Using Hospital Data to Measure Quality of Care and Linking it to DRG of Care and Linking it to DRG (Case-Mix) Payments Presented by Jugna Shah, MPH President, Nimitt Consulting Inc. Nordic Case-Mix Conference Helsinki, Finland J ne 2010 June 2010
June 2010 Jugna Shah, Nimitt Consulting, Inc. 1 Key Quality and Case-Mix Based Payment Questions From the Early Years of DRGs “Promoters and Critics” of PPS implementation had various expectations about what would happen to quality of care as a result of DRG payment incentives – Carrot vs. Stick Question: – Would hospitals respond appropriately to PPS incentives to reduce patient care without compromising quality in order to keep the surplus generated or – Would they cut care so much that patients would have poor outcomes that went beyond eliminating unnecessary or marginally beneficial care to restricting or cutting needed care? Would quality suffer? Result from the Early Years… No real declines seen in the “quality of care” being provided…WHY? Peer Review Organizations during the 1980 and Quality Integrity Organizations during the 1990s focused on making sure DRG payment incentives did not result in poor quality of care for patients Hospitals and doctors are inherently good and would not with-hold Hospitals and doctors are inherently good and would not with hold care or discharge patients quicker and sicker… Financial pressures of DRGs had yet to be felt… The notion that costs can be lowered only at the expense of quality was not true… But Two Key Questions Remain: (1) Did we achieve a reduction in costs? (2) Do We Have the Health Outcomes We Want? General Information About the U.S. Healthcare System • Healthcare spending accounts for 16% of the GDP and by 2017 this is expected to be 19.5% • Medicare is the main social insurance program providing health insurance coverage to people over the age of 65, disabled persons, and/or those who meet other special criteria. • U.S. government is the single largest insurer/payer in the country • In 2008, the U.S. spent $2.3 trillion on health care—about $7,681 per person (could double by 2020). • Many healthcare providers and payers exist • Other payers follow Medicare’s lead in making coverage and payment decisions
June 2010 Jugna Shah, Nimitt Consulting, Inc. 2 Some Facts About Today’s U.S. Healthcare System • The U.S. spends more on health care than any other country in the world, yet our quality is worse… – The U.S. has the highest rate of preventable deaths, highest infant mortality, and lowest average life expectancy compared to many industrialized nations. p y – 15 million incidents of medical harm occur in U.S. hospitals every year (Source: Institute for Healthcare Improvement) – As many as 98,000 deaths a year in the U.S. are the result of preventable medical errors (Source: Institute of Medicine) More Facts About Healthcare in the U.S. • The U.S. spent $2.3 trillion on health care in 2008—about $7,681 per person (could double by 2020). 1 • As much as 30 percent, or $690 billion, may be wasted. 2 • 1 Centers for Medicaid & Medicare Services 2 Institute of Medicine, 2002 & New England Healthcare Institute, 2008 More Facts About Healthcare in the U.S. (cont) • As much as 16 percent of hysterectomies a year may be unnecessary – Institute of Medicine, 2001 • Only half of the 100 million antibiotics prescribed annually are necessary. – FDA, 2003
June 2010 Jugna Shah, Nimitt Consulting, Inc. 3 More Facts About Healthcare in the U.S. (cont) • Colon cancer patients get recommended follow-up treatment only 40% of the time. – From Journal Cancer, 2008 • It's estimated that a quarter of all new drug prescriptions contain errors. – Institute of Medicine, July 2006 We Have a Problem… • In its landmark 2001 report, Crossing the Quality Chasm, the Institute of Medicine said it best, “ health care harms too frequently and routinely fails to deliver its potential benefits ... between the health care we have and the care we could have lies not just a gap, but a chasm." • Greater spending rapid access and high utilization create an • Greater spending, rapid access, and high utilization create an illusion of high quality health care, yet… – The link between more spending and quality doesn’t exist – The link between high utilization and quality doesn’t exist In fact, greater spending and higher utilization have been linked to “poorer” outcomes which is one reason for the latest reforms! Some Questions to Consider… • Can providers be “motivated, inspired, forced, etc.” to provide high quality of care? If so, how? – Make outcomes data public and let the “market” work – Link payments directly to data reporting and quality measures • Do NOT pay for poor care up front • Do NOT pay for poor outcomes at the end Do NOT pay for poor outcomes at the end • Can efficiency incentives created by the government through payment system “carrots and sticks” promote hospitals to improve quality of care? • What does “value” in healthcare mean? Value to whom?
June 2010 Jugna Shah, Nimitt Consulting, Inc. 4 Defining “Value” in Healthcare… • Value may include: – Reduction in cost – Efficient care delivery – Improvement in outcomes – The improvement of health outcomes relative to the money spent (Harvard Business School) spent (Harvard Business School) • The National Priorities Partnership, convened by the National Quality Forum (NQF) states, “The vision is to have world-class, affordable healthcare system by eliminating harm, waste, and disparities, while improving payment policy, public reporting, quality improvement, and consumer engagement”. Quality and Payment: Medicare’s Current Initiatives Quality and Payment Today • With high health care costs, waste in the system, and poor quality indicators, the government has had no choice but to finally ask questions related to access, utilization, rising costs, efficiency, and quality in order to find a way to obtain value for every U.S. dollar spent on healthcare. • Medicare has expressed a strong desire to move from being a “passive payer to an active purchaser of healthcare services”
June 2010 Jugna Shah, Nimitt Consulting, Inc. 5 Medicare’s Current Initiatives that Link Case-Mix Payments to Quality (1) Requiring certain data elements to be reported – “pay for reporting” (2) No longer making higher MS-DRG payments for certain “preventable conditions” also called hospital acquired conditions that may develop while the patient is in the conditions that may develop while the patient is in the hospital or for never events – “pay for performance” (3) Publishing data on process and patient satisfaction measures – “transparency as an indirect market driver” These initiatives represent a start, but more must be done to achieve greater value for each healthcare dollar spent. Current Medicare Quality Measure Environment • Medicare tracks quality measures in most of the settings it pays for services including: – Hospital inpatient and outpatient; about 60 measures – Physician Quality Reporting Initiative– about 153 measures – Nursing Home – about 19 measures Nursing Home about 19 measures – Home Health – about 12 measures – Dialysis (End Stage Renal Disease, or ESRD) – about 22 measures – 30-day readmission measures for acute myocardial infarction and pneumonia. • Re-admission measures are significant since almost 18% of Medicare patients are readmitted within 30 days of discharge resulting in almost $15 billion in costs annually with one study showing about $12 billion of the costs being preventable (1) Pay-for-Reporting Case-Mix Data • The Hospital Quality Reporting Data for Annual Payment Update program required by law in 2003 and authorized Medicare to pay hospitals that successfully reported quality measures more. Initially this started with a payment of .4% more and today it is up to 2% more. • Today, for hospitals to receive their full case-mix payment under Medicare-Severity Diagnosis Related Groups (MS-DRGs) and, their outpatient case-mix payment based on Ambulatory Payment Classifications (APCs), pre-defined quality measures must be reported
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