The quality dollars reimbursement game

Quick — do you know where your hospital's quality department is located?

If not, you'd better!

The submission of quality measures, once a voluntary act of leading institutions, should now be considered and treated as a critical element within a hospital's strategic revenue plan, as measured both in hard and soft dollars.

Following the CMS playbook of driving change — voluntary, incent, require and penalize — large commercial plans have now begun to play the game and are requesting providers' voluntary participation in the submission of certain quality measures, which are distinct and separate from the more well-known CMS measures.

From the inception of only a handful of inpatient measures to the multiple hands of measures — from outpatient, registries and physician quality reporting to hospital-acquired infections to value-based purchasing — the quality dollars reimbursement game has changed and will continue to change. Quality leaders now stand directly in the revenue path, so be sure you know the path to their office, and make sure it's a path well-traveled!

Silva Craig M ppIn my new role as CEO of Q-Centrix, I have had the opportunity to speak to many quality leaders across the country — from directors and VPs to COOs — who oversee quality and patient safety departments.  As I have learned more about their roles, listened to their stories and empathized with their challenges, the one common theme that has most resonated with me is that the breadth and pace of change of quality initiatives continues unabated.  Further, the impact of such change is much greater today than it once was.

Prior to my current role, I worked in the field of revenue cycle management.  I witnessed first-hand how the evolution of patients taking on greater financial responsibility for their healthcare bill directly impacted a hospital's bottom line via uncompensated care.  I would presume a similar analogy exists in the field of quality measures.  As CEOs, CFOs and VPs of revenue cycle management fully understand the impact of not capturing a patient's financial obligation at time of service, quality directors and quality VPs equally appreciate that an inability to timely submit or the submission of sub-par quality has a direct and meaningful financial impact. 

In an environment of declining reimbursement, patients taking on greater financial responsibility and the advent of quality-influenced reimbursement, it's no surprise that the challenges are enormous.  Therefore, hospital leaders must get directly and actively involved in ensuring quality efforts start and are driven from the top. 

The quality journey
Although efforts started more than a decade earlier, modern state quality initiatives began to take root in the late 1990s and early 2000s. What provided the platform for change was a confluence of public reports (the Institute of Medicine's "To Err Is Human: Building a Safer Health System and Crossing the Quality Chasm"), the creation of the National Quality Forum and the alignment of Joint Commission and CMS on Core Measure initiatives.  In aggregate, these efforts were geared toward decreasing errors and variation in the delivery of care and ultimately, providing consistent, high-quality medical care that eliminated patient harm.

Originally, these measures (acute myocardial infarction, heart failure and pneumonia ) were voluntary, but after initial levels of participation proved unsatisfactory, Congress added a financial incentive to the program in the Medicare Prescription Drug, Improvement and Modernization Act of 2003.  Section 501(b) of the MMA mandated the creation of the Hospital Inpatient Quality Reporting program.  With this program, hospitals that chose not to participate or failed to meet the criteria for successful reporting in a given year had their annual payment update reduced by 0.4 percentage points.  The Deficit Reduction Act of 2005 increased this reduction to 2 percentage points.  And today, as we begin the journey into value-based purchasing, further financial impacts will be at hand.

Compounding the financial implication is that during this same span of time, the number of measures increased dramatically with the inclusion of outpatient measures in 2006, additional measures in 2008 and 2010, and, most recently, the addition of hospital acquired condition measures. And to further complicate matters, various states have specific measures reporting requirements distinct from CMS measures. 

Commercial plans take action
Presuming that quality measures are the work of government agencies alone would be an incorrect assumption. The commercial plans have begun to mimic the CMS "playbook" with their own version of voluntary submissions packaged within incentives.  Blue Cross Blue Shield of Michigan is working hand-in-hand with providers on the Collaborative Quality Initiatives.

In the late 1990s, BCBS MI and five hospitals joined forces to track performance on angioplasty procedures. The analysis yielded recommendations to decrease the variation in bypass surgeries and other complications. The net outcome, once the recommendations were implemented, was an estimated savings of $244 million in healthcare costs over five years.

That initial effort has resulted in 19 additional initiatives focused on the most common and costly areas of surgical and medical care. Through a collaborative effort, providers within the state collect, share and analyze data so as to implement recommended changes to enhance patient care.

What is unique about the program is that BCBS MI provides funding to support the initiative, including offsetting some of the data abstraction costs and financially incentivizing participation. I anticipate over time we will see these types of initiatives become commonplace, and further, the incentive will morph into a penalty structure for nonparticipation — akin to CMS' approach.

Institutions start playing the game
So, given the challenges of the quality dollars reimbursement game, what should one do?

Rather than be presumptive and provide a quick list of to-dos, I'll pose a few questions for you to reflect on and answer honestly.  If the answer to these questions is more often "no" than "yes", I'd encourage you to assemble your leadership team and put in place a plan to address these shortfalls.

  • Does your institution subscribe to the notion that reimbursement streams, both public and private, will further be predicated on quality performance?
  • Is quality engrained into the culture and behavior of your institution?
  • Is quality incorporated into the institution's strategic agenda?
  • How frequently and transparently does your institution review and report on your quality efforts across the organization, including the board?
  • Are the institution's top performers leading the quality efforts?
  • How collaborative are your institution's quality efforts, and do they include medical staff, administration and patients working in tandem to design and improve the care process?
  • Does your institution benchmark and rigorously seek out best practices?
  • Does your institution appropriately allocate resources (capital and people) across processes, technology and structure to achieve the highest value add?

During the various discussions I had with quality leaders across the country, I delved into the decision-making process of how these leaders gained approval for their quality investments.  Surprisingly, at least 50 percent indicated their senior leaders were unaware of the details of their on-going challenges and the pace of change.

When I compare that to my experiences in revenue cycle management, I would say the majority, if not all, of the senior leaders were fully aware of the changing landscape in patients taking on greater financial responsibility for their healthcare spend and its implications on the financial performance of the hospital. 

So, considering the enormous financial implications on quality performance, why is that the case?  Could it be I misunderstood the conversation? Maybe. Are the financial implications simply not significant enough? Possibly. Or, could it be that the cultural environment of those particular institutions have not yet embraced or appreciated the implications of this evolving market?

Regardless, I encourage you to honestly reflect on your own institution and assess whether you are doing all that you should. By working to create greater awareness and action plans to meet the growing role of quality metrics in improving patient outcomes, this will allow your institution to benefit from the healthcare system's quality-based reimbursement model.

And also, be sure to pay a visit to your quality department and see how they are doing — presuming you know the path to their office!

Milton G. Silva-Craig is the CEO of Q-Centrix, LLC, the largest exclusive provider of outsourced retrospective and concurrent Core Measure and Registry data abstraction for acute care hospitals. With more than 20 years of experience in the healthcare and information technology industries, Mr. Silva-Craig has demonstrated success in leading and managing high-growth businesses and institutions. Q-Centrix was welcomed into Sterling Partners' portfolio in December 2013.

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