Fact Sheets

CMS Hospital Value-Based Purchasing Program Results for Fiscal Year 2020

CMS Hospital Value-Based Purchasing Program Results for Fiscal Year 2020

The Hospital Value-Based Purchasing (VBP) Program is one of many quality programs Medicare has established to pay for the quality of care rather than just the quantity of services provided to patients. This program is part of our long-standing effort to improve care across the entire healthcare delivery system by tying Medicare payment to quality and cost measure performance, and as recently reinforced in Executive Order 13890, which emphasizes empowering patients and health providers with better quality care and cost data to improve their ability to make healthcare decisions and to hold providers accountable. The Hospital VBP Program works by adjusting what Medicare pays hospitals under the Inpatient Prospective Payment System (IPPS) based on the quality and cost of inpatient care the hospitals provide to patients.

Findings:  Fiscal Year 2020 Hospital VBP Program Results

In FY 2020, more hospitals will receive positive payment adjustments than will receive negative payment adjustments.

For fiscal year (FY) 2020, the law requires that 2 percent of the payments for all participating hospitals be withheld and redistributed to the hospitals based on their performance on a previously announced set of quality and cost measures. We estimate that the total amount available for value-based incentive payments in FY 2020 will be approximately $1.9 billion.

The Total Performance Score (TPS) for each hospital is based upon hospital performance scores in each of four measurement domains. Each domain contributes 25 percent to the total score. The measurement domains for the FY 2020 Hospital VBP Program are:

• Clinical Outcomes
• Safety
• Person and Community Engagement
• Efficiency and Cost Reduction

We have posted the Hospital VBP Program incentive payment adjustment factors for each participating hospital for FY 2020 in Table 16B at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2020-IPPS-Final-Rule-Home-Page-Items/FY2020-IPPS-Final-Rule-Tables.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending.

This is the eighth year of the Hospital VBP Program, affecting payment for inpatient stays
in approximately 2,700 hospitals across the country. Hospitals’ payments will depend on
the following:

• How they performed—compared to their peers—on important healthcare quality and cost measures during a performance period.
• How much they have improved the quality of care provided to patients over time.

For FY 2020, more hospitals will have an increase in their Medicare payments than will have a decrease. In total, more than 1,500 hospitals (over 55 percent) will receive higher Medicare payments.

For FY 2020, almost 60 percent of hospitals will see a small change (between -0.5 and 0.5 percent) in their Medicare payments. The average net payment adjustment is 0.16 percent. The average net increase in payment adjustments is 0.60 percent, and the average net decrease in payment adjustments is -0.39 percent. Due to the Hospital VBP Program, the highest performing hospital in FY 2020 will receive a net increase in payments of 2.93 percent, and the lowest performing hospital will incur a net decrease in payments of -1.72 percent.

Computing the Hospital VBP Program Score

The actual amount of incentive payments earned back by participating hospitals will depend on the following three values:

• Each hospital’s Total Performance Score (TPS)
• Each hospital’s value-based incentive payment percentage
• Total amount available under the program for value-based incentive payments

Hospitals may earn back an increase, a decrease, or no change to their Medicare IPPS payments for the applicable fiscal year.

The calculation of hospital TPSs were subject to minimum case size for measures and other measure requirements. Also, hospitals must have a domain score for at least three of the four measurement domains in order to have a TPS calculated. Hospitals that do not meet the minimum domain requirements do not have their payments adjusted in the corresponding fiscal year. For every measure, each participating hospital receives an achievement score (based on how they performed compared to other hospitals) and an improvement score (based on how much they improved over time); the higher of the two scores is awarded as the measure score.

For FY 2020, the average TPS across all participating hospitals increased to 38.5 from 38.1 in FY 2019. On average, rural hospitals performed better in the Safety, Person and Community Engagement, and Efficiency and Cost Reduction domains, while urban hospitals performed better in the Clinical Outcomes domain. For FY 2020, the average TPS across all rural hospitals of 42.8 was greater than the national average TPS. Similarly, smaller hospitals (based on the number of inpatient beds) performed better in the Safety, Person and Community Engagement, and Efficiency and Cost Reduction domains and had higher overall TPS, while urban hospitals performed better in the Clinical Outcomes domain. For FY 2020, the average TPS across all rural hospitals is 42.8, which is greater than the national average TPS.

For additional information on the Hospital VBP Program, please visit the CMS website at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/HVBP/Hospital-Value-Based-Purchasing.html 

For additional information on the QualityNet website visit:
https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228772039937.

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