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 Medicare Eligible Program (TMEP)
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.