Senator Baucus recently presented proposals for health care
reform to the Senate Committee on Finance.
The document covered multiple issues and areas of reform, closely
paralleling the MedPac recommendation.
Reformation of the Medicare payment policy and a move towards quality of
care and care management were central themes in his proposals.
Value Based Purchasing (VBP)
VBP has been discussed for several years at CMS and Senator
Baucus is interested in moving it forward for Acute Care IPPS hospitals. Incentive payments will be based upon
hospital performance of select quality measures, initially selected from those
currently being used in the CMS Pay for Reporting or RHQDAPU program. Incentive amounts shall be based upon the
hospitals performance score or their level of improvement from the prior
payment period. The payments will apply
to all MS-DRGs and hospitals that are in the bottom quartile of performance
shall receive no incentive, a sliding scale will be used for those at 26-75
percentiles, and the full incentive will be paid to those above the 75th
percentile. All unused funds shall be
returned to the Medicare Trust Fund. The
program will begin in FY 2012 for baseline performance and payments shall be
adjusted beginning FY 2013 based upon the hospitalís performance under the VBP
program. The funding for the incentive
pool will be generated by reducing Medicare IPPS payments to participating
hospitals for all MS-DRGs: 2% reduction
in FY 2013, 3% in F 2014, 4% in 2015 and 5% in 2016 and thereafter.
Hospitals are already being impacted by the economic climate
and the reducing funds available to them.
The commencement of the VBP and reduction in MS-DRG payments will place
additional strain on these already tasked institutions unless they are able to
meet and exceed performance minimums.
Change is not quick in coming, so institutions that are not top
performers in the current RHQDAPU system will have to make immediate and
significant changes to address their quality performance to impact their
results upon the roll out of the VBP program.
Pharmaceutical companies and device companies need to be sensitive to
their customersí quality performance and the scores impacting their product
lines, and should be prepared to assist their customers in attaining these
CMS is also given the authority to weight the measures for
calculation of the final score, so those product-lines which influence a
hospital quality performance or patient outcomes need to ensure that the
weighting of individual measures accurately reflect the best outcome, safety,
efficiency and patient satisfaction in the overall score.
Currently, only hospitals will be involved, but CMS is
tasked with completing a plan for physician VBP program in 2010 and a proposal
for VBP for home health agencies and skilled nursing facilities by 2011 and
2012, respectively. Therefore, quality
and performance measures need to be developed for future adoption into a VBP
plan and assistance rendered to those institutions to prepare them for these
Beginning in 2010, CMS will identify and establish hospital
data related to 30 day readmission rates of hospitals for eight conditions with
the highest volume ad highest rate of readmission. Benchmarks shall be set in 2011 for all readmissions
that are not potentially preventable, but which are the result of complications
or related conditions. By 2013,
hospitals with readmissions within 30 days from discharge above the 75th
percentile will be subject to a payment withhold on a MS-DRG by MS-DRG basis,
equal to 20% of the MS-DRG payment amount from the prior year.
Readmissions are being closely tracked and shall soon have
some financial dis-incentives behind them.
Pharmaceutical and medical device companies need to be aware of the
readmission rates and causes related to the disease categories they treat, and
be prepared to address these concerns with their customers.
Readmission is a temporary phase in the move towards bundled
payments. Bundled payments will have
far-reaching implications since it is proposed to cover all IPPS hospital and
post-acute care services for 30 days after discharge, beginning with the top
20% of post-acute spending in 2015 and extending to all conditions post acute
care spending by 2018. This puts a price
on a hospitalís efficiency, complication rates, and patient outcomes regardless
of whether they are preventable or not.
The bundled payment will arrive at a risk adjusted rate based upon
overall costs by condition, so any deterrence from the norm will entitle the
hospital to payments which will fall under or over their cost. Products designed to assist the hospital in
reducing complications and errors and improving their time and efficiency will
become critical to the hospitalsí success in meeting these goals.
Accountable Care Organization (ACO)
Physicians are not involved in the readmission or bundled
payment initiatives, but they are central to the hospital being able to meet
its performance goals, and paramount for the continued care of the patient and
the outcomes of care. Baucus is promoting
the creation of ACOs which would be a group of providers (hospital/physician,
physician/physician, networks of group practices, etc) that would continue to
be paid fee for service but would be entitled to an incentive payment drawn
from the cost savings they generate for the Medicare program. Quality of care is also an important element
in this program, and certain thresholds must be met for any incentive payment
to be made.
The ongoing management of chronic disease has been identified
as a priority and the Baucus proposal is promoting additional bonus payments
for primary care physicians, payment for care management services after
hospital discharge for certain major chronic diseases (CHF, CAD, COPD, Asthma,
Diabetes, Depression), or reimbursement for evaluation and management for a
chronic disease if they are not readmitted within 60 days after hospital
discharge. The creation of a Chronic
Care Management Innovation Center (CMIC) will also allow CMS to test
alternative payment policies for high cost, chronically ill Medicare
Comparative Effectiveness Research (CER)
The Obama administration has already slated 1.1B for CER in
the stimulus package but they have stated that CMS will not be using these
studies for its coverage determinations.
Baucus similarly spoke of the importance of CER, but in his proposal to
limit the use of CERs by HHS, he actually opened the door for the use of these
studies by CMS. He placed certain
parameters which must be met (such as transparency and standards), but which if
met, would allow CMS to make use of the information.
Additional issues were also addressed in the Baucus proposal,
such as the drive towards greater transparency of relationships between
physicians and manufacturers, and more detail is available in the attached
slide presentation. The quality
initiatives, however, shall be felt the most by IPPS acute care hospitals and
thus are discussed above. Health care
reform can only be achieved by the participation of all interested parties and
the services they provide need to ensure higher-quality and more cost effective
care. Hospital focus needs to look
beyond the baseline product cost, but also look at the impact pharmaceutical
products or devices have on the hospitals cost of services, efficiency and
outcomes and how they impact potential