It is no secret that health care (HC) reform is on the horizon, with significant changes in the Center for Medicare and Medicaid Services (CMS) reimbursement beginning on October 1, 2012. Despite beliefs, hopes, or opinions to the contrary, these changes are going to occur. Yet, in general, HC facilities and providers seem ill-informed about the significance of these changes and their role in optimizing reimbursement. This article will briefly summarize the current state of HC expenses in the United States and the value-based purchasing program.
CURRENT STATE OF HC IN THE UNITED STATES
Despite efforts to reduce expenditures, HC costs are rising in most industrialized countries around the world. However, these expenditures are disproportionately higher in the United States, where more HC dollars are spent per capita and where HC consumes a greater proportion of the gross domestic product.1 Approximately 10% of Americans consume over 50% of HC costs, and 5 chronic conditions are the main drivers of HC consumption: heart failure, asthma, diabetes mellitus, coronary artery disease, and depression.2 Unfortunately, this increased expenditure does not translate into improved quality and outcomes.
HC is a trillion dollar industry in the United States and is associated with crises related to safety, quality, cost, and access. Approximately 98,000 Americans die each year due to faulty HC processes and system failures.3 Only half of adult US patients receive guideline-recommended care for their illnesses,4 and less than 50% of physicians use recommended processes of care.5 Our current HC system spends an estimated 30 to 40 cents of every HC dollar annually, or roughly three quarters of a trillion dollars, on costs associated with “overuse, underuse, misuse, duplication, system failures, unnecessary repetition, poor communication, and inefficiency.”6 Despite a reduction in the number of emergency departments, more patients are turning to the emergency department for emergent and nonemergent care.7 Patient satisfaction with the current system continues to decline.8 It is apparent that a change in the direction of HC is both warranted and vitally necessary.
Value-based purchasing (VBP) is a payment methodology that links payment more directly to the quality of care provided in acute care hospitals. Essentially, VBP rewards the delivery of high-quality, efficient clinical care and will transition HC from a volume-based system to a value-based system in the United States. VBP stems from the Deficit Reduction Act of 2005, which authorized CMS to develop a plan for VBP for Medicare hospital services commencing in fiscal year (FY) 2009. Specific in the plan are an on-going process for developing, selecting, and modifying measures of quality and efficiency in hospital inpatient settings; reporting, collection, and validation of quality data; the structure of value-based payment adjustments, including determining thresholds or improvements in quality that would substantiate a payment adjustment, the size of such payments, and the sources of funding for the value-based payments; and public disclosure of information on hospital performance.9
In May 2011, CMS issued the VBP final rule linking acute care Medicare reimbursement to quality performance beginning with patient discharges on or after October 1, 2012. Initially VBP will cover these 5 conditions or procedures9:
- Acute myocardial infarction
- Heart failure
- Certain surgeries
- Certain HC–associated infections and certain hospital-acquired infections
The proposed expansion for FY 2013 will encompass other conditions, including9:
- Chronic obstructive pulmonary disease
- Coronary artery bypass graft
- Percutaneous transluminal coronary angioplasty
- Other vascular procedures
Baseline data on performance have already been collected, and the first hospital VBP performance period began on July 1, 2011 and ended on March 31, 2012. More than 3000 hospitals across the country are eligible to participate in VBP,9 and all hospitals participating will have their base operating diagnosis related groups payments for each patient discharge reduced by a small percentage each year. In FY 2013, the DRG percent reduction is 1%, 1.25% for FY 2014, 1.5% for FY 2015, 1.75% for FY 2016, and 2% for FY 2017 and subsequent years.9 Those reduction monies will be used to fund the incentive payments for hospitals participating in VBP.
At least 60 days before October 1, 2012, CMS will notify each hospital participating in VBP of its estimated value-based incentive payment for each patient discharge in FY 2013 through that hospital’s QualityNet account. On November 1, 2012, hospitals will be notified of their exact value-based incentive payments for each FY 2013 discharge. The exact value-based incentive payment will depend on each hospital’s total performance score.9
The key concept of VBP is that buyers should hold providers of HC accountable for both cost and quality of care. Therefore, VBP uses cost, quality, and patient satisfaction as its quality performance measures. Patient satisfaction, using 8 dimension scores from Hospital Consumer Assessment of Healthcare Providers and Systems, will determine 30% of the incentive payments, whereas improved clinical outcomes, using 12 process-of-care measures, will determine 70% of the incentive payments. In FY 2013, VBP will be expanded from 2 domains to a total of 4 with the addition of outcomes, such as mortality and efficiency. Revised incentive payments will then be based on 30% for 13 process-of-care measures, 30% for outcomes, and 20% for efficiency. Patient satisfaction will be unchanged.9
Of utmost importance is recognition that failure to meet or improve baseline VBP scores will result in DRG payment reductions for all CMS patients—not just payment for the conditions listed above. Although it is possible for hospitals to offset, or “earn back,” the fees being charged for VBP with demonstrated improvement in quality scores, it is expected to be challenging for most facilities. As an example, in a national analysis of hospital performance, Texas-based VHA Inc. recently calculated a national median VBP score of 53, when hospitals likely will need scores higher than 70 to maximize their Medicare reimbursements.10 On average, hospitals face an average VBP revenue risk of $888,812 in 2012 and $6.67 million over 5 years.10
With initiation of VBP, acute care hospitals are rewarded based on how closely clinical guidelines and practices are followed and how well hospitals enhance patients’ experiences. Thus, the VBP program requires reengineering of acute care processes. Patient-centered care must remain the focus of a rigorous curriculum of goals and metrics for acute care hospitals.
2. Centers for Disease Control and Prevention.. Chronic Disease Overview: Costs of Chronic Disease. Centers for Disease Control and Prevention Web site. Available at http://www.cdc.gov/nccdphp/overview.htm
Accessed May 4, 2012.
3. Kohn LT, Corrigan JM, Donaldson MSfor the Committee on Quality of Health Care in America at the Institute of Medicine.To Err Is Human. 20065th ed. Washington, DC National Academy Press:26–48
4. McGlynn EA, Asch SM, Adams J, et al. The quality of health care delivered to adults in the United States. N Engl J Med. 2003;348:2635–2645
5. Casalino L, Gillies RR, Shortell SM, et al. External incentives, information technology, and organized processes to improve health care quality for patients with chronic diseases. JAMA. 2003;289:434–441
6. Lawrence DReid PP, Compton WD, Grossman JH, Fanjiang G. Bridging the quality chasm. In: Building a Better Delivery System: A New Engineering/Health Care Partnership. 2005 Washington, DC National Academy Press
7. Nawar EW, Niska RW, Xu J. National Hospital Ambulatory Medical Care Survey: 2005 Emergency Department Summary, Advance Data from Vital and Health Statistics No. 386 National Center for Health Statistics (NCHS). Hyattsville, Md
About the Society of Chest Pain Centers
The Society of Chest Pain Centers (SCPC) is an international not-for-profit organization that focuses on transforming cardiovascular care by assisting facilities in their effort to create communities of excellence that brings together quality, cost, and patient satisfaction. As the only cross-specialty organization, SCPC provides the support needed for individual hospitals and hospital systems to effectively bridge existing gaps in treatment by providing the tools, education, and support necessary to successfully navigate the changing face of health-care. For more information on SCPC, accreditation and certification opportunities, visit www.scpcp.org, or call toll free 1–877–271–4176.