2.0 Background
2.1 DHA identified
seven demonstration hospitals based on historical TRICARE utilization
and claims data for DRG 470 surgical procedures for the LEJR demonstration.
Hospitals were selected for participation in the demonstration if
they had 20 or more DRG 470 admissions (total) during FY 2013, FY
2014, and FY 2015. Participation in the demonstration is required;
once selected for participation, hospitals will remain in the demonstration
for the term of the demonstration, regardless of future DRG 470
utilization rates. The demonstration hospitals for this initiative
include:
• Florida
Hospital - Tampa
• Tampa General Hospital
• Columbia Largo
Medical Center
• Brandon Regional
Hospital
• Florida
Hospital - Wesley Chapel
• Columbia Regional
Medical Center Oak Hill
• Memorial Hospital
of Tampa
2.2 For purposes of this initiative,
demonstration year one will commence for LEJR admissions (DRG 470
only) on May 23, 2016, and include all completed episodes of care
through September 30, 2017. Subsequent demonstration years will
be conducted on a FY basis (i.e., for episodes ending October 1st
through September 30th).
2.3 At least 30 days prior to
the start of the demonstration, and every demonstration year thereafter,
DHA will establish target episode prices for each demonstration
hospital and communicate these target prices in writing to the East
Regional Contractor. These target episode prices will become the
financial basis for calculating eligibility for incentive payments
or penalties. Target episode prices shall be calculated as follows:
2.3.1 Target
episode prices will be based on a blend of hospital-specific and
market-wide historical episode costs for DRG 470 admissions and
associated post-operative care within 90 days of discharge for the
preceding three FYs (FY 2013, FY 2014, and FY 2015). This historical
data period shall be used for the duration of the demonstration,
with annual adjustments for inflation. In demonstration years one
and two, the blended rate for the target episode price shall be
developed with two-thirds hospital-specific data and one-third market-wide
data; in demonstration year three, the target episode price shall
be developed with one-third hospital-specific data and two-thirds
market-wide data.
2.3.2 DRG 470 episodes of care for
Service members, TRICARE beneficiaries with OHI, and TRICARE Dual
Eligible Fiscal Intermediary Contract (TDEFIC) beneficiaries will
be excluded from target episode price calculations.
2.3.3 Cost data
for teaching hospitals will be adjusted to account for Indirect
Medical Education (IDME) costs. IDME costs will be excluded from
target episode price calculations.
2.3.4 The episode price in effect
on the end date of the 90-day episode shall be used for incentive calculation
purposes, regardless of whether any component of the care was delivered
in the previous demonstration year.
2.3.5 The government may also choose
to make an adjustment to truncate the costs of extremely high-cost
or low-cost episodes. Any such adjustment would apply for both the
target cost and the actual cost of episodes.
2.4 All hospital,
physician, and post-operative care claims (for the 90-day period
following hospital discharge) will be paid via normal TRICARE reimbursement
methodologies. At the end of each demonstration year, DHA will calculate
total allowable costs and allowable charges for all DRG 470 episodes
at demonstration hospitals (not including costs for outpatient pharmaceutical
costs and unrelated conditions or procedures that are specifically
excluded in the CMS Comprehensive Care of Joint Replacement (CJR)
model). For each demonstration hospital, DHA will determine the
TRICARE allowable charges for all episodes as follows:
• Multiply
the number of episodes of care by the hospital’s target episode
price for each demonstration year to determine the aggregate target
price.
• Determine
the actual costs (i.e., total TRICARE allowable charges) for all
episodes of care during the demonstration year for each hospital.
• Adjust actual costs
to exclude IDME costs for teaching hospitals.
• Compare adjusted actual
costs to the aggregate target price to determine whether costs were
less than, equal to, or greater than anticipated for each demonstration
year.
2.5 To ensure that demonstration
hospitals are not reducing the quality of care offered to beneficiaries
or reducing patients’ overall perception of their hospital experience,
hospitals must achieve and maintain a favorable rating on two quality
measures in order to be eligible for any gain-sharing. DHA will
utilize the CMS composite quality score to determine eligibility
for gain-sharing. The CMS composite quality score is a hospital-level
summary quality score reflecting performance and improvement on
the quality measures adopted for Medicare’s CJR model (Total Hip
Arthroplasty (THA)/Total Knee Arthroplasty (TKA)) complications
measure and the Hospital Consumer Assessment of Healthcare Providers
and Systems (HCAHPS) patient experience survey measure. In order
to be eligible for gain-sharing, demonstration hospitals must achieve
and maintain a CMS composite quality score which exceeds the CMS
standard for the Medicare CJR model. The Government will use CMS
Hospital Compare data as the source for composite quality scores
for TRICARE demonstration hospitals.
2.6 Demonstration hospitals that
achieve and maintain a favorable composite quality score and demonstrate
cost savings as compared to the target episode price will be eligible
to participate in gain-sharing, expressed as a percentage of total
cost savings. During the first demonstration year, hospitals who
meet these requirements will receive an incentive payment of 5%
of the total cost savings for that year. During the first demonstration
year, hospitals who do not meet these requirements will not incur any
financial risk (no loss-sharing penalty).
2.7 Gain/loss sharing will increase
over time, from no loss sharing in demonstration year one (only gain-sharing),
to higher levels in later years (gain-sharing of 5% in demonstration
years one and two, and 10% in demonstration year three). Loss sharing
is 0% in demonstration year one, 5% in year two, and 10% in demonstration
year three. Episode gain, or loss sharing amounts under the demonstration will
be non-underwritten costs and paid out of the CLIN as indicated
in
Section 1, paragraph 5.4.
2.8 DHA will
identify cohort hospitals based on historical TRICARE utilization
and claims data for DRG 470 surgical procedures. Hospitals in the
Tampa-St. Petersburg market will be considered for cohort hospital
status if they had less than 20 DRG 470 admissions (total) during
FY 2013, FY 2014, and FY 2015. Once selected as a cohort, hospitals
will remain in cohort status for the term of the project, regardless
of future DRG 470 utilization rates.
2.9 Cohort hospitals are not eligible
for incentive payments. The Government will analyze their cost and
quality performance outcomes as they compare to demonstration hospitals
to better understand health care trends and the impact of using
incentive payments to produce higher value outcomes. Cohort hospital
analysis results will not be used to determine eligibility for incentive
payments for demonstration hospitals.
2.10 The three-day prior hospital
stay rule for Skilled Nursing Facility (SNF) care for DRG 470 patients is
waived for LEJR Demonstration Hospitals. All other existing TRICARE
benefits and reimbursement policies will continue to apply.