Transcript Building a Fiscally Healthy VAD Program: Ensuring Financial

Building a Fiscally Healthy VAD Program:
Ensuring Financial Success and Growth
Pavan Atluri, M.D
Assistant Professor of Surgery
Director, Mechanical Circulatory Support
and Heart Transplantation
Director, Minimally Invasive and Robotic
Cardiac Surgery Program
Division of Cardiovascular Surgery
Department of Surgery
University of Pennsylvania
9th Annual INTERMACS Meeting
Saturday, May 16th, 2015
Navigating Hospital Administrators
• Growth is a factor of financials
• Strong financials = more support
• VAD therapy is expensive…..but, can be
profitable
• VAD programs are profitable only if quality is
excellent
– Limited complications
– Limited LOS
Review of profitability measurement at UPHS
CMS Centers for Medicare & Medicaid Services
PAYMENT BASICS
Medicare payment basics
$
Hospital-specific base rate
Indirect medical education
HUP - #8
PPMC - #185
Disproportionate share
Regional wage rate adjustment
New York-Presbyterian - #86
others
Massachusetts General - #97
As a result:
x
Hospital base determined by
University
several
factors of Michigan - #24
• HUP rates are 61% higher
MS-DRG weight
Mayo St Mary - #150
Northwestern Memorial - #187
Determined by CMS
• PPMC rates are 38% higher
Medicare payments
are 17% higher at HUP than PPMC for the same procedure.
$• Medicare
payment
Medicare MS-DRG Payments Vary by Institution
FY 2013 CMS Median Payment for MS-DRG 1 ≈ $202,000
High cost cases may qualify for outlier payments
Medicare pays hospitals by MS-DRG
Typical MCS MS-DRGs
1
2
3
215
Heart or Heart/Lung
Transplant
ECMO
Replace or repair component of implantable VAD
Implant total heart or internal
VAD
Trach
Remove and replace/repair
external VAD
Vent 96+ w
O.R. procedure
with MCC
wo MCC
Implant BIVAD external
Insert temporary non-implantable extracorporeal
circulatory device
Implant single ventricular (extracorporeal)
external heart assist system
Repair heart assist system
MS-DRG 1 (higher payment) versus
2 depends on presence of at least
one MAJOR co-morbidity
Capturing MCCs critical to financial success
• MS-DRG 1 (higher payment) or MS-DRG 2 (lower payment)?
– depends on presence of at least one “Major Complication and/or Comorbidity” (MCC)
• MCCs
– Medicare-defined list
– Changes every year
– Must be SECONDARY to primary dx
• A co-morbid condition
• NOT an exacerbation of the primary dx
– Usually describes an acute manifestation of disease rather than
chronic disease states
Best Practice: Create a process to review all MS-DRG 2
assignments prior to claim submission
What are the common VAD MCCs?
Code
785.51
* 428.23
518.81
584.5
570
* 428.43
038.9
995.92
486
427.41
785.52
348.30
995.91
056.01
262
507.0
427.5
Description
Cardiogenic shock
Acute on chronic systolic heart failure
Acute respiratory failure
Acute kidney failure with lesion of tubular necrosis
Acute and subacute necrosis of liverMedical records defines
Acute on chronic combined systolic andcardiogenic
diastolic heartshock
failure
as:
Unspecified septicemia
Severe sepsis
inotrope dependence
Pneumonia, organism unspecified
OR
Ventricular fibrillation
Cardiac index > 2.2
Septic shock
Encephalopathy, unspecified
Sepsis
Encephalomyelitis due to rubella
Other severe protein-calorie malnutrition
Pneumonitis due to inhalation of food or vomitus
Cardiac arrest
N
654
574
327
241
170
157
142
136
128
107
86
71
66
57
54
53
50
% of
Claims
16.6%
14.5%
8.3%
6.1%
4.3%
4.0%
3.6%
3.4%
3.2%
2.7%
2.2%
1.8%
1.7%
1.4%
1.4%
1.3%
1.3%
Source: FY 2013 IPPS final rule MedPAR file (contains all hospital inpatient claims for Medicare beneficiaries from FY 2011)
* These diagnosis codes are on the MCC list, but are not considered MCCs when the primary diagnosis is heart
failure.
Courtesy of Thoratec
MCC examples
Primary Dx
Secondary Dx
Acute on chronic
heart failure
Cardiogenic shock
Primary Dx
Secondary Dx
Chronic Systolic HF
Severe
Malnutrition NOS
Primary Dx
Secondary Dx
Chronic Systolic HF
Acute on chronic
heart failure
Primary Dx
Secondary Dx
Acute on chronic
heart failure
Pulmonary collapse
Primary Dx
Secondary Dx
Acute on chronic
heart failure
Acute kidney failure
Most common MS-DRG 1
MS-DRG 1:
Cardiogenic shock qualifies as a secondary &
major co-morbid condition
MS-DRG 1:
Severe malnutrition qualifies as a secondary &
major co-morbid condition
MS-DRG 2:
Acute heart failure is not secondary to chronic HF
and does not qualify as a co-morbid condition
MS-DRG 2:
Pulmonary collapse is secondary, but not a major
co-morbid condition
MS-DRG 2:
Acute kidney failure no longer on the CMS list of
major co-morbid conditions
What difference does it make?
it pays…
70% of MSDRG 1
60% of MSDRG 1
MSDRG Code
58% of MSDRG 1
Why MSDRG 1 is so important
2013 Medicare
BTT and DT Cases only
ALOS
Avg Payment
Average Direct Cost
Average Contribution
MSDRG 1
27.5
196,396
166,741
29,655
MSDRG 2
20.5
125,606
152,293
(26,687)
Delta
7.0
70,791
14,448
56,342
Medicare DRG 1 & 2 rates are largley modelled on transplant cases,
but most of the VAD case cost is in the device:
MSDRG 2 is much less profitable than MSDRG 1
$70 thousand dollars for the 7 extra days
Pro Fee Coverage
• Procedural payment-unique operation in that
follow–up daily care is billable
• Daily rounds
– Day One
– Acute
– Less acute
Varies depending on:
• LOS
• Number & type of procedure(s)
• Number of interrogations
– Discharge day
• VAD interrogation
2012 MPFS Final Rule RVUs (CY 2012 Addenda)
https://www.cms.gov/PhysicianFeeSched/downloads/Addenda.zip
PRIVATE PAYORS
Payments vary widely by payor
• Medicare sets their own rates
• Managed care and commercial rates are
negotiated
– Often include a device pass-through
– Occasionally global arrangement for postoperative care
– Can be significantly higher than Medicare
• Balancing the payor mix is an important
component of financial success
Negotiate carve out contracts with private payers
• “Carve-out “contracts are one of the keys to making
VAD program financially healthy
• “Carve-outs” pay a “better” rate for certain items
• Generally, carve outs include:
– All implantable prosthetic devices
– All accessories to implantable prosthetics
• Avoid payers bundling VADs into any transplant global
package payments
• If not covered under a carve out contract, negotiate
rate for outpatient VAD accessories and supplies, or
outsource
COSTS
Three primary cost factors
1. Device cost ─ can vary widely
•
Heartmate II and Heartware  $80–90K per kit
•
Syncardia  100K
•
R-VAD  $34K
•
ECMO – minimal device cost vs Impella /Tandem
2. Length of Stay ─ varies widely
3. Site of Stay ─ ICU days versus Med/Surg days
•
SICU days are twice as costly
Daily cost of the five basic phases of VAD care
Implant day literally “off the charts”
Post-Op 1
SICU
Pre-Op 1
Cath Lab
(optional)
Implant
Pre-Op 2
CCU or Med/Surg
Example: Patient GF
Note:
Implant cost omitted to clarify scale
Post-Op 2
Med/Surg
VAD financial profile
Medicare MSDRG#1 Heart Transplant/VAD w MCC
Net Loss
Payment
Profitable range of
length of stay
Med/Surg
SICU
Implant
Day 7
Pre-op
Quality has a direct impact on financial viability due to decreased LOS,
decreased ICU days, fewer drugs, fewer OR returns....
QUALITY
Bleeding during primary admission seems to increase post-operative LOS
Source: Intermacs
Infection during stay increases post-operative LOS
45% had some infection during stay
Keys to Success
• Decrease risk through:
– Appropriate patient selection
– “Right-time” implant
• Intermacs II – IV rather than I
– Document to achieve appropriate reimbursement
• MS-DRG 1 versus 2
– Improve payor mix by outreach and affiliation strategy
– Improve quality
• Fewer total days, ICU days, drug, and complications
• Minimize re-hospitalizations for HF, GI bleeding, thrombosis
• Minimize pump exchanges