Focus on value-based purchasing to help your hospital succeed

Discharges, transitions play a big role

As the Centers for Medicare & Medicaid Services’ (CMS) Value-Based Purchasing program moves toward basing reimbursement on quality, case managers can take the lead in making sure their hospitals score well and don’t lose reimbursement.

“Case managers can influence many of the targets in value-based purchasing, and they have the advantage of being the consistent component of the care team while other team members may see patients intermittently. Case managers play a big role in discharge planning and transitions of care, which ties into a lot of areas in value-based purchasing, particularly Medicare spending per beneficiary,” says Danielle Lloyd, MPH, vice president, policy development and analysis for the Premier healthcare alliance.

Beginning with discharges on Oct. 1, 2012, CMS is penalizing and rewarding hospitals based on a complicated formula that determines how well they perform in two domains: 12 measures of clinical processes of care and eight patient experience measures from the Hospital Consumer Assessment of Health Care Providers and Systems (HCAHPS). For fiscal 2013, hospitals automatically lose 1% of their Medicare base operating payment for each discharge. Hospitals that performed well on the value-based purchasing metrics compared to other hospitals and/or improve their performance on the measures receive value-based incentive payments.

The worst performers are losing almost the full 1% of their base operating payment while the top hospitals are earning the 1% reduction back and getting a bonus of a little less than 1%, Lloyd says.

“This is a budget-neutral system with a cap on how much an organization can lose but not a cap on how big bonuses will be. What hospitals can earn is dependent on the performance of other hospitals, as well as their own performance,” she says.

Hospitals with a lot of Medicare patients have a growing and significant amount of reimbursement at stake, based on the quality of their outcomes, Lloyd points out. Premier is monitoring the value-based purchasing program to ensure that no particular type of hospital is disproportionately impacted, Lloyd says. “Right now, based on our modeling, urban teaching hospitals that serve a disproportionately high number of low-income patients tend to have poorer performances,” she says.

All case managers need to be aware of the metrics included in value-based purchasing, says Beverly Cunningham, RN, MS, vice president of resource management at Medical City Dallas Hospital. Cunningham’s hospital received a bonus in the value-based purchasing program. (For a look at hospitals that did well under the program, see below.)

“While we want all our metrics to be great, we should really key in on those in value-based purchasing because they affect the reimbursement the hospital gets,” she says.

To succeed, hospitals should have strong initiatives in three key areas: core measures, HCAHPS, and readmissions, Cunningham says. “If hospitals don’t have those three area of focus hard-wired into the culture, they’re behind the eight ball,” she says.

Hospitals need to know their individual results in each category and be able to identify trends so they can make improvements, Cunningham says. In her state, the Texas Hospital Association sends out a detailed quarterly report that includes a trend estimate for value-based purchasing, she says. The association contracts with a company that aggregates data for each hospital, she adds.

The report includes the score for the key areas in value-based purchasing and estimates the impact for the future. Cunningham suggests that case management directors check with their chief financial officers to determine if there is similar data available in their states.

Investing in technology

To succeed under value-based purchasing, it is essential for hospitals to standardize their processes of care throughout the patient stay, including patient education, discharge planning, and follow-up, and to analyze data to determine where improvements can be made, says Karoline Hilu, MD, a principal for strategic planning at The Advisory Board Company, a healthcare technology, research, and consulting firm based in Washington, DC.

The first step in the improvement process is investing in technology that you can use to identify opportunities for improvement so your staff can determine where to focus. “Those institutions that invest in technology and determine which patients are at highest risk are in the best position to succeed in value-based purchasing,” she says.

“The number of measures included in value-based purchasing and other programs adds to the amount of manual work the staff has to do. Hospitals need to invest in technology that can guide staff in determining what to do for each patient at the right time,” Hilu says.

For instance, predictive modeling software eliminates the need for manual chart review by automatically identifying that a patient has been admitted and is at high risk for readmission, Hilu says. “Then the technology can guide the care managers in specific interventions during the inpatient stay, as well as a safe and appropriate transition to the next level of care,” she says.

Case managers should be heavily involved in identifying patients who are readmitted and determining the reason for the readmission in order to aggregate the data and look for trends, Cunningham says. In addition, be aware that incidences of readmissions and mortality count against the discharging hospital, regardless of where they occur and take steps to identify patients who are admitted to other hospitals whenever possible, she adds.

Having an electronic case management system for collecting information is critical for hospitals to be able to aggregate data, Cunningham says. “Hospitals can no longer afford for case managers to jot down information on pieces of paper and tally it. Case management directors have got to go to bat for getting an electronic system of some sort where they can input data and run reports,” she says.

HCAHPS scores had a big impact on hospitals’ value-based purchasing scores in 2013, Lloyd says. “The process measures have been around for a while and many of them are close to being topped out. There’s a lot of high performance and not much room for hospitals to improve,” she says.

A lot of organizations are looking at HCAHPS data to determine areas where the scores are lowest and developing process improvement projects, Lloyd says. Some hospitals have developed patient advisory councils to give them suggestions on how to improve the patient experience, she adds.

Improving scores on the HCAHPS is not easy, Lloyd adds. “We also have concerns that we have expressed to CMS that the risk adjustment is not adequate on the patient experience scores. Hospitals that care for more acutely ill patients tend to have lower patient experience scores,” she says.

Unlike readmissions data, core measures, and other metrics, patient satisfaction data show only aggregate scores. “A hospital’s final score doesn’t identify who the patients are who gave bad ratings, and since the survey is completed after discharge, there’s no way to drill down three months later and deduce what happened in a specific incidence,” adds Hiten Patel, managing director, research and insight, at The Advisory Board Company.

Instead, he suggests that hospitals focus on areas where they don’t score well, examine the processes that are in place, and take steps to make changes.

“Some institutions are beginning to collect information included in the HCAHPS survey in real time, during the patient stay. In the future, hospitals are going to have to develop ways to predict outcomes scores while the patient is still in the bed and determine how to improve, in order to move the dial,” he says.


• Beverly Cunningham, RN, MS, Vice President of Resource Management at Medical City Dallas Hospital. email:

• Karoline Hilu, MD, a Principal for Strategic Planning, The Advisory Board Company, Washington, DC. email:

• Danielle Lloyd, MPH, Vice President for Policy Development and Analysis for the Premier healthcare alliance, Charlotte, NC. email:

Stay ahead of the curve to succeed under VBP

New measures to be added in the future

When it comes to doing well on the Centers for Medicare & Medicaid Services’ (CMS) Value-Based Purchasing Program, hospitals need to “take care of today but also take care of tomorrow,” says Beverly Cunningham, RN, MS, vice president of resource management at Medical City Dallas Hospital.

Don’t be lulled into a false sense of security if your readmissions or other data look great today, because it’s just a sample, Cunningham warns. “Every time CMS collects more data, they use a different group of patients,” she points out.

“This program is just getting started, and with each passing year, new domains and new measures will be added. Hospitals may do well in one year and not as well in the next because of different measures and different performance by other hospitals,” adds Danielle Lloyd, MPH, vice president, policy development and analysis for the Premier healthcare alliance.

Keep in mind that the measurement period for value-based purchasing is well in advance of the payment period. “Hospitals can’t wait until the payment years to take steps to improve their quality. They need to watch what is coming into the inpatient quality reporting program and assume that those measures are on deck for value-based purchasing,” Lloyd says.

Only processes of care and patient experience domains are included in value-based purchasing for fiscal 2013, but the program will evolve over the next few years as new elements are added and some measures are removed, says Hiten Patel, managing director, research and insight, at The Advisory Board Company, a healthcare technology, research and consulting firm based in Washington, DC.

The percentage of hospitals’ base operating payment affected by value-based purchasing will grow in the future, by one-fourth of 1% per year until it caps out at 2%. Value-based purchasing measures for fiscal 2013 include 12 clinical processes of care, which are basic core measures, and eight patient experience measures from the Hospital Consumer Assessment of Health Care Providers and Systems (HCAHPS). In fiscal 2013, 70% of a hospital’s score is based on the clinical processes of care and the remaining 30% on performance on the HCAHPS, Patel says.

In fiscal 2014, beginning Oct. 1, 2013, CMS is adding three outcomes measures — 30-day all-cause mortality for heart failure, pneumonia, and acute myocardial infarction — and retaining the original two domains: clinical processes and patient experience. In fiscal 2015, central line-associated bloodstream infections and the AHRQ patient safety indicators will be added to the outcomes domain. Also in 2015, an efficiency domain, including Medicare spending per beneficiary, will be added, making four domains — clinical processes of care, patients experience of care, outcomes (which includes mortality and patient safety), and efficiency.

Medicare spending per beneficiary is a compilation of Medicare Parts A and B payments from three days prior to an admission through 30 days after discharge. “CMS is trying to get hospitals to think about how they can influence overall spending once patients are outside their four walls. This is where case managers can have a big influence on their hospitals’ scores by determining the best post-discharge plan for each patient and making sure the transition goes smoothly,” Lloyd says.

Know what is coming down the pike and get ready for it, Cunningham suggests. “We know that there has been discussion about a length-of-stay metric, and CMS has indicated that it will include more DRGs in the data for readmissions and mortality. Case managers should be familiar with the Inpatient Prospective Payment System proposed rules that come out in the spring and be aware that they can comment on what CMS proposes,” she says. Then watch for the final rule in August that will take effect October 1, she adds.

Hospital earns biggest bonus under VBP

Staff focus on quality, the patient experience

At Treasure Valley Hospital in Boise, ID, recipient of the biggest bonus under the Value-Based Purchasing Program, the entire team focuses on clinical quality and the patient experience, says Nicholas Genna, chief executive officer of the 10-bed physician-owned surgical hospital.

“Clearly, clinical quality comes first. We go over and over that with every teammate. But we also work hard on the overall patient experience,” he adds.

The hospital pays close attention to how its scores on Hospital Compare measure up to scores of local competitors, state, and national statistics and looks for opportunities to make improvements, adds Charon Castanon, MS, RN, director of quality. “We are attuned to producing the best possible clinical outcomes and patient experience,” she says.

The hospital has a 3-to-1 patient-to-nurse ratio. The admissions staff and the operating room staff attend patient rounds, and the hospital leaders take turns rounding. “We all want to see firsthand how the patients are doing and what their experiences are,” Genna says.

After discharge, every patient receives a thank-you note that is signed by everyone who provided care during the hospital stay.

At Treasure Valley Hospital, the inpatient nurse manager also acts as a case manager and is responsible for utilization review. Discharge planning is handled by all the nurses, with the nurse manager having ultimate responsibility. “All of our nurses are trained in care coordination,” Genna says.

The nurse assesses patients before the surgery, either when the patient comes in for preadmission testing or on the telephone to make sure they meet admissions criteria, determine what their needs will be after discharge and to make sure they have resources in place at home for a safe discharge. They educate the patients about the surgical process, their hospital stay, and pain management alternatives.

Post-acute care

The nurse manager reviews the patient’s chart on Day 1 and works with the nurses on the floor to anticipate their needs. For instance, if the patient has had spinal surgery, she makes sure that physical therapy is ordered. If the patient will go home with new medications, she calls in the pharmacist to review all the medications.

When patients are discharged, the nurse works with the post-acute services to ensure that they have all the information they need and makes follow-up calls to make sure patients are not having problems. “We follow patients through the continuum of care to make sure they have a successful discharge and are not readmitted,” she says.

Recognizing that pain management may be an issue for surgical patients, the nurses make sure the patient’s pain is under control before he or she leaves the hospital.

The staff use checklists as a reminder of the Surgical Care Improvement Program (SCIP) measures and other measures that should be in place. In addition, the electronic medical record includes prompts as reminders of the guidelines. “We have worked to ensure that there are checks and balances so nothing is missed. Our preoperative list includes all patient safety measures as well as the SCIP measures,” Castanon says.

After bonus, hospital continues to focus on VBP

Staff looks ahead to potential new metrics

Medical City Dallas Hospital earned a bonus from the Centers for Medicare & Medicaid Services’ (CMS) Value-Based Purchasing Program, but the 530-bed medical and surgical hospital isn’t resting on its laurels.

“We’re not sitting back and thinking we’ve got it made. This is an ongoing process that will not stop. We are staying informed about the new metrics that CMS is adding to value-based purchasing and concentrating on all of the components of the program,” says Beverly Cunningham, RN, MS, vice president of resource management.

The hospital has delegated responsibility for leading initiatives on the various components of value-based purchasing to hospital leaders. The chief nursing officer is the champion of Hospital Consumer Assessment of Health Care Providers and Systems (HCAHPS) measures. The vice president of quality is champion for core measures. Cunningham and the chief nursing officers are champions of readmissions, with the director of case management and a nurse manager taking a leading role.

Every department in the hospital that is involved in patient care gets a weekly report on core measures and the HCAHPS scores. In addition, the hospital posts dashboards on each unit with that unit’s scores. “Everybody on the unit knows the trends and how they compare to other units,” she says.

The leadership team drills down on every core measure outlier score and sends an abstract to the quality improvement coordinator responsible for that core measure and the nurse manager on the unit where the outlier occurred. The nurse manager interviews the nurse responsible for that core measure outlier to understand what happened, what can be improved, and how to spread the word to other staff. “The leadership wants to understand what happened so as leaders, we can remove any roadblocks the nurses have,” she says.

The chief nursing officer holds an outlier meeting twice a month attended by the nurse manager from any unit that had an outlier, the nurse responsible, and representatives from quality and nursing. “It’s not a punitive meeting. We discuss what happened, how to improve, and how to share the information with the rest of the staff. Everybody goes back to their nursing unit and tells three people, who tell three people, and so on, to spread the word,” Cunningham says.

Drilling down on readmissions

Each unit picks two HCAHPS measures and focuses on making improvement for two months, then re-evaluates. “Patients fill out the HCAHPS survey after discharge and we don’t know what patient gave us what score. It’s very different from core measures when we know the exact outlier and who is responsible. We get data every week and we can’t look at every data piece,” she says.

The hospital’s readmission team is aggregating data about readmissions and drilling down on each readmission to find out the cause. The electronic case management system automatically flags patients when they come back to the hospital within 30 days after discharge. The case manager alerts the unit nurses that a patient has been readmitted. “The admitting nurses wouldn’t know that the patient was being readmitted, but the electronic system allows immediate identification. This is one of the compelling reasons for having an electronic case management system,” Cunningham says.