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.