Ethan Rhodes
The Hospital Value-Based Purchasing (VBP) Program is a US-based initiative that rewards hospitals for providing high-quality care to Medicare patients. The program was introduced by the Affordable Care Act and is funded through a 2% reduction in Diagnosis-Related Group (DRG) funding for participating hospitals. This money is then distributed to hospitals based on their Total Performance Score (TPS), which is calculated using three factors: achievement points, improvement points, and measure/dimension scores. The Hospital VBP Program is designed to improve the quality, efficiency, patient experience, and safety of care that Medicare beneficiaries receive during acute care inpatient stays. While the program has shown some success in improving healthcare quality and containing costs, there are concerns about its unintended consequences for healthcare disparities, particularly for organizations serving a disproportionate number of disadvantaged patients.
| Characteristics | Values |
|---|---|
| Purpose | To improve the quality of hospital care and patient safety and experience, and to contain costs |
| Hospitals covered | More than 3,000 hospitals across the country |
| Payment adjustments | Based on the quality of care delivered to patients during inpatient stays |
| Funding | Through a 2% reduction of Diagnosis-Related Group funding for participating hospitals |
| Performance measurement domains | Achievement points, improvement points, and measure/dimension score |
| Reports provided by CMS | Baseline Measures Report, Percentage Payment Summary Report, Mortality and Complication Hospital-Specific Report, and Medicare Spending per Beneficiary Hospital-Specific Report |
| Impact | Growing concerns about unintended consequences for healthcare disparities due to built-in biases against organizations serving disadvantaged patient populations |
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What You'll Learn
Medicare payments are based on quality, not quantity
The Hospital Value-Based Purchasing (VBP) Program rewards acute care hospitals with incentive payments for the quality of care provided during inpatient stays. The better the quality of care, the higher the incentive payment. This program is funded through a 2% reduction in Diagnosis-Related Group (DRG) funding for participating hospitals. The money withheld is then distributed among eligible facilities according to their performance.
The Centers for Medicare & Medicaid Services (CMS) provide hospitals with reports to help them understand their performance and the payment adjustments they can expect. These include the Baseline Measures Report, which details baseline period results and performance standards, and the Percentage Payment Summary Report, which outlines baseline and performance period results, performance standards, and the value-based incentive payment adjustment factor.
CMS also uses quality measures in its quality improvement, public reporting, and pay-for-reporting programs for specific healthcare providers. These quality measures are tools that help quantify healthcare processes, outcomes, patient perceptions, and organizational structure, all of which contribute to delivering high-quality healthcare.
While value-based purchasing incentivizes hospitals to improve care quality, it does not directly address the need for incentives to improve care efficiency or coordination among providers. As the costs of the Medicare Program continue to rise, it is essential to understand the value obtained from additional spending.
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Acute care hospitals receive incentive payments
The Hospital Value-Based Purchasing (VBP) Program is a value-based care program introduced by the Affordable Care Act. The program rewards acute care hospitals with incentive payments for the quality of care provided in the inpatient hospital setting. This program adjusts payments to hospitals under the Inpatient Prospective Payment System (IPPS) based on the quality of care they deliver. The quality of care is better for hospital patients, and hospital stays are improved. The Hospital VBP Program encourages hospitals to improve the quality, efficiency, patient experience, and safety of care that Medicare beneficiaries receive during acute care inpatient stays. This is achieved by eliminating or reducing adverse events, such as healthcare errors that result in patient harm, and adopting evidence-based care standards and protocols to obtain the best outcomes for patients. The program also incentivizes hospitals to improve patient experience and increase the transparency of care quality for consumers, clinicians, and other stakeholders.
The Hospital VBP Program is funded through a 2% reduction from participating hospitals' Diagnosis-Related Group (DRG) payments for the applicable fiscal year. This withheld money is then redistributed to hospitals based on their Total Performance Score (TPS). Each hospital may earn two scores on each measure: one for achievement and one for improvement. The final score awarded is the higher of these two scores. The actual amount of incentive payments a hospital earns is also linked to the total amount available under the program. The Hospital VBP Program is mandatory for all hospitals paid under the IPPS, with a few exceptions specified by law. These exclusions include psychiatric, rehabilitation, long-term care, and children's hospitals, as well as critical access hospitals and hospitals in certain states, such as Maryland.
CMS provides hospitals with reports reflecting the Hospital VBP Program's impact for each fiscal year. These reports include the Baseline Measures Report and the Percentage Payment Summary Report, which allow providers to access their baseline period results, performance standards, and measure scores. CMS also provides hospitals with a Mortality and Complication Hospital-Specific Report (HSR) and a Medicare Spending per Beneficiary (MSPB) HSR for each fiscal year's performance period. These reports help hospitals review and request corrections to the calculations of the performance period measure results. CMS updates the value-based incentive payment adjustment factors, which are publicly posted during the January refresh update on Medicare.gov and the Provider Data Catalog on data.cms.gov.
The Hospital VBP Program began providing value-based incentive payments in FY2013. The program has been successful in improving healthcare quality, reducing costs, and enhancing patient outcomes. The top hospitals in value-based purchasing for FY2021 include the Mayo Clinic Hospital - Saint Mary's Campus and AdventHealth Orlando, which had positive revenue adjustments due to the program. The Hospital VBP Program is an important initiative that continues to drive improvements in the quality of care provided by acute care hospitals.
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Performance period data is collected annually
The Hospital Value-Based Purchasing (VBP) Program is one of several value-based care programs introduced by the Affordable Care Act. The program rewards acute care hospitals with incentive payments for the quality of inpatient care. The quality of care is assessed based on factors such as eliminating adverse events, adopting evidence-based care standards, improving patient experience, and increasing transparency. The incentive payments are funded through a 2% reduction in Diagnosis-Related Group (DRG) funding for participating hospitals. This money is then distributed among eligible facilities based on their performance.
Baseline Measures and Performance Standards
CMS provides hospitals with baseline measures and performance standards for the measures included in the Hospital VBP Program. The Baseline Measures Report allows hospitals to access their baseline period results, which serve as a reference point for improvement.
Data Collection and Performance Period
The performance period refers to the time during which data is collected to assess hospital performance in a given fiscal year. The data collected during this period is used to calculate hospitals' Total Performance Scores (TPS), which drive the Medicare Value Purchasing Adjustment. The higher the TPS, the higher the incentive payment.
Performance Measurement Domains
The Hospital VBP Program evaluates hospitals' performance through various measurement domains. These domains include achievement points, improvement points, and measure/dimension scores. Achievement points reflect a hospital's performance compared to all hospitals during the baseline period. Improvement points consider the progress made by a hospital relative to its own baseline period results. The measure/dimension score represents the higher of the achievement or improvement points.
Performance Reports and Corrections
CMS provides hospitals with access to their performance period results through the Percentage Payment Summary Report. Hospitals can review their baseline period results, performance standards, measure scores, domain scores, and TPS. Additionally, CMS offers a Mortality and Complication Hospital-Specific Report (HSR) and a Medicare Spending per Beneficiary (MSPB) HSR for each fiscal year's performance period. Hospitals have a 30-day review and correction period to request corrections to the calculations before they are used to determine the TPS.
Incentive Payment Adjustment Factors
The Hospital VBP Program's incentive payment adjustment factors are listed by CMS Certification Number (CCN). These factors determine the incentive payments that hospitals receive based on their performance and TPS. The higher the TPS, the greater the positive adjustment in Medicare payments.
In summary, the Hospital Value-Based Purchasing Program collects performance period data annually to assess hospital performance and determine incentive payments. This process involves baseline measurements, data collection during the performance period, evaluation through various measurement domains, performance reporting, and incentive payment adjustments. The ultimate goal is to improve the quality of inpatient care and enhance the patient experience.
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Patient safety and experience are improved
The Hospital Value-Based Purchasing (VBP) Program is a value-based care program introduced by the Affordable Care Act. The program rewards hospitals that provide high-quality care to Medicare patients during inpatient stays. The quality of care is assessed based on specific measures and domains, with hospitals receiving payment adjustments accordingly. This incentivizes hospitals to continuously improve their performance and enhance patient safety and experience.
The Hospital VBP Program encourages hospitals to enhance patient safety and improve patient experiences by eliminating or reducing adverse events, such as healthcare errors that may cause harm. By adopting evidence-based care standards and protocols, hospitals can achieve better outcomes for their patients. This includes implementing measures to reduce healthcare-acquired infections, falls, and other preventable incidents, leading to safer patient care.
Additionally, the program emphasizes incentivizing hospitals to improve patient experiences. This includes increasing the transparency of care quality, ensuring that patients can make informed decisions about their treatment options, and providing clear communication throughout their hospital stay. Hospitals are encouraged to seek feedback from patients and make continuous improvements to meet their needs and expectations.
The Hospital VBP Program also recognizes hospitals that provide high-quality care at a lower cost to Medicare. By rewarding cost-effective care, the program promotes efficiency and encourages hospitals to streamline their processes. This, in turn, can benefit patients by reducing wait times, improving access to necessary treatments, and enhancing the overall patient experience.
The specific initiatives and improvements driven by the Hospital VBP Program can vary across different hospitals. Each hospital receives reports, such as the Baseline Measures Report and Percentage Payment Summary Report, to assess their performance and make necessary improvements. These reports allow hospitals to compare their baseline period results with performance period results, identify areas of strength and weakness, and develop targeted strategies to enhance patient safety and satisfaction.
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Payments are adjusted based on hospital performance
The Hospital Value-Based Purchasing (VBP) Program, introduced by the Affordable Care Act, links provider reimbursement to the quality of care provided rather than the quantity of services. The program incentivizes hospitals to improve the quality, efficiency, patient experience, and safety of care that Medicare beneficiaries receive during acute care inpatient stays. The Hospital VBP Program rewards acute care hospitals with incentive payments for the quality of care provided in the inpatient hospital setting. This program adjusts payments to hospitals under the Inpatient Prospective Payment System (IPPS) based on the quality of care they deliver. The money withheld from participating hospitals' Diagnosis-Related Group (DRG) payments is then redistributed to hospitals based on their Total Performance Score (TPS).
The Hospital VBP Program is funded through a 2% reduction of Diagnosis-Related Group (DRG) funding for participating hospitals. The actual amount of incentive payments a hospital earns is also linked to the total amount available under the program. The higher the TPS, the more money the hospital is awarded, and the lower the score, the more the hospital is penalized. The performance measurement domains for the 2021 Hospital VBP Program included the Mayo Clinic Hospital - Saint Mary's Campus, which had a 1.69% VBP adjustment with a revenue adjustment of $9.5 million, and AdventHealth Orlando, which had a 0.90% VBP adjustment with a revenue adjustment of $3 million.
CMS provides hospitals with a Baseline Measures Report and a Percentage Payment Summary Report each fiscal year. The Baseline Measures Report allows providers to access their baseline period results and the performance standards for the measures included in the Hospital VBP Program. The Percentage Payment Summary Report allows providers to access their baseline period results, performance period results, performance standards, measure scores, domain scores, TPS, and the value-based incentive payment adjustment factor that will be applied to each Medicare patient discharge in the fiscal year. CMS also provides hospitals with a Mortality and Complication Hospital-Specific Report (HSR) and a Medicare Spending per Beneficiary (MSPB) HSR for each fiscal year's performance period.
The Hospital-Acquired Condition Reduction Program reduces payments to hospitals in the bottom percentile for their performance on measures concerning patient safety, adverse events, and healthcare-associated infections. Hospitals among the bottom 25% of performers on the composite hospital-acquired conditions measure will receive a further reduction of 1% in payment after other payment adjustments are made for the Hospital Value-Based Purchasing program and other value-based programs.
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Frequently asked questions
The Hospital Value-Based Purchasing Program is a US program that links Medicare reimbursement to the quality of care provided, rather than the quantity of services. The program is designed to improve patient safety and experience.
The program rewards hospitals with high-quality care with incentive payments. These payments are funded by a 2% reduction in Diagnosis-Related Group funding for participating hospitals. The money withheld is then distributed to eligible hospitals based on their Total Performance Score (TPS).
A hospital's TPS is calculated using three factors: achievement points, improvement points, and measure/dimension scores. Achievement points are based on how well a hospital performs compared to all hospitals. Improvement points are based on how much a hospital has improved compared to its performance during a baseline period.
