CMS: 1,451 Hospitals Penalized in 2014 Value-Based Purchasing Program

For fiscal year 2014, more than half of all hospitals within CMS' Hospital Value-Based Purchasing program will lose some portion of their Medicare reimbursements.

NewCMSlogoThe Patient Protection and Affordable Care Act established the VBP program. For FY 2014, this meant CMS took back 1.25 percent of Medicare reimbursements at hospitals paid under Medicare's inpatient prospective payment system. The resulting $1.1 billion would then be dispersed to hospitals based on how well they performed on healthcare quality measures, like treatment of heart attack and congestive heart failure, as well as patient satisfaction.

Patrick Conway, MD, chief medical officer of CMS, wrote a blog post advertising the results. He said more than 1,300 hospitals will "essentially break even" over the course of this year, defining "break even" as Medicare reimbursements increasing no more than 0.2 percent or decreasing no more than 0.2 percent. About 630 hospitals will receive a bonus of more than 0.2 percent, while 778 hospitals will lose more than 0.2 percent of their Medicare pay.

Jordan Rau, a staff writer at Kaiser Health News, has followed the government's VBP and readmissions reduction programs since their inception, and he drilled down into CMS' results further. According to his latest report, overall, 1,451 hospitals will be paid less this year under Medicare's VBP program, be it a small or large penalty. This total is similar to last year, which was the first installment of VBP. Higher payments will be doled out to 1,231 hospitals.

Compared with last year, the average penalty rose from 0.21 percent to 0.26 percent. At least 60 percent of hospitals in Maine, Massachusetts, Nebraska, New Hampshire, North Carolina, Utah and Wisconsin received higher Medicare payments under this year's VBP program. Hospitals in California, Connecticut, Nevada, New Mexico, New York, North Dakota, Washington and Wyoming did not fare as well, as at least two-thirds in each state will see lower reimbursement rates.

Dr. Conway of CMS said in his blog post that the second year of VBP is leading to better quality overall and is helping the U.S. healthcare system shift away from fee-for-service.

"As the Hospital Value-Based Purchasing program continues to evolve with a richer set of measures, including an efficiency measure in FY 2015, we may see the mix of value-based payment adjustment factors change again," Dr. Conway wrote. "Meanwhile, value-based purchasing in Medicare continues to move ahead, improving the way that healthcare is delivered to people with Medicare now and helping create a healthcare system that will ensure quality care for generations to come."

To see how individual hospitals fared on both VBP and readmissions combined for FY 2014, click here for KHN's interactive chart. In August, CMS announced 2,225 hospitals would be penalized $227 million for greater-than-expected readmission rates.

More Articles on the Hospital Value-Based Purchasing Program:
10 Quality Provisions in the FY 2014 IPPS Rule to Know
How Will Pay-for-Performance Impact Hospital Revenue in FY 2014?
CMS Announces Value-Based Purchasing Winners, Losers

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