Intersecting ICD-10, VBP Can Enhance Patient Care and Practice Revenue

Both ICD-10 and Value-Based Purchasing (VBP) share an indispensible commonality - improving patient care. In fact, the legislative history of ICD-10 adoption indicates that its fundamental objectives are to improve the quality of care and provide better data. Similarly, CMS  set forth the primary purpose of quality health care – “the right care for every person every time.”

As is well known, ICD-10 is a set of diagnoses codes utilized to equate a specific condition and co-conditions with a number that is eventually converted into reimbursement for medical treatment and services performed. In August 2012, a final rule was release, which delayed the implementation from October 1, 2013 to October 1, 2014. Yet, as a recent HFMA article illustrates, "careful strategic planning has helped leaders at University of Washington (UW) Medicine in Seattle respond to rapid changes in the healthcare environment."

 Specifically, in relation to ICD-10, UW Medicine assessed the following:

• Impact assessment and feasibility study;

• Created cross-departmental teams, identified leaders, and created a clear structure;

• Collaborated with project teams that had similar goals; and

• Drove compliance through physician education.

In creating the structure for the teams, six areas of impact were included: clinical operations, physician engagement, revenue cycle/finance, coding/CDI, technology, and data reporting. After focusing on ICD-10, it was discovered that many other initiatives are complimentary. One of the key identified “takeaways” was “embracing responsible scope creep.” That is refuting earlier organizational practices of keeping projects addressing different initiatives separate instead of embracing economies of scale. Given the cost and time associated with ICD-10 preparation, addressing more than one objective can reduce the impact on clinicians and better patient outcomes. Hence, potentially reducing the number of hospital-acquired conditions, diminishing the number of readmissions, and improving the overall patient experience. All of these factors have a direct impact on the VBP program and, in turn, the revenue cycle.

What started as a pilot program in the Deficit Reduction Act of 2005, CMS was authorized to develop a plan commencing in FY 2009. The Hospital Inpatient Value-Based Purchasing Program (Hospital VBP) became permanent under Section 3001(a) of the Affordable Care Act. The May 5, 2011, Federal Register indicated that the program would apply to payments for discharges occurring on or after October 1, 2012. And, “[s]coring the Hospital VBP program will be based on whether a hospital meets or exceeds the performance standards with respect to the measures,” as well as, patient satisfaction. Funded by an incentive pool, which was created through a 1 percent reduction of participating hospitals’ base operating DRG payments (increases to 2 percent in 2017), it provides payments to hospitals that meet or exceed the FY13 performance standards. For those not meeting the standards, a penalty or reduction in reimbursement is assessed.

As the December 20, 2012, CMS Report indicated, nearly 3,000 hospitals had bonuses or penalties of nearly $1 billion tied to patient quality care. Of the hospitals included, 1,557 received bonuses, while 1,427 will see reduced payments. The revised payments begin in this month.

For physicians and other providers, the take-aways are fundamental. Focus on providing the best quality of care, document the nuances of a patient’s condition, and communicate effectively with project teams to ensure smooth implementation of the various initiatives. In the end, those providers who do will see better rewards for their efforts.