The Basics of Hospital Value-Based Purchasing

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The Basics of Hospital Value-Based PurchasingIn the new Hospital Value-Based Purchasing (VBP) Program, Medicare rewards hospitals that provide high quality care at competitive costs for their patients. Since October 2012, hospitals nationwide are being paid for inpatient acute care services based on documented quality care measures rather than the volume of services.

SOURCE: www.CMS.gov

Established under the Affordable Care Act, the Hospital VBP Program has implemented a pay-for-performance approach 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.

“Instead of payment that asks, ‘How much did you do?’ the Affordable Care Act clearly moves us toward payment that asks, ‘How well did you do?’ and more importantly, ‘How well did the patient do?’” according to Dr. Don Berwick, Centers for Medicare and Medicaid Services (CMS) Administrator.

Here’s How It Works:

Measures

The VBP program has 20 measure counts for FY 2013, 24 measure counts for FY 2014 and 26 measure counts for FY 2015.

Awarded Points

Patient Experience of Care domain scores are the sum of a hospital’s Hospital Consumer Assessment of Healthcare Providers and Suppliers (HCAHPS) base score and that hospital’s HCAHPS Consistency score.

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.

The dimensions of the Patient Experience of Care domain for FY 2013-2015 are:

  1. Nurse communication
  2. Doctor communication
  3. Hospital staff responsiveness
  4. Pain management
  5. Medicine communication
  6. Hospital cleanliness and quietness
  7. Discharge information
  8. Overall hospital rating

Outcome of Care and Process of Care domain scores are calculated by using  a formulary whereby hospitals may earn two scores on each measure count – 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.

Achievement Points are awarded by comparing a hospital’s rates during the performance period with the 50th percentile (threshold) of 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 the 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: are 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 receive 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.

 

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.

Total Performance Score

CMS calculates a hospital’s Total Performance Score by:

  • *Combining the greater of either the hospital’s Achievement or Improvement points for each measure to determine a score for each domain;
  • *Then multiplying each domain score by a specified “weight” (percentage); and
  • *Then adding together the weighted domain scores.

 

For FY 2013, the Total Performance Score is a compilation of the Clinical Process of Care domain score represents 70 percent of the total allowable reimbursement while the Patient Experience of Care domain score represents a possible 30 percent. These two dimensions are added together to make up the Total Performance Score. The Total Performance Score is then translated into an incentive payment that makes a portion of the base DRG payment contingent on performance.

For FY 2014, the Total Performance Score is a compilation of the Clinical Process of Care domain score representing 45 percent of the total allowable reimbursement while the Patient Experience of Care domain score remains a possible 30 percent. The newly introduced Outcomes scoring represent the remaining 25 percent. These three dimensions represent the Total Performance Score formulary.

For FY 2015, Clinical Process of Care will account for 20 percent, Patient Experience of Care will account for 30 percent, Outcomes 20 percent and the newly introduced Efficiency domain at 20 percent will round out the total possible reimbursement to the hospitals.

Baseline and Performance Periods

Domain FY 2013 FY 2014 FY 2015
Clinical Process of Care Measures Baseline Period:
July 1, 2009-March 31, 2010Performance Period:
July 1, 2011-March 31, 2012
Baseline Period:
April 1, 2010-Dec. 31, 2010Performance Period:
April 1, 2012-Dec. 31, 2012
Baseline Period:
Jan. 1, 2011-Dec. 31, 2011Performance Period:
Jan. 1, 2013-Dec. 31, 2013
Patient Experience of Care Dimensions Baseline Period:
July 1, 2009-March 31, 2010Performance Period:
July 1, 2011-March 31, 2012
Baseline Period:
April 1, 2010-Dec. 31, 2010Performance Period:
April 1, 2012-Dec. 31, 2012
Baseline Period:
Jan. 1, 2011-Dec. 31, 2011Performance Period:
Jan. 1, 2013-Dec. 31, 2013
Mortality Outcome Measure(s) N/A Baseline Period:
July 1, 2009-June 30, 2010Performance Period:
July 1, 2011-June 30, 2012
Baseline Period:
Oct. 1, 2010-June 30, 2011Performance Period:
Oct. 1, 2012-June 30, 2013
AHRQ PSI Composite Outcome Measure(s) N/A N/A Baseline Period:
Oct. 15, 2010-June 30, 2011Performance Period:
Oct. 15, 2012-June 30, 2013
CLABSI Outcome Measure(s) N/A N/A Baseline Period:
Jan. 1, 2011-Dec. 31, 2011Performance Period:
Feb. 1, 2013-Dec. 31, 2013
Efficiency Measure(s) N/A N/A Baseline Period:
May 1, 2011-Dec. 31, 2011Performance Period:
May 1, 2013-Dec. 31, 2013

Incentive Payment

In FY 2013, about 1 percent 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 percent
FY 2014 1.25 percent
FY 2015: 1.5 percent
FY 2016: 1.75 percent
FY 2017: 2 percent

Succeeding years: 2 percent

Hospital Compare

CMS will post all scores on its Hospital Compare site and use the final performance score to determine the value-based incentive payment.

The Home Health Factor

One of the challenges for hospitals will be to select the home health care provider that can complete best practice to prevent avoidable readmissions and hold to the lowest hospital cost per patient initial post discharge 30-day episode.

Reducing Readmissions

Through the Affordable Care Act, Medicare will link hospital payments with improving patient care in other ways.  Beginning in 2013, hospitals will receive a payment reduction if they have excess 30-day readmissions for patients with heart attacks, heart failure, and pneumonia. By 2015, most hospitals will face reductions in their Medicare payments if they do not meaningfully use information technology to deliver better, safer, more coordinated care. In addition, beginning in 2015, hospitals with high rates of certain hospital acquired conditions will receive further payment reductions from Medicare.