Focus on overall quality to succeed under value-based purchasing

CMS is adding more measures as time goes on

As reimbursement adjustments under the Centers for Medicare & Medicaid Services' (CMS) Value-based Purchasing (VBP) Program start to kick in this October 1, it's more important than ever for case managers to be pay attention to overall quality improvement and not just concentrate on particular patients or conditions, says Danielle Lloyd, MPH, vice president for policy development and analysis for the Premier healthcare alliance, with headquarters in Charlotte, NC.

"The big picture is that we are going to a world where care is more coordinated, more efficient, and more accountable. Case managers have been focused on efficient use of resources, transitions of care and discharge coordination for a long time, and they are well positioned to take a lead in their hospitals' initiatives," adds Richard Bankowitz, MD, MBA, FACP, enterprise-wide chief medical officer for Premier.

Under VBP, all hospitals will receive a 1% reduction in their base operating DRG payment for all Medicare fee-for-service discharges, not just those selected for the VBP initiative. The reduction goes up by ¼ percentage point for each subsequent year until it reaches 2% in 2017, but hospitals can earn bonuses by performing well. Hospitals that perform well on quality measures chosen by CMS or improve their baseline performance on the measures during a performance period would receive value-based incentive payments.

The Value-based Purchasing Program is designed to be budget-neutral, with a set amount of money that can be shifted around, Lloyd says. This means that when some hospitals fall short, others can get a bonus. CMS estimates that some hospitals can get as much as a 1% bonus, while others are getting close to a 1% reduction in payment for all DRGs in the first year of the program, she adds.

Susan Wallace, MEd, RHIA, CCS, CDIP, CCDS, director of compliance/inpatient consultant for Administrative Consultant Service, LLC, a healthcare consulting firm based in Shawnee, OK, points out that hospitals that perform poorly on the CMS readmission reduction initiative and the VBP measures could lose as much as 2% of all Medicare reimbursement in fiscal 2013. That figure could rise to 5% by fiscal 2017.

"Medicare is intent that hospitals do everything they can to ensure that patients have a smooth transition," Wallace says. "If hospitals do a better job coordinating care while patients are in the hospital and in ensuring successful care transitions, they can also reduce excess readmissions and avoid that payment reduction as well as performing better on value-based purchasing," she adds.

Value-based purchasing measures for fiscal 2013 includes 12 clinical process-of-care measures and eight patient experience measures. CMS is adding three outcomes measures — 30-day all-cause mortality for heart failure, pneumonia, and acute myocardial infarction — to value-based purchasing in fiscal 2014. It has announced its intentions to add additional measures for fiscal 2015, including Medicare spending-per-beneficiary, which aggregates all Medicare Part A and Part B spending on a patient beginning three days before admissions and continuing until 30 days after discharge.

Wallace points out that the number of measures included in value-based purchasing is going to increase in future years. "Anything that is part of the Inpatient Quality Reporting program is subject to being included in value-based purchasing in the future. CMS is transitioning to an active purchaser of healthcare and views these measures as being indicative of higher quality patient care," she says.

This means that hospitals can't just concentrate on improving their performance on measures that CMS has already included in the Value-based Purchasing Program. Value-based purchasing needs to be part of a broad quality improvement project. Hospitals need to look ahead to the future and the measures that CMS has proposed adding over time, she says.

"Since in the proposed rule for the Inpatient Prospective Payment System for fiscal 2013, CMS discusses value-base purchasing measures for 2015, hospitals may think they've got a lot of time to prepare, but the performance periods for 2015 start in October 2012 and January 2013, depending on the measure," she says.

Lloyd adds: "It's important to remember that the measurement period is well in advance of the payment period. Hospitals can't wait until the payment years to take steps to improve their quality." For instance, for measures that will be taken into consideration for hospital reimbursement beginning in October, the baseline period was July 1, 2009, to March 31, 2010, and the performance period was July 1, 2011, to March 31, 2012. (For a look at what two Texas hospitals learned from the CMS/Premier Hospital Quality Incentive Demonstration value-based purchasing project, see related article, below.)

Elizabeth Lamkin, MHA, chief executive officer and partner in PACE Healthcare Consulting, LLC, based in Hilton Head Island, SC, points out that value-based purchasing gives hospitals an opportunity to profit if they perform better than their peers, but they need to have a strong care management department in order to do so. "Hospitals have to get their houses in order right now to survive in the future. It's all about becoming a really safe and reliable hospital," she says.

Value-based purchasing, the Recovery Audit Program, and the readmission reduction program have all elevated the roles of the case management department and physician advisor working as a strong team, she adds. "Case managers really bring everything together. They are in the chart, looking at documentation and have the opportunity to work with physicians and documentation improvement specialists to improve the documentation. Case managers review what is going on in the clinical areas and have the opportunity to improve communication between the care providers and patients and families, and we know that helps patient satisfaction," Lamkin says.

The financial impact of case managers has skyrocketed and that's the case that case management directors need to make to administration, Lamkin says. "Especially now that value-based purchasing is going into effect, case managers need to demonstrate how they affect clinical, patient satisfaction, and efficiency measures as well as controlling length of stay and outliers and avoiding denials by getting medical necessity correct on the front end," she says.

Lamkin recommends that case managers work as a team with the clinical staff, physicians, patient services, finance, and ancillary services and establish interdisciplinary team conferences in which the entire team reviews cases. "Case management is truly the opportunity to ensure that the financial side and the clinical side work together," she says.

Case managers need to broaden their thinking about care coordination and take a patient-centered approach as they act as advocates for their patients, Bankowitz says. The patient-centered approach should be explicitly defined in the job descriptions and responsibilities for case managers, he says.

"Most patients don't want care that is not effective or efficient. They don't want procedures with no value and don't want a specialist consultation when it's not necessary. As they coordinate care on a daily basis and when they create discharge plans, case managers have the opportunity to ensure that the care patients receive is effective and cost-efficient," Bankowitz says.

Work closely with hospitalists and the rest of the treatment plan and look beyond discharge planning to the bigger picture of coordinated care, Bankowitz says.

"It's going to take a team effort among the case managers, social workers, nurses, and hospitalists to determine how best to deliver value," he says.

Hospitals and post-acute care under VBP

Good discharge planning crucial for success

Beginning with discharges on and after Oct. 1, 2014, hospitals will be held accountable for not only the cost of care they provide for Medicare beneficiaries but also for the cost of services provided by rehabilitation hospitals, skilled nursing facilities, home health agencies, and other post-acute providers for 30 days after patients are discharged.

The new Medicare spending-per-beneficiary measure is designed to evaluate how efficiently care is delivered when patients are in the hospital and the effectiveness of the discharge plans they develop. The measure will be added to the Centers for Medicare & Medicaid Services' Value-Based Purchasing Program beginning in fiscal 2015.

Under the Medicare spending-per-beneficiary initiative, every Medicare Part A and Part B claim incurred by the patient beginning three days before discharge through 30 days after discharge is included in the Medicare spending-per-beneficiary ratio. Medicare Part D expenditures are not included.

CMS will get a total of claims data for the entire episode of care and adjust it based on the patient's age and severity of illness. The sum of all payments will be divided by the number of episodes, and that figure will be compared with the median Medicare spending-per-beneficiary amount across all hospitals.

"CMS is taking steps to incentivize hospitals to do a better job in managing the patient's length of stay while they are in the hospital as well as improving transitions in care. Both contribute to how much is spent during the entire episode of care," says Susan Wallace, MEd, RHIA, CCS, CDIP, CCDS, director of compliance/inpatient consultant for Administrative Consultant Service, LLC, a healthcare consulting firm based in Shawnee, OK.

The Medicare spending-per-beneficiary measure means that case managers need to ensure that patients have successful transitions in care as well as making sure that documentation includes details that indicate severity of illness and services received, Wallace says. Many value-based purchasing measures are risk-adjusted, which means it is extremely important that documentation clearly indicates how sick patients are, she says. "It only makes sense that it costs more to treat patients who are sicker, and the risk-adjustment process is intended to reflect that. If a hospitals' documentation inadequately portrays patients' severity of illness, they are likely to have unfavorable results under this measure," she adds.

Hospitals may have little control over what happens after patients are discharged, Wallace points out. However, she adds, CMS emphasizes that physician practices and the availability of community resources have a lot to do with what happens to patients after discharge. "CMS has indicated that hospitals can have the most effect on Medicare spending by providing good care while the patient is in the hospital and developing effective care transition plans," she says.

The performance period for spending per beneficiary started May 1, 2012, Wallace says. "Even though this won't be included in value-based purchasing until fiscal 2015, hospitals need to start now to make sure the documentation is complete and that they develop workable transition plans for all patients," she says.

Danielle Lloyd, MPH, vice president for policy development and analysis for the Premier healthcare alliance points out that it's possible for two different patients in two hospitals to have the same amount in claims for an inpatient stay, but when the total cost of care is tabulated, the sums could vary greatly. "One patient could have a physician who relies more on skilled nursing stays after discharge and the other hospital's physician might prefer discharging patients to home with home health services instead," she says.

Under Medicare spending-per-beneficiary, case managers should work closely with the treatment team and the patient and family to develop discharge plans that are cost-effective and that meet the needs of each individual patient, Lloyd adds.

Keep in mind that care doesn't end at the hospital's doorstep. "Case managers need to extend their reach and take a fresh view of how to coordinate care after discharge," she says.


  • Elizabeth Lamkin, MHA, Chief Executive Officer and Partner, PACE Healthcare Consulting, Hilton Head, SC. email:
  • Danielle Lloyd, MPH, Vice President for Policy Development and Analysis for the Premier healthcare alliance, Charlotte, NC. email:
  • Susan Wallace, MEd, RHIA, CCS, CDIP, CCDS, Director of Inpatient Compliance for Administrative Consultant Services, Shawnee, OK. E-mail:

To succeed at VBP, focus on improving clinical care

Good communication boosts patient satisfaction

As hospitals struggle to become more efficient because of reduced reimbursement from Medicare, Medicaid, and commercial payers, they must continuously work to improve processes everywhere, from supply chain management to ensuring the best contracts for medication and equipment to the most efficient use of beds, and moving patients quickly through the continuum, says Joseph Prosser, MD, chief quality officer at Texas Harris Methodist Hospital Fort Worth and Texas Health Harris Methodist Hospital Azle. Both hospitals are part of Texas Health Resources, a faith-based nonprofit healthcare delivery system in North Texas and participated in the CMS/Premier Hospital Quality Incentive Demonstration value-based purchasing project on which the Value-Based Purchasing Program is based.

According to Premier, hospitals that participated in the demonstration project raised their overall quality and scored higher than non-participating hospitals on the measures covered by Hospital Compare.

The secret to success in value-based purchasing is to focus on improving all clinical measures, not just those currently in value-based purchasing or on the Hospital Compare scorecard, Prosser says.

"All of the hospitals in the Texas Health Resources system have a relentless focus on clinical measures and on making sure everybody gets perfect care every time. From the clinical perspective, we have worked to reduce variation in clinical practice and to make sure the patients get the recommended care they need. On the patient satisfaction side, we begin to plan the discharge on Day 1 and don't wait until the end of the stay to hit patients with the fact that they're not going home. This is crucial to achieving good patient throughput as well as contributing to patients' satisfaction with their experiences in the hospital," he says.

When the CMS project began, the hospitals created multidisciplinary task forces to look at opportunities for improvement. "We know the best practices for each clinical indicator and look for opportunities to improve performance by continuously measuring and educating our physicians, nurses, and ancillary staff," he says.

The multidisciplinary teams also look at the best practices and focus on ways to reduce variation among physicians. "This is a long-term, ongoing continual performance improvement project that never ends as the science of medicine evolves," he says.

One initiative is to include prompts in the medical record to remind clinicians of the care patients need and the appropriate sequences. "Humans occasionally forget or are tired, and having a tool on the electronic medical record helps make sure nothing falls through the cracks. The high-performing healthcare organizations use multiple approaches to ensuring the delivery of exceptional care. Because of the diverse number of physicians and nurses, we can't rely on any single solution," he says.

The hospitals create regular reports on performance on clinical indicators and share the information with physicians and their peers. "In addition, I spend my time showing results to physicians to remind them on the need to take extra minutes with the patients so they can get their questions answered and feel valued as humans," he says.

The hospitals have a discharge planning task force that includes senior leadership and medical management which meets monthly to develop action plans to improve the discharge process. They look at the efficiency of internal and external communications. Medical management meets with post-acute providers to improve communication and improve the discharge process.

The task force developed a process improvement project to ensure that discharge planning begins as soon as patients are admitted. "We have emphasized for years that the patients' journey needs to be assessed, evaluated from the moment they come in the hospital door," Prosser says. Case managers know quickly if patients will be able to be discharged home or if they will need post-acute services. "We work with patients, family members, and surrogates on Day 1 to help them become familiar and comfortable with the discharge plan and the fact that the patient is not going home in the same condition he or she came in with. Good communication throughout the stay is the key to improving patient satisfaction," he says.