VBP Overview

The value-based purchasing program applies to acute care hospitals paid under the Medicare Inpatient Prospective Payment System. Beginning in FY2013, CMS will allocate 1% of its base operating DRG payment (gradually increasing to 2% by FY2017) to hospitals based on their overall performance on a set of quality measures that have been shown to improve clinical processes of care and patient satisfaction. That amounts to an estimated $850 million in the first year.

The withheld money will be redistributed to hospitals on the basis of their quality performance. Because CMS plans for the program to be budget neutral, those who don’t achieve the mandated goals will be penalized, losing Medicare revenue.

For FY2013, CMS will measure performance using two domains: the clinical process of care (70% of the score), which comprises 12 clinical process-of-care measures, and the patient experience of care (30% of the score), which is based on HCAHPS survey measures.

In FY2014, CMS will add the acute myocardial infarction, heart failure, and pneumonia mortality measures, two composite patient safety and inpatient quality indicators developed by the Agency for Healthcare Research and Quality, and eight measures of healthcare-acquired conditions.

CMS will exclude from hospitals’ scores any measures for which they report fewer
than 10 cases. CMS also will exclude from the VBP program any hospital for which fewer than four of the 12 proposed clinical process measures apply, and any hospital that reports fewer than 100 HCAHPS surveys during the performance period.