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Maryland's Experience of Merging Quality
with Reimbursement
Dianne Feeney, Associate Director, Quality IniAaAves Sule Calikoglu, Associate Director, Performance Measurement Maryland Health Services Cost Review Commission
Fragmented US Financing System But Maryland’s System Harmonizes Payments to Hospitals
2
Public Payer 1
US Healthcare System
Private Payer 1
Private Payer 2
H
Maryland HSCRC Responsible for establishing Uniform All-Payer payment
levels and approved revenue Allocations based on
Reasonable relative resource Use by service and by
facility
Fragmented Payment System Creates many problems in the US and contributes to our country’s Fragmented and disjointed care delivery system
H H H H H H H
Public Payer 2
Pluralistic (fragmented) Financing System
All-Payer Unit Rates
Health Services Cost Review Commission • Origins
– Hospitals needed a mechanism to financing Uncompensated Care – Business (trustees) wanted a way to contain costs (abandon cost-‐
based payment) – Maryland Hospital AssociaCon strongly supported legislaCon
• Enabling LegislaAon 1971 – Enabling statute – very broad authority and language – Created a poliCcally/legally independent agency (“HSCRC” or
“Commission”) – Unique governance structure -‐ 7 volunteer Commissioners – Small experienced staff 28 FTEs (core analyCc staff of 10-‐12)
• JurisdicAon – InpaCent and outpaCent hospital services (no Part B) – 46 Acute Care Hospitals -‐ $14.5 billion in revenue
Commission Statute • Broad powers -‐ data collecCon & to set hospital payment levels
(“rate se[ng”) • Statute arCculated economic principles to apply
– ProspecCve rates – Prices must reflect costs (efficient markets) – Fairness in pricing (no undue discriminaCon/preference)
• Otherwise no detailed rate methods in statute • Specified six primary policy goals:
– Efficiency (cost containment) – Access – Equity & Fairness – Accountability – Financial Stability/Sustainability – EffecCveness (quality)
4
HSCRC Payment System • Originally – a Unit Rate (Fee-‐for-‐service) payment system • HSCRC constrained unit rate growth year to year • IncenCvized increase in volume • HSCRC retained the Unit Rate Payment system (great
calibraCon system) but imposed a DRG constraint (or virtual DRG budget) for each paCent
• PaCent sCll charged their itemized bill • Hospital held to this per case budget or an overall weighted
charge per case budget (all rolled up) • Same incenCves as Medicare per case system (IPPS) • HSCRC now building larger payment episodes
5
Maryland Payment System Fundamentals • Uniform data reporCng system (data is key)
– Commission’s system for cost reporCng (prescribed reporAng format) – Methods for reporCng/allocaCng costs to “funcConal” departments
• Uniform data collecCon – Cost Reports (detailed direct/indirect cost & volume data) – Detailed paCent level data (administraAve or case mix/claims data) – Other (wage/salary survey data; trustee disclosure data)
• Data analysis; review variaCons in costs • Establish approved base costs and rates (apply standards of
“reasonableness”) • Update base rates annually • Perform compliance checks for data submifed and rates charged
6
“Bending the Cost Curve” • Lowest Rate of Cost Growth of any State 1976-‐2010
• 1976: Maryland Cost per case was 25% ABOVE the US average • 2010: Maryland Hospital cost per case 3% BELOW the US average (1) • EsCmated $46 billion savings to the State over the period 1976-‐2010
7
0.001.002.003.004.005.006.007.008.009.00
76 80 84 88 92 96 '00 '04
US hospital cost growth
Maryland hospital slower cost growth
Growth in Hospital Costs per case (MD vs. US)
• Had the US grown at the slower Maryland rate of growth – hospital spending would have been $2.0 trillion lower
Note (1): Medpac idenCfied a “most efficient” cohort of hospitals naConally with high quality scores – that are 9-‐11% below average US cost per adjusted admission
Indexed Rate of Growth
• Caveat: savings is “Per Case”
Summary of Key Benefits of this System • System of raConal prices that relate to actual costs • ProspecCve pricing – befer incenCves & allow for predictability • Uncompensated care & teaching costs covered (social mission) • Emphasis on rate compliance and DRG target compliance • Otherwise free to allocate resources and make management
decisions as they see fit • HMOs can manage uClizaCon (aligned incenCve with hospital) • High level of transparency and public accountability – prices all
known, DRG payments known, costs by hospital known • Data used most by hospitals themselves • Controlled per case cost growth and met other policy goals
8
Quality IniCaCves Linked to Payment • Phase I: Quality-‐Based Reimbursement (QBR)
– Hospital Quality Alliance (HQA)/Joint Commission/CMS Clinical Care process measures for: heart afack, heart failure , pneumonia, surgical care improvement program, childhood asthma care, global immunizaCons
– PaCent Experience of Care (HCAHPS)
• Phase II: Maryland Hospital Acquired CondiCons (MHAC) • ~50 PotenCally Preventable ComplicaCon Categories
• Phase III: Admission Readmission Revenue Program (ARR)
Process: Quality Based Reimbursement (QBR)
QBR Performance Measurement -‐Implemented in 2008 -‐.05% hospital inpaAent revenue “at risk” -‐CLINICAL SCORE-‐ Chart abstracted clinical data • Opportunity Score
– Percent of paCents receiving each core measure
• Appropriateness Score (removed for FY 2015 Payment) – Percent of paCents in each domain
receiving ALL indicated care (Perfect Care)
-‐Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS)-‐ Pa:ent survey data • Performance Score
– Percent of top box answers (always) for each dimension
• Consistency Score – Measure whether hospitals are
meeCng the achievement thresholds across the eight proposed HCAHPS dimensions
-‐MORTALITY (New for FY 2015 Payment)-‐ Administra:ve/claims data
QBR MEASURES AND DOMAINS
CLINICAL PROCESS MEASURES – FY2014/ FY2015 AMI-1 Aspirin at Arrival AMI-2 Aspirin prescribed at discharge AMI-3 ACEI or ARB for LVSD AMI-5 Beta blocker prescribed at discharge AMI-8a - Primary PCI Recvd. Within 90 Min. of Arrival CAC-1a - Relievers for Inpatient Asthma (age 2 through 17 years) CAC-2a - Systemic Corticosteroids for Inpatient Asthma (age 2-17) CAC-3 Home Management Plan of Care (HMPC) to Patient HF-1 Discharge instructions HF-2 Left ventricular systolic function (LVSF) assessment HF-3 ACEI or ARB for LVSD PN -3b Blood culture before first antibiotic – Pneumonia PN-6 Initial Antibiotic Selection for CAP SCIP CARD -2 Surgery Patients on Beta-Blocker Therapy Prior to Admission Who Received a Beta-Blocker During the Perioperative Period SCIP INF 1- Antibiotic given within 1 hour prior to incision SCIP INF-2 Antibiotic selection for surgery SCIP INF-3 Antibiotic discontinuance within appropriate time period postop. SCIP INF-4 Cardiac Surgery Patients with Controlled 6 A.M. Postoperative Serum Glucose SCIP INF6- Surgery Patients with Appropriate Hair Removal SCIP VTE-1 Surgery Patients with Recommended VTE Prophylaxis Ordered SCIP VTE-2 Surgery Patients with Recommended VTE Prophylaxis Given SCIP INF-9 Urinary Catheter removed Days 1 or 2 postop (new 2015) IMM-1a Pneumococcal Vaccination (new 2015) IMM-2 Influenza Vaccination (new 2015)
HCAHPS DIMENSIONS- FY 2014/FY2015
Cleanliness and Quietness of Hospital Envr Communication About Medicines (Q16-Q17) Communication With Doctors (Q5-Q7) Communication With Nurses (Q1-Q3) Discharge Information (Q19-Q20) Overall Rating of this Hospital Pain Management (Q13-Q14) Responsiveness of Hospital Staff (Q4,Q11)
FY 2014
Clinical 70%
HACHPS 30%
MORTALITY-FY 2015
3M
Risk of Mortality
Rate
Clinical 40%
HCAHPS 50%
Mortality 10%
FY 2015
QBR Results for FY2013 Total Amount Redistributed=$7.9 million
HOSPITAL NAME QBR FINAL
SCORE
Penalty/Reward as % of Total
Inpatient Revenue
Penalty/Reward in $
Southern Maryland Hospital Center 0.4096 -0.50% -$730,413 Greater Baltimore Medical Center 0.4099 -0.50% -$1,043,091 Prince Georges Hospital Center 0.4106 -0.50% -$874,760 Sinai Hospital 0.4338 -0.45% -$1,644,016 Atlantic General Hospital 0.4638 -0.39% -$138,255 .. .. .. .. .. .. .. .. .. .. .. .. Dorchester General Hospital 0.8005 0.28% $106,058 Baltimore Washington Medical Center 0.83 0.34% $643,512 Maryland General Hospital 0.8301 0.34% $408,057 St. Mary's Hospital 0.905 0.49% $265,070 McCready Memorial Hospital 0.923 0.52% $27,012
Outcomes: Maryland Hospital Acquired Condi:ons(MHACs)
Maryland Hospital Acquired CondiCons (MHAC) IniCaCve Overview
• Implemented in July 2009 • Uses PotenCally Preventable ComplicaCons product developed by 3M HIS to
measure complicaCon rates • PPCs are defined as harmful events (accidental laceraCon during a
procedure) or negaCve outcomes (hospital acquired pneumonia) that may result from the process of care and treatment rather than from a natural progression of underlying disease.
• Relies on Present on Admission Indicators (POA) for secondary diagnoses in administraAve/claims data
• 2% inpaCent hospital revenue at risk for 2014, increased to 3% for FY 2015 (2% achievement and 1% improvement)
15
Example MHACs • PPC5 – Pneumonia and Other Lung InfecCons • PPC6 – AspiraCon Pneumonia • PPC16 – Venous Thrombosis • PPC24 – Renal Failure without Dialysis • PPC35 – SepCcemia and Severe InfecCons
MHAC Results � In FY2013 Total Amount Redistributed=$16.7 million with 2% maximum reducCon and 1.2% reward for hospitals.
� ComplicaCon rates declined by 20% in the first two years of the program.
� EsCmated total cost savings due to reducCons in complicaCon rates in the iniCal two years were $105.4 million.
17
Readmissions: Admission Readmission Revenue
Admission Readmission Revenue (ARR)
– Began FY 2012 – 31 hospitals – Same hospital all-‐cause 30 day readmissions-‐ episode-‐based payment that covers both the iniCal admission and any subsequent re-‐admission
ARR Structure
Acute HospitalizaCon
DRG pmt
Readmission 1 Readmission 2
DRG pmt DRG pmt
Each paid separately under old system -‐ More payment for more volume
“DRG” payment amount or “weight” covers both the iniCal admission and ALL subsequent re-‐admissions-‐ hospital keeps savings for elimina:ng readmissions
HSCRC establishes an expanded Episode
Bundle
$10,000 $9,000 $6,000
30 day “window”
ARR vs. CMS Readmission Policy • ARR
– Bundling of payments based on payment weights
– Keep the savings from reduced readmissions based on historical performance
– Seed-‐funding for iniCal year – Inclusive-‐all condiCons, few
exempCons – Case-‐mix adjusted
• CMS – Ranking of performance
compared to the naCon – PenalCes for the worse
performers (1% penalty for the first year)
– 3 condiCons (AMI, HF, PN) – Risk Adjustment using
historical informaCon
30-‐Day All-‐Cause Readmission Rates Maryland vs. US-‐ Medicare
FY 2010 Readmission Rates MD US Readmission per 1,000 Medicare FFS Beneficiaries 18.94 14.45 Readmission as a % of Total Discharges 21.2% 18.5% Same-‐Hospital Readmission as a % of Total Discharges 15.4% Not Available
Source: Delmarva FoundaCon, Analysis of Medicare Claims
Trends in 30-‐Day All-‐Cause Same-‐Hospital Readmission Rates-‐ HSCRC
as Percent of Discharges
9.8% 9.8% 9.9% 9.8% 9.6% 9.7% 9.9% 9.7% 9.5% 9.7% 9.6% 9.4% 9.5%
9.6% 10.4% 10.7% 10.5%
11.0% 11.1% 11.5% 11.1% 10.7% 10.9% 11.1% 10.8% 10.7%
13.9% 14.0% 14.0% 13.8% 13.3% 13.7%
14.0% 13.8% 13.3% 13.3% 13.5% 13.2% 13.3%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
FY2009 FY2010 FY2011 FY2012
All-‐Payer
Medicaid
Medicare
Source: HSCRC InpaAent Discharge Database based on ARR technical specificaAons
Maryland Readmission Rates ConCnue to Decline in More Recent Quarters
Source: HSCRC InpaCent Discharge Database
9.8% 9.8%
9.9% 9.9%
9.6%
9.7%
9.9%
9.8%
9.6%
9.7% 9.6%
9.4% 9.5%
9.3% 9.2%
8.9%
8.4%
8.6%
8.8%
9.0%
9.2%
9.4%
9.6%
9.8%
10.0%
10.2%
2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1
FY2009 FY2010 FY2011 FY2012 FY2013
Trends in 30-‐Day All-‐Cause Same-‐Hospital Readmissions as % of Total Discharges in Maryland
Includes 0-‐1 Day stays. Rates are not risk adjusted
Value Index – Cost per Case & ComplicaAons
25
-12.00%
-10.00%
-8.00%
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
-4.00% -2.00% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00%
Rea
sona
blen
ess
of C
harg
es P
ositi
on
Low cost -‐ higher quality hospitals
High cost
Low cost
High Quality
Lower Quality High rate of complicaCons
Moving Forward • Expanding to inter-‐hospital readmissions • ReporCng and monitoring expansion • Medicare waiver modernizaCon
– Gain sharing with other providers – Bundled payments – PopulaCon-‐based rates