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CMS Releases Value-Based Purchasing Incentive Plan

 |  By cclark@healthleadersmedia.com  
   January 11, 2011

Federal officials have issued a long-awaited proposal on how they will make value-based purchasing incentives. The document sets forth which metrics will generate payment after Oct. 1, 2012. 

The Centers for Medicare & Medicaid Services proposal, issued late Friday, incorporates 17 clinical process-of-care measures used in five health categories, acute myocardial infarction, heart failure, pneumonia, healthcare associated infections and surgical care improvement. It also will use eight measures from the hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey that reflects how patients view their care experiences.

Those measures include patients' views of their communication with nurses and doctors, the responsiveness of hospital staff, their pain management and the cleanliness and quietness of the hospital environment.

These 25 measures will be used to generate FY 2013 DRG payments.

By 2014, it will add mortality outcome measures for the three health conditions, eight hospital-acquired condition measures and nine Agency for Healthcare Research and Quality measures. The hospital-acquired condition measures include surgical foreign object retention, air embolism, blood incompatibility, pressure ulcer stages III and IV, falls and trauma such as burns or electrical shocks, catheter-associated urinary tract infections and manifestations of poor glycemic control.

The regulations will apply to discharges at 3,000 acute care hospitals. All these hospitals will have their funding reduced starting with 1% in fiscal year 2013, rising to 2% by FY 2017, but will have a chance to earn that money back, and perhaps more, under the incentives algorithm.

Algorithms will be calculated to derive a Total Performance Score or TPS for each hospital.

CMS director Don Berwick, in a statement, called the proposed regulations "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 will reward hospitals for improving patients' experiences of care, while making care safer by reducing medical mistakes."

Senior Associate Directors for Policy for the American Hospital Association, Beth Feldpush and Joanna Kim, say that while their organization supports the guidelines, one element sticks out they believe unfairly penalizes hospitals.

Under the proposal, hospital-acquired conditions are included in the algorithm that would result in financial penalties to a hospital that had higher percentages. That's a problem because another section of the Patient Protection and Affordable Care Act also includes specific financial penalties for hospitals with higher rates of hospital-acquired infections.

"We were surprised to see HAI in the value based purchasing rules, and this is something the AHA will be strongly opposing," Feldpush says. If this is allowed to stand, "hospitals will be at risk for double jeopardy, with financial penalties imposed twice on the same set of measures."

Kim and Feldpush say the AHA is studying other parts of the proposal in order to give a more detailed response. So far, they say, "There's a lot in here that we really do like," and that these financial incentives, "will lift all boats."

Hospitals will learn what their value-based incentive payment will be for FY 2013 "at least 60 days prior to Oct. 1, 2012," CMS said. The period of evaluation begins this July 1 and lasts until March 31, 2012.

Several other parts of proposed regulations clarify how the algorithm will work. For example, hospitals will benefit not only if they have high scores, but also if they show improvement.

CMS proposes to use a linear improvement equation, so that each percentage of improvement will count the same. It had been suggested that some hospitals might get greater rewards if they improved from very low scores, or if they achieved improvement from almost perfect to perfect.

Blair Childs, senior vice president of public affairs for Premier healthcare alliance, said the rules "will evolve the Medicare payment system to reward improvements in quality and health outcomes."

Through its five-year Hospital Quality Incentive Demonstration pilot project with CMS, Premier says, incentives like these "can achieve better outcomes for patients. In five years, participants in the HQID raised their overall quality by an average of 18.3%."

The Centers for Medicare & Medicaid Services proposal may be viewed here.

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