HI 225 Ch10 pp ts.ab202017

1. © 2018 American Health Information Management Association© 2018 American Health Information Management Association
Principles of Healthcare Reimbursement
Sixth Edition
Anne B. Casto, RHIA, CCS

2. © 2018 American Health Information Management Association
Chapter 10,Value-Based Purchasing
• Learning Objectives
– Explain the origins and evolution of value-based
purchasing and pay-for-performance
– Describe key characteristics of the value-based
purchasing programs implemented by CMS for
various healthcare settings and payment systems
– Explain how compliance with CMS value-based
purchasing programs affects healthcare
reimbursement for a facility, entity or provider
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3. © 2018 American Health Information Management Association
Value-Based Purchasing
• Value-based purchasing (VBP) and pay-for-
performance (P4P) systems reflect
widespread movement in healthcare
• Movement seeking to improve quality, safety,
efficiency, and value of healthcare
• VBP and P4P systems link
– Quality
– Performance
– Payment
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Efficiency = cost
Cost per beneficiary
Cost per patient

4. © 2018 American Health Information Management Association
VBP and P4P Characteristics
Measurement
Process of collecting
data
Stakeholders have
facts
Transparency
Act of making
information available
to the public
Stakeholders can
make informed
decisions
Accountability
Obligation to provide
information about, to
be answerable for,
and to justify actions
Holds organizations
and individuals
responsible
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5. © 2018 American Health Information Management Association
VBP and P4P
Goals
• Improve clinical
quality
• Improve
cost/affordability of
healthcare
• Improve patient
outcomes
• Improve the patient
experience for
receiving care
Institute for Healthcare
Improvement (IHI)
Tripe Aim
• Improving the patient
experience of care
• Improving the health
of populations
• Reducing the per
capita cost of
healthcare
Drivers
• To Err is Human:
Building a Safer
Health System
• Crossing the Quality
Chasm: A New Health
System for the 21st
Century
• Rewarding Provider
Performance: Aligning
Incentives in
Medicare
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6. © 2018 American Health Information Management Association
Private Sector Initiatives
Leapfrog Group
Goal: positively affect the quality and affordability of healthcare by “leaping” forward
Altarum Bridges to Excellence®
Integrated Healthcare Association (IHA) of CA
Performance Measures
National Alliance of Healthcare Purchaser Coalitions (National Alliance)
Improve value of healthcare
National Committee for Quality Assurance (NCQA)
Improve the quality of healthcare
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7. © 2018 American Health Information Management Association
Research on Impact
• Little evidence to support the use of VBP/P4P
systems despite their proliferation
– See textbook for review of research
• May questions remain about how to design
and implement VBP/P4P to achieve their
stated goals
• Class discussion: Why are we still using
them when their efficacy has not be
proven???
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8. © 2018 American Health Information Management Association
Advantages and Disadvantages
Advantages
Demonstrated commitment
to providing quality care
Establishment of
infrastructure for reporting on
quality
Rewards for providing quality
healthcare
Transparent process of
rewards
Ability to focus on
underserved or high-risk
groups
Disadvantages
Implementation of
intervention that is not
evidence-based
Potential for unintended
consequences
Difficulty in measuring
processes and outcomes
Potential costs of
implementation could be
better spent on other efforts
Better documentation of care
rather than actual better
quality of care
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9. © 2018 American Health Information Management Association
Models
Reward-based
• Rewards (compensation) when targets are met
or exceeded
• Higher fee schedule for superior performance
• Increased payment rates for superior providers
Penalty-based
• Compensation withheld when targets are not
met, or performance is not improved
• Lower fee schedule for inferior performance
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10. © 2018 American Health Information Management Association
Patient-Centered Medical Home
• PCMH: model of primary care that seeks
to meet the healthcare needs of patients
and to improve and patient and staff
experiences, outcomes, safety, and
system efficiency
• Organized by health plans, states, payers,
providers or multi-stakeholder groups
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11. © 2018 American Health Information Management Association
PCMH
Core Features of
Primary Care
• Continuous and long-
term
• Comprehensive and
prevention, wellness,
acute care, and
chronic care
• Coordinated across
the continuum of care
• Patient-centered
• Orientation towards
the whole person
• Informed engagement
of patient and family
• Recognition of each
patient’s unique needs
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Multidisciplinary
team
Electronic
information
systems and on-
line portals
Chronic disease
registries
Population-based
management of
chronic diseases
Continuous
quality
improvement

12. © 2018 American Health Information Management Association
PCMH
• Fee schedule in combination with PMPM
and P4P bonuses
• Results
– Small positive effect on patients’ experience of care
– Small to moderate positive effect on staffs’
experiences
– Not enough evidence to determine effects on clinical
and economic outcomes
– No evidence for overall cost savings
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13. © 2018 American Health Information Management Association
Accountable Care Organizations
• Set of providers who are jointly held accountable for
achieving
– Measured quality improvements
– Reductions in the rate of spending growth
– Health and healthcare costs of its designated population
• Three essential characteristics
– Ability to manage patients across the continuum of care,
including acute, ambulatory, and post-acute health services
– Capability to prospectively plan budgets and resources needs
– Sufficient size to support comprehensive, valid, and reliable
measurement of performance
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14. © 2018 American Health Information Management Association
ACO
• Affordable Care Act (ACA; Section 3022)
– CMS required to establish Medicare Shared Savings Program
(MSSP)
• Promote development of ACOs
• CMS’ refinement and delineation of general definition
– Legal entity recognized under state law
– Composed of a group of ACO participants (providers of services
and suppliers) that have established a mechanism for shared
governance
– 3-year agreement with CMS
• ACO participants coordinate the care of traditional Medicare beneficiaries
• ACO is accountable for the quality, cost, and overall care of all the beneficiaries
assigned to it
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15. © 2018 American Health Information Management Association
How it Works
Medicare beneficiaries are
assigned to an ACO based
on their claim history
Beneficiary can use
providers inside ACO AND
outside of the ACO
ACO and non-ACO providers
are still paid under regular
Medicare PPS
ACO receives reward
(shared savings) if targets
are met
ACOs
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16. © 2018 American Health Information Management Association
ACOs
• Three different programs
– MSSP (permanent part of MCR)
• Created by ACA; became operational in 2012
• 480 ACOs serving 9 million beneficiaries (2017)
• 3 Tracks
– Next Generation ACO demonstration (2016)
• 44 ACOs
• Higher levels of risk and reward than MSSP, small
financial incentive for beneficiary to use ACO
– Medicare ACO Track 1+model (2018)
• Introduces downside risk
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17. © 2018 American Health Information Management Association
MSSP
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Source: CMS 2018. https://www.cms.gov/Medicare/Medicare-Fee-
for-Service-Payment/sharedsavingsprogram/about.html

18. © 2018 American Health Information Management Association
MSSP Track 1
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19. © 2018 American Health Information Management Association
Attribution (Assignment)
Prospective
• Uses data from a
review year to
assign patients to
the next
performance year
Performance Year
• Assigns patients
at the end of a
performance year
based on patients
that were served
during the
performance year
• Better reflects
ACO’s
populations for
which they are
held accountable
Hybrid
• Combines
prospective
method and
performance year
method
• End result is the
same as if only
the performance
year method was
used
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20. © 2018 American Health Information Management Association
Performance Measures
• Measures (indicators) are quantitative tools that
provide an indication of performance in relation to
specified processes or outcomes
– Structure measures
• Characteristics of the organization such as existence of
health information technology
– Process measures
• Compliance with treatment guidelines or standards of care
– Outcome measures
• End result of activities or process, such as mortality rate
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21. © 2018 American Health Information Management Association
CMS – Linking Quality to
Reimbursement
1. Better care for individuals
2. Better health for the population
3. Lower cost through improvements
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22. © 2018 American Health Information Management Association
CMS Quality Strategy
Make care safer by reducing harm caused while care is delivered
Help patients and their families be involved as partners in their care
Promote effective communication and coordination of care
Work with communities to help people live healthily
Promote effective prevention and treatment of chronic disease
Make care affordable
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23. © 2018 American Health Information Management Association
Quality Reporting Programs
• Facility or provider will maintain full
payment for services when it successfully
participates in a quality-measure reporting
program
– See table 10.3 for programs
– Measures are specific to the healthcare
setting
– Most receive a 2% reduction for failure to
successfully participate
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24. © 2018 American Health Information Management Association
Value-Based Purchasing Programs
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NQS
Domains
Communication
and Core
Coordination
Community/Po
pulation Health
Effective
Clinical Care
Efficiency and
Cost
Reduction
Patient Safety
Person and
Caregiver-
Centered
Experience
and
Outcomes

25. © 2018 American Health Information Management Association
Hospital VBP Program (IPPS)
• CMS reduces the MS-DRG base payment
amounts by 2% for all providers then
redistributes the withhold based on facility
Total Performance Score (TPS)
– Higher TPS is better
– For every point increase in Total Performance
Score (TPS) provider increases payment by a
portion of the holdback percent (MS-DRG
base rate reduction)
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26. © 2018 American Health Information Management Association
Hospital VBP Program
• Distribution of monies
is based on 4
domains
– Clinical care
• Example: HF-1
Discharge
Instructions
– Safety
• Example: Heart
failure 30 day
mortality rate
– Efficiency and cost
reduction
• Example: Medicare
spending per
beneficiary
– Patient and caregiver-
centered experience
of care/care
coordination
• Hospital Consumer
Assessment of
Healthcare Providers
and Systems Delivery
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Performance
achievement component
Facility performance
compared to all other
facilities
Performance
improvement component
Facility’s current
performance to their
baseline perofrmance

27. © 2018 American Health Information Management Association
Hospital-Acquired Conditions Present
on Admission Indicator Program (IPPS)
• Reduces
payments for
conditions that are
hospital-acquired
• Reduction on a
case-by-case
basis
• Pay at lower
severity MS-DRG
level
– Within the MS-
DRG family
– See Figure 10.5
in text
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1. Foreign object retained after surgery
2. Air embolism
3. Blood incompatibility
4. Stage III and IV pressure ulcers
5. Falls and trauma
6. Manifestations of poor glycemic control
7. Catheter-associated urinary tract infection
8. Vascular catheter-associated infection
9. Surgical site infection, mediastinitis, following
CABG
10. Surgical site infection following bariatric surgery
for obesity
11. Surgical site infection following certain orthopedic
procedures
12. Surgical site infection following cardiac
implantable electronic device
13. Deep vein thrombosis/pulmonary embolism
following certain orthopedic procedures
14. Iatrogenic pneumothorax with venous
catheterization

28. © 2018 American Health Information Management Association
Hospital-Acquired Condition
Reduction Program (IPPS)
• Facilities with HAC scores in the lowest-
performing quartile will have payment
reduced by 1% for ALL encounters
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Domains (table 10.4)
AHRQ Patient Safety and Adverse
Events
Catheter associated UTI; Central-line
associated bloodstream infection;
Clostridium difficile infection; SSI
colon and abdominal hysterectomy;
Methicillin-resistant Staphylococcus
aureus (MRSA), bacteremia

29. © 2018 American Health Information Management Association
Hospital Readmission
Reduction Program (IPPS)
• Patient returns to hospital within 30 days of
discharge from the original admission and the
admission is not a planned readmission
– Exclusions apply
• Measures readmissions for certain conditions for
ALL patients (Medicare and non-Medicare)
• Hospitals can have up to 3% reduction in base
MS-DRG operating amount reduced for ALL
admissions during the applicable payment year
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30. © 2018 American Health Information Management Association
Hospital Readmission
Reduction Program
Acute
Myocardial
Infarction
Heart Failure Pneumonia
Chronic
Obstructive
Pulmonary
Disease
Total Hip
Arthroplasty and
Total Knee
Arthroplasty
Coronary Artery
Bypass Graft
(CABG) Surgery
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31. © 2018 American Health Information Management Association
ESRD Quality Incentive
Program (ESRD PPS)
• Facilities strive
to perform as
well as they
did during the
comparison
period to avoid
payment
reduction
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Domains
Clinical
75% of
TPS
Reporting
10% of
TPS
Safety
15% of
TPS

32. © 2018 American Health Information Management Association
Home Health Value-Based
Purchasing Program (HH PPS)
• HHA strive to
meet program
goals and achieve
high quality
scores through
improved
planning,
coordination and
management of
care
• Currently
applicable for 9
states
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Arizona Florida Iowa
Maryland Massachusetts Nebraska
North Carolina Tennessee Washington

33. © 2018 American Health Information Management Association
Home Health Value-Based
Purchasing Program
Payment Year Incentive /
Reduction
2018 3%
2019 5%
2020 6%
2021 7%
2022 8%
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HHAs with the highest TPS will
receive incentive payments
applied to final claim payment
amounts
HHAs with average performance
will not receive an adjustment to
payments
HHAs with deficient performance
will receive reductions in
payments
See table 10.7 for example
measures

34. © 2018 American Health Information Management Association
Skilled Nursing Facility VBP
Program (SNF PPS)
• TPS is calculated for each
facility
– Achievement score
– Improvement score
• CMS withholds 2% of SNF
PPS payments to fund the
program
• High performing facilities
will receive incentive
payments
• Facilities in lowest 40% will
receive decreased
payments
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SNF 30-day all
cause
readmission
measures
30-day
potentially
preventable
readmission

35. © 2018 American Health Information Management Association
Quality Payment Program
(QPP) (RBRVS)
• Mandated by Medicare Access and CHIP
Reauthorization Act (MARCA)
– Links physician payment to quality measures
and cost saving goals
• Two tracks
– Merit-based incentive payment system (MIPS)
– Advanced Alternative Payment Models
(APMs)
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36. © 2018 American Health Information Management Association
QPP - MIPS
• Consolidates the Medicare meaningful use
incentive, the physician quality reporting system
(PQRS) and the physician value-based payment
modifier program into one model
• Receive bonuses based on performance on
metrics
– See table 10.8 for example measures
– 4% reduction in 2019
– Incentive/penalty increases each year until it reaches
9% in 2022
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37. © 2018 American Health Information Management Association
QPP - APM
• APM – models that have a significant risk
for providers and offer a potential for
significant reward
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Example APMs
Next
Generation
ACOs
MSSP Tracks 2
and 3
Comprehensive
Primary Care
Plus (CPC+)

38. © 2018 American Health Information Management Association
QPP - APM
• 2019 – providers can receive a 5% lump
sum bonus based on 2017 performance
– 5% incentive offered 2019-2024
• If a provider participates in APM, they do
not have to participate in MIPS
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39. © 2018 American Health Information Management Association
Future of VBP
• Healthcare community has requested the
CMS consider social risk factors
(socioeconomic status (SES) factors or
sociodemographic status (SDS) within VBP
framework
• Social risk factors include, but not limited to,
income, education, race and ethnicity,
employment, disability, community resources
and social support
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40. © 2018 American Health Information Management Association
Future of VBP
Social Risk Factors and
Performance Under
Medicare’s Value-Based
Purchasing Program
-Office of the Assistant
Secretary for Planning and
Evaluation (ASPE)
Accounting for Social Risk
Factors in Medicare Payment
-National Academies of
Sciences, Engineering, and
Medicine
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