HFMA: Federal Health Reform Legislation

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HFMAFederal Health Reform Legislation
Payment Restructuring

• Raymond Sweeney
• Healthcare Association of New York State

• December 17, 2009

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Federal Update
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Congressional Activity on Reform
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Critical Issues in Play
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Coverage Expansion
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Coverage Expansion Compromise in Senate
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Major Financing Components
Reflects gross cost of coverage expansions
based on CBO scores.
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Key Hospital and Health System Provisions
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Medicare Update Factor Reductions
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DSH Reductions
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Hospital Readmissions
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Hospital Value-Based Purchasing
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Geographic Variation
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Wage Index
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Graduate Medical Education
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Independent Medicare Advisory Board
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340B Drug Discount Program
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Federal Health Reform
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Hospital Readmissions
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Readmissions Payment Penalty - Senate
Methodology will likely be based on 2011
discharge data.
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Patient Protection and Affordable Care Act
Readmissions Adjustment

• Calculate observed to expected ratio (O/E ratio)
• For each condition
• If O/E ratio gt 1
• Calculate total payments for excess readmissions
• (O/E ratio multiplied by DRG payments for that
  condition) 1
• Calculate readmission adjustment factor
• 1 (total excess payments)(for all conditions
  covered by policy)
• total payments (all discharges)
• Apply the higher of the readmission adjustment
  factor or the specified cap to all Medicare
  payments

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Readmission Payment Penalty
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Senate Patient Protection and Affordable Care
Act
Proxy Potential Number of Hospitals With Excess
O/E Ratio
Data Source Hospital Compare Medicare claims.
July 1, 2005 and June 30, 2008. Accessed 12-1-09
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New York State is in the Highest Rate Category
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30-Day Risk-Adjusted Readmission Rates NYS
Regional Comparisons
Mean US Rate
Mean US Rate
Mean NYS Rate
Mean NYS Rate
Mean NYS Rate
Based on Medicare CBSA
Mean US Rate
Mean US Rate
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Sample Strategies to Reduce Readmissions

• Standardized discharge process
• Risk-screening program and case management
• Improved communications with those caring for
  patients post-discharge
• Hospitalists coordinate with sequential providers
• Conduct post-discharge follow-up calls
• Connect patients to Primary Care Physician,
  medical home, and other services - if lacking
• Palliative care programs

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Selected Pilots

• Institute for Healthcare Improvements (IHI)
  Hospital to Home Initiative (cardiology patients)
• IPRO Transitions in Care
• The Transitional Care Model (Mary Naylor)
• The Care Transitions Program (Eric Coleman)
• Project RED - Re-engineered discharge (Brian
  Jack)
• BOOSTing Care Transitions (Mark Williams)

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Hospital Value-Based Purchasing
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Senate Bill Value-Based Purchasing

• Implementation starting in FFY 2013
• 1 pool in FFY 2013 1.25 in FFY 2014 1.5 in
  FFY 2015 1.75 in FFY 2016 2 in FFY 2017 and
  thereafter
• Budget Neutral
• Dollars left in the pool will go to hospitals no
  details as to how
• Measures to be selected from those currently
  reported plus Healthcare-Acquired Conditions
  (e.g. Heart attack, heart failure, pneumonia)
• Secretary has authority to expand the list of
  measures used
• No sooner than FFY 2014, expansion must include
  efficiency measures i.e. Medicare spending per
  beneficiary)
• Establishes an appeals process for VBP outcomes

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Senate Bill Value-Based Purchasing (contd)

• Scores and payout percentages would be publicly
  reported
• Scores to be based on hospital performance
  compared to national standards
• Hospitals will be paid tomorrow based on prior
  years performance
• Each year the standards will be updated

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Core Measures Continued
Source Hospital Compare Website - Reporting
Period January 2008 through December 2008
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Geographic Variation
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Institute of Medicine Study of Geographic
Variation

• The study should take into account
• Differences in input prices health status
  practice patterns access to medical services
  supply of medical services socio-economic
  factors, which shall include race, ethnicity,
  gender, age, income and educational status, and
  provider and payer organizational models.
• Consider patient access to care, insurance
  status, distribution of health care resources,
  health care outcomes, and consensus-based
  measures of health care quality.
• Patient preferences and patient compliance with
  treatment protocols.

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Medicare Part A B Per Enrollee Spending New
York Core-Based Statistical Areas
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Medicare Part A B Per Enrollee Spending And
Growth New York Core-Based Statistical Areas
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Medicare Part A B Per Enrollee Spending And
Growth by NYC CBSA Compared to Other State CBSAs
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Medicare Part A B Per Enrollee Spending And
Growth by Selected NYS CBSAs Compared to Other
State CBSAs
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Medicare Payment Bundling
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Accountable Care Organizations
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Medicaid Payment Demos
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Bundling

• Expanded, DRG-like payment for specific disease
  episodes
• Includes pre-hospital care, hospital care, and a
  time-limited (30-45 days) portion of post-acute
  services
• Should include physician component (in Senate
  bill not in House bill)
• Provider assumes performance risk for limited
  period covered
• Requires freedom from legal barriers (anti-trust,
  Stark, gain sharing, etc.)

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Global Budget/Accountable Care Organizations

• Global or capitated account for a defined
  population over a longer period (say one year)
• Provider assumes broader performance risk
• Core provider responsible for broader range of
  services, over longer period of time
• Risk /reward relates to utilization control
• Patient population not necessarily
  disease-specific
• Hospital or MD could be core provider (Senate
  bill, House billMD-only)
• Legal barrierssame as bundling

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Existing Demonstrations/Initiatives

• Medicare Acute Care (ACE) Episode Demonstration
• Bundlingorthopedic and cardiovascular surgery
• 5 system demos (OK, TX, NM, CO)
• MassachusettsGlobal Budgeting Reform
• MinnesotaBaskets of Care
• PrometheusEvidence-informed case rate (ECR)
  three pilots

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AHA Payment Reform Task Force

• Align hospital and MD payment on per admission
  basis by 2013 medical home payment for primary
  care MDs
• Bundled payment (certain conditions, 7 days
  post-discharge) by 2015
• Global payment/ACOvoluntary option
• Include side path for inner-city safety net and
  rural hospitals
• Remove legal barriers

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HANYS Process to Date

• Board Retreat discussionMassachusetts
• Finance, Quality, C3I Committeesindividual and
  joint discussion
• General views
• Some more ready than others to pursue demo
• Concerns relate to assuming greater risk,
  willingness of MDs to participate, inadequate
  data systems, lack of capital
• General support for state demo authority help
  with legal barriers
• Strong interest in education on concepts,
  operational challenges

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HANYS Next Steps

• Federal Advocacyensure that ACO (and bundling)
  provisions allow equal opportunities for
  hospitals to participate
• Provide member education on federal reform
  opportunities (briefings, Webcasts)
• Develop bundling and global budgeting-specific
  operational tools collaborate with Massachusetts
  on material under development (risk transfer, ACO
  formation, etc.)
• Continue joint Finance, Quality, Continuing Care
  workgroup to advise and guide process
• Seek similar state demo authority, including
  flexibility regarding legal barriers