Reprinted from REPORT ON MEDICARE COMPLIANCE, the nation's
leading source of news and strategic information on Medicare compliance, Stark
and other big-dollar issues of concern to health care compliance officers.
By Nina
Youngstrom, Managing Editor
October 20,
2014 Volume 23 Issue 37
While hospitals fend off claim denials
in core compliance risk areas, they also face revenue losses from
pay-for-performance programs and their sometimes counterintuitive consequences.
At the same time, pay-for-performance programs may create compliance risks for
hospitals under fraud and abuse laws, because of the temptation to reward
physicians for improving quality of care and give free goodies to patients to
improve their health. The risks mount as the pay-for-performance programs
mature and penalties increase.
A large chunk of hospital payment is at
risk from the value-based purchasing, hospital readmission reduction and
hospital-acquired conditions programs, which were created or enhanced by the
Affordable Care Act. The cumulative effect of these potential rewards and
penalties are an argument for greater oversight of the programs and their
overlapping performance indicators. “Imagine your biggest payer comes to you
and tells you it will put 6% of your hospital reimbursement on the line and it
is based on your performance compared to other hospitals in three key quality
programs,” said Washington, D.C., attorney Daniel Hettich at an Oct. 14 webinar
sponsored by RACmonitor.com. Some hospitals proceed with business as usual,
hoping their commitment to quality of care will keep them ahead of the game,
and some hospitals ignore them, hoping the programs will disappear. “Others
seek to understand the basics of the programs and what they can do to increase
the hospital’s performance under the programs,” said Hettich, who is with King
& Spalding. “That is the correct answer.” To ensure hospitals rise to the
pay-for-performance occasion, for the sake of their patients and their
payments, they have to send in the troops — compliance officers, medical
directors, coders, billers, quality improvement and others, he said.
Pay-for-performance programs are
advancing the shift from payment for volume to payment for quality of care. The
groundwork was laid by the Inpatient Quality Reporting program, which penalizes
hospitals that don’t report to CMS on quality measures and is still in play.
But that is just about reporting data. “Results don’t matter with IQR,” Hettich
said.
The first of the true pay-for-performance
programs is value-based purchasing (VBP) and it’s the only one that carries
both rewards and penalties. The program is funded by reductions in base
operating DRG per discharge payment reductions. That means all hospitals will
be paid 1.5% less in fiscal year 2015, which started Oct. 1, and up to 2% less
in FY 2017 and beyond, Hettich said. The pool is redistributed to hospitals
according to their compliance with quality measures, which is judged against
their own compliance two years earlier (“improvement”), and their compliance
compared to other hospitals (“achievement”), he said. “As long as you improve
your own performance, you will get some points.” CMS figures it will give $1.5
billion in incentive payments to hospitals in 2015 when 1.5% of reimbursement
is at stake, but their performance this year on quality measures (and other
aspects of VBP) affects 2% of 2017 payments.
Quality measures include rates of c.
difficile infections; catheter-associated urinary tract infections; and 30-day
mortality for acute myocardial infarction, pneumonia or heart failure.
CMS Assigns Achievement, Improvement
Points
For most measures, CMS assigns
achievement and improvement points based on two cutoffs: a threshold and a
benchmark. Thresholds are defined as compliance rates by the average hospital
and benchmarks are defined as compliance rates by the top 5% of hospitals in
the nation, he said. In the achievement area, there are 10 points for meeting
or exceeding the benchmark, no points below the threshold and between one and
nine points depending on where hospitals fall between the threshold and the
benchmark. “The gold standard is the benchmarks,” (e.g., having a surgical-site
infection rate in the lowest 5% of hospitals nationally), he said. “That’s the
score you need to get the full 10 points.”
Hettich said there is a similar formula
for the improvement score, with zero points if hospitals fall below their own
baseline score, one to nine points depending on how far above their baseline
they are scored and 10 points for meeting a national benchmark. For example, if
a hospital provided fibrinolytic therapy to 82% of AMI patients in 2015, up
from 43% in 2013, it gets seven points for improvement.
There’s a pitfall with CMS’s
methodology, Hettich said. “I call it the compression problem,” he said. Many
of the quality measures have little room between the performance of average
hospitals and top hospitals. That can wreak havoc on their scores. With the flu
vaccination, for example, a hospital that misses only one case out of 100 drops
from 10 points to zero because the top hospitals have a near-perfect compliance
rate while average hospitals hit the 99% mark. “That means hospitals have a
huge incentive to bring the 99% compliance rate to 100% compliance and there
has been a lot of debate about whether that is a rational use of resources.
Aren’t there bigger fish to fry?” he said. Specialty hospitals should keep this
in mind because, for example, orthopedic hospitals’ excellent performance on
surgery-related measures could “be offset by missing performance indicators in
a handful of heart failure cases.”
Quality measures are only one aspect of
the VBP payment. Hospitals are also scored on patient satisfaction, as measured
by the Hospital Consumer Assessment of Healthcare Providers and Systems
(HCAHPS) survey, and Medicare spending per beneficiary, which is new and
controversial.
HCAHPS Survey Has Eight Questions
There are eight questions on the HCAHPS
survey. Patients are asked about their communication with physicians and
nurses, pain management, discharge information and communication about
medication, among other things. CMS again rates their self-improvement and
achievement, Hettich said. But here’s a quirk: Unless patients give hospitals
an “excellent,” they fail. A “good” might as well be an “awful,” he said.
The third category of VBP — Medicare
spending per beneficiary — was implemented this year, Hettich said. It calls
for CMS to score hospitals on Part A and B spending per beneficiary from three
days before admission to 30 days after discharge. The scores will be risk
adjusted for age and severity of illness, capture readmissions and exclude
high-cost outliers, he said. If a hospital’s per-beneficiary spending was more
than the average hospital, there will be no points assigned. Hospitals have to
be in the lowest 5% to get 10 points. CMS plans to get a lot fancier with this
measure; the 2015 IPPS proposed rule envisions drilling down to Medicare
spending per beneficiary for three medical and three surgical episodes, Hettich
said.
When all is said and done, CMS assigns
a weight to each measure in the three categories and calculates every
hospital’s total VBP percentage at the end of the year. If its performance was
less than impressive, the hospital may not recover any of the withhold. Or it
will break even, or get the withhold back and then some, Hettich said. The
maximum hospitals received in 2013 was 0.5% on top of the 1% withhold, and if
that holds, the maximum bonus for 2017, when the withhold is 2%, will be a 1% payment
increase.
Another program in the
pay-for-performance playbook is the hospital readmission reduction program. CMS
compares hospitals’ risk-adjusted 30-day readmission rates to the national
average for myocardial infarction, heart failure, pneumonia and, as of Oct. 1,
chronic obstructive pulmonary disease, coronary artery bypass graft,
percutaneous transluminal coronary angioplasty and other vascular conditions.
Hospital payments already have been cut 1% if readmissions exceed “expected”
rates, and it will rise to 3% this year, Hettich said. The categories of
patients for readmission reduction and value-based purchasing overlap, “so
improving services for these patients will yield benefits” for both, he said.
Finally, there is the hospital-acquired
condition (HAC) program, which takes a bite out of reimbursement for the worst
offenders. CMS finalized two domains in the 2015 IPPS rule, and bases 35% of
the HAC score on the first and 65% of the HAC score on the second. The first
domain is PSI-90, an amalgam of Agency for Healthcare Research and Quality
measures (e.g., pressure ulcers, postoperative sepsis). They are calculated
using ICD-9 codes and present on admission codes, which convey whether patients
had the condition when they presented at the hospital or acquired it there. The
second domain includes catheter-associated UTIs, surgical site infections and
central-line associated bloodstream infections and are CDC measures that must
be abstracted from medical records.
Hospitals will receive zero to 10 points
for each measure, representing best to worst. CMS will then award points based
on the adverse incident rate and compare the hospitals to each other to
identify the 25% of hospitals with the most HACs. Compliance officers can’t
look at every claim to check whether there’s a HAC, but they can ensure there
are policies and procedures for reporting HACs and spot check claims to detect
when they may not have been reported. “Make sure policies are clear that you
can’t ignore it and say ‘no one will be the wiser,’” Hettich said.
With so much reimbursement on the line,
hospitals may be inclined to use financial incentives to promote compliance
with the VBP and readmission and HAC reduction goals. “The knee-jerk instinct
would be to say ‘a lot of measures depend on physicians to limit infections, so
let’s share some of our incentive payments with them. If we get $1 million, we
will share half with them,’” Hettich said. That may not fly with regulators
because, generally, no safe harbors to the anti-kickback law or exceptions to
the Stark law shield financial incentives that promote quality and efficiency,
he said. There are also civil monetary penalty laws against gainsharing and a
patient inducement CMPL that bars offering money or gifts to Medicare
beneficiaries to influence their selection of a provider. For example, in an
advisory opinion (02-14), OIG said a program to furnish bandages, helmets or
beepers to hemophilia patients may implicate the patient inducement CMPL. OIG
reiterated this in a 2006 advisory opinion, which said arrangements where
providers offer noncovered goods or services to beneficiaries could violate
fraud and abuse laws.
Incentives Are a ‘Dangerous Area’
“It’s a dangerous area that has to be
carefully considered in terms of what types of incentives hospitals might want
to give physicians and patients and they should be thinking about these
issues,” he said.
There is some leeway in the fraud and
abuse laws in this context. For example, OIG has given the green light to 16
gainsharing programs, which are designed to distribute a percentage of cost
savings to physicians based on efficiency and/or quality improvement. In an
Oct. 3 proposed regulation, OIG sought feedback on easing the gainsharing CMPL (RMC
10/13/14, p. 5).
There are also fraud and abuse waivers
for accountable care organizations. For example, the shared savings
distribution waiver protects shared-savings payments and distributions among
ACO participants and providers from the Stark and anti-kickback statutes and
gainsharing CMPL. Also, incentives offered by ACOs to beneficiaries to
encourage preventive care and compliance with treatment regimens will be
protected from the CMPL that prohibits inducements to beneficiaries to sway
them to pick a particular provider or supplier.
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