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On May 6, 2011, the Federal Register published the Final Rule regarding the implementation of the hospital value-based purchasing (VBP) program after the Centers for Medicare & Medicaid Services (CMS) released the Final Rule on April 29, 2011. Under the Patient Protection and Affordable Care Act (Section 3001 (a)), the VBP program will pay hospitals based on their actual performance on quality measures, rather than just the reporting of those measures. The VBP Program applies beginning in FY 2013 to payments for discharges occurring on or after October 1, 2012. The performance period for calculating a hospital’s FY2013 reimbursement begins on July 1, 2011. Hospitals must act now if they wish to have the greatest chance at reimbursement under the VBP program.
Significant Aspects of the Final Rule
Quality Measures
- The VBP program for FY 2013 will include 12 clinical quality measures as well as the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) patient experiences with care survey. Notably, the Final Rule does not adopt measures PN-2, PN-7, AMI-2, HF-2 and HF-3. The clinical measures will account for 70 percent of a hospital's VBP score and the HCAHPS survey for 30 percent.
- The VBP Program for FY 2014 will add the heart attack, heart failure and pneumonia mortality measures; eight measures of hospital-acquired conditions (HACs); and two composite patient safety and inpatient quality indicators developed by the Agency for Healthcare Research and Quality (AHRQ)
Performance Standards
The Final Rule defines the benchmark for the FY 2013 Hospital VBP Program Scoring Methodology as the mean of the top decile of hospital performance during the baseline period. With respect to calculating achievement, improvement points and consistency points, the Final Rule abandons the use of percentiles for calculating the benchmark in HCAHPS in Hospital VBP and instead applies percentages of top-box scores in HCAHPS calculations.
- For the finalized achievement thresholds, see the Final Rule, pages 83-84.
- For the finalized benchmarks, see the Final Rule, pages 95-96.
- For the finalized scoring methodology, see the Final Rule, pages 105-108.
Applicability
The VBP program will apply to all acute-care prospective payment system (PPS) hospitals with certain exceptions based on volume. For example, for the clinical process measures, CMS will exclude from hospitals' scores any measures for which they report fewer than 10 cases and will exclude from the VBP program any hospitals for which fewer than four of the 12 proposed clinical process measures apply. CMS will also exclude from the VBP program any hospital that reports fewer than 100 HCAHPS surveys during the performance period.
VBP Payment Incentives are Budget Neutral and generated from HIPPS payments
CMS will fund the program from current HIPPS payments. CMS will be reducing all inpatient PPS Medicare-severity diagnosis-related group (MS-DRG) operating payments to participating hospitals using a phased-in approach. Payments will be reduced by 1 percent in FY 2013; 1.25 percent in FY 2014; 1.5 percent in FY 2015; 1.75 percent in FY 2016; and 2 percent in FY 2017 and beyond. The reduction will be applied to all MS-DRG operating payments but will not affect disproportionate share, indirect medical education, low-volume adjustment or outlier payments. The VBP program is budget neutral; all funds withheld must be paid out to hospitals.
Validation Requirements
CMS will use the validation process created for the FY 2013 Hospital IQR program to ensure the accuracy of the data for FY 2013 Hospital VBP program.
Implementation Dates
- FY 2013: Payments, for both the clinical process and HCAHPS measures, CMS will use a baseline period of July 1, 2009 through March 31, 2010, and a performance period of July 1, 2011 through March 31, 2012.
- FY 2014: CMS will use a 12-month performance period of July 1, 2011 through June 30, 2012 for the three 30-day mortality measures. The agency notes that it intends to move to a full year of performance data for all measures in future years.
To download a complete copy of the Final Rule, click here.
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