Providers preparing for payment and reimbursement changes to achieve value-based healthcare continue to adopt new types of care models such accountable care organizations in order to improve access and outcomes while lowering overall costs. These types of initiatives force hospitals to be more efficient and may introduce a new set of questions for decision-making regarding drug utilization. Although pharmaceuticals drive costs within hospitals and must be incorporated into clinical protocols and embedded within information technology systems, the key considerations outlined below must be evaluated to determine how drugs may ultimately help hospitals improve quality as well as their bottom line.
1. Understand if the drug will minimize medication errors and improve patient safety and care. Hospitals must evaluate whether a drug will ultimately contribute to enhanced operational efficiency and improved patient safety. Improving patient safety through a reduction in medication errors remains an important CMS initiative. Serious preventable medication errors occur in 3.8 million annual inpatient admissions, and inpatient preventable medication errors cost approximately $16.4 billion annually.[1] Reducing a hospital's rate of medication error based on the requirement for less frequent dosing can be significant — the less dosing, the less chance of error and unnecessary costs. In terms of improving patient safety, one example is utilizing Exparel, a local anesthetic given at the close of surgery that delivers post-surgical pain control with reduced opioid requirements for up to 72 hours. This drug intervention may allow the direct patient care giver to focus on the non-pharmacological aspects of patient care which can contribute to improved outcomes.
2. Determine if the drug will help drive a reduction in hospital readmissions and length-of-stay. Given that beginning in FY2013, payments will be reduced to hospitals that have excess readmissions for acute myocardial infarction, heart failure and pneumonia, it is essential to know if a drug can help patients avoid returning to the hospital after discharge. The financial implications for a hospital can be significant for readmissions given penalties will apply to all of the Medicare payments the hospital incurs, not only those DRGs associated with the excessive readmissions. Selecting a drug that has been demonstrated to reduce readmissions over an equally efficacious and safe drug may ultimately contribute to the hospital's bottom line. Within congestive heart failure, although drugs represent a small part of the overall cost of treating the condition (approximately $440 per patient per year), drugs have a tremendous potential to contribute to cost offsets given their role in preventing expensive hospitalizations (a cost on average of $7,100 to $8,400 with potential to be much higher).[2] Angiotensin-converting-enzyme inhibitors, angiotensin II receptor blockers beta blockers, aldosterone blockers and vasodilators are examples of drugs that have been statistically proven in clinical trials to reduce hospital readmissions for heart failure. In the Medicare program alone, CHF led to nearly 1.4 million hospitalizations and $17 billion in spending in 2007. In terms of drugs contributing to the reduction in LOS, could a new anesthesia agent reduce the overall surgery time in an OR (one of the more expensive hospital settings), or could a new post-surgery cardiovascular drug contribute to a faster recovery time? One example is Lovenox and its use in the hospital for patients who are candidates for deep vein thrombosis prevention. The use of this drug has significant savings opportunities to avoid DVTs, decrease LOS and prevent pulmonary embolisms. Focusing on CHF, the appropriate use of medications is significant from a hospital reimbursement perspective since a hospital will not get paid for a readmission for this condition, so medication reconciliation and programs to drive adherence and compliance are important from both a quality and cost impact.
3. Assess if the drug can improve quality metrics. Although over the past decade terms such as "pay-for-reporting" and "pay-for-performance" have been discussed and embedded in healthcare reform and hospital strategic plans, now is the critical juncture where incremental reimbursement may be determined by achieving specific quality and performance metrics. Under the Hospital Value-Based Purchasing Program, which went into effect Oct. 1, 2012, CMS will make value-based incentive payments to acute-care hospitals based on how well they perform on certain quality measures or how much their performance improves on certain quality metrics during a specific period. Given these national payment reform initiatives, it is imperative for hospitals to evaluate not only how the drug performed in the clinical trial in terms of efficacy and safety but how it ties to quality metrics. Examples include vaccines that may prevent an inpatient hospitalization for pneumonia, superior antibiotics that can shorten the duration of an inpatient hospital stay, or chronic obstructive pulmonary disease medications given the high cost of the condition.
4. Evaluate a drug's comprehensive value proposition. While in the past hospitals may have adopted products on their formulary if they demonstrated superior efficacy and safety, many other factors contribute to a drug's successful formulary adoption in today's healthcare era. A focus on whether a drug has displayed evidence-based efficacy, whether it is considered non-traditional or experimental and whether FDA indicates it has been approved, are all key considerations for a hospital's formulary decision. Pharmaceutical companies are continually investing in clinical research and development with a much larger emphasis on health economics and outcomes models, and any long-term cost savings should be considered in a patient's care regimen. Dosage and duration of drug requirements are important considerations that can impact the productivity of the clinical staff and ultimately financial savings. A drug with a once/daily dosage vs. three times/daily dosage can represent efficiencies in terms of a pharmacist's time, a nurse's time, filling, charting on schedule activities and overall daily operations.
While drugs may appear to drive near-term costs, long-term benefits and savings related to complications and hospitalization may be off-set, in addition to helping drive quality metrics and outcomes. Drugs are an essential element of patient care and should be integrated into the overall value-based care environment for hospitals.
Tori Manis may be reached at tmanis@thecamdengroup.com.
Footnotes:
[1] National Priorities Partnership. Convened by the National Quality Forum. "Preventing Medication Errors: A $21 Billion Opportunity"
[2] Robert W. Dubois, MD, PhD; Marv Feldman, RPh, MS; John Martin, MPH; Julie Sanderson-Austin, RN; Kimberly D. Westrich, MA. “Role of Pharmaceuticals in Value-Based Healthcare: A Framework for Success” The American Journal of Managed Care.
1. Understand if the drug will minimize medication errors and improve patient safety and care. Hospitals must evaluate whether a drug will ultimately contribute to enhanced operational efficiency and improved patient safety. Improving patient safety through a reduction in medication errors remains an important CMS initiative. Serious preventable medication errors occur in 3.8 million annual inpatient admissions, and inpatient preventable medication errors cost approximately $16.4 billion annually.[1] Reducing a hospital's rate of medication error based on the requirement for less frequent dosing can be significant — the less dosing, the less chance of error and unnecessary costs. In terms of improving patient safety, one example is utilizing Exparel, a local anesthetic given at the close of surgery that delivers post-surgical pain control with reduced opioid requirements for up to 72 hours. This drug intervention may allow the direct patient care giver to focus on the non-pharmacological aspects of patient care which can contribute to improved outcomes.
2. Determine if the drug will help drive a reduction in hospital readmissions and length-of-stay. Given that beginning in FY2013, payments will be reduced to hospitals that have excess readmissions for acute myocardial infarction, heart failure and pneumonia, it is essential to know if a drug can help patients avoid returning to the hospital after discharge. The financial implications for a hospital can be significant for readmissions given penalties will apply to all of the Medicare payments the hospital incurs, not only those DRGs associated with the excessive readmissions. Selecting a drug that has been demonstrated to reduce readmissions over an equally efficacious and safe drug may ultimately contribute to the hospital's bottom line. Within congestive heart failure, although drugs represent a small part of the overall cost of treating the condition (approximately $440 per patient per year), drugs have a tremendous potential to contribute to cost offsets given their role in preventing expensive hospitalizations (a cost on average of $7,100 to $8,400 with potential to be much higher).[2] Angiotensin-converting-enzyme inhibitors, angiotensin II receptor blockers beta blockers, aldosterone blockers and vasodilators are examples of drugs that have been statistically proven in clinical trials to reduce hospital readmissions for heart failure. In the Medicare program alone, CHF led to nearly 1.4 million hospitalizations and $17 billion in spending in 2007. In terms of drugs contributing to the reduction in LOS, could a new anesthesia agent reduce the overall surgery time in an OR (one of the more expensive hospital settings), or could a new post-surgery cardiovascular drug contribute to a faster recovery time? One example is Lovenox and its use in the hospital for patients who are candidates for deep vein thrombosis prevention. The use of this drug has significant savings opportunities to avoid DVTs, decrease LOS and prevent pulmonary embolisms. Focusing on CHF, the appropriate use of medications is significant from a hospital reimbursement perspective since a hospital will not get paid for a readmission for this condition, so medication reconciliation and programs to drive adherence and compliance are important from both a quality and cost impact.
3. Assess if the drug can improve quality metrics. Although over the past decade terms such as "pay-for-reporting" and "pay-for-performance" have been discussed and embedded in healthcare reform and hospital strategic plans, now is the critical juncture where incremental reimbursement may be determined by achieving specific quality and performance metrics. Under the Hospital Value-Based Purchasing Program, which went into effect Oct. 1, 2012, CMS will make value-based incentive payments to acute-care hospitals based on how well they perform on certain quality measures or how much their performance improves on certain quality metrics during a specific period. Given these national payment reform initiatives, it is imperative for hospitals to evaluate not only how the drug performed in the clinical trial in terms of efficacy and safety but how it ties to quality metrics. Examples include vaccines that may prevent an inpatient hospitalization for pneumonia, superior antibiotics that can shorten the duration of an inpatient hospital stay, or chronic obstructive pulmonary disease medications given the high cost of the condition.
4. Evaluate a drug's comprehensive value proposition. While in the past hospitals may have adopted products on their formulary if they demonstrated superior efficacy and safety, many other factors contribute to a drug's successful formulary adoption in today's healthcare era. A focus on whether a drug has displayed evidence-based efficacy, whether it is considered non-traditional or experimental and whether FDA indicates it has been approved, are all key considerations for a hospital's formulary decision. Pharmaceutical companies are continually investing in clinical research and development with a much larger emphasis on health economics and outcomes models, and any long-term cost savings should be considered in a patient's care regimen. Dosage and duration of drug requirements are important considerations that can impact the productivity of the clinical staff and ultimately financial savings. A drug with a once/daily dosage vs. three times/daily dosage can represent efficiencies in terms of a pharmacist's time, a nurse's time, filling, charting on schedule activities and overall daily operations.
While drugs may appear to drive near-term costs, long-term benefits and savings related to complications and hospitalization may be off-set, in addition to helping drive quality metrics and outcomes. Drugs are an essential element of patient care and should be integrated into the overall value-based care environment for hospitals.
Tori Manis may be reached at tmanis@thecamdengroup.com.
Footnotes:
[1] National Priorities Partnership. Convened by the National Quality Forum. "Preventing Medication Errors: A $21 Billion Opportunity"
[2] Robert W. Dubois, MD, PhD; Marv Feldman, RPh, MS; John Martin, MPH; Julie Sanderson-Austin, RN; Kimberly D. Westrich, MA. “Role of Pharmaceuticals in Value-Based Healthcare: A Framework for Success” The American Journal of Managed Care.
More Articles on Medication Management:
7 Steps to Reduce Hospital Pharmacy Costs Without Eliminating Staff