dollars & Sense™

hfma.org/dollars

Price Transparency Task Force Convened by HFMA

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Enhancing Price Transparency

• Clarifies basic definitions that are often misused

• Sets forth guiding principles

• Establishes roles for payers, providers, others

• Reflects consensus of key stakeholders

hfma.org/dollars

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Price Information Guide to Educate& Engage Consumers

• Describes how to request price estimates, step by step

• Clarifies what estimates may or may not include

• Explains in-network and out-of-network care

• Defines key terms

• Available for posting on your website at no charge

• Hardcopies available for purchase in bulk at a nominal price through AHA’s online store: ahaonlinestore.orghfma.org/dollars

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Every day, healthcare professionals conduct sensitive financial discussions with patients. But there have been no accepted, consistent best practices to guide them in these discussions—until now

hfma.org/dollars

Communication Is Critical Throughout the Process

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Patient Financial Communications:Best Practices Address Key Issues

Provision of Care

Registration and Insurance

Verification

Financial Counseling

Patient Share

Prior Balances (if applicable)

Balance Resolution

Patient Financial Communications Training Program

• Agenda for live training

• Slide deck that can be customized

• Sample financial policies

• Coaching guidelines

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Recognition to Signify Commitment to Your Community

• Recognition demonstrates commitment to best practices in patient financial communications

• Based on HFMA review of an application and supporting documentation

• All provider organizations may apply

• Recognition valid for two years

• Adopters may use the phrase “Supporter of the Patient Financial Communications Best Practices” in their marketing materials

• Makes a strong statement to your community

hfma.org/dollars

Best Practices for Resolution of Medical Accounts

• We want to find solutions that are balanced, fair, and reasonable.

• We keep patients informed about payment expectations and time frames.

• The business practices that we—and our business affiliates use—have been approved at the Board level.

By following the HFMA Best Practices for Medical Account Resolution, your organization is affirming that. . .

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Best Practices for Resolutionof Medical Accounts

hfma.org/dollars

Leading the Change from Volume to Value

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• Defining and delivering value

• Key organizational capabilities for building value

• Organizational road maps

hfma.org/valueproject

HFMA Value Project Reports

Acquisition and Affiliation Strategies

Acquisition andAffiliation Strategies

Current State & Future Directions of Value

Value InHealth Care

HMFA’s Value Project

Four Key Capabilities for Value

Building Value-DrivingCapabilities


Defining &Delivering Value

Defining andDelivering Value


Organizational Road Maps for Value-Driven Health Care

The Value Journey:Organizational Road Maps forValue DrivenHealth Care


hfma.org/valueproject

New Research Extends Value Strategies Outside the Organization

• Value-focused acquisition and affiliation strategies

• Different needs require different approaches

• Emergence of new organizational combinations

• Blurring of lines between competitors and collaborators

• Change governance and organizational structures as systems change

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New HFMA Value Report Focus: Critical Role of Physicians

• Alignment and employment options

• Compensation and incentives

• Financial support and sustainability of the physician enterprise

• Physician leadership and governance structures

• Population management capabilities

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Documents

Fundamentals of Reform/ HFMA Update Melinda Hancock National Chair Elect West Virginia Chapter January 15, 2015