Fact sheet

CMS Hospital Value-Based Purchasing Program Results for Fiscal Year 2019

CMS Hospital Value-Based Purchasing Program Results for Fiscal Year 2019

Overview of the Hospital Value-Based Purchasing Program
The Hospital Value-Based Purchasing (VBP) Program adjusts what Medicare pays hospitals under the Inpatient Prospective Payment System (IPPS) based on the quality of inpatient care the hospitals provide to patients. For fiscal year (FY) 2019, the law requires that CMS reduce a portion of the base operating Diagnosis-Related Group (DRG) payment amounts otherwise applicable to a participating hospital for each discharge by two percent (2.0%), and that the estimated sum total of these reductions be the amount redistributed to participating 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 2019 will be approximately $1.9 billion.

The Hospital VBP Program is one of many quality programs Medicare has established to pay for the quality of care rather than 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, including hospital inpatient care, by tying Medicare payment to quality and cost measure performance. In FY 2019, more hospitals will receive positive payment adjustments than will receive negative payment adjustments.

Fiscal Year 2019 Hospital VBP Program Results

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 2019 Hospital VBP Program are:

  • Clinical Care
  • 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 2019 in Table 16B at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2019-IPPS-Final-Rule-Home-Page-Items/FY2019-IPPS-Final-Rule-Tables.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending.

This is the seventh year of the Hospital VBP Program, affecting payment for inpatient stays
to approximately 2,800 hospitals across the country. Hospitals’ IPPS payments will depend on
the following
:

  • How well 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 2019, more hospitals will have an increase in their Medicare payments than will have a decrease. In total, more than 1,550 hospitals (over 55 percent) will receive higher Medicare payments.

For FY 2019, almost 60 percent of hospitals will see a small change (between -0.5 and 0.5 percent) in their IPPS payments. The average net payment adjustment is 0.17 percent. The average net increase in payment adjustments is 0.61 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 2019 will receive a net increase in IPPS payments of 3.67 percent, and the lowest performing hospital will incur a net decrease in IPPS payments of 1.59 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
  • Estimated FY 2019 amount available for value-based incentive payments

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

The calculations of hospital TPSs were subject to minimum case size and 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 well it performed compared to other hospitals) and an improvement score (based on how much it improved over time); the higher of the two scores is awarded as the measure score.

For FY 2019, the average TPS across all participating hospitals increased to 38.1 from 37.4 in FY 2018, indicating improved quality of care and value. On average, rural hospitals performed better in the Safety, Person and Community Engagement, and Efficiency and Cost Reduction domains, while urban hospitals performed well in the Clinical Care domain. For FY 2019, the average TPS across all rural hospitals of 42.4 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, as well as overall TPS, while urban hospitals performed well in the Clinical Care domain.

Moving Forward

Value-based purchasing is an important step to revamping how care and services are paid for, moving increasingly toward rewarding better value, outcomes, and innovations. As we more closely link patient outcomes and costs to value-based hospital payment, the Hospital VBP Program not only aims for quality gains on paper, it also aims to promote a culture that prioritizes quality and value of care and better empowers patients and their healthcare providers through the public display of program results. Additional FY 2019 program results will be publicly reported on the next update of the Hospital Compare website. 

Additional Information

For more 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 and the QualityNet website at https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228772039937.

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