Jonathan Pearce and Steven WoodGuest Blog: This blog is published as a collaboration between Jonathan W. Pearce, CPA, MBA, FHFMA, Founding Principal of Singletrack Analytics, LLC, and Steven Wood, PhD, VP of Research and Strategic Partnerships, CODE Technology. Singletrack Analytics is a healthcare financial and data analytics firm, assisting healthcare providers and purchasers achieve success through better use of data and analytic techniques.


A Note from CODE: CODE collects, reports and benchmarks patient-reported outcomes as a service. If you’re a hospital part of the CJR program, you know that successful submission of PROs earns you two bonus points. We wondered, how can we help hospitals predict with confidence exactly how much money is on the table? In what scenario(s) does collecting PROs give hospitals the bump they need to move into a better quality category?

To answer this question, we called our friend Jonathan Pearce, a cost data guru, who has the privilege of working closely with a number of CJR hospitals. In our research with Jonathan, we learned CJR hospitals who have not submitted PRO data may in fact benefit from submission of that data. Under the right circumstances, submission of PRO data can increase a hospital’s CQS quality score, thereby decreasing their CMS discount and correspondingly increasing their surplus or decreasing their deficit. A framework for understanding if your hospital can benefit from PRO submission is detailed below.


Relatively few CJR hospitals have successfully submitted PRO data. A recent report provided by CMS indicates that only about 21% of CJR hospitals have successfully submitted their PRO data for this program. Anecdotal inquiry indicates that there are many more CJR hospitals that are collecting PRO data in some way but not at sufficient volume to qualify for successful submission. This may result in substantial funds being left on the table by many of these organizations.

The way this works is that CJR participant hospitals that successfully submit PRO and risk variable data can receive two points toward their composite quality score. CMS calculates a composite quality score for each participant hospital for each performance period, which equals the sum of:

  • The hospital’s quality performance score for the THA/TKA Complications measure;
  • The hospital’s quality performance score for HCAHPS Survey measure;
  • Any additional quality improvement points the hospital may earn as a result of demonstrating improvement on either or both of the quality measures; and, if applicable, 2 additional points for successful data submission of patient reported outcomes and limited risk variable data.
  • The sum of the components above constitutes the composite quality score, which is capped at 20 points.

This calculation will place the hospital into one (1) of four (4) categories (Excellent, Good, Acceptable, Below Acceptable) for the determination of the bonus they receive or payment they must make.

For most CJR hospitals that are within two (2) points of the higher category, successfully submitting PRO data will move them into the next category which will reduce the discount percentage they face in calculating the amount of money they may owe to or receive from CMS. For hospitals in the “Below Acceptable” category, moving to the “Acceptable” category allows them to receive the surplus of funds that they have created, which may be significant.

This opportunity arises when three factors are present:

  • The hospital hasn’t submitted the PRO data, and therefore hasn’t received the two (2) quality points for this data submission
  • A two (2) point increase in the quality score would move the hospital into a different performance category having a lower CMS discount, and
  • The hospital’s current surplus is not limited by the stop-gain amount applicable to that performance year.

 

Certain CJR Hospitals Can Benefit by Successfully Submitting PRO Data to CMS

A recent analysis by Singletrack Analytics indicated that a number of CJR hospitals would have benefited financially from successfully submitting PRO data. For hospitals having quality ratings of “Acceptable” or higher, the amounts by which surpluses could have increased in CJR performance year 1 (which included only about 6 months of episodes) varied depending on the particular hospital’s circumstances and ranged from about $2,000 to about $40,000, with results from a 12 month reconciliation being twice those amounts. These additional savings would have accrued from decreasing the CMS discount from 3% to 2%, or from 2% to 1.5% as the hospital moved to a higher performance category.

The greatest opportunity, however, would accrue to hospitals in the “Below Acceptable” performance category in which any savings they created was withheld by CMS. In our analyses none of these hospitals would have increased their quality scores by implementing PRO reporting (either they were already reporting PRO data or the additional 2 points from PRO reporting wouldn’t have changed their performance category); however the savings that some of these hospitals created was substantial [in two (2) cases it exceeded $100,000 and in one (1) case it exceeded $200,000], so significant increases in savings would be possible for hospitals in this group that hadn’t submitted their PRO data and could have improved their quality score by 2 points.

Here’s an Example of how a Hospital Benefited from Successfully Submitting PRO Data

This hospital has the following characteristics:

  • It’s surplus is not limited by the “stop gain limit”.
  • • It’s current composite quality score is 5.5, placing it in the “Acceptable” performance category with a CMS discount of 3%.
  • Submission of the PRO data would increase its score to 7.5, moving it to the “Good” performance category with a discount of 2%.
  • The unadjusted target price is $2 million. With a 3% CMS discount this target is $1.94 million. This is the target for an “Acceptable” quality score.
  • With a 2% discount from achieving a “Good” quality score the target would be $1.96 million, a difference of $20,000. This difference would be reflected in the Net Payment Reconciliation Amount.
  • If the hospital moved from the “Good” to “Excellent” category and therefore from a 2% discount to a 1.5% discount the difference in NPRA would be $10,000.

 

How to Assess the Opportunity Patient-Reported Outcomes Present in Your Hospital

CJR hospitals have data to determine if successful PRO data submission can be of benefit. Those hospitals can assess the potential financial opportunity of submitting the PRO data by reviewing their CMS reconciliation as follows:

  • Performance Category: if this category is Excellent, no further improvement is possible.
  • Composite Quality Score: compare it to the table in the Methodology Notes of the reconciliation, which is reproduced below. If adding two (2) points to the score would place the CJR hospital in a different quality category then an increase in surplus is possible.
  • Reconciliation Summary: Review the CMS Reconciliation worksheet and see if the Initial Reconciliation Amount equals the Total Stop Loss/Stop Gain amount. If so, the surplus hasn’t been limited by the Stop Gain amount and additional surplus is possible up to the Stop Gain amount for the respective performance year.

CMS CJR Reconciliation Chart

Data Submission Requirements

In order to meet the requirements for successful submission of PRO data, participating hospitals must meet the minimum case requirements for eligible procedures in the table below for each performance year in order to fulfill the successful data collection criteria set forth in the CJR final rule.

Minimum Case Requirements for Eligible Procedures in each Performacne Year (PY) for Successful Data Collection
Minimum Case Requirements for eligible procedures in each performance year for successful data collection

Cost-Benefit Analysis of PRO Data Submission

Obviously, the process of collecting and submitting the PRO data has a cost that must be assessed against its benefits. Costs of collecting this data by the hospital and its orthopedic practices is estimated at $65,000 per year, with outsourced solutions often being somewhat more cost-effective. For hospitals whose additional surplus would exceed these amounts, submission of the PRO data would be cost-effective.

Conclusion

While not all CJR hospitals may gain an initial financial advantage from PRO data submission, certain hospitals may find that it increases their quality score sufficiently to place them into a lower CMS discount category. In particular, hospitals in the “Below Acceptable” may be able to move to the “Acceptable” category and receive any surplus funds that they’ve generated. A quick analysis of the CMS reconciliation report can identify these potential opportunities.

About the Author

CODE Technology

CODE Technology

We’re research nerds, and we believe Patient-Reported Outcomes are going to transform healthcare for the better - and we’re not alone. That is why we’re helping organizations collect and interpret as much data as possible, as efficiently as possible. Let us help you help the world.

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