TRUVENQ HEALT ANALYTICS 777 E. Eisenhower Parkway Ann Arbor, MI 43103 (734) 913-3399 (734) 913-3700 mike.boswood@truvenhealth.com September 17, 2013 VIA FACSIMILE AND U. S. MAIL Ed Hernandez, O.D. Chair, Senate Committee on Health State Capitol, Room 2080 Sacramento, CA 95814 Richard Pan, M.D. Chair, Assembly Committee on Health State Capitol P. 0. Box 942849 Sacramento, CA 94249-0009 Dear Doctors Hernandez and Pan: Thank you very much for your letter dated August 29, expressing your concerns about Prime Healthcare Services and their selection in our 100 Top Hospitals program. We fully understand the nature of these concerns, given Truven Health's extensive work aggregating and analyzing healthcare claims data on behalf of constituents across the spectrum of the U.S. healthcare system. Our 100 Top Hospitals program, which is the focus of your letter, is part of a large portfolio of Truven Health offerings and is a unique aspect of what we do. We appreciate your statements of support for our program and very much hope that we can help you understand our process in detail and answer any questions you may have. To that end, the following background on our 100 Top Hospitals program is a good starting point. Tmven Health Analizfics I 00 Top Hospitals Background Since it began in 1993, the 100 Top Hospitals program has been dedicated to developing a national balanced scorecard for hospitals and health systems to measure the effectiveness of leadership in driving balanced performance improvement. Every year, we strive to improve the relevancy and effectiveness of our metrics and peer reviewed methodologies in measuring leadership effectiveness. In 2011, the 100 Top Hospitals National Balanced Scorecard was selected by the National Institute of Standards and Technology to validate performance levels of the hospital winners of the Malcolm T. Baldrige award, initiated by President Ronald Reagan in 1991 to provide best leadership practices for use by American business leaders to compete globally. 102511.cfrn The 100 Top Hospitals National Balanced Scorecard was selected for its fundamental purpose and theory, as well as the academic vetting and field testing of our scorecard and peer reviewed methods. Ed Hernandez, O.D. Richard Pan, M.D. September 17, 2013 Page Two Source Data and Testing The foundation of the 100 Top Hospitals program is public data sourced from the Centers for Medicare Medicaid Services: Medical Cost Report and Hospital Compare data. Public data has a number of limitations, including the absence of traceable patient identifiers and restriction to the Medicare patient population for calculating mortality, complications, patient safety, and length of stay. As you well know, these patients are the sickest, most vulnerable and most expensive to treat. Truven Health Analytics goes to great to strengthen the reliability of these public data sets. We employ an extensive list of adjustments, reasonableness and statistical tests, and additional reviews described in the attached Addendum A: Key Quality Processes and in the enclosed 100 Top Hospitals study abstract which is also available at 1 Our testing extends to determining the appropriate use of public data for a balanced scorecard, actionable nature of metrics, reasonableness checks against prior year's data sets, scores, winners and ranges of performance. We often make our methods and databases available to leading academic researchers to vet our measurement approaches and methods. For example, the appropriateness of our use of public data for creating a national balanced scorecard to measure leadership performance was validated by Griffith and Alexander in their Hayhow award-winning research. To ensure consistency and the validity of comparison and national benchmarks, our study excludes specialty hospitals and certain patient populations such as and rehabilitation patients. Further, we perform "winner exclusions" as listed in Addendum A. This allows us to eliminate hospitals with poor scores on our quality metrics as well as hospitals with poor financial results. The goal is to identify hospitals and health systems with the highest balanced performance. In summary, our 100 Top Hospitals program is built on the foundation of public data, and our processes are transparent, comprehensive, stringent and time-tested. The result is a set of actionable national benchmarks for hospital and health system boards and executives to use to achieve balanced excellence. 1 Griffith JR, Alexander JA, Jelinek RC. Measuring Comparative Hospital Performance. Healthcare Management. 2002 Jan-Feb: 47(1) Ed Hernandez, O.D. Richard Pan, M.D. September 17, 2013 Page Three Prime Health Services Your specific concerns about our awards to Prime Health Services and its facilities primarily relate to allegations of potential Medicare upcoding. We agree that these allegations, if ultimately proved true, would likely subvert Prime's awards. To rescind them now, however, would be premature. In the past, Truven Health has rescinded awards based on admission of guilt, sanctions and convictions of wrongdoing. None of these circumstances is yet present with Prime Health Services. We have followed and continue to monitor the various inquiries and allegations about Prime. These include the pending federal investigation and the earlier inquiries by the Medicare Quality Improvement Organization of California. In that case, the Q10 declined to sanction Shasta Regional Medical Center, or any other Prime hospital, after investigating allegations of upcoding in 2009. Absent admission of guilt, we generally do not take action contrary to the official findings of an authority that investigated the upcoding issue, reviewed the patient medical records and found no wrong doing. Next Steps Federal and state agencies are dedicated to stopping fraudulent business and billing practices by hospitals. Clearly, the reason the government invests heavily in detecting fraudulent practices is that they are difficult to both identify and prove. Given Truven Health's extensive government payment integrity work, we know that coding patterns alone do not evidence proof of fraudulent coding. Direct review of the medical record is required to make that determination. As explained above, Truven Health relies on CMS data for its 100 Top Hospitals program. This data is publicly available. As such, it does not include patient identifiers or other aspects of an individual's medical record. Without this information at a minimum, there is no possible way for Truven Health - or anyone - to validate the presence of upcoding. That determination must be left to authorities with both the source data and the investigatory powers that are required to build the case. For the reasons explained above, we are not in a position to act on your recommendations. We have not shied away from rescinding a 100 Top Hospitals award when the facts warrant the action. We will do so again, if Prime Health Services or any hospital or health system is found guilty of fraudulent practices by federal investigators. The integrity of the 100 Top Hospitals study and its attendant value to the healthcare community depends on applying rules fairly to a_ll hospitals -- not one hospital or one health system. Our reliance on findings of government agencies or court proceedings is fair to all hospitals and health systems. Ed Hernandez, 0.D. Richard Pan, M.D. September 17, 2013 Page Four We remain willing to discuss these issues and to answer any further questions. Very truly yours, Michael . President and CEO