Value - Based Purchasing

Value - Based Purchasing Presented by Kyle Bain For Kemal Erkan HCM-401 Course Changing the Behavior for Efficient Population Health Management

Presentation Outline • Definition & Factors • Critical Quality Measures • Calculations • Incentive Percentage Changing the Behavior

Value - Based Purchasing • Definition & Factors • Critical Quality Measures • Calculations • Incentive Percentage Changing the Behavior

Definition & Factors • Definition • A Payment Reform under which Hospitals and other Providers are provided Bonuses based upon their performance against Quality Measures • Ranking and “Achievement Score” is based on Comparison and Improvements to a “Base-Line” • Factors (aka Domains) • Clinical Process of Care • “Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey” Changing the Behavior

Critical Quality MeasuresBreakdown • “Clinical Process of Care” - 5 Specific Conditions • Acute Myocardial Infarction • Heart Failure • Pneumonia • Surgeries • Healthcare Associated Infections • “HCAHPS Survey” (Patient Survey) • 1 Year Performance Period • First year based on ¾ of the fiscal year Changing the Behavior

Calculations • CMS will Reduce Hospitals’ base Diagnosis Related Group (DRG) payments by 1% in 2013 • 2% in 2017 and beyond • Redistribution of about $850 Million • Hospitals in the Highest Percentile receive the Largest Incentive • Top 25% = Incentive • Bottom 25% = Penalty Changing the Behavior

Visual Factors CQM Survey 1 2 3 4 5 Survey Partial Score Last Years Base Line Comparison to other Hospitals Final Score

Incentive PercentageBreakdown • Incentives • Top 95th = .3% to .6% Bonus • Top 90th = .3% to .4% Bonus • Top 75th = .1% to .3% Bonus • Middle 50th – No Bonus or Penalty • As required by law, all scores will be published on the “Hospital Compare” website • Hospital’s Domain-Specific Score • Hospital’s Condition Specific Score • Total Performance Score Changing the Behavior

Value- Based Purchasing Questions? Changing the Behavior

Medicare Shared Savings Program

Healthcare Reform & the Transformation of Reimbursement • Payments will be increasingly linked to performance • “Performance risk” will be increasingly transitioned to providers • Payers and consumers will become accountable; and a greater value will be placed on maintaining individual health

Accountable Care Organizations • ACOs are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to the patients they serve • When an ACO succeeds in both delivering high-quality care and spending health care dollars more wisely, it will have the opportunity to share in the savings it achieves

Medicare Shared Savings Program • The Affordable Care Act, signed by President Obama in March of 2010, requires CMS to establish a shared savings program in order to: • Facilitate coordination and cooperation among providers • Improve quality of care • Reduce unnecessary costs

Medicare Shared Savings Program • The Shared Savings Program is designed to improve outcomes & increase value of care by: • Promoting accountability for the care of Medicare FFS beneficiaries • Requiring coordinated care for all services provided under Medicare FFS • Encouraging investment in infrastructure and redesigned care processes

Requirements • Form a legal structure to receive and distribute shared savings to participating providers • 3-year agreement • Have a minimum of 5,000 Medicare beneficiaries • Report Quality Measures

United Medical ACO Organizational Structure

Timeline • CMS will begin accepting applications for the Shared Savings Program on January 1st, 2012 • First ACO agreements start on April 1st, 2012 and July 1st, 2012 • First performance year will be 18 or 21 months

Quality Measures • Quality Assessments will be calculated based on 33 measures from the following 4 domains; • Patient Experience • Care Coordination and Patient Safety • Preventive Health • Caring for at-risk populations

Payment Models • One-Sided Model • Share up to 50% of any savings they achieve compared to target spending • Two-Sided Model • Share up to 60% of the savings, but will also be accountable for losses

Issues • Upfront Expenses • Final rule did create the “Advanced Payment Model” that provides upfront funds. This money would be recovered from any future shared savings achieved by the team of providers • Legal Issues • Stark & Anti-Kickback • HHS estimates that ACOs could save Medicare up to $940 million in the first 4 years • Far less than 1% of Medicare spending during that time period

Shared Savings Program Questions?

Value - Based Purchasing