Study Identifies "Break Even" Scores for Hospitals Under Value-Based Purchasing

A recent study  has identified the total performance score hospitals need to "break even" in the fiscal year 2013 value-based purchasing program, which is slated to begin Oct. 1.

The study was authored by Ed Klein and Paul Shoemaker, both from American Hospital Directory, and published with the Health Financial Management Association.

A hospital's TPS is determined according to certain clinical practice and patient satisfaction measures for the performance period compared to a prior baseline period. Incentive payments for each discharge will be based on a hospital's TPS.

An analysis of hospital TPSs, based on fiscal year 2010 Hospital Compare Data, showed a median score of 37 for hospitals. Only a small number of exceptional hospitals exceeded scores over 80. Under the program, hospitals with a TPS of zero will receive a 1 percent reduction in revenue, while hospitals with TPS of 100 will receive a 1.6 percent bonus.

The VBP program will be funded in FY13 by reducing the base operating DRG payment amount for each IPPS discharge by 1 percent. A hospital with a TPS of 37, for example, would receive an incentive payment of 0.99 percent of the base operating DRG payment for a discharge.

Therefore, the theoretical "break-even" TPS would be that of 37.7, according to the study. This represents the point at which there would be a 1 percent higher incentive payment that would equal the 1 percent IPPS discharge withholding needed to fund the VBP program.

Read the full study here.

Related Articles on Value-Based Purchasing:

CBO: Most Demonstration Projects Don't Curb Medicare Costs
Making the Grade: Self-Service Strategies for Improving the Patient Experience
The Perfect 10: Hospital Officials Scramble to Ace Patient Satisfaction Scores

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