Case managers likely to play big role in pay-for-performance initiatives

Hospital pay-for-performance measures being tested by CMS

Sometime in the next few years, your hospital could receive some of its Medicare reimbursement based on how well it performs, if the Centers for Medicare & Medicaid Services (CMS) follows its typical course of action.

Hospitals are advised to start preparing now for future pay-for-performance initiatives from CMS, initiatives in which case managers should play a major role, says Teresa Fugate, RN, BBA, CPHQ, CCM, manager with Pershing, Yoakley & Associates, a Knoxville, TN-based health care consulting firm.

"There is likely to be an incentive to care for your patients more efficiently and more effectively. If the demonstration project proves to be successful, CMS will roll it out for all hospitals," she says.

The CMS Hospital Quality Incentive Demonstration Project, launched October 2003, is the first national test by Medicare to analyze the impact of economic incentives on quality care.

CMS contracted with 278 hospitals that subscribe to Premier Inc.’s clinical benchmarking system, Perspective. Premier Inc. in San Diego is a health care alliance that helps hospitals improve clinical and financial performance with comparative data, supply chain management, and insurance services. The project involves 34 indicators in heart attack, coronary artery bypass graft, heart failure, community-acquired pneumonia, and hip and knee replacement.

The quality measures include all 10 indicators from the National Voluntary Hospital Reporting Initiative and indicators from National Quality Forum, CMS 7th Scope of Work Indicators, Joint Commission on Accreditation of Healthcare Organizations Core Measures Indicators, Leapfrog Group indicators, and Agency for Healthcare Research and Quality patient safety indicators.

The five clinical areas chosen for the demonstration project are the top diagnosis-related groups (DRGs) for which Medicare is billed.

The CMS project does not look at cost. It examines key processes, such as prompt administration of beta-blockers and antibiotics as well as a few key outcomes, such as mortality rate and hospital readmissions.

Hospitals participating in the demonstration project will be eligible for increased Medicare payments in each of the five clinical areas if they are among the top performers in a given area. The top 10% in each clinical area will receive a 2% increase in Medicare payments. The next 10% receive a 1% increase.

The bonuses are expected to total about $21 million during the three-year pilot project.

In the third year of the project, hospitals that fail to improve their performance in a specific clinical area beyond a minimum threshold established in the first year of the project will be subject to a payment reduction of 1% or 2%.

The pay-for-performance arrangement is a win-win situation for Medicare, Fugate points out. If hospitals improve the quality of care for their patients, they’re naturally going to decrease their costs, she adds.

The 278 hospitals in the pay-for performance project submit data to Premier, where they are aggregated and examined for data integrity.

Premier works with the individual hospitals on ways to improve their performance, says Jan McNeilly, RN,CPHQ, CHE, principal for clinical advisor services at Premier. "The hospitals in the project are motivated to look at performance improvement in a different way. They can’t spend 12 to 18 months on a performance improvement project. They have to think about rapid cycle improvement," she says.

Even before the demonstration project, Premier was tracking clinical performance from its member hospitals and others who contract for Premier’s services, McNeilly adds.

The organization has a comparative database with inpatient data from more than 500 hospitals, some of which contract with Premier for their consulting services. The data include the entire billing and medical record file for inpatient discharges. The majority of the hospitals also submit data from outpatient services.

"The data we collect are comprehensive. For every discharged patient, we know their diagnosis, any secondary diagnoses, everything billed to them, what time they spent in the ICU [intensive care unit], what kinds of antibiotics they were prescribed," McNeilly explains.

The Premier staff use the data to determine which hospitals are the best performers and to share knowledge about what the best performers are doing to help other hospitals.

Premier always has calculated the top quartile set of hospitals based on the clinical processes, outcomes, and costs. There is a separate one for each key condition. When the demonstration project started, the hospitals in Premier’s database already were exceeding national norms on key measures.

"The demonstration project gives us another best-in-class kind of comparison," McNeilly says.

Premier uses the 3M APR-DRG system to adjust the data.

"The staff and management at every hospital I visit tell me, Our patients are sicker,’ but when we examine the data for pneumonia, for instance, the data rarely validate their perception," she adds.

When Premier works with its hospitals to improve their clinical quality, the staff always work with the case management staff, McNeilly says. "The CMS pay-for-performance project has added another layer to the case managers’ responsibilities. In addition to making sure the hospital is using its resources wisely and that unnecessary delays are not occurring, the case managers are now working to ensure that the right things are being done," she notes.

Case managers in the participating hospital are taking a stronger role on the care planning team to make sure the patients receive the recommended care in a timely manner, McNeilly says.

"The case management staff is growing. I’m going into hospitals where they have 20 to 30 case managers with roles that have expanded far beyond the traditional utilization review role," she adds. For instance, some hospitals have set up call centers where staff have the responsibility to work with the insurance companies, freeing up the case managers to spend more time with the patients.

"Case managers are clearly a member of the team that is coordinating care, rather than someone policing the length of stay," McNeilly says. In other hospitals, there are case managers who are dedicated to a particular population, such as congestive heart failure, and coordinate both inpatient and outpatient follow-up, she adds.

Contracts with hospitals that subscribe to the comparative database include performance improvement and infrastructure assessment.

"We look at how embedded is quality improvement in this organization? Do they actually focus on quality or just on meeting the JCAHO standards for performance improvement?" McNeilly says.

She examines how engaged the senior executives are in performance improvement.

In some hospitals, the management merely delegates performance improvement and is not directly leading the program. In others, senior management is heavily involved.

For instance, at one of the top performing hospitals, when McNeilly asked about quality indicators, the chief financial officer described what they did to improve patient aspirin compliance for stroke patients.

The demonstration project offers an opportunity for all hospitals to benefit from what participating hospitals learn, Fugate adds.

"There is an inherent need for the hospitals to improve quality. These indicators have been shown to improve the quality of patient care. It’s evidence-based medicine, and they should be doing it anyway," she says.