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CMS Releases Proposed Rule on Value-Based Purchasing

February 21, 2011
by Mark Hagland
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Quality Measures Tied to Hospital Incentives
Donald Berwick, M.D.
Donald Berwick, M.D.

On January 7, the federal Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would establish a federal value-based purchasing program for hospital care, in accordance with provisions in the federal healthcare reform legislation passed in March of last year for such a program. CMS Administrator Donald Berwick M.D., in announcing the proposed rule, said in a statement, “Today's proposal is a huge leap forward in improving the quality and safety of America's hospitals for both Medicare beneficiaries and all Americans.”

The hospital value-based purchasing program would impact Medicare hospital payments beginning in fiscal year 2013, in relation to discharges occurring on or after Oct. 1, 2012, and would make value-based incentive payments to acute care hospitals, based either on how well the hospitals perform on certain quality measures or how much the hospitals' performance improves on certain quality measures from their performance during a baseline period. The higher a hospital's performance or improvement during the performance period for a fiscal year, the higher the hospital's value-based incentive payment for the fiscal year would be.

The program, mandated under the Affordable Care Act, would apply to Medicare payments under the Inpatient Prospective Payment System (IPPS) for inpatient stays in more than 3,000 acute-care hospitals. The financial incentives would be funded by a reduction in the base operating DRG payments for each discharge, which under the statute will be 1 percent in FY 2013, rising to 2 percent by FY 2017.

Initially, CMS plans to require hospitals to report on 45 measures, 27 of which are “chart-abstracted process of care measures,” related to acute myocardial infarction, heart failure, pneumonia, and surgical care improvement. Fifteen of the measures are “claims-based measures,” CMS notes, which will assess the quality of hospital care in the following areas: 30-day mortality and 30-day readmission rates for Medicare patients diagnosed with AMI, heart failure, or pneumonia; and surgical care improvement rates.

CMS will be accepting comments on the program's proposed rule until March 8, 2011, and will respond to them in a final rule published next year.

Healthcare Informatics 2011 March;28(3):56

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