CMS to Encourage Further Care Coordination and Quality Reporting

Tim Hunter

The Centers for Medicare and Medicaid Services (CMS) recently released several proposed and final rules outlining payment for services in 2009. While each rule contains important programmatic information, an intra-rule analysis provides a broader description of CMS’s intentions with respect to value-based purchasing and developing incentives for coordination of patient care among providers and hospitals. This article examines programmatic changes implemented across settings of care by CMS to advance quality improvement and performance-based payment initiatives and identifies actions manufacturers can take to improve brand loyalty.

2009 Medicare Hospital Inpatient Final Rule

In the proposed rule, CMS described the next step(s) in the following programs related to value-based purchasing and coordinating financial incentives:

Never Events—The agency has identified a set of events that never should happen during the course of care in a hospital. Examples of “never events” identified by CMS include[1]:

    • Surgery on the wrong body part
    • Surgery on the wrong patient
    • Wrong surgery performed on a patient

The agency has initiated a National Coverage Analysis for the “never events” to identify a way to ensure that patients receive all necessary care associated with treatment without paying the surgeon and hospital for an erroneous surgery and related care.[2]

Quality Reporting Measures[3]—Currently, hospitals are subject to a two-percentage-point decrease in payments if they do not submit qualifying quality data related to specific measures. For FY 2008, only 186 of 3,538 eligible hospitals failed to submit qualifying data. CMS is increasing the number of reportable measures in 2009 to 42. 

Hospital-Acquired Conditions (HAC)—The agency has identified several conditions that it considers to be reasonably preventable and either costly or common. Of particular interest to orthopedic device manufacturers are the following conditions following certain orthopedic procedures:

    • Surgical site infection
    • Deep vein thrombosis and pulmonary embolism

As of Oct. 1, CMS is no longer paying hospitals at a higher rate for the increased costs associated with the treatment of a listed HAC. The agency estimates that this policy will result in annual savings of $21 million in Medicare payments to hospitals and that it will lead hospitals and surgeons to more properly document conditions present upon admission.

2009 Medicare Hospital Outpatient Proposed Rule

The 2009 proposed rule for Medicare outpatient programs includes a number of initiatives aimed at reporting of quality data, coordination of incentives across settings of care and value-based purchasing. Two examples are described below:

Quality Reporting Measures—After successfully requiring hospitals to report quality data for specified measures, CMS has expanded the mandatory reporting to the hospital outpatient setting. Hospitals that fail to report on a set list of outpatient measures for 2009 will be subject to a two-percentage-point reduction in the 2010 payment update, which effectively links quality data reporting across both settings.

Episode-of-Care Payments—As stated in the 2008 Medicare hospital outpatient final rule, the agency is seriously considering ways to consolidate outpatient payments into larger, more comprehensive, episode-of-care payments. In fact, CMS already applies a single composite payment for selected groups of services that routinely are performed together and represent a comprehensive service. If the agency implements an episode-of-care structure, hospital outpatient payments could begin to look more like the MS-DRG payments made in the inpatient setting.

Demonstration Programs/ Other CMS Initiatives

Several demonstration programs and programmatic changes can be viewed as at least tangible to CMS’s goal of maximizing value-based healthcare and coordinating provider incentives.

Coordination-of-Care Demos—A patient is likely to receive medical care from a number of physicians as well as from hospital staff when a surgical procedure is performed. CMS often notes that physicians (or surgeons) and facilities do not always have financial incentives that align in treating the patient. For example, a surgeon is paid independently by Medicare, regardless of where the surgery is performed (setting), how long the patient is hospitalized or whether the patient suffers an HAC (outcome). Coordination-of-care demonstration programs seek to align financial incentives among providers and facilities, often by pooling payments for all treating providers under an episode of care designation.  
   
For example, CMS currently is developing the Medicare Acute Care Episode (ACE) demonstration that bundles services (both hospital and physician) into a single episode of care with a negotiated payment amount. The demonstration allows select hospitals and providers in four states to share cost savings achieved through integrated care delivery for hip and knee replacement surgeries.[4]

Medicare Administrative Contractors—Mandated by law in 2003, CMS is implementing a new system for awarding its claims processing and management contracts. Fiscal intermediaries and carriers, which were responsible for physician and hospital claims processing, are being replaced with Medicare Administrative Contractors (MAC) that administer the Medicare program for both physicians and facilities.
   
The new MAC system ensures (in most cases) that a single entity is setting policy and processing claims for both physicians (surgeons) and facilities (hospitals, surgical centers, etc.) in a given region. Medicare contractors now are aligned and have an incentive to pursue policies that advance to goals of local, value-driven care because they are responsible for both physician and facility claims processing and cost management.

Future Implications

These initiatives and demonstrations are a subset of those designed by CMS to drive value-based payments, align incentives among providers and settings of care, and improve quality of care.  Additionally, these initiatives are part of a constantly shifting puzzle. The introduction of a new program requirement, such as reporting quality data, remains a fluid process. For example, in 2009 the agency is expanding the quality reporting initiative in at least three ways:
   
    • New setting of care—CMS has expanded the program to the hospital outpatient setting
    • More reportable measures—CMS has increased the number of hospital inpatient measures to 42 for next year
    • New uses of the data—CMS has created Hospital Compare, which provides information to the public regarding the quality of care provided by hospitals and includes data from the quality reporting initiative

In the future, CMS also may consider a fourth use:

    • Integrate physician quality data—it is possible that CMS can link physician and hospital quality reporting initiatives to more closely analyze continuum of care for selected procedures

Information from the demonstrations aimed at aligning incentives to physicians and hospitals could be used to drastically change, or even link, future payments for services. In addition, these initiatives, as well as the implementation of a streamlined claims processing system under MACs, could be used to restrict payments to surgeons that are associated with “never events” and/or HACs. Finally, it is likely that the number of quality data measures required for full payment in all settings will increase, allowing the agency to become a more prudent and selective payer of Medicare services.

What Role Can Manufacturers Play?

Orthopedic device manufacturers can implement any number of initiatives to assist surgeon and hospital customers in adapting to these ongoing changes. Interactive product training, certification programs, educational outreach and development of clinical standards can help hospitals and physicians succeed in a system predicated on quality and value of care. Manufacturers also can sponsor the development of pre- and post-approval clinical data through clinical studies, registries and meta-analyses to educate customers about the benefits of using a particular product. Finally, when appropriate, manufacturers should identify opportunities to participate with hospital/physician groups to develop protocols for participation in future coordination-of-care demonstrations that involve orthopedic procedures. These and other efforts can allow manufacturers to develop true partnerships aimed at improving patient care.

References:
1. CMS Medicare Fact Sheet: Medicare Takes New Steps to Help Make Your Hospital Stay Safer, Aug. 4, 2008.
2. National coverage analyses for “never events” can be found at: www.cms.hhs.gov/mcd/overview.asp.
3. More information on the RHQDAPU can be found in the 2009 Medicare inpatient final rule, available at: http://edocket.access.gpo.gov/2008/
pdf/E8-17914.pdf.
4. A complete description of the ACE demonstration can be found at: www.cms.hhs.gov/DemoProjectsEvalRpts/downloads/ACESolicitation.pdf.

Tim Hunter is the director of reimbursement for Musculoskeletal Clinical Regulatory Advisers, LLC. In this capacity, he works with client companies to solve complex coverage and reimbursement issues for existing, new and future products. Please send inquiries to Tim at [email protected].