Problematic Risk Adjustment in National Healthcare Safety Network Measures.

This article reviews the risk-adjustment models underpinning the National Healthcare Safety Network (NHSN) standardized infection ratios. After first describing the models, the authors focus on hospital intensive care unit (ICU) designation as a variable employed across the various risk models. The risk-adjusted frequency with which ICU services are reported in Medicare fee-for-service claims data was compared as a proxy for determining whether reporting of ICU days is similar across hospitals. Extreme variation was found in the reporting of ICU utilization among admissions for congestive heart failure, ranging from 25% in the lowest admission hospital quartile to 95% in the highest. The across-hospital variation in reported ICU utilization was found to be unrelated to patient severity. Given that such extreme variation appears in a designation of ICU versus non-ICU utilization, the NHSN risk-adjustment models' dependence on nursing unit designation should be a cause for concern.

A Middle-Ground Proposal for Making Health Care Premiums More Affordable.

Passage of any health care reform that addresses the rising cost of health care in the United States will be a difficult political challenge unless a middle-ground compromise between government control of health care insurance and free market approaches can be found. On the basis of the competitive market for Medicare supplemental insurance, a Medicare Adherence Policy insurance option is proposed that would leverage Medicare's authority to set prices to create a practical middle-ground reform that can strike a balance between the role of government and the free market.

Will Hospital Peer Grouping by Patient Socioeconomic Status Fix the Medicare Hospital Readmission Reduction Program or Create New Problems?

BACKGROUND: In 2016 the U.S. Congress directed the Centers for Medicare & Medicaid Services (CMS) to implement the 21st Century Cures Act to fix a flaw in the Hospital Readmissions Reduction Program (HRRP). One section of the Act is intended to remove bias in calculating penalties for hospitals treating large percentages of low socioeconomic status (SES) patients. A study was conducted to analyze the effect of the introduction of SES hospital peer groups on the number and distribution of the hospitals being penalized. METHODS: The CMS analysis files for the fiscal year 2017 HRRP final rule and Disproportionate Share Hospital adjustments were used to assign hospital peer groups. The median excess readmission ratios for hospital peer groups were calculated, and the resulting pattern of hospital penalties within peer groups was analyzed. RESULTS: The findings suggest that because CMS assigns individual HRRP penalties on six clinical conditions but proposes to assign hospitals to a single SES peer group based on all admissions, it will ignore substantial differences in the distribution of peer group medians across these conditions. For surgical cases, as expected, hospitals with fewer patients had higher readmission rates, while for medical cases, hospitals with fewer patients had fewer readmissions. These findings may result in distortion of the peer group adjustment intended to correct for SES. CONCLUSION: Hospital peer groups may create unintended redistributions of penalties through distortion of peer group medians. An observed relationship between lower-volume hospitals and fewer readmissions for medical conditions requires additional research to establish its basis.

Is the CMS Hospital-Acquired Condition Reduction Program a Valid Measure of Hospital Performance?

In October 2014, the Centers for Medicare & Medicaid Services began reducing Medicare payments by 1% for the bottom performing quartile of hospitals under the Hospital-Acquired Condition Reduction Program (HACRP). A tight clustering of HACRP scores around the penalty threshold was observed resulting in 13.2% of hospitals being susceptible to a shift in penalty status related to single decile changes in the ranking of any one of the complication or infection measures used to compute the HACRP score. The HACRP score also was found to be significantly correlated with several hospital characteristics including hospital case mix index. This correlation was not confirmed when an alternative method of measuring hospital complication performance was used. The sensitivity of the HACRP penalties to small changes in performance and correlation of the HACRP score with hospital characteristics call into question the validity of the HACRP measure and method of risk adjustment.

Quality Improvement Initiatives Need Rigorous Evaluation: The Case of Pressure Ulcers.

The Partnership for Patients (PfP) and the Agency for Healthcare Research and Quality (AHRQ) have reported a 23.5% decline in hospital-acquired pressure ulcers (HAPU) over 4 years resulting in a cumulative cost savings of more than $10 billion and 49 000 averted deaths, claiming that this significant decline may have been spurred in part by Medicare payment incentives associated with severe (stage 3 or 4) HAPUs. Hospitals with a high rate of severe HAPUs have a payment penalty imposed, creating a financial disincentive to report severe HAPUs, possibly contributing to the magnitude of the reported decline. Despite the financial disincentive to report, the number of severe HAPUs found in claims data over the corresponding 4-year period did not decline but instead remained unchanged. The results from claims data, combined with some flaws in estimating HAPUs, call into question the validity of the decline in HAPUs reported by PfP and AHRQ.

Rethinking Medicare Payment Adjustments for Quality.

Payment reforms aimed at linking payment and quality have largely been based on the adherence to process measures. As a result, the attempt to pay for value is getting lost in an overly complex attempt to measure value. The "Incentivizing Health Care Quality Outcomes Act of 2014" (HR 5823) proposes to replace the existing patchwork of process and outcomes quality measures with a uniform, coordinated, and comprehensive outcomes-based quality measurement system. The Outcomes Act represents a shift in payment policy toward getting value instead of an increasingly complex attempt to measure value.

Comparison of the Properties of Regression and Categorical Risk-Adjustment Models.

Clinical risk-adjustment, the ability to standardize the comparison of individuals with different health needs, is based upon 2 main alternative approaches: regression models and clinical categorical models. In this article, we examine the impact of the differences in the way these models are constructed on end user applications.

Adjusting Population Risk for Functional Health Status.

Risk adjustment accounts for differences in population mix by reducing the likelihood of enrollee selection by managed care plans and providing a correction to otherwise biased reporting of provider or plan performance. Functional health status is not routinely included within risk-adjustment methods, but is believed by many to be a significant enhancement to risk adjustment for complex enrollees and patients. In this analysis a standardized measure of functional health was created using 3 different source functional assessment instruments submitted to the Medicare program on condition of payment. The authors use a 5% development sample of Medicare claims from 2006 and 2007, including functional health assessments, and develop a model of functional health classification comprising 9 groups defined by the interaction of self-care, mobility, incontinence, and cognitive impairment. The 9 functional groups were used to augment Clinical Risk Groups, a diagnosis-based patient classification system, and when using a validation set of 100% of Medicare data for 2010 and 2011, this study found the use of the functional health module to improve the fit of observed enrollee cost, measured by the R(2) statistic, by 5% across all Medicare enrollees. The authors observed complex nonlinear interactions across functional health domains when constructing the model and caution that functional health status needs careful handling when used for risk adjustment. The addition of functional health status within existing risk-adjustment models has the potential to improve equitable resource allocation in the financing of care costs for more complex enrollees if handled appropriately. (Population Health Management 2016;19:136-144).

Distributing shared savings for population health management.

Lessons from outcomes-based fee-for-service payment models that can be applied to population health management models include the following: Focus on outcomes, not processes. Limit the number of outcomes measures used. Ensure that the amount distributed is substantial enough to motivate behavior change. Communicate results clearly and transparently. Ensure that the financial consequence of poor performance is proportional to the cost increase it generates. Focus on reducing the rate of excess preventable outcomes.

Hospital readmission rates: the impacts of age, payer, and mental health diagnoses.

We examine impacts of age, payer, and mental health conditions upon hospital readmissions and the comparability of same-hospital and multiple-hospital readmission rates. Medicaid primary payment and extreme age are associated with significantly higher readmission rates. We find low correlation between same-hospital and multiple-hospital readmission rates and identify urban hospitals with high proportions of Medicaid patients and mental health admissions as factors driving the use of multiple hospitals within readmission chains. Hospital payment incentives and performance measures using readmission rates will be distorted if factors leading to higher readmission rates are ignored, or if readmissions to different hospitals cannot be identified.

Inappropriate use of payment weights to risk adjust readmission rates.

In this article, the authors demonstrate that the use of relative weights, as incorporated within the National Quality Forum-endorsed PacifiCare readmission measure, is inappropriate for risk adjusting rates of hospital readmission.

Paying for outcomes, not performance: lessons from the Medicare Inpatient Prospective Payment System.

Drawing on lessons learned from the implementation of the Medicare Inpatient Prospective Payment System (IPPS), the authors propose principles for the design and implementation of a hospital payment system based on paying for outcomes.

Redesigning the Medicare inpatient PPS to reduce payments to hospitals with high readmission rates.

A redesign of the Medicare inpatient prospective payment system (IPPS) that reduces payments to hospitals that have high-risk adjusted readmission rates is proposed. The redesigned IPPS uses a readmission performance standard from best practice hospitals to determine the risk-adjusted number of excess readmissions in a hospital and determines the payment reduction for a hospital based on its excess number of readmissions. Extrapolating from Florida Medicare 2004-2005 discharge data, the redesigned IPPS is estimated to reduce overall annual Medicare inpatient expenditures nationally by $1.25, 1.92, and 2.58 billion for readmission windows of 7, 15, and 30 days, respectively.

Hospital complications: linking payment reduction to preventability.

The Center for Medicare & Medicaid Services (CMS) policy of denying payment for certain in-hospital complications should be modified, given that complications are not always preventable.

Developing a prospective payment system based on episodes of care.

A patient-centered approach to defining episodes of care around a hospitalization can provide the basis for creating expanded bundles of services that can be used as the basis of payment. Paying by episodes of care strengthens the incentive to providers to deliver care efficiently. A hospital-based episode of care prospective payment system can be phased in over time by gradually expanding the services and the time period included in the episode. Establishing equitable prospective episode payment amounts requires that the severity of illness of the patient during the hospitalization and the chronic disease burden of the patient be taken into account.

Identifying potentially preventable readmissions.

The potentially preventable readmission (PPR) method uses administrative data to identify hospital readmissions that may indicate problems with quality of care. The PPR logic determines whether the reason for readmission is clinically related to a prior admission, and therefore potentially preventable. The likelihood of a PPR was found to be dependent on severity of illness, extremes of age, and the presence of mental health diagnoses. Analyses using PPRs show that readmission rates increase with increasing severity of illness and increasing time between admission and readmission, vary by the type of prior admission, and are stable within hospitals over time.

Redesigning Medicare inpatient PPS to adjust payment for post-admission complications.

Under the Medicare diagnosis-related group (DRG) based inpatient prospective payment system (IPPS), payments to hospitals can increase when a post-admission complication occurs. This article proposes a redesign of IPPS that reduces, but does not eliminate, the increase in payment due to post-admission complications. Using California data that contained a specification of whether each diagnosis was present at admission, and applying a conservative approach to identifying potentially preventable complications, the impact of post-admission complications on DRG assignment was determined. Based on the redesigned IPPS, the increase in Medicare payments due to post-admission complications was reduced by more than one billion dollars annually.