Nov. 15—More hospitals will receive Medicare payment cuts than bonuses in FY14 from the value-based purchasing (VBP) program, according to newly released data from the Centers for Medicare & Medicaid Services (CMS).

The VBP program, authorized by the Affordable Care Act, scores participating hospitals’ overall performance on a set of quality measures that aim to improve clinical processes of care and patient satisfaction. The program draws on a fund provided by 1.25 percent of hospitals’ Medicare base-operating DRG payments to pay hospitals based on their performance on quality metrics.

The annual results generally evenly divide hospitals into one-quarter receiving cuts, one-quarter receiving bonuses, and half getting about the same amount back that that was withheld by the fund. In FY14, 630 hospitals will receive extra funds, more than 1,300 hospitals will receive the about the same amount withheld by the fund (0.2 percent more or less), and 778 hospitals will face a net cut.

“Even though we’d like to see every hospital across the country offer the highest quality care possible, we’re pleased with this round of results,” Patrick Conway, MD, chief medical officer and director of the Centers for Clinical Standards and Quality at CMS, said in a blog post. “Hospital value-based purchasing provides a useful snapshot of how hospitals are performing on important indicators for patient safety, care, quality, and well-being.”

The VBP program excludes many hospitals, including those designated as critical access providers.

Pattern Emerges

The second-year results also demonstrate a high degree of consistency from the program’s inaugural year. More than two-thirds of the higher-performing hospitals also received bonuses in the first year of the VBP program. About three-quarters of the lower performers also had payment cuts last year.
Conway called those results “good news.”

“The fact that not every higher-performing hospital last year made the grade this year and not every lower performing hospital last year will see payment decline this year means that hospitals are adjusting to the new world of value-based payment,” Conway said. “It also may mean that the important addition of 30-day mortality measures for heart attack, heart failure, and pneumonia had an impact on hospitals’ scores.”

The existing quality measures include assessments of whether hospitals ensure that patients who may have had a heart attack receive care within 90 minutes and provide care within a 24-hour window to surgery patients to prevent blood clots. The program’s measures also are adjusted annually including a planned addition of an efficiency measure in FY15.

Publication Date: Friday, November 15, 2013