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.