In a recent Premier healthcare alliance webinar, Danielle Lloyd, senior director for reimbursement policy, and Christine Van Dusen, senior consultant, made the following points about CMS' upcoming Value-Based Purchasing program.
1. It's the son of pay-for-performance. The Value-Based Purchasing program is essentially a continuation of the Premier-led pay-for-performance demonstration, which started in 2003, involved more than 260 hospitals and showed hospital improvement on quality measures. P4P demonstrated that financial incentives can help hospitals focus on measuring and improving quality. Under VBP, those principles will be applied to all hospitals with a few exceptions, such as hospitals that are too small to provide valid data.
2. Basics of Value-Based Purchasing. Initially, 1 percent of the DRG will be tied to performance on quality and outcomes measures, rising to 2 percent of the DRG by FY 2017. It will be budget-neutral, meaning whatever is taken from low-performing hospitals will be given to high-performing hospitals. Payments or deductions will be based on meeting measures in the CMS Hospital Compare measure set.
3. Comment period for proposed rules. CMS issued proposed rules for the Value-Based Purchasing program on Jan. 7 and is accepting comments until March 8. A final rule is expected sometime in the spring.
4. Measurements start in July. The performance period starts on July 1, 2011. The baseline period, on which to base improvement, would use 18 months of data from July 1, 2009 to March 31, 2010.
5. Payment changes to be phased in. Budget-neutral changes in payment begin Oct. 1, 2012 by reducing base operating payments for each discharge 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.
6. Measures used. The program would initially use 25 initial quality measures in FY 2013, including 17 process measures (such as AMI, heart failure, pneumonia and HAIs) and eight patient experience (HCAHPS) dimensions. In FY 2014, 20 measures would be added, including three for mortality, eight on hospital-acquired conditions and nine patient safety inpatient quality indicators.
7. How measures are weighted. The clinical process measures are weighted 70 percent, and the HCAHPS dimensions are weighted 30 percent. Also, CMS won't grade on a curve or "top off." Standards would be raised if most hospitals tend to perform very well.
8. Uses either improvement or achievement score. Either the achievement or the improvement score is used as the final score, depending on which is higher. Improvement and achievement scores are measured from the baseline to the top decile for process and outcomes and the 95th percentile for patient experience. The patient experience score also involves a consistency score, to make sure the hospital is performing well in all eight dimensions.
9. How scores are converted into payment. To convert the quality score to a payment adjuster, CMS plans to use a linear function, which means a one-point increase in score for a high performer would be the same dollar amount as a 1-point increase for a low performer.
10. How payment adjuster is used. The payment adjuster would be applied to each hospital claim, either increasing or decreasing payment, depending on the hospital's last-measured performance. CMS will notify hospitals of their estimated payment adjuster for the first year by Aug. 1, 2012 and of their final adjuster on Nov. 1, 2012, via QualityNet.
View slides from the Premier presentation on value-based purchasing.
1. It's the son of pay-for-performance. The Value-Based Purchasing program is essentially a continuation of the Premier-led pay-for-performance demonstration, which started in 2003, involved more than 260 hospitals and showed hospital improvement on quality measures. P4P demonstrated that financial incentives can help hospitals focus on measuring and improving quality. Under VBP, those principles will be applied to all hospitals with a few exceptions, such as hospitals that are too small to provide valid data.
2. Basics of Value-Based Purchasing. Initially, 1 percent of the DRG will be tied to performance on quality and outcomes measures, rising to 2 percent of the DRG by FY 2017. It will be budget-neutral, meaning whatever is taken from low-performing hospitals will be given to high-performing hospitals. Payments or deductions will be based on meeting measures in the CMS Hospital Compare measure set.
3. Comment period for proposed rules. CMS issued proposed rules for the Value-Based Purchasing program on Jan. 7 and is accepting comments until March 8. A final rule is expected sometime in the spring.
4. Measurements start in July. The performance period starts on July 1, 2011. The baseline period, on which to base improvement, would use 18 months of data from July 1, 2009 to March 31, 2010.
5. Payment changes to be phased in. Budget-neutral changes in payment begin Oct. 1, 2012 by reducing base operating payments for each discharge 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.
6. Measures used. The program would initially use 25 initial quality measures in FY 2013, including 17 process measures (such as AMI, heart failure, pneumonia and HAIs) and eight patient experience (HCAHPS) dimensions. In FY 2014, 20 measures would be added, including three for mortality, eight on hospital-acquired conditions and nine patient safety inpatient quality indicators.
7. How measures are weighted. The clinical process measures are weighted 70 percent, and the HCAHPS dimensions are weighted 30 percent. Also, CMS won't grade on a curve or "top off." Standards would be raised if most hospitals tend to perform very well.
8. Uses either improvement or achievement score. Either the achievement or the improvement score is used as the final score, depending on which is higher. Improvement and achievement scores are measured from the baseline to the top decile for process and outcomes and the 95th percentile for patient experience. The patient experience score also involves a consistency score, to make sure the hospital is performing well in all eight dimensions.
9. How scores are converted into payment. To convert the quality score to a payment adjuster, CMS plans to use a linear function, which means a one-point increase in score for a high performer would be the same dollar amount as a 1-point increase for a low performer.
10. How payment adjuster is used. The payment adjuster would be applied to each hospital claim, either increasing or decreasing payment, depending on the hospital's last-measured performance. CMS will notify hospitals of their estimated payment adjuster for the first year by Aug. 1, 2012 and of their final adjuster on Nov. 1, 2012, via QualityNet.
View slides from the Premier presentation on value-based purchasing.