Better Pay for Better Performance: Hospital Outcomes Determine CMS Reimbursement

In an effort to promote higher quality and more efficient healthcare for Medicare beneficiaries, the Centers for Medicare & Medicaid Services (CMS) recently announced plans to implement a Hospital Value-based Purchasing (VBP) Program as mandated by the Affordable Care Act (ACA). Building on quality care measures already being reported, the Value-based Purchasing Program will score hospitals according to how well they perform on specific measures and offer incentive payments to those that meet or exceed standards. The new program will shift payments from hospitals that are not achieving acceptable outcomes to those that are. Government officials expect $850 million in Medicare reimbursement to be reallocated based on performance in patient care.

CMS views value-based purchasing as an important step toward revamping reimbursement for patient care—moving toward rewarding better value, patient outcomes, and innovations and away from payment based on volume. The program will be funded by gradually reducing all inpatient prospective payment system operating payments to participating hospitals and then reallocating payments based on hospital performance.

Measuring Performance

Beginning in 2013, CMS will consider clinical process of care, patient experience, and outcome measures in calculating performance scores. Hospitals will be scored according to 17 clinical process measures—which include three measures of myocardial infarction care, three measures of heart failure care, four measures of pneumonia care, and seven measures of surgical care—along with the results of the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Patient Experiences with Care Survey. By 2014, CMS will expand the measures to include 30-day myocardial infarction, heart failure, and pneumonia mortality measures as well as patient safety and inpatient quality indicators and measures of hospital-acquired conditions. Hospital performance and domain- and condition-specific scores will be posted on the Hospital Compare website.

A hospital will receive an incentive payment for achieving quality benchmarks and for improving performance as compared to a baseline period. To earn points for achievement, the hospital would have to perform at least as well as half of all hospitals during the performance period. To earn points for improvement, the hospital has to exceed its own baseline performance during the performance period. Scores and incentive payments will be determined annually.

What to Do?

The American Hospital Association has encouraged hospital administrators to evaluate and compare their current performance with state and national averages to begin preparing for these changes in reimbursement. Nursing leadership also needs to be ready. Nurse-to-patient ratios directly affect quality of care. So do working conditions and continuing staff education. Nurse leaders need to seek support from hospital administrators to be sure that nurses have the training and resources they need to deliver quality care. There is more riding on it now than ever.

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