Hospital Groups Propose 7 Ways to Restructure Value-Based Purchasing

In a letter to CMS, the AHA and other nationwide hospital organizations recommended at least seven ways to restructure the agency's value-based purchasing program to assess hospital performance and reward them with incentive payments.

CMS plans to institute its Medicare value-based purchasing program, mandated by the healthcare reform law, on Oct. 1, 2012. The program will give hospitals extra incentive payments for meeting certain criteria the agency is now drafting.

The AHA, Association of American Medical Colleges, Catholic Health Association, Federation of American Hospitals, National Association of Public Hospitals and Health Systems, and Premier offered the following recommendations:

1. Relationship with inpatient quality reporting. CMS should clarify how the value-based measures relate to the current hospital inpatient quality-reporting program. Also, the Hospital Compare program should continue to report quality measures, even if not all of the measures are incorporated into the value-based program, the letter said.

2. Relationship with meaningful use measures.
CMS needs to explain how it will integrate the value-based measures with clinical quality measures used to demonstrate meaningful use for healthcare IT incentive payments.

3. Selecting quality measures. Quality measures for the value-based program should be consistent with the National Quality Strategy, be endorsed by the National Quality Forum and recommended by multi-stakeholder groups such as the Hospital Quality Alliance or the upcoming Measure Applications Partnership. CMS should consult the Joint Commission's framework for evaluating quality measures.

4. Calculating performance scores. The agency should explore different weighting methodologies for each measure or category of measures for the value-based performance score and present several options for public comment. One possible approach is weighting scores by "opportunities to provide care," in which "a hospital’s overall denominator would be the sum of every opportunity it has to provide the right care."

5. Minimum number of cases to participate. To help determine the minimum number of patient cases for a hospital to participate, CMS should publicly release the results of its value-based studies before it publishes its proposed rule.

6. Timing of implementation. In the first year of the program, CMS should refrain from using "differing time spans for the baseline and performance periods," because this would "achieve longer measurement periods at the expense of introducing seasonality issues," the letter stated. Instead, the agency should shorten the baseline period for the first year to correspond to the performance period.

7. Making incentive payments. Including the value-based payment within each DRG payment would have little meaning for hospitals. Instead, CMS should pay hospitals lump-sums to help ensure the program "immediately and significantly impacts hospital performance in a manner that improves the quality of care."

Read the hospital organizations' letter to CMS on Medicare value-based payment (pdf).

Read more coverage of value-based purchasing:

- CMS to Hold Forum on Its Value-Based Purchasing Program

- Healthcare Reform Bills Would Reward Hospitals for Medicare Spending Efficiency

- CMS Announces Results of First OPPS Data Report

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