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October 18, 2006

Preparing for Pay For Performance - Federal Fiscal Year 2008 and Beyond

The forces of payment and quality performance are starting to converge, and the planned approaches to Medicare Value Based Purchasing (Pay for Performance) are being openly discussed at national meetings. In order to start preparing for these impending changes, IHA is working to provide our member hospitals with the services and support needed for implementing these changes and assessing impact on your hospital.

The Value Based Purchasing programs of Medicare will utilize a few different approaches in assessing performance of providers on targeted areas for improvement and hospital acquired infections. Some of the approaches discussed include:

• Infection and Complications Identification - Present on Admission Code on All Inpatient Diagnostic Codes
• Implementation of a Severity Adjusted DRG System
• Increasing Number of Performance Measurements, Including the Patient Experience Survey – HCAHPS
• Utilizing the Aggregate Composite Measurement (ACM) or ‘Bundle’ Measurement

Addition of Present on Admission Code
Starting October 1, 2007, the current plans by Medicare are to incorporate the Present on Admission Code on all inpatient diagnostic codes on the patient claims. The Present on Admission Code will allow providers to identify those conditions that occurred during the hospital stay or prior to the stay.

The Present on Admission Code is to be used by Medicare to identify cases in which an infection occurred during the hospital stay and as a result, under the Deficit Reduction Act, a hospital will receive a reduction in DRG payment for that patient case.

The Present on Admission ICD-9-CM Coding Guidelines were released recently and are available on the CDC’s National Center for Health Statistics web site (click here).

Implementation
Implementation of these guidelines will require hospitals to not only change their medical record information systems, but also requires that clinicians are provided with educational information on these changes so they may properly record occurrences. Hospitals need to provide ongoing training and support so that one can understand the importance of documenting those occurrences prior to or during admission, and for some select cases, those in which a determination cannot be clinically determined (i.e. Some infections).

State Reporting Requirements
The State of Illinois is moving ahead to collect the Present on Admission codes on the hospital discharge data starting in 2007. While the rules governing this collection are just starting to move through the State of Illinois rule-making process, the State Board of Health did approve the expanded reporting of data to include these codes. The proposed rules presented to the State Board of Health had a target date of October 1, 2007 with a phase in starting April 1, 2007.

IHA is working collaboratively with the Illinois Department of Public Health (IDPH) and will soon be releasing the new reporting formats that will be used in transmitting data to IHA and then on to IDPH. IHA will allow hospitals to begin submitting data starting January 1, 2007 using the new formats which include the Present on Admission code.

Federal Requirements and Challenges
The federal government has a major technical challenge in collecting the Present on Admission code on the current HIPAA 837 format (known as the 4010 A1 version) as there is no physical location for this code in the 4010 A1 format. As there is a national standard for staging in of HIPAA formats, the HIPAA 5010 version which includes the Present on Admission codes is not scheduled to be implemented by providers until 2012 (under the HIT reconciliation bill under consideration it has a change calling for the implementation date of Version 5010 to be 2009).

Currently the Medicare administrators are meeting on this issue to determine how best to incorporate the Present on Admission codes into the current HIPAA 837 format. There is no easy solution as all of the approaches discussed have some implementation challenges for both providers and health plans.

Severity Adjusted DRG System
As noted in earlier memos, Medicare is in the process of reviewing all severity adjustment DRG systems and has not yet made a decision on a single solution. As you may recall, Medicare did propose the 3M All Payer system in the proposed regulations, but was met with many opposing comments as there had been no open process for consideration of other severity systems. Also, IHA and other associations expressed concern that there was no mention or discussion of 'public version’ software which has been present since 1982 and has kept the cost of DRG software affordable for all parties.

It is expected that during 1^st quarter 2007, Medicare will make a decision on the severity adjusted software system at which time IHA will also purchase it and begin modeling the information to better understand possible shifts in payment. Also, IHA will incorporate the severity adjusted software into COMPdata and assign severity adjusted DRGs to the patient level data going back a couple of years so hospitals can have a ballpark determination of expected impact on reimbursement shifts.

Increasing Number of Performance Measurements, Including the Patient Experience Survey – HCAHPS
The number of performance measurements is expected to increase each year and to shortly include the patient experience survey known as the HCAHPS. If your hospital is reimbursed under the federal PPS system, you are required to participate in all of the measurements that are applicable to the services provided by your hospital.

PPS Hospital Unknown Nuance With HCAHPS Participation Which Could Result in Market Basket Increase Loss for Federal Fiscal Year 2008
As CMS has stated in the proposed ambulatory payment regulations that participation in HCAHPS will be required to receive the full federal fiscal year 2008 inpatient payment, the last opportunity to conduct a pilot test on HCAHPS is March 2007. PPS Hospitals that fail to participate in the HCAHPS pilot will not be allowed to submit their data in time to qualify for the federal fiscal year update.

In Illinois, there were about 30 PPS hospitals that have yet to participate in the HCAHPS pilot. On November 1, the final regulations on ambulatory payment are to be released and IHA will know if this provision on HCAHPS is retained in the final regulations. If the proposal is retained and hospital federal fiscal year 2008 inpatient market basket increase payments will be based upon participation in HCAHPS, IHA will notify each of the 30 PPS hospitals that they have not cleared the pilot testing yet. March 2007 is the only HCAHPS pilot time frame remaining to qualify for full market inpatient increases that will go into effect in October 2008 should the proposed ambulatory rules be retained in the final rules.

Aggregate Composite Measurement or ‘Bundle’
In a conference call today with state hospital associations, AHA confirmed that it is unlikely that CMS will be able to apply a "Pay for Performance" approach to each of the 21 current performance measurements of the Hospital Quality Alliance (and soon to be 50 plus with HCAHPS and other SCIP measurements). Therefore, it appears that CMS will utilize the aggregate composite measurements or ‘bundle’ for pay for performance purposes.

The aggregate composite measurement or ‘bundle’ is a measurement of the percent of all cases within a specific clinical measurement area (i.e. Heart failure, pneumonia, etc.) in which the "Right care was provided to every patient every time" (this is Medicare’s quality theme).

For nearly two years, IHA has been providing this ‘bundle’ measurement on the dashboards to all CEOs and Quality Directors that are submitting data to the IHA Comparative Performance Initiative. Hospitals are strongly encouraged to review their performance on this composite ‘bundle’ measurement and identify opportunities for improvement.

For example, if a hospital is experiencing a low ‘bundle’ score on pneumonia – is the compliance with the pneumococcal measurement bringing the pneumonia ‘bundle’ score down? If that is the case, has the hospital considered implementing a standing order? If a hospital looks at the measurements that are dragging down the ‘bundle’ score for each of the clinical areas, one will probably be able to identify strategies for improvement. Successful intervention strategies by Illinois hospitals are all shared on the IHA Quality section of the IHA web site – under the "Targeted Quality Improvement Series" section.

IHA Support and Services
IHA will be providing a variety of services to assist hospitals in responding to this changing environment. About 170 attendees recently attended a seminar on Upcoming Reporting Requirements and Hand Hygiene Workshop. Due to the interest in these topics, another day long seminar on these two topics is being held on October 31.

IHA support services available to IHA members to address these upcoming changes include:

IHA values your guidance and advice in identifying new opportunities to support our member hospitals and the patients they serve.

Staff Contact: Pat Merryweather: (630) 276-5590 or Tim Philipp: (630) 276-5682.