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Figure 1. Performance Score Based on Attainment or Improvement. This example uses PN-2, Pneumococcal vaccination status for pneumonia patients. CMS sets a minimum attainment threshold for the measure of 0.47 and a benchmark of 0.87. Hospital A has a baseline performance score of 0.21 and improves to 0.70 for the reporting year. Hospital A will earn six points for attainment beyond the 0.47 CMS attainment threshold, and earns seven points for improvement from their 0.21 baseline to 0.7. Hospital A’s performance score will therefore be 7 points for this performance measure.Source: Dr. Torcson, Centers for Medicare & Medicaid Services
Mock scorecards, interactive blueprints, quality dashboards: Hospitals are frantically seeking out any advantage that might help them excel in a fast-approaching, mandatory competition with millions of dollars on the line. Value-based purchasing (VBP), a program authorized by the Patient Protection and Accountable Care Act of 2010, gives the Centers for Medicare & Medicaid Services (CMS) the power to base a portion of hospital reimbursement payments on how well hospitals perform in 25 core measures.
The move is intended to help CMS flex its muscles and move from being a passive bystander to an active buyer of what its officials have deemed higher-quality healthcare. Analysts and healthcare experts warn that if hospitalists aren’t paying attention, however, they could put themselves at unnecessary risk or lose out on a major opportunity to demonstrate their value in what Patrick Torcson, MD, SFHM, is calling a “team sport.”
Dr. Torcson, chair of SHM’s Performance and Standards Committee, says every hospitalist should be aware of the core-measures concept, which has been around since 2003 in what’s now called the Hospital Inpatient Quality Reporting (IQR) Program. “We’re not reinventing the wheel; we’re just transforming the program from pay-for-reporting to actual pay-for-performance,” he says. Value-based purchasing, though, is raising the stakes considerably. “It’s really significant because it marks the beginning of an era of accountability and true pay-for-performance at the hospital level.”
A major reason for the heightened concern is the structure of the program. In other quality demonstration projects, CMS has established a score to beat: “Anyone above that threshold is in the money. If you didn’t make it, there was no harm, no foul,” says Trent Haywood, MD, JD, chief medical officer of the Irving, Tex.-based for-profit healthcare cooperative VHA Inc.
We are really honing in on that kind of a quality dashboard, and [VBP’s arrival] is definitely going to be a big boost toward doing that. We are talking about making it part of our credentialing process, part of our privileging process, and part of our physician reimbursement and pay schedule process.
—Laura Dietzel, PeaceHealth’s program director for High-Tech Meaningful Use
What’s different this time is that value-based purchasing is not a collaboration but a competition in which every hospital is pitted against the entire market, says Dr. Haywood, the former deputy chief medical officer at CMS. It’s also a zero-sum game. That means there will be winners and losers, with the entire cost-neutral program funded by extracting money from the worst performers to financially reward the best. “In this competition-type model, you need to know who you can beat,” he says.
Race to the Top
That new reality has set off a mad scramble among hospitals hoping to gain any edge they can and spawned a cottage industry of consultants, lawyers, and quality specialists advising them on how to maximize their points. The drive to achieve and maintain a high level of performance is also spurring hospitals to seek more individual accountability as they look to minimize their financial risk.
Hospitals’ baseline scores already have been set, and the initial nine-month performance evaluation period begins July 1. Beginning with discharges on Oct. 1, 2012 (fiscal year 2013), the payment phase will kick in. CMS will start by withholding 1% of the base DRG reimbursement paid to hospitals. That money can be earned back based on how well each hospital scores on the performance measures during the evaluation period. The amount initially withheld will rise by 0.25 percentage points per year until it is capped at 2% in 2017 and beyond.
Think of the competition as an annual decathlon with a pool of prize money funded by the participants, except that hospitals will be evaluated on far more measures. So far, the program includes 17 core Clinical Process of Care measures and eight measures based on Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) surveys. Twenty other potential measures are waiting in the wings, including ones related to hospital-acquired conditions, patient safety, inpatient quality, and mortality, some of which likely will be introduced in fiscal year 2014.