On the march toward value-based purchasing: How far does OPPS go?

Does final OPPS rule measure quality or utilization?

On Oct. 30, 2008, the Centers for Medicare & Medicaid Services (CMS) issued the final 2009 rule for the Hospital Outpatient Prospective Payment System (OPPS). For the first time, beginning in calendar year 2009, hospitals that did not meet the outpatient quality reporting requirements or that elected not to report quality indicators in calendar year 2008 will see a payment reduction.

Jugna Shah, president of Nimitt Consulting in Washington, DC, says, this is the "first time hospitals will face a payment implication in the outpatient setting as CMS kicks off its hospital outpatient quality program, an indicator of the move toward value-based purchasing [VBP] in the outpatient setting."

11 Quality MeasuresBut how far does the rule go toward VBP? Though CMS sought comments on 18 additional quality measures, only four new measures on imaging services were added to the seven measures adopted in 2008. (See box, left, for the 11 quality measures for 2009.) In general, Shah says the 2009 OPPS final rule reflects most of what CMS proposed, despite commenters' concerns. "For example, providers will see new composite APCs [ambulatory payment classifications] in the area of multiple imaging services and further reductions in drug reimbursement, despite industry concerns."

Four new quality measures

What's interesting, Shah points out, is that the four new quality measures being adopted for 2009 will not require hospitals to do anything extra from an administrative or data collection perspective, unlike the initial seven measures implemented in 2008. "All hospitals have to do is basically operate as they always have and submit their claims to CMS. Hospitals will not have to expend any additional resources to abstract the new indicators from their data to report on the new measures. Medicare will do it on its end by using the claims data."

Just what Medicare will do with these data is still unclear, Shah says. While CMS stands behind the new measures on imaging, contending that they speak directly to patient safety, Shah and many commenters, question whether the new indicators really get at measuring quality or whether they are simply focused on utilization patterns. She points to the measure on mammography follow-up rates. "In the final rule, Medicare says it's not measuring how or when follow up occurs but the degree to which the facility must repeat the mammography imaging. So that sounds like CMS is interested in counting frequency... and that's a volume or utilization issue," she says — a sentiment many commenters echoed.

And while CMS says the imaging measures address unnecessary exposure of patients to contrast and radiation, Shah says, the agency has not set any particular performance scores, and how it will determine payment implications for 2010 reimbursement remains unclear. She notes that many commenters questioned CMS' intent by releasing these new measures. For example, are we going to see CMS tie these new measures to diagnoses? In mining the claims data, what will CMS determine about hospital quality? Answers remain elusive, Shah says.

Composite APCs

Shah says a report by MedPAC a few years ago showed that imaging services "exploded in terms of volume so Medicare may be thinking, providers are 'doing more,' but is the volume increase in imaging services directly related to improved patient outcomes or higher quality of health care?"

In addition to the four imaging measures, CMS adopted four new composite APCs for multiple imaging services provided in the same session for families of services in the area of ultrasounds, CTs, and MRIs. CMS initially proposed payment reductions for these types of services in 2006 but deferred implementation pending further study. In 2009, providers will see CMS' movement forward in reducing separate payments when multiple services are rendered on the same date of service.

"If you provide multiple imaging services today, you will receive multiple APC payments," Shah explains. "In 2009, if you provide two or more services from the same imaging family on the same date of service, you will receive a single new composite APC payment." If a hospital performs two services, she says, their reimbursement might be better than it is today. But, "if three or more services are provided on the same date of service, then providers are likely to lose financially pretty much every time," she adds.

Shah believes the new composite APCs and the new quality measures speak more to CMS wanting to create efficiency incentives for providers to control utilization, rather than directly aiming to measure quality. CMS indicates that its new initiatives are aimed at creating "efficiency incentives" so that only what's necessary is provided and what's unnecessary is cut. One way CMS is doing this is by reducing the number of items or services it will generate separate payment for. "Some of that is all well and good," she says "though some people might argue that CMS is going too far with some of its policies."

Truly measuring quality, in terms of patient outcomes, etc., is tough to quantify and that is not what CMS is doing right now, says Shah. "What I think CMS is doing is measuring whether hospitals report certain measures, but perhaps this will eventually be linked to true patient quality and outcomes data. Perhaps that's the next step."

Voluntary validation program

With the 2008 rule, Shah says hospitals "pretty much met the reporting requirements if they signed up to be in the program and reported their data." Though validation criteria were expected to be part of the 2009 rule, CMS postponed implementing them in the final version. In the meantime, it will go forward with a voluntary validation program. The agency in 2009 will randomly select 800 hospitals from which to review 50 records.

Though participation by selected hospitals is voluntary, Shah says, "if your hospital is selected, you should consider participating since it would be useful for hospitals to learn something about their data abstraction accuracy before there are any formal repercussions."

The next step: VBP

While CMS proposed adding elements of the inpatient rule's value-based purchasing statutes, including present on admission and hospital-acquired conditions, it did not finalize the implementation of such measures for the outpatient setting for 2009, Shah says. But much discussion was generated from commenters. Characterizing the comments, Shah says many questioned how to create equivalent measures for the outpatient setting, especially considering the differences between the two settings' payment systems. We're just not there yet for the outpatient setting and much still needs to be sorted out, she says, and CMS recognized this.

However, "I think it's just a matter of time before we see CMS move forward with measures that are similar to the inpatient present on admission and hospital-acquired conditions as these are additional elements of VBP that CMS is interested in," she says. "I think it's simply a question of when CMS is able to sort out the current data and payment system issues, but at least providers will not see this for 2009 and probably not even 2010. I think it's going to take them some amount of time to actually get some of that stuff sorted out."

But the transition to a value-based purchasing system is moving "full steam ahead," Shah says. "I would say CMS has certainly started the march down that road," with payment policies that encourage providers to think carefully about what and how many services it is providing.

(Editor's note: The final rule in the Federal Register is open for comment through Dec. 29.)