Volume 4, #1

April 2007

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Hospital Pay-for-Performance

Candace E. Shaeffer, RN, MBA, RHIA
Chief Compliance Officer

Quality reporting programs are a hot topic in healthcare publications today. While the programs for physicians and hospitals are different, they do share some goals and designated quality measures. Because emergency physician documentation may be used for inpatient quality reporting, it is important for emergency physicians and managers to be aware of inpatient reporting programs, the quality measures being reported and the documentation requirements.

The Centers for Medicare and Medicaid Services (CMS) implemented hospital quality reporting programs initially because of quality and efficiency concerns and later to fulfill statutory requirements. CMS noted the quality identified in the 1998 Institute of Medicine (IOM) study, the rapid growth in healthcare spending and inconsistent evidence of value, and determined a solution was needed.

In 2001, then HHS Secretary Tommy Thompson announced the Quality Initiative that called for implementation of voluntary hospital quality reporting. This initiative combined inputs from various organizations in addition to CMS, such as the American Hospital Association, Federation of American Hospitals, JCAHO and the National Quality Forum among others. In 2003, the voluntary reporting initiative was launched along with several demonstration projects to assess the value and outcomes of quality programs.

The Medicare Modernization Act of 2003 included provisions that linked quality reporting to reimbursement, set up demonstration projects and required the posting of hospital quality data on the Internet. This law introduced the concept of “value based purchasing,” which means paying for performance.

The Deficit Reduction Act (DRA) of 2005 included additional quality reporting language that added more quality measures, increased the financial penalty for not reporting and established a plan requiring outpatient quality reporting by 2009.

Overview of Hospital Quality Reporting

Hospital Pay-for-Performance (P4P) or Hospital Quality Reporting, comprises a variety of programs developed by Medicare and other organizations in an effort to measure and provide incentives for hospitals to deliver high quality inpatient care. P4P programs generally tie provider payments or a portion of those payments to CMS designated quality processes.

CMS is leading the effort and driving the implementation of quality reporting programs. There are a range of financial incentives (or penalties for not reporting performance) to encourage hospitals to achieve identified quality and efficiency goals that promote improvements in the quality of patient care and effectiveness of resource utilization. In addition, these programs hope to standardize data collection priorities and mechanisms and provide useful information about hospital quality to the public.

Examples of hospital inpatient P4P programs include Medicare’s Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU), Premier Hospital Quality Incentive Demonstration, and the Leapfrog Hospital Rewards Program.

For Medicare, the programs and reporting of quality measures for hospitals currently apply only to inpatients. Facilities excluded from performance reporting include psychiatric, rehab, long term care, children’s and cancer hospitals, and hospitals in Puerto Rico and other US territories.

A P4P program for hospital outpatients, such as discharged ED patients, is expected to be implemented in 2009 as mandated by the Deficit Reduction Act of 2005. For now, the ED physician’s documentation can still play a valuable role in inpatient reporting. For many diagnoses, inpatient reimbursement is higher if specific co-morbidities are documented and abstracted from the patient’s medical record. These co-morbidities may be documented by any physician who cares for the patient during the hospital stay—including the ED physician.

LYNX will release a new product near the end of the year called CareBridge. This new software tool will bridge the gap between ED and inpatient admissions. It will ensure your ED documentation reflects the complexity of care. For example, co-morbidities are documented, supporting the appropriate DRG. In addition, CareBridge will offer comprehensive reporting capabilities that will assist in reporting P4P quality measures. CareBridge is scheduled for release in Q4 2007.

ED Relevant Measures Required for Hospital Reporting

While the quality measures in the different inpatient reporting programs and demonstration projects vary, the ED relevant measures can be determined by reviewing each individual program’s set of measures. In Medicare’s RHQDAPU program, the starter set includes 10 quality measures for three different medical conditions: acute myocardial infarction (5 measures), heart failure (2 measures) and pneumonia (3 measures).

For 2007, the number of medical conditions in this Medicare program for inpatient reporting has increased to four with a total of 21 measures: acute myocardial infarction (8 measures), heart failure (4 measures), community acquired pneumonia (7 measures), and surgical care improvement (2 measures). Measures from the 2007 Medicare RHQDAPU set that should be considered for documentation by ED physicians include:

• Acute MI:
  • aspirin at arrival
  • beta blocker at arrival
  • thrombolytic agent within 30 minutes of arrival
  • percutaneous Coronary Intervention within 120 minutes of hospital arrival
• Additional potential ED interventions for Acute MI:
  • adult smoking cessation advice/counseling
  • ACE inhibitor or Angiotensin Receptor Blocker for LVS dysfunction
• Pneumonia:
  • blood culture before first antibiotic received
  • initial antibiotic within 4 hours of hospital arrival
  • appropriate initial antibiotic selection
• Additional potential ED interventions for Pneumonia:
  • influenza vaccination status
  • pneumococcal vaccination status
  • oxygen level assessment (ABG or pulse oximetry)
  • adult smoking cessation advice/counseling
• Additional potential ED interventions for other conditions includes Heart Failure:
  • left ventricular function assessment
  • ACE inhibitor or Angiotensin Receptor Blocker for LVS dysfunction
  • adult smoking cessation advice/counseling
• Surgical Care Improvement:
  • prophylactic antibiotic received within 1 hour prior to surgical incision

Hospital Reporting of Quality Measures Impacts Reimbursement

For Medicare, all eligible hospitals must report quality data in order to receive a “full market basket update” or the full conversion factor applied to their payments. More than 98% of hospitals eligible to participate received their full payments in 2005. In 2006, the penalty for non-reporting was a payment reduction of 0.4%; the DRA increased the payment penalty to 2% for 2007.

According to a 2006 Deloitte Center for Health Solutions report, there were 84 P4P programs at the end of 2004 and 115 by the end of 2005. Of the 84 programs in 2004, 57 were sponsored by commercial insurers, 12 by Medicaid plans, 6 by employer groups, 5 by CMS/Medicare and 4 by other organizations. 86% of payers award the P4P as a bonus; however, the use of tiered fee schedules is increasing.

The Hospital Quality Reporting Process

The various reporting programs have different measures and processes for reporting. Common to all is that an inpatient coder reviews the inpatient medical records and identifies patients with medical conditions that require reporting. Once the records requiring quality reporting are identified, the coder reviews the medical record documentation and abstracts the specific measures established for each medical condition.

For Medicare programs, data abstracted from all medical records (Medicare and non-Medicare) is submitted to the CMS Quality Improvement Organization (QIO) using the CMS Abstraction and Reporting Tool (CART). The QIO data warehouse forwards the hospital data to CMS where it is evaluated for the hospital’s payments.

Hospital Inpatient and Physician ED Quality Reporting Programs are Different

While the hospital and physician programs are similar and they include many of the same quality measures, the reimbursement effects of the two provider programs are different. For Medicare, the hospital P4P program, while called voluntary, reduces DRG payments if the eligible hospital does not report quality measures. The physician outpatient quality reporting program does not yet impact reimbursement, but beginning in July 2007 physicians will receive a 1.5% bonus of their Medicare reimbursement (subject to a cap) for reporting measures consistent with Medicare requirements.

Several of the quality measures differ between the hospital and physician programs. The hospital program focuses on management of acute conditions while many of the physicians’ measures focus on proactive care and disease management strategies. The goals in the latter case are to help avoid preventable hospitalizations and emergency department visits and prevent complications.

ED Physicians can Support the Hospital’s Quality Reporting Efforts

The most important thing ED physicians can do is to consistently document the ED relevant performance measures required for the hospital’s reporting. The CFO or Health Information Management (HIM, medical records department) will have information on the specific quality measures the hospital is tracking and can provide it to the ED physician group.

Thorough documentation of relevant performance measures by ED physicians will help hospitals achieve the highest reporting level possible. Moreover, it would be beneficial for the group to make the hospital aware of the extent of the ED group’s contribution to the hospital’s quality reporting efforts, if only for the recognition.

Click here to learn more about reporting quality measures with LYNX.