News: CMS announces inpatient value-based purchasing program

January 20, 2011

On Friday, January 7, CMS issued a proposed rule to establish a new hospital value-based purchasing program, according to an agency release. The program, required by 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. According to the release, 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% in fiscal year 2013, rising to 2% by fiscal year 2017.

In a related fact sheet issued at the same time, CMS said “[t]he transition of these [quality] initiatives to value-based purchasing is intended to transform Medicare from a passive payer of claims based on volume of care to an active purchaser of care based on the quality of services its beneficiaries receive.”

For fiscal year 2013, CMS proposes to use 17 clinical processes of care measures as well as eight measures from the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey that documents patients’ experience of care. For each of the proposed clinical process and patient experience of care measures a hospital would earn 0-10 points for achievement, within an achievement range (a scale between an achievement threshold and a benchmark).

With regard to the improvement score, CMS proposes that a hospital would earn 0-9 points for improvement, based on how much its performance on the measure during the performance period improved from its performance on the measure during the baseline period. Finally, CMS would calculate a Total Performance Score (TPS) for each hospital, which would involve combining and weighting relevant factors.

Editor’s Note: This article first appeared in Medicare Weekly Update.

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