CMS Hospital Value-Based Purchasing Program Results for Fiscal Year 2017
Hospital Value-Based Purchasing Program Overview
The Hospital Value-Based Purchasing (VBP) Program adjusts what Medicare pays hospitals under the Inpatient Prospective Payment System (IPPS) based on the quality of care they provide to patients. For fiscal year (FY) 2017, the law requires that the applicable percent reduction, the portion of Medicare payments available to fund the program’s value-based incentive payments, increase from 1.75 to 2 percent of the base operating Medicare Severity Diagnosis-Related Group (MS-DRG) payment amounts for all participating hospitals. We estimate that the total amount available for value-based incentive payments for FY 2017 discharges will be approximately $1.8 billion.
The Hospital VBP Program is one of many Affordable Care Act programs Medicare has established to pay for the quality of care rather than the quantity of services provided to patients. The Hospital VBP Program is part of our long-standing effort to structure Medicare payments to improve care across the entire healthcare delivery system, including hospital inpatient care. In FY 2017, more hospitals will receive positive payment adjustments, indicating improved quality of care and a strong example of better care, smarter spending, and healthier people in action.
Fiscal Year 2017 Hospital VBP Program Results
The domains for the FY 2017 Hospital VBP Program and the weighting for these domains were:
- Clinical Care
- Outcomes (25 percent)
- Process (5 percent)
- Patient and Caregiver Centered Experience of Care/Care Coordination (25 percent)
- Safety (20 percent)
- Efficiency and Cost Reduction (25 percent)
We have posted the Hospital VBP incentive payment adjustment factors for FY 2017 in Table 16B, available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2017-IPPS-Final-Rule-Home-Page-Items/FY2017-IPPS-Final-Rule-Tables.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending.
This is the fifth year of the Hospital VBP Program, affecting payment for inpatient stays in approximately 3,000 hospitals across the country. Hospitals’ payments will depend on:
- How well they performed – compared to their peers – on important healthcare quality and resource use measures during a performance period.
- How much they have improved the quality of care provided to patients over time.
For FY 2017, more hospitals will have an increase in their base operating MS-DRG payments than will have a decrease. In total, over 1,600 hospitals will have a positive payment adjustment.
For FY 2017, about half of hospitals will see a small change in their base operating MS-DRG payments (between -0.5 and 0.5 percent). After taking into account the statutorily mandated 2 percent withhold, the highest performing hospital in FY 2017 will receive a net increase in payments of slightly more than 4 percent, and the lowest performing hospital will incur a net reduction of 1.83 percent.
Computing the VBP Score
The Hospital VBP Program is a budget-neutral program funded each year through a reduction of participating hospitals’ base operating MS-DRG payments for the applicable fiscal year. These payment reductions are redistributed to hospitals as incentive payments based on their Total Performance Score (TPS), as required by law. The actual amount earned by each hospital will depend on:
- Its TPS.
- Its value-based incentive payment percentage.
- The total amount available for value-based incentive payments.
Hospitals may earn back a value-based incentive payment percentage that is less than, equal to, or more than the applicable percent reduction for that program year. This means hospitals could see an increase, a decrease, or no change to their Medicare IPPS payments for the applicable fiscal year. Hospitals excluded from the Hospital VBP Program are not subject to the reduction of 2 percent and are not eligible to receive incentive payments. The total estimated amount available for value-based incentive payments for FY 2017 discharges is about $1.8 billion.
Hospital TPSs were subject to minimum case and measure requirements. Also, hospitals must have a domain score for at least three of the four 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 of the hospitals participating in the Hospital VBP Program receives an improvement score and an achievement score; the higher of the two scores is awarded as the measure score.
New Program Requirements for FY 2018
The measure set for the FY 2018 program year includes several changes:
- We are removing two measures from the Clinical Care – Process subdomain (the AMI-7a and IMM-2 measures) and are moving the remaining measure (PC-01) to the Safety domain.
- We are adding a three-item Care Transition dimension, which is part of the Hospital Consumer Assessment of Hospital Providers and Systems (HCAHPS) survey, to the Patient and Caregiver Centered Experience of Care/Care Coordination domain.
- In the Calendar Year (CY) 2017 Outpatient Prospective Payment System (OPPS) proposed rule, we proposed to remove the Pain Management dimension, which is derived from the HCAHPS survey, from the Patient and Caregiver Centered Experience of Care/Care Coordination domain beginning with the FY 2018 VBP program year. We intend to address the proposal and respond to any comments submitted in the CY 2017 OPPS final rule anticipated for release in November 2016.
The FY 2018 Hospital VBP Program will include four equally-weighted domains:
- Clinical Care (25 percent)
- Patient Experience and Caregiver Centered Experience/Care Coordination (25 percent)
- Safety (25 percent)
- Efficiency and Cost Reduction (25 percent)
Moving Forward
As we more closely link patient outcomes and treatment 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 focused on the needs of patients. Value-based purchasing in Medicare continues to move ahead, improving healthcare for people with Medicare now and creating a healthcare system that will ensure better care, smarter spending, and healthier people for generations to come.
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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