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CMS Releases Final Rule on Value-Based Purchasing for Hospital Payment

April 30, 2011
by Mark Hagland
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Rule will apply to Medicare hospital discharges as early as October of next year

On April 29, the federal Centers for Medicare and Medicaid Services (CMS) issued a final rule on value-based purchasing for hospital reimbursement under the Medicare program, for payments beginning in fiscal year 2013.

As CMS indicates on its website, “Starting in October 2012, Medicare will reward hospitals that provide high quality care for their patients through the new Hospital Value-Based Purchasing Program. The program marks the beginning of an historic change in how Medicare pays health care providers and facilities—for the first time, hospitals across the country will be paid for inpatient acute care services based on care quality, not just the quantity of the services they provide.”

In addition, CMS officials intend for the new program to support the goals of the Partnership for Patients, the new public-private partnership that “has the potential to save up to $35 billion in U.S. health care costs, including up to $10 billion for Medicare,” according to CMS.

According to the final rule, the Hospital Value-Based Purchasing Program, beginning in fiscal year 2013, will “focus on how closely hospitals follow best clinical practices and how well hospitals enhance patients’ experiences of care. When hospitals follow these types of proven best practices, patients receive higher quality care and see better outcomes. And helping patients health without complication can improve health and ultimately reduce health care costs.”

In the first year of the program, the value-based purchasing program will include 12 clinical quality measures, as well as the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) patient experiences with care survey. The clinical measures will account for 70 percent of a hospital’s value-based purchasing score, and the HCAHPS survey for 30 percent. Over time, more measures will be applied to the process.

“Importantly, as the rule notes, the program will apply to payments for discharges occurring on or after October 12, 2012.”

As for the details under the headlines, some provider organizations expressed concerns. Among them was Blair Childs, senior vice president of public affairs at the Charlotte-based Premier Healthcare Alliance, who released a statement that same day, expressing a variety of reservations. Childs’s statement said, in part, that, “Based on our experience with the Hospital Quality Incentive Demonstration (HQID), the Premier healthcare alliance strongly supports policies that link payment to quality outcomes. However, we are disappointed that CMS essentially ignored comments from the field on the proposed Medicare value-based purchasing (VBP) rule and did not adjust its policies accordingly.” Childs criticized a number of specific elements of the methodology being used, including the fact that, “While inclusion of HCAHPS is an important advancement of patient-centered care, a 30 percent weighting is excessive, since research shows that high-acuity or depressed patients score their experience at a lower level. Because of this, we believe that CMS’ policy will disadvantage hospitals that take on complex patients.”

Healthcare Informatics will continue to report on new developments in this area as they emerge. For more information check the fact sheet for the final rule.