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![Page 1: Value Based Purchasing Harry Holmes, Ph.D. Senior Policy Advisor Harris County Healthcare Alliance October 11, 2012 The Board-Leadership and Management.](https://reader035.fdocuments.in/reader035/viewer/2022062516/56649dc05503460f94ab4956/html5/thumbnails/1.jpg)
Value Based Purchasing
Harry Holmes, Ph.D. Senior Policy Advisor
Harris County Healthcare Alliance
October 11, 2012The Board-Leadership and Management
Student Association, UTSPH
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Statutory Basis for Value Based Purchasing (VBP)
• Required by the Affordable Care Act, which added Section 1886(o) to the Social Security Act
• Quality incentive program built on the Hospital Inpatient Quality Reporting (IQR) measure reporting infrastructure (www.hospitalcompare.hhs.gov)
• Next step in promoting higher quality care for Medicare; pays for care that rewards better value and patient outcomes, instead of just volume of services
• Funded by a 1% reduction from participating hospitals’ base operating diagnosis-related group (DRG) payments for FY 2013, increasing to 2% by FY 2017
• Uses measures that have been specified under the Hospital IQR Program and results published on Hospital Compare for at least one year
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Hospitals in VBP
• How is “hospital” defined for this program?
• The Hospital VBP Program applies to subsection (d) hospitals:
• Section 1886(o)(1)(C)(i)(d) of the Affordable Care Act
• If you want the text of the actual law:http://www.gpo.gov/fdsys/pkg/PLAW-111publ148/pdf/PLAW-111publ148.pdf
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Exemptions
• Hospitals excluded from Inpatient Prospective Payment System (IPPS): Psychiatric, Rehabilitation, Long-term care, Children’s, Cancer and Critical access hospitals
• Hospitals that pose immediate jeopardy to the health or safety of patients
• Hospitals without the minimum number of cases, measures, or surveys in the performance period
• Hospitals that have an exemption from the Secretary of the Department of Health and Human Services (HHS) – For example: Maryland received a waiver for the FY 2013 Program Year
through this process, but they must re-submit their exemption request annually
• Hospitals excluded from the Hospital VBP Program will not be subject to the base operating DRG reduction for the applicable fiscal year
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Summary of Scoring Process
• Two domains: – Clinical Process of Care (12 measures) – Patient Experience of Care (8 HCAHPS dimensions)
• Hospitals are given points for Achievement and Improvement for each measure or dimension, with greater of set of points used
• Points are added across all measures to reach the Clinical Process of Care domain score
• Points are added across all dimensions and are added to the Consistency Points to reach the Patient Experience of Care domain score
• Weighting:– 70% of Total Performance Score based on Clinical Process of Care measures – 30% of Total Performance Score based on Patient Experience of Care
dimensions
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Minimum Scoring Base
• Hospitals receive a Clinical Process of Care domain score if they have at least 10 cases for each of at least 4 applicable measures during the Performance Period.
• Hospitals with at least 100 completed Hospital Consumer Assessment Healthcare Providers and System (HCAHPS) surveys during the Performance Period receive a Patient Experience of Care domain score.
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12 Clinical Process of Care Measures
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8 Patient Experience of Care Dimensions (surveys from patients)
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Total Performance Score
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Scoring Curve with Threshold and Benchmark
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Achievement
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Achievement Points
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Performance
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Performance Points
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Baseline and Performance Periods and 2013 Reports
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Payment Summary Report
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Clinical Measures Report
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Clinical Measures (2)
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Patient Experience
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Appeals Process
• Appeals Process: Allows hospitals to seek corrections for errors that may have been introduced during the TPS calculations that may affect a hospital’s payment
• Extends to hospitals’ Total Performance Score and its performance assessment with respect to performance standards, not directly to incentive payments
• Requires that hospitals must first submit a corrections request prior to submitting an appeal
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Information Becomes Public
• Hospitals’ performance information will be posted, including: – Measure rates – Condition-specific scores – Domain-specific scores – Total Performance Scores (TPS)
• CMS anticipates posting hospital performance information on the Hospital Compare website in April 2013
• Incentive adjustment postings on Hospital Compare will be addressed in future rulemaking
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Converting Total Performance Score (TPS) into a value based multiplier for reimbursement :
• Estimate each hospital’s total annual base operating DRG payment amount using Medicare inpatient claims data
• Calculate the total annual estimated base operating DRG payment amount reduction across all eligible hospitals
• Calculate the linear exchange function slope • Calculate each hospital’s value-based incentive payment
percentage (also known as percent of base operating DRG earned back)
• Compute the net percentage change in the hospital’s base operating DRG payment amount for each Medicare discharge
• Compute the value-based multiplier (also known as the value-based incentive payment adjustment factor)
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Following slides were not in presentation due to time constraints
Detail on Converting Total Performance Score to a Value-Based Incentive Payment
Adjustment Factor
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Converting Total Performance Score to a Value-Based Incentive Payment Adjustment Factor (1)
• Estimate each hospital’s total annual base operating DRG payment amount
• Add Estimated Base Operating DRG Payment Amount for Each Medicare Discharge in the Fiscal Year (calculated using the most recently available MedPAR files)
• Example Result – Hospital’s estimated total annual base operating
DRG payment amount = $1,000,000
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Value-Based Incentive Payment Adjustment Factor (2)
• Calculate the total annual estimated base operating DRG payment amount reduction across all eligible hospitals • Example Hospital Base Operating DRG Payment Amount ×
Applicable Percent Reduction for Program Year $1,000,000 × 1.0% (for FY13) = $10,000
• Sum across all hospitals: Sum [Base Operating DRG Payment Amount × 1.0% (for FY13)] • Hospital’s Estimated FY13 Base Operating DRG Payment Amount
Reduction = $10,000
• Example Result:• Hospital’s Estimated FY13 Base Operating DRG Payment Amount
Reduction = $10,000 • Total Annual Estimated Base Operating DRG Payment Amount
Reduction Across All Hospitals = $1 billion (Assumption from example)
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Value-Based Incentive Payment Adjustment Factor (3)
• Calculate the Linear Exchange Function Slope • Example Result
• Linear Exchange Function Slope = 2.0
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Value-Based Incentive Payment Adjustment Factor (4)
• Calculate each hospital’s Value-Based Incentive Payment Percentage
• Applicable Percent Reduction for Program Year × Hospital’s TPS/100 × Linear Exchange Function Slope
• 0.01 (for FY13) × 71/100 (for this example hospital) × 2.0 = 0.0142, or 1.42% – Note: This hospital’s TPS = 71. TPS is expressed as a decimal (71/100 =
0.71).
• Result for This Example Hospital: – 0.0142 or 1.42% Value-based Incentive Payment
Percentage
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Value-Based Incentive Payment Adjustment Factor (5)
• Compute the net percentage change in the hospital’s base operating DRG payment amount for each discharge
• Hospital’s Value-based Incentive Payment Percentage – Applicable Percent Payment Reduction – 1.42% – 1.00% = 0.42%
• Result for this Example Hospital: – 0.42% Net Change in Base Operating DRG Payment
Amount • OR
– 0.42% × $1,000,000 = $4,200 FY13 Estimated Net Change
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Value-Based Incentive Payment Adjustment Factor (6)
• Compute the hospital’s Value-Based Multiplier – 1.0 + Net Percentage Change in Base Operating
DRG Payment Amount – 1.0 + 0.42/100 = 1.0042
• Result for this Example Hospital: – 1.0042 FY13 Estimated Value-Based Multiplier
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