The P4P crossroads - Is hospital pharmacy leadership ready?


With the rollout of CMS’ Value-based Purchasing (VBP) Program and the Hospital Readmissions Reduction Program (HRRP) in 2012, hospitals are under the gun to attain higher quality standards or face the fallout of financial penalties. Many hospitals, including those that believe they were performing at high levels, were caught off guard to learn that their initial CMS performance reports pointed to penalty levels weighty enough to turn heads.

After the initial shock wore off, one of the first phone calls many CEOs made was to the pharmacy director seeking a plan of action to help improve performance. It’s no wonder. Many of the measures under regulatory scrutiny could be positively impacted with the right pharmacy directives and strategies.

The question is: Are pharmacy directors equipped and ready to face this challenge?

The reality of how three initiatives under Title III of the Affordable Care Act - VBP, HRRP and the Hospital Acquired Conditions (HAC) - will impact bottom lines is beginning to come into focus. A typical 300-bed hospital with $50 million in annual CMS inpatient payments could find that $3 million is potentially at risk by 2017.

Strategies for competing

Competition will be fierce. It’s the foundation upon which pay-for-performance programs are built. All scoring around VBP is relative to how one facility performs in relation to all others across the country. And there is little room for error.

For FFY13 scoring, process of care measures formed the primary basis of penalties, and hospitals generally had to be performing at 93% compliance with these quality measures just to be ranked as average. A score of 100% was often needed to be considered among top-tier facilities. Essentially, one missed opportunity to provide the proper care (e.g., medication, lab test, education) could drop a hospital out of the high-performance category.

To effectively devise strategies for competing in a new “Pay for Performance” era, pharmacies must understand where they can have the most impact. Conducting a gap analysis around the key performance measures and determining the most effective care delivery models is critical. These initiatives will also need to be backed by flexible IT structures that provide the necessary tools for driving improvements in patient outcomes and clinical intelligence reporting. 

The impact-2014 and beyond

Thresholds and benchmarks for process of care measures under VBP are so high that they leave very little room for error or improvement. As more focus is placed on the patient experience and outcomes measures (where current performance scores lag), hospitals will have more opportunity to make improvements and rise to the top.

Primary performance measure sets for FFY14 will expand from the FFY13 “process of care” focus to include a more holistic view of performance - process of care (45%), patient experience (30%), and outcomes (25%). This shift increases the potential impact of pharmacy initiatives to impact of overall care since the focus will be more around outcomes and eventually efficiency (cost) measures and less on ensuring a single step in the care delivery.

The risk associated with the readmissions reduction program will escalate quickly following its 2012 introduction. Covering readmissions for heart failure, myocardial infarction, and pneumonia and impacting 1% of payout in 2012, the program will increase to 2% in 2013 and 3% in 2014. Conditions covered will expand to chronic obstructive pulmonary disease, coronary bypass grafting, percutaneous transluminal coronary angioplasty,  and other vascular procedures by 2014.

Of 3,400 hospitals falling under HRRP in its first year, 65.5% were penalized, representing $280 million in penalties. Unlike the VBP program, there is no reward for having lower than expected readmissions rates, but as readmission rates begin to drop around the United States, it will become increasingly difficult to ensure your hospital is on the right side of the penalty equation.

Pay-for-performance initiatives have the potential to elevate the role of the pharmacy department in driving performance improvement through initiatives that optimize medication use, enhance patient education, and prevent outlier events such as adverse drug events. While the pharmacy has sometimes struggled to demonstrate the value of the clinical services it provides, there is now a structure that supports a business plan for demonstrating how these initiatives impact care and the bottom line.

Consider this simple four-part analysis for positioning pharmacy services:

Establish current gaps in care by reviewing the data. Determine which services would be most valuable in closing these gaps at your organization.

Rank each opportunity for improvement by the impact that pharmacists can have on improving performance and reducing readmissions.

Consider all options for care delivery models and determine the most effective approach within the framework of hospital workflows. Also consider what current activities that are not delivering high value should be eliminated!

Consider the sustainability of the final strategy. What are the diverse sources of value that will support the service (e.g., decreased readmission, increased HCAHPS scores, reimbursable clinical visits, or discharge prescription services)?

When conducting this analysis, many pharmacy directors will find that high thresholds minimize the potential for improving process of care measures even though the pharmacy department’s ability to impact this part of the VBP equation is high.

Surgical Care Improvement Project (SCIP) and other “Core Measure” outcomes can be greatly impacted through pharmacy systems and processes that ensure every patient gets proper care. That said, the patient experience measures that revolve around HCAHPS scores often provide more opportunity for improvement because of the much larger gap between the threshold and benchmark.

The question then becomes: “Does it make more sense to focus resources on improving a performance measure by .04%, or will resources be better used in taking a HCAHPS score from 30% to 80% to lead the pack?” Based on this type of analysis, many hospitals are looking at HCAHPS scores first.

The pharmacy department at Minnesota-based Fairview Health Services, a health system encompassing seven hospitals and more than 40 primary health clinics, is leading the charge to impact pain management HCAHPS scores.

The organization first appointed a pain stewardship pharmacist charged with monitoring daily reports for all patients on oral long-acting opioids, fentanyl and methadone, as well as checking current medication profiles against patient history.

Interventions include an “opioid review” note that is documented by the pain stewardship pharmacist and a plan of transition to oral medications that includes a weaning of acute pain medications for continuity of care. These initiatives have resulted in an increase in pharmacist consults.

Other hospitals are focusing on patient education to boost HCAHPS and hopefully reduce readmissions. Using pharmacists to provide medication and self-management education to patients is a critical component.

The role of technology

While process and workflow strategies will go a long way toward raising the bar on quality standards, it will take a solid foundation of technology, automation, and clinical decision support (CDS) to truly impact quality measures.

Electronic medical records (EMR) are a critical first step, but the current reach of CDS in these applications can be somewhat limited in that it is not able to consider all existing relevant contextual patient data. Most alerts appear one time - at the time of order entry - with no additional follow-up to take into account the dynamic nature of patient care. Alert fatigue further reduces effectiveness of the tools.

When rules-based, advanced surveillance technology is combined with robust CDS solutions, hospitals can achieve much richer aggregation of patient data covering the overall scope of care and ultimately rendering an alert that is more relevant to the patient’s true condition. Smart logic built into these applications can be used to develop rules that enable real-time and ongoing monitoring of patient care to impact performance.

Currently most performance data and reports lag weeks if not months behind actual care delivery and provide little value around impacting patient care and driving continuous quality improvement.

West Florida Hospital (WFH), a 531-bed acute care hospital in Pensacola, Fla., realized a 100% increase in pharmacy-driven interventions upon deploying surveillance technology and reaped the benefits associated with better care delivery as well as chalked up monthly savings of $6,300 around renal dosing adjustments and $11,800 for antibiotic-related interventions. 

Currently, WFH’s entire renal dosing program is driven by the technology, and the hospital’s Antimicrobial Management Program uses the surveillance technology to monitor appropriate use of high-cost antibiotics as well as patients on antibiotics for more than 10 days. Rules-based monitoring also aids WFH in its efforts to track CMS Core Measures performance for acute myocardial infarction, heart failure, diabetes, and pneumococcal and influenza vaccinations.


It’s a new day for the pharmacy as regulatory and reimbursement pressures open the door for pharmacy management to take the lead in strategically positioning hospitals for the performance expectations of the future. Are you ready?  

Steve Riddle, PharmD, BCPS, FASHPis vice president of Clinical Affairs with Pharmacy OneSource, part of Wolters Kluwer Health. He can be reached at

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