The New Value-Based Purchasing Efficiency Measure: Are You Ready?
By Toni Cesta, PhD, RN, FAAN
As one of the elements of health care reform, the Centers for Medicare & Medicaid Services (CMS) has implemented a course of action aimed at bringing Medicare to a break-even budget. The elements that we are now familiar with include the "clinical processes of care," "outcomes" (which include readmissions, deaths and complications), "the patient experience of care," and the "efficiency measure." This month, we will focus on the efficiency measure as it so closely complements the work of case managers in the hospital setting. Of course, case managers must also participate in the other value-based purchasing initiatives. We have a role to play in coordinating the clinical processes of care, or core measures, and readmissions. We also participate in improving the patient experience of care and have a lighter role in reducing deaths and complications.
However, the efficiency measure brings much of the work of case management to the surface yet again. This measure focuses on length of stay and spending per beneficiary episode, two elements that case management plays a critical role in controlling and managing.
Definition of the Efficiency Measure
Medicare’s purpose in applying this measure is to encourage hospitals to be more cost-efficient by providing financial incentives to hospitals based on their performance. CMS also hopes to increase the transparency of care for consumers and recognize hospitals that are involved in providing high-quality care at lower cost.
This claims-based measure assesses the beneficiary’s Part A and Part B spending during an "episode." For the purposes of this measure, an episode spans from the three days prior to a hospital admission through 30 days after patient discharge. It includes transfers, readmissions and additional admissions during this 30-day period. The measure is adjusted for age and severity of illness. It is also price-standardized. Price standardization removes any variation that may be due to differences in wages based on geographic location, as well as other factors such as indirect medical education payments (IME) or disproportionate share hospital (DSH) payments. Risk adjustment accounts for variation due to the patient’s health status.
According to CMS, "Medicare Part A (Hospital Insurance) helps cover inpatient care in hospitals, including critical access hospitals, and skilled nursing facilities (not custodial or long-term care). It also helps cover hospice care and some home health care. Certain conditions must be met to get these benefits." (http://www.cms.gov/Medicare/Medicare-General-Information/MedicareGenInfo/Part-A.html.)
As for Part B, according to CMS, "Medicare Part B (Medical Insurance) helps cover doctors’ services and outpatient care. It also covers some other medical services that Part A doesn’t cover, such as some of the services of physical and occupational therapists, and some home health care. Part B helps pay for these covered services and supplies when they are medically necessary." (http://www.cms.gov/Medicare/Medicare-General-Information/MedicareGenInfo/Part-B.html.)
Achievement Versus Improvement Scores
The achievement threshold for hospitals is set by CMS as the median Medicare spending per beneficiary across all hospitals during the performance period. It is your hospital’s performance compared to all other hospitals. Hospitals with a score above the achievement threshold will receive zero points. Those with a score at or below the achievement benchmark will receive ten points. All other hospitals will receive 1 to 9 points.
The improvement score is your own hospital’s performance as compared to its own performance during the baseline period. Hospitals with a score equal to or higher than baseline would score 0 improvement points. Hospitals with scores at or below the improvement benchmark would receive 10 points. All others would receive 1 to 9 points.
Case Managers Should Know their Own Efficiency Score
The efficiency score measure shows whether Medicare spends more, less, or about the same per Medicare patient treated in your hospital as compared to other hospitals across the United States. Factored in are Part A and B expenses for the three days prior to the admission through thirty days post-discharge, resulting in a ratio. The ratio is calculated by dividing the amount Medicare spends per patient for an episode of care initiated at your hospital by the amount spent per patient nationally. A ratio equal to the national average means that Medicare spends about the same per patient for an episode of care at your hospital as it does at the average hospital nationally. Higher ratios mean more spent than the average, and lower ratios mean less spent. So for this measure, less is more!
You can use this understanding of the measure to look your own hospital’s score up on the website www.hospitalcompare.hhs.gov.
Care Provided Across the Continuum Affects the Score at Your Hospital
As you review your hospital’s score, you must keep in mind how you, as a case manager, can impact this score. First of all, any provider along the continuum of care will have an impact on the score. Care provided to the patient within seventy-two hours of admission resulting in a Part A or Part B bill will be calculated in. So for patients receiving care by a primary care doctor, or diagnostic testing in the outpatient setting, these costs will be included. Conversely, for patients receiving post-acute care such as home care, or care in a skilled nursing facility or rehab setting, these costs will also be included.
Case managers in the emergency department can have an impact on cost containment by alerting the emergency room doctor to any tests that were just done in the outpatient setting. Traditionally, the emergency room physician will repeat these tests. Because of the new efficiency measure, this practice will need to change. These redundant costs will increase the hospital’s score. In addition, it is simply not good practice to re-expose patients to tests they do not need to have repeated.
The same should apply to patients continuing to receive care in skilled nursing facilities or rehab centers. The facility can obtain all prior tests and should be as conservative as possible when considering repeating them. In your role as discharge planner, you should be sure to send as much of this information along with the patient as is appropriate. Today, much of this hand-off information can be sent electronically.
Managing Cost Through Care Coordination
Care coordination is the primary role case managers perform that directly affects length of stay and cost. While utilization management and timely discharge planning also have an impact, care coordination affects the care progression of the patient through the acute care episode. We can define care coordination as "the deliberate organization of patient care activities between two or more participants (including the patient) involved in a patient’s care in order to facilitate the appropriate delivery of patient care services."
Care coordination is an active process. It involves the marshaling of personnel and other resources needed to carry out all the required patient care activities. It is often managed by the exchange of information among participants responsible for different aspects of care. But it is also an active process that case managers must use to ensure that patient care is delivered appropriately and timely. The care must first be coordinated and then must be facilitated. Facilitation involves the removal of any barriers to timely care progression and requires a daily review of the patient’s care needs and identification of any delays in meeting those needs.
Managing patient flow can be an important tool in the case manager’s toolbox for care coordination. Elements to focus on include:
- delays in inpatient services, including ancillary services such as radiology;
- delays in accessing community resources;
- payer delays;
- timeliness of test results reporting;
- physician care progression delays;
- family decision-making delays.
These elements are referred to as avoidable days, avoidable delays or variances. Case managers, as part of the care coordination process, must identify and correct these types of barriers to patient flow as they occur.
Length of Stay and Cost of Care
While length of stay and cost of care are related, they do have to be addressed as separate issues. If length of stay is reduced, yet all the direct costs of care remain the same, then not much is saved. Therefore, any length of stay reduction program must also address the quantity of resources consumed, for the day and for the entire stay, as part of the improvement plan. Direct costs of care include items such as laboratory, radiology and pharmacy services. Indirect costs are items such as lighting, heat and air conditioning, insurance, and so on. These are typically fixed costs that do not vary but rather are spent whether or not a patient is occupying a bed.
Cost reduction must be aimed at the direct costs associated with the patient’s stay and should be geared around a set of best practice guidelines that outline the average cost to care for a specific type of patient. Many hospitals have moved toward standard order sets and practice guidelines to help drive practice change as it relates to care progression, resource consumption, and outcomes of care.
It is still common for physicians to not have access to their own cost data, and certainly many case managers do not have this type of access. Today’s challenge is to develop a way to bring the cost data (including length of stay) together with the clinical data in a way that is meaningful and useful. As hospitals begin to develop these types of report cards, case managers will be able to work with them to identify "real" strategies for managing cost and length of stay. Electronic medical records are a vital component of this and provide access to data in ways that were not readily available in the past.
If you are developing such a report, be sure to include only cost data that is impacted by the physician. Provide information as to how the cost data was obtained to improve its credibility. Determine just how detailed you want to get. There is a fine line between giving relevant information and overwhelming the reader with details. As mentioned above, report the direct costs associated with what the physician ordered for the patient and that were within his control.
Length of Stay Strategies
Case managers have had responsibility for length of stay management since the specialty moved into the acute care setting in the late 1980s. Today, length of stay is a more difficult outcome to manage, as the margin for improvement is usually so small. In addition, length of stay management must be an interdisciplinary process of improvement that involves all members of the team.
You may want to start off with an analysis of your top diagnoses by volume, and then cross-walk these against the diagnoses that are most predictable and/or manageable. The most commonly seen diagnoses today include heart failure, pneumonia and major joint replacements. Sepsis and renal failure are also commonly seen, and any of these may represent opportunities in your hospital. Start with those that represent the greatest opportunity in terms of length of stay reduction and volume. You may have a few diagnoses with a large number of excess days, but these may be in small volume. Once you have identified the diagnoses you want to focus on, you should select teams to work on them. If possible, have each team chaired by a physician who specializes in the diagnosis you are working on. This will lend clinical credibility to the team, but also ensure that the physicians feel part of the process.
When working with physicians on length of stay reduction programs, I recommend that you start with an analysis of the data surrounding that diagnosis or surgical procedure.
Begin to understand the issues surrounding that diagnosis such as:
- average length of stay;
- cost per day;
- cost per stay;
- top admitting physicians;
- avoidable delay reasons;
- discharge destinations;
- readmission rate and causes of readmission;
- third-party payer denials of payment;
- RAC or other auditor denials;
- typical levels of care such as observation versus inpatient;
- observation to inpatient conversion rate.
By collecting this data, you will have both a baseline and an idea as to where to focus the team’s efforts.
Other elements that affect cost and length of stay should also be examined as you take a deep-dive look at the diagnosis:
- preventable readmissions;
- health care-associated infections;
- adverse drug events;
- unwanted end-of-life services;
- unrelated diagnostic tests;
- delayed test results;
- delayed scheduling.
You may want to create a diagnosis-specific report card that includes a selection of the elements listed above. If possible, include the percentage of impact that each issue has on the overall length of stay for that diagnosis or surgical procedure. A Pareto chart is a good tool for looking at the data as well. You can use this type of chart to help the team focus on the issues representing the greatest opportunity for improvement. Physicians will respond positively to data that is clearly understood and objective.
As case managers, we must focus on length of stay management and strategies for continuous reduction. However, if we reduce length of stay and the cost of care remains the same, then the overall impact on the bottom line of the organization will be greatly reduced.
The goal in managing cost in order to impact the efficiency measure would be to reduce the use of unnecessary tests, treatments and procedures while also reducing delays in providing these services. This is an important core role of the hospital-based case manager and one that is often overlooked due to inadequate staffing ratios, lack of focus on this issue, or a case management model that does not include this as a core function in the role of the case manager in that hospital.
In best practice models today, the case manager must have clinical competence and experience in order to work with the physician who is managing the patient’s care. The case manager can be responsible for
- setting milestones of care with the physician, liaison with the family;
- facilitating care plans with physicians, nursing and ancillary departments;
- identifying the expected length of stay;
- focusing the team on evidence-based practice;
- monitoring clinical and financial outcomes throughout the stay and at the point of discharge;
- consistently tracking and managing avoidable delays;
- facilitating timely transitions.