building a fiscally healthy vad program: ensuring financial success and growth pavan atluri, m.d...
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Building a Fiscally Healthy VAD Program: Ensuring Financial Success
and GrowthPavan Atluri, M.D
Assistant Professor of SurgeryDirector, Mechanical Circulatory Support
and Heart TransplantationDirector, Minimally Invasive and Robotic
Cardiac Surgery Program
Division of Cardiovascular SurgeryDepartment of Surgery
University of Pennsylvania
9th Annual INTERMACS MeetingSaturday, 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
PAYMENT BASICSCMS Centers for Medicare & Medicaid Services
Medicare payment basics
$ Medicare payment
Hospital base determined by several factors
$ Hospital-specific base rate
Indirect medical education
Disproportionate share
Regional wage rate adjustment
others
Determined by CMSx MS-DRG weight
As a result:
• HUP rates are 61% higher
• PPMC rates are 38% higher
• Medicare payments are 17% higher at HUP than PPMC for the same procedure.
HUP - #8
PPMC - #185
University of Michigan - #24
New York-Presbyterian - #86
Massachusetts General - #97
Mayo St Mary - #150
Northwestern Memorial - #187
Medicare MS-DRG Payments Vary by Institution
FY 2013 CMS Median Payment for MS-DRG 1 ≈ $202,000High cost cases may qualify for outlier payments
Medicare pays hospitals by MS-DRG
Typical MCS MS-DRGs
1 2 3 215
ECMO Replace or repair component of implantable VAD
Trach Implant BIVAD external
Vent 96+ w O.R. procedure
Insert temporary non-implantable extracorporeal circulatory device
with MCC wo MCCImplant single ventricular (extracorporeal) external heart assist system
Repair heart assist system
Heart or Heart/Lung Transplant
Implant total heart or internal VAD
Remove and replace/repair external VAD
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 Co-morbidity” (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?
* These diagnosis codes are on the MCC list, but are not considered MCCs when the primary diagnosis is heart failure.
Source: FY 2013 IPPS final rule MedPAR file (contains all hospital inpatient claims for Medicare beneficiaries from FY 2011)
Code Description N% of
Claims785.51 Cardiogenic shock 654 16.6%428.23 Acute on chronic systolic heart failure 574 14.5%518.81 Acute respiratory failure 327 8.3%584.5 Acute kidney failure with lesion of tubular necrosis 241 6.1%570 Acute and subacute necrosis of liver 170 4.3%
428.43 Acute on chronic combined systolic and diastolic heart failure 157 4.0%038.9 Unspecified septicemia 142 3.6%995.92 Severe sepsis 136 3.4%486 Pneumonia, organism unspecified 128 3.2%427.41 Ventricular fibrillation 107 2.7%785.52 Septic shock 86 2.2%348.30 Encephalopathy, unspecified 71 1.8%995.91 Sepsis 66 1.7%056.01 Encephalomyelitis due to rubella 57 1.4%262 Other severe protein-calorie malnutrition 54 1.4%507.0 Pneumonitis due to inhalation of food or vomitus 53 1.3%427.5 Cardiac arrest 50 1.3%
Courtesy of Thoratec
Medical records defines cardiogenic shock
as: inotrope dependence
OR Cardiac index > 2.2
*
*
MCC examplesPrimary Dx Secondary Dx
Acute on chronic heart failure
Cardiogenic shockMS-DRG 1:Cardiogenic shock qualifies as a secondary & major co-morbid condition
Primary Dx Secondary Dx
Chronic Systolic HF Acute on chronic heart failure
MS-DRG 2:Acute heart failure is not secondary to chronic HF and does not qualify as a co-morbid condition
Most common MS-DRG 1
Primary Dx Secondary Dx
Chronic Systolic HF Severe Malnutrition NOS
MS-DRG 1:Severe malnutrition qualifies as a secondary & major co-morbid condition
Primary Dx Secondary Dx
Acute on chronic heart failure
Pulmonary collapseMS-DRG 2:Pulmonary collapse is secondary, but not a major co-morbid condition
Primary Dx Secondary Dx
Acute on chronic heart failure
Acute kidney failureMS-DRG 2:Acute kidney failure no longer on the CMS list of major co-morbid conditions
What difference does it make?it pays…
MSDRG Code
60% of MSDRG 1
70% of MSDRG 1
58% of MSDRG 1
Why MSDRG 1 is so important
2013 MedicareBTT and DT Cases only
MSDRG 1 MSDRG 2 DeltaALOS 27.5 20.5 7.0 Avg Payment 196,396 125,606 70,791 Average Direct Cost 166,741 152,293 14,448 Average Contribution 29,655 (26,687) 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
– Discharge day
• VAD interrogation
2012 MPFS Final Rule RVUs (CY 2012 Addenda) https://www.cms.gov/PhysicianFeeSched/downloads/Addenda.zip
Varies depending on: •LOS•Number & type of procedure(s)•Number of interrogations
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 post-
operative 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
Post-Op 1SICU
Post-Op 2Med/Surg
Example: Patient GFNote: Implant cost omitted to clarify scale
Pre-Op 1 Cath Lab (optional)
Pre-Op 2CCU or Med/Surg
Implant
Implant day literally “off the charts”
VAD financial profileMedicare MSDRG#1 Heart Transplant/VAD w MCC
Net LossPayment Profitable range of
length of stay
Pre-op
ImplantDay 7
SICUMed/Surg
QUALITY
Quality has a direct impact on financial viability due to decreased LOS, decreased ICU days, fewer drugs, fewer OR returns....
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