Value Based Purchasing

The Patient Protection and Affordable Care Act (ACA) of 2010 established a Medicare Value Base Purchasing (VBP) program to pay hospitals for their actual performance on quality measures, rather than just the reporting of those measures, beginning in fiscal year 2013 (FY 2013). The VBP program applies to most acute-care hospitals. The Center for Medicare and Medicaid Services (CMS) pays hospitals for treating Medicare patients. In the program, CMS withholds from each hospital a percentage of base DRG payment. The percentage withheld started at a maximum of 1 percent in FY 2013 increases to a maximum of 2 percent in FY 2017 and stays at 2 percent unless it is changed by law. Each hospital has the ability to earn back none, some, all or more than the percentage withheld based the scores achieve on the identified quality measures. This program is a “zero sum game”. All of the money is earned back by the hospitals so if a hospital does really well it takes financial resources from one that does less well. CMS has the ability to change what it is measuring each year. All measures that are included in VBP must be publicly reported for one year on CMS website Hospital Compare, www.medicare.gov/hospitalcompare.

The VBP is scored on four domains. The first is clinical process of care. Hospitals have voluntary reported identified patient treatment outcome information to CMS for several years. This information is considered to the standard of practice (for example, an aspirin at the time of a suspected heart attack). Hospitals refer to these reported measures as “core measures”. Some of these measures are now part of the clinical process of care measure of Value Based Purchasing. CMS selects which measures apply each year. As the hospitals improve on measures to the point that there is little room for differentiation, the measure may be removed.

The second domain is patient experience of care which contains some of the responses to the HCAHPS (Hospital Consumer Assessment of Healthcare Providers and Systems) that patients may complete after discharge from the hospital. There are eight areas that are included for VBP and only the responses that are a 9 or 10 are counted.

The third domain is outcomes. This domain looks at 30 day morality for heart attack, heart failure and pneumonia. It also includes an indicator for hospital-acquired conditions and central line associated blood stream infections.

The fourth domain is the efficiency measure. The Medicare Spending Per Beneficiary (MSPB) Measure assesses Medicare Part A and Part B payments for services provided to a Medicare beneficiary during a spending-per-beneficiary episode that spans from three days prior to an inpatient hospital admission through 30 days after discharge. The payments included in this measure are price-standardized and risk-adjusted.

Healthcare Council through its various programs and committees works with members to improve processes that may positively impact any of the measures related to VBP.