As CMS’ value-based purchasing program enters its second year, emergency departments are poised to influence hospital outcomes

An interview with reimbursement and coding expert Michael Granovsky, MD , FACEP

This year, more than 1,400 hospitals are seeing their Medicare reimbursements cut based on a new quality incentive program mandated by the Centers for Medicare and Medicaid Services (CMS). More than 1,200 hospitals are receiving a payment boost.

The CMS Quality Incentive Program is built on the Hospital Inpatient Quality Reporting (IQR) measure-reporting infrastructure, with the clinical process of care measures coming from the Hospital Inpatient Prospective Payment Systems final rule. Several of the measures under CMS’s Hospital Value-Based Purchasing program (HVBP) are emergency department–specific, uniquely positioning EDs to influence whether hospitals come out ahead or fall behind, said Michael Granovsky, MD, FACEP, president of coding for LogixHealth and chair of ACEP’s Coding and Nomenclature Commitee.

For several years, CMS has had stiff penalties associated with not fully reporting on Hospital Outpatient Prospective Payment System quality measures. For 2014, CMS will apply a 2 percent penalty to hospitals not reporting outpatient quality measures, which directly reduces the hospital’s conversion factor. CMS, consistent with an escalating focus on quality, added penalties to the Value-Based Payment program as well. The mandatory program began last year, when diagnosis-related group (DRG) payments to all participating acute care hospitals were cut by 1 percent. For the 2014 reimbursement year, which began Oct. 1, 2013, and extends through Sept. 30, 2014, the cuts grew to 1.25 percent. By 2017, they will top out at 2 percent per Medicare patient.

The money goes into a pool intended to incentivize hospitals to perform better than the median or show significant improvement relative to their own baseline year, whichever score is higher. Hospitals demonstrating high performance or improvement either break even or receive more money than they put in, according to an adjusted payment calculation. Those that perform worse than the middle 50 percent of hospitals or fail to improve will sustain a net loss in revenue.

This year, reimbursement was based on hospital performance across more than a dozen clinical process of care measures; the results of patient-satisfaction surveys; and patient outcomes, such as inpatient mortality rates for heart attack, heart failure, and pneumonia.

Four of the 13 clinical process of care measures include ED-specific patient care performance: fibrinolytic therapy received within 30 minutes of patient arrival at the hospital (AMI-7a), primary percutaneous coronary intervention received within 90 minutes of hospital arrival (AMI-8a), blood culture testing before initial antibiotic received in the ED (which is being phased out), and initial antibiotic selection for community-acquired pneumonia in immunocompetent patients (PN-6).

In 2009, ACEP established a Value Based Emergency Care Task Force (VBEC) to focus on the issues being debated before the passage of the Affordable Care Act in order to move the needle forward on enhancing quality of care, measuring performance, and improving patient health and safety. To that end, the VBEC brought together diverse and previously disparate members of the emergency medicine community, including leaders from the ACEP Board of Directors; senior management; the Quality and Performance, Federal Government Affairs, Research, and Reimbursement committees; academia; practice management; rural health; and health information technology systems management. The VBEC identified four key areas to monitor and develop a strategic response plan regarding:

1. Care coordination (readmissions, medical home, transitions of care)
2. Episodes of care (the ED encounter as an episode)
3. Health Resources and Services Administration federally qualified health centers (exploring partnership with ACEP)
4. Emergency-medicine data registry (feasibility of a registry for quality improvement, reporting, maintenance of certification, benchmarking, etc.)

“High-functioning EDs are strategizing and partnering with their hospitals to ensure well-developed systems and resources are in place to minimize the time to thrombolytics or transfer to the cath lab and coordinating with nursing, laboratory, and pharmacy personnel to provide consistent treatment for pneumonia patients,” Dr. Granovsky said.

Prior to 2013, while many EDs were focused on other payment reforms—some of which include the four HVBP measures—the program had not been the target of specific efforts, according to the authors of a study early last year in the Annals of Emergency Medicine.¹

The study evaluated ED performance based on hospital characteristics for these four measures using Hospital Compare data from 2008 through 2010 and the 2009 American Hospital Association Annual Survey.

Of the 2,927 EDs examined, for-profit hospitals earned the highest performance scores, while public hospitals and those without Joint Commission accreditation scored lowest. However, public hospitals had the highest proportion of improvement scores, while for-profits had the lowest. The study could not conclusively account for these differences but recommended ED leaders monitor achievement and improvement across these measures.

The ED is now appropriately being perceived as the “front door of the hospital,” Dr. Granovsky said, stressing the relevance of efforts designed to improve overall patient experience and to focus on initiatives like HVBP.

“With Medicare as the dominant payer for hospital services, the 1.25% DRG withhold creates a strong incentive for hospitals to optimize their processes, improve outcomes, and increase patient satisfaction.”
–Michael Granovsky, MD, FACEP

On top of HVBP, many hospitals are also being hit with penalties for higher-than-expected readmission rates, and these fees will reach 3% by 2015. An additional program will penalize hospitals with high rates of hospital-acquired infections and patient injuries. And HVBP will include new measures as well, including hospital efficiency with respect to the cost of care.

“Many forward-thinking ED groups are leading the way and assisting the hospital with post-discharge clinics or even becoming involved in home healthcare visits to reduce the number of readmissions for vulnerable patients, such as those with congestive heart failure, as well as other complex medical conditions and comorbidities,” Dr. Granovsky said.

While more hospitals faced penalties than bonuses in 2014 under HVBP, fewer than 800 received a reimbursement cut larger than 0.2% and just more than 600 saw a payment increase larger than this. The average penalty was 0.26%, up from 0.21% in 2013, while the average bonus was 0.24%, a marginal increase from 2013.

Hospitals in the Midwest fared better than hospitals in the Northeast and West. Private, for-profit hospitals performed better than public and nonprofit hospitals.

While there has been some debate about whether the financial incentives are strong enough to drive improvement, Dr. Granovsky said it’s something most hospital CEOs are taking very seriously, especially as these reforms lead to increased transparency.

“With Medicare as the dominant payer for hospital services, the 1.25% DRG withhold creates a strong incentive for hospitals to optimize their processes, improve outcomes, and increase patient satisfaction,” Dr. Granovsky said.

The idea behind CMS initiatives like HVBP is to move health care away from a fee-for-service system to one that pays for performance and quality. Whether these efforts can achieve this is unknown. A 2012 New England Journal of Medicine study of the Medicare Premier Hospital Quality Incentive Demonstration, the CMS pilot program that served as the basis for HVBP, showed performance incentives had no impact on clinical outcomes despite improvement in scores across performance measures.²

Kelly April Tyrrell is a freelance journalist based in Wilmington, Del.

References

1. McHugh M, Neimeyer J, Powell E, et al. An early look at performance on the emergency care measures included in Medicare’s Hospital Inpatient Value-Based Purchasing Program. Ann Emerg Med. 2013;61:616-623.e2.
2. Ashish KJ, Joynt K, Orav J, Epstein A. The long-term effect of premier pay for performance on patient outcomes. N Engl J Med. 2012;366:1606-1615.