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Hospital Value-Based Purchasing

Overview

Hospital Value-Based Purchasing (VBP) is part of the Centers for Medicare & Medicaid Services’ (CMS’) long-standing effort to link Medicare’s payment system to a value-based system to improve healthcare quality, including the quality of care provided in the inpatient hospital setting.  

The program attaches value-based purchasing to the payment system that accounts for the largest share of Medicare spending, affecting payment for inpatient stays in over 3,500 hospitals across the country.    

Participating hospitals are paid for inpatient acute care services based on the quality of care, not just quantity of the services they provide. Congress authorized Inpatient Hospital VBP in Section 3001(a) of the Affordable Care Act. The program uses the hospital quality data reporting infrastructure developed for the Hospital Inpatient Quality Reporting (IQR) Program, which was authorized by Section 501(b) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.

HVBP News

CMS Announces Release of FY 2016 Hospital VBP Program Results to Hospitals

CMS has announced the release of the Percentage Payment Summary Reports to hospitals for the Fiscal Year (FY) 2016 Hospital VBP Program. The FY 2016 Hospital VBP Percentage Payment Summary Report provides hospitals their Total Performance Score and value-based incentive payment percentage for each Medicare patient discharge in FY 2016.

The Hospital VBP Program is funded by a 1.75% reduction from participating hospitals’ base operating diagnosis-related group (DRG) payments for FY 2016. Resulting funds are redistributed to hospitals based on their Total Performance Scores (TPS). The actual amount earned by each hospital depends on the range and distribution of all eligible/participating hospitals’ TPS scores for a FY. It is possible for a hospital to earn back a value-based incentive payment percentage that is less than, equal to, or more than the applicable reduction for that program year.

For Fiscal Year (FY) 2016, CMS has added the following measures:

  • IMM-2, Influenza Immunization (Clinical Process of Care domain)
  • CAUTI, Catheter-Associated Urinary Tract Infection (Outcome domain)
  • SSI, Surgical Site Infection Colon Surgery & Abdominal Hysterectomy (Outcome domain)

For Fiscal Year (FY) 2016, CMS has removed the following measures:

  • AMI-8a, Primary PCI Received Within 90 Minutes of Hospital Arrival
  • HF-1, Discharge Instructions
  • PN-3b, Blood Cultures Performed in the Emergency Department Prior to Initial Antibiotic Received in Hospital
  • SCIP-Inf-1, Prophylactic Antibiotic Received Within One Hour Prior to Surgical Incision
  • SCIP-Inf-4, Cardiac Surgery Patients with Controlled 6AM Postoperative Serum Glucose

CMS anticipates releasing the FY 2016 Hospital VBP Program results to the public during the December 2015 refresh to the Hospital Compare site. CMS will also update the value-based incentive payment adjustment factors for FY 2016 in Table 16B of the FY 2016 Inpatient Prospective Payment System (IPPS) rule.

Payment Adjustments

CMS Publishes HVBP-based Incentive Payment Adjustment Factors for FY 2016

CMS has continued implementation of the Hospital Value-Based Purchasing (VBP) Program in the FY 2016 Inpatient Prospective Payment System (IPPS) rule (see 80 FR 49544). In that final rule, CMS relied on the finalized methodology to calculate the value-based incentive payment adjustment factor and the portion of Medicare’s IPPS payments that will be subject to the adjustment factor, which was adopted in the FY 2013 IPPS rule (see 77 FR 53573-76). In accordance with the Hospital VBP statute, CMS also updated the applicable percent for the FY 2016 Program, which is 1.75 percent. For more information on these payment-related policies, please refer to the FY 2016 IPPS Final Rule and FY 2013 IPPS Final Rule in the “Related Links” section below.

The value-based incentive payment adjustment factors for the FY 2016 payment adjustments under the Hospital VBP Program may be found in the “Related Links” section below. The link will redirect to the FY 2016 IPPS Final Rule Tables page. The FY 2016 payment adjustments for the Hospital VBP Program may be found in Table 16B. Tip: The list of payment adjustment factors is organized by CMS Certification Number (CCN). If you are unsure of your hospital's CCN, please visit the CCN listing at https://data.medicare.gov/Hospital-Compare/Hospital-General-Information/xubh-q36u.

Regulations and Notices

CMS Finalizes Program Provisions for FYs 2016 and 2018-21 of HVBP

On July 31, 2015, CMS announced the display of the FY 2016 IPPS Final Rule, which included a number of policies related to the Hospital VBP Program. Specifically, we finalized payment and operational details for FY 2016, the fourth year in which value-based incentives are available under the program. We also finalized new policies for FY 2018, including (1) new measures, (2) performance periods, (3) performance standards, and (4) domain weighting.

The final rule also included policies related to certain measures for FY 2019 through FY 2021, including select performance periods and performance standards for those program years. For more information on these payment-related policies, please refer to the FY 2016 IPPS Final Rule in the “Related Links” section below.