NC Center for Hospital Quality and Patient Safety

1. Medicare Spending per BeneficiaryAugust 7, 2012Joanne Campione, PhD, MSPHDirector, Quality Measurement • NC Center for Hospital Quality and Patient Safety

2. Why Measure Efficiency? • Medicare is transforming from a system that rewards volume of service to one that rewards efficient, effective care and reduces delivery system fragmentation. • CMS aims to recognize hospitals that can provide high quality care at a lower cost to Medicare. • Decades of research has shown excessive and un-defined variation in beneficiary spending.

3. Per Capita Medicare Spending by Hospital Referral Region, 2000 Source: Eliot Fisher, presentation at AcademyHealth Annual Research Meeting, June 2006.

4. Variation in Annual Total Cost and Quality for Chronic Disease PatientsQuality of Care* and Medicare Spending for Beneficiaries with Three Chronic Conditions, by Hospital Referral Region Best Practice Curve Ft. Lauderdale, FL East Long Island, NY A Orange County, CA Greenville, NC Manhattan, NY D Newark, NJ Boston, MA B C Saginaw, MI Melrose Park, IL Median Amount Spent per Patient per HRR = $28,694 Anderson G. The Commonwealth Fund. Medicare Data 2001.

5. Improving Care Coordination and Reducing Cost The Effect of Advanced Practice Nurse Care on Congestive Heart Failure Patients’ Average Per Capita Expenditures • Importance of improving transitions in care, doctor to doctor, and post-hospital • Follow-up care following hospital discharge could reduce rehospitalization • High cost care management could reduce errors and lower costs • Will require restructuring Medicare benefits and incentives Dollars $9,618 $6,152 Source: M.D. Naylor, Making the Bridge from Hospital to Home,The Commonwealth Fund, Fall 2003.

6. Value-Based Purchasing The increasingly informed consumer will make health care decisions on the basis of VALUE VALUE = Outcomes + Satisfaction Cost

7. Why Added to VBP? • The Affordable Care Act (ACA) states the Secretary must ensure that efficiency measures are included in a hospital value-based purchasing program • The statutory language requires the use of Medicare Spending per Beneficiary measures (MSPB). • CMS originally proposed to include the MSPB measure in VBP for FY2014, but delayed implementation. • MSPB will be the singular measure in the efficiency domain. However, it is not yet NQF-endorsed.

8. outcomes process efficiency • FY2014: 45% process clinical quality, 30% patient experience, 25% 30-day mortality outcomes • FY2015: • 50% clinical quality • 30% outcomes (including 30-day mortality) • 20% processes • 30% patient experience (no change) • 20% efficiency (adjusted cost/beneficiaries)

9. VBP Measure Domains & Weights

10. FY2015 Proposed Domains

11. Medicare Spending Per Beneficiary (MSPB) Measure • Part A and Part B payments from 3 days prior to an admission through 30 days post discharge with certain exclusions. • Risk-adjusted for age and severity of illness, and will be standardized to remove differences in geographic payment adjustments and other payment factors. • CMS anticipates submitting the proposed measure to the NQF for endorsement in the near future.

12. Steps for MSPB Construction • Construct MSPB Episode • Calculate Standardized Episode Spending • Calculate Expected Episode Spending • Exclude Outliers • Calculate MSPB Amount for Each Hospital • Calculate MSPB Measure • Report MSPB Measure

13. MSPB Population • Based on episodes of care 3 days prior to admission through 30 days post discharge • Includes claims from all part A (hospital) and B (physician) services. Beneficiaries Included: • Enrolled in Medicare Parts A and B from 90 days prior to the episode through the end of the episode • Admitted to subsection (d) hospitals Beneficiaries Excluded: • Excludes patients who died during episode • Enrolled in Medicare Advantage or Medicare is secondary

14. Case Exclusions Admissions NOT considered to be index admissions: • Admissions which occur within 30 days of discharge from another index admission • Acute-to-acute transfers • Episodes where the index admission claim has $0 payment • Admissions having discharge dates fewer than 30 days prior to the end of the performance period

15. Pricing Standardization

16. Calculating the Expected Spending • Risk-Adjustment Accounts for variation in patient case mix across hospitals, such as age and severity of illness / co-morbid conditions • Linear regression (OLS) estimates the relationship between risk adjustment variables and Standardized Episode Spending • Separate Regression Model for each major diagnostic category (MDC)

18. More Information on QualityNet.org Questions regarding the MSPB measure may be sent to: cmsmspbmeasure@acumenllc.com

19. Determining the Spending Ratio • Each hospital’s score is a ratio • Ratios are calculated based on a hospitals’ average spending across all eligible episodes compared to the national median

20. Hospitals Held Accountable

21. National MSPB Per Episode Type Source: Remington Report July/August 2012

22. National % of Spending by Claim Type Source: Remington Report July/August 2012

23. National Distribution Medicare Spending Per Beneficiary – All HospitalsDischarges May 2010 - February 2011 0.7 0.8 0.9 1 1.1 1.2 1.3 LOWER spend per patient compared to national median HIGHER spend per patient compared to national median • Note: N = 3,374 hospitals. Source: AAMC analysis of Hospital Compare and AAMC member data - April 2012.

24. HospitalCompare • The preview period for hospitals ran from February – March 2012 for data posted in April 2012. • Posted MSPB ratio values are for May 15, 2010 – February 14, 2011.

25. Data Timeframes – FY2014 HCAHPS and Process Measures • 9-month baseline: 4/1/10 – 12/31/10 • 9-month performance: 4/1/12-12/31/12 Mortality Measures • 12-month baseline: 7/1/09 – 6/30/10 • 12-month performance: 7/1/11 – 6/30/12 Thresholds and Benchmarks were published in the final CY 2012 OPPS Final Rule.

27. Proposed Data Timeframes FY2015 HCAHPS and Process Measures • 12-month baseline: 1/1/11 – 12/31/11 • 9-month performance: 1/1/13-12/31/13 Mortality Measures • 9-month baseline: 10/1/10 – 6/30/11 • 12-month performance: 10/1/12 – 6/30/12 AHRQ Patient Safety Indicator Composite • 10/15/10 - 6/30/11 and 10/15/12 – 6/30/12

28. Proposed Data Timeframes FY2015 Outcomes Domain – CLABSI Measure • Baseline Period: January 26, 2011 through December 31, 2011 (about 11-months) • Performance Period: January 26, 2013 through December 31, 2013 (about 11-months) Efficiency Domain – Medicare Spending Per Beneficiary • Baseline Period: May 1, 2011 through December 31, 2011 (8-months) • Performance Period: May 1, 2013 through December 31, 2013 (8-months)

29. MSPB Ratios Across the Nation

30. MSPB Ratios for the CarolinasMay15, 2012 – Feb 14, 2011

31. THANK YOU!!