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Value-Based Purchasing

In October 2012, Medicare began rewarding hospitals that provide high-quality care for their patients through the Hospital Value-Based Purchasing (VBP) Program. Under VBP, hospitals paid through the Inpatient Prospective Payment System (IPPS) are paid for inpatient acute care services based on quality of care—not the volume of services they provide. As the Medicare Quality Improvement Organization for Minnesota, Stratis Health offers technical assistance and support for Minnesota hospitals to be successful in this value-driven environment. If you need assistance or have questions about VBP, contact Stratis Health Program Manager, Vicki Olson, RN, MS, 952-853-8554.

Value-Based Purchasing fact sheet. Learn more about how the Value-Based Purchasing Program applies to your hospital, with information for FY 2013, FY 2014, FY 2015, FY 2016, and FY 2017. (9-page PDF)

Measures Included in VBP: Latest Results from Hospital Compare

December 2013 Release of Hospital Compare (44-page PDF)

  • Inpatient Process Measures
  • HCAHPS Survey Dimensions
  • Inpatient Outcome Measures (Mortality Only)
  • Central Line Associated Bloodstream Infection (CLABSI)
  • Catheter Associated Urinary Tract Infections (CAUTI)
  • Surgical Site Infections (SSI – Colon Surgery)
  • Surgical Site Infections (SSI– Abdominal Hysterectomy)
  • Medicare Spending Per Beneficiary
  • AHRQ PSI 90 Composite Measure

Report Date: January 2014

Archive

July 2013 Release of Hospital Compare (46-page PDF)

Inpatient Measures and HCAHPS Survey Dimensions from April 2013 Release of Hospital Compare (44-page PDF)

Inpatient Process Measures and HCAHPS Survey Dimensions from July 2012 Release of Hospital Compare (44-page PDF)

Inpatient Process Measures and HCAHPS Survey Dimensions from October 2012 Release of Hospital Compare (46-page PDF)

Inpatient Process Measures and HCAHPS Survey Dimensions from December 2012 Release of Hospital Compare (47-page PDF)

Background

The Hospital Value-Based Purchasing Program marks the beginning of a historic change in how the Centers for Medicare & Medicaid Services (CMS) pays health care providers and facilities. For the first time, approximately 3,500 hospitals across the country will be paid for inpatient acute care services based on care quality. The Patient Protection and Affordable Care Act requires that the total amount of value-based incentive payments available for distribution be equal to the total base operating Diagnosis-Related Group (DRG) payments reduction, as estimated by the Secretary of the Department of Health and Human Services.

The Law also requires that CMS redistribute that available amount across all participating hospitals based on their performance scores. In Fiscal Year (FY) 2013, approximately 1 percent of DRG payments to eligible hospitals will be withheld to provide the estimated $800 million that will be allocated to hospitals based on their overall performance. This is based on a set of quality measures that have been shown to improve clinical processes of care and patient experience. This report is the result of a simulation of the FY 2013 Program, using data from 2008 and 2010 as the Baseline and Performance Periods, respectively. This report will not result in any financial impact to your hospital. Instead, this report is intended to provide insight into how the Hospital VBP Program will use your performance data from Baseline and Performance Periods to calculate your Total Performance Score, which is the basis for the incentive adjustment that will be made in the FY 2013 Program, starting on October 1, 2012.

The Hospital Inpatient Quality Reporting (IQR) Program was originally mandated by Section 501(b) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA). This section of the MMA authorized CMS to reduce the annual payment rate update for a hospital that does not successfully report designated quality measures. The Deficit Reduction Act of 2005 increased the original reduction to 2.0 percentage points. The Hospital VBP Program uses some quality measures that hospitals are already reporting via the Hospital IQR Program. For FY 2013, the Hospital VBP Program will use 12 Clinical Process of Care measures and 8 dimensions of the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey.
More >

Hospital Value-Based Purchasing: Program final rule. The final rule for the Medicare Hospital Value-Based Purchasing Program from the Department of Health and Human Services, Federal Register, Vol. 76, No. 88, May 6, 2011, Rules and Regulations. (58-page PDF)

Hospital Value-Based Purchasing: FY2013 Overview for Beneficiaries, Providers, and Stakeholders, July 27, 2011. A recorded Open Door Forum presentation from the Centers for Medicare & Medicaid Services. (72-page PDF)

Measures

The VBP program has 20 measures for FY 2013 and 24 for FY 2014. Each hospital may earn two scores on each measure—one for achievement and one for improvement. The final score awarded to a hospital for each measure or dimension is the higher of these two scores.

Points

Achievement Points: Awarded by comparing an individual hospital's rates during the performance period with the 50th percentile (threshold) all hospitals' performance and the mean of the top decile, which is approximately the 95th percentile (benchmark) during the baseline period:

  • Hospital rate at or above benchmark: 10 achievement points
  • Hospital rate below achievement threshold: 0 achievement points
  • Hospital rate equal to or greater than the achievement threshold and less than the benchmark: 1-9 achievement points

Improvement Points: Awarded by comparing a hospital's rates during the performance period to that same hospital's rates from the baseline period:

  • Hospital rate at or above benchmark: 9 improvement points
  • Hospital rate at or below baseline period rate: 0 improvement points
  • Hospital rate between the baseline period rate and the benchmark: 0-9 improvement points

Consistency Points: The consistency points relate only to the Patient Experience of Care domain. The purpose of these points is to reward hospitals that have scores above the national 50th percentile in ALL 8 dimensions of the HCAHPS. If they do, they receive the full 20 points. If they don't, the LOWEST dimension is compared to the range between the national 0 percentile (floor) and the 50th percentile (threshold) and awarded points proportionately. This formula is to be used for each dimension to determine the lowest dimension from the performance period:

  • Your hospital performance period score – floor
  • National achievement threshold – floor

Domain score

VBP measures roll up to a domain. FY 2013 has two domains, the Clinical Process of Care domain and the Patient Experience of Care domain. Measure scores are added and divided by the total possible points x 100 to determine the Clinical Process of Care domain score. Dimension scores are added together to arrive at the HCAPHS base points. Base points plus the consistency score are added together to determine the Patient Experience of Care domain score.

Domain weighting

The federal rule defines how much each domain will be weighted to calculate the Total Performance Score for each fiscal year.

Total performance score

A hospital's performance is assessed on the measures that comprise the domains. The domains are weighted and rolled up to the Total Performance Score. The Total Performance Score is computed by multiplying the Clinical Process of Care domain score by 70% and the Patient Experience of Care domain score by 30%, then adding those totals. The Total Performance Score is then translated into an incentive payment that makes a portion of the base DRG payment contingent on performance.

Incentive payment

In FY 2013, about 1% of DRG payments to eligible hospitals will be withheld to provide the estimated $850 million necessary for the program incentives. Following is the schedule for future withholding:

  • FY 2013: 1.00 %
  • FY 2014: 1.25 %
  • FY 2015: 1.50 %
  • FY 2016: 1.75 %
  • FY 2017: 2.00 %
  • Succeeding years: 2.00 %

Based on performance, hospitals will earn an incentive payment. The law requires that the Centers for Medicare & Medicaid Services (CMS) redistribute the estimated $850 million across all participating hospitals, based on their performance scores. CMS will use a linear exchange function to distribute the available amount of value-based incentive payments to hospitals, based on hospitals' total performance scores on the hospital VBP measures.

The estimated amount of the hospital's incentive payment will be shared through the QualityNet account 60 days prior to October 1, 2012. The hospital will receive the exact amount on November 1, 2012. Stratis Health recently provided hospitals with a hospital-specific VBP worksheet to estimate how their current performance would translate into a Total Performance Score. CMS will be distributing a hospital-specific VBP report on February 29, 2012.

Eligibility criteria

Eligible hospitals are paid through the inpatient prospective payment system, so critical access hospitals, children's hospitals, VA hospitals, long term care facilities, psychiatric hospitals, and rehabilitation hospitals are excluded. Eligible hospitals (PPS hospitals) need to meet additional criteria to be included.

  • The Clinical Process of Care domain requires four or more measures, each with at least 10 cases.
  • The Patient Experience of Care domain requires at least 100 HCAPHS surveys in the performance period.
  • To be included in VBP, the hospital must meet these criteria for both domains.

Improvement resources

More information

  • Hospital Value-Based Purchasing Program. The official CMS website for the Medicare Hospital Value-based Purchasing Program.
  • Hospital Compare. Hospital Compare is a consumer-oriented website that provides information on how well hospitals provide recommended care to their patients. The consumer can see the recommended care that an adult should get if being treated for a heart attack, heart failure, or pneumonia, or having surgery.

If you have questions regarding the Hospital Value-Based Purchasing Program, contact Stratis Health program manager, Vicki Olson, RN, MS, 952-853-8554.