Winners and Losers Under VBP
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Nothing about VBP should come as a surprise, Bogen notes. “The underpinnings of VBP have been in place for some time.” The measures identified for the first and second years
of the VBP program have already
been reported as part of the hospital IQR program. At South Nassau
Communities Hospital, “the public reporting of data has actually made it easier for those of us in finance to push this agenda forward. Every CEO, COO, CMO, and CNO—as well as hospital board—is acutely aware of the quality data.”
If you haven’t already done so, try to align Medicare quality standards with those of your commercial payers, says Ladely. During the next round of contract negotiations, make sure this issue gets on the table. You want those payers to use the same quality metrics CMS is using, but even if they don’t agree to that, negotiate so you have considerable overlap. “Negotiate with them in such a manner … that you aren’t chasing too many things at the same time.”
Demonstrate you are already capturing and reporting quality data, he says. He’s found payers very willing to negotiate the issue. You may end up with a mix, but the more overlap you can negotiate, the fewer measures you will have to report.
Hospitals with a larger volume of Medicare patients could be affected in terms of absolute dollars. But regardless of size or location, all eligible hospitals have a lot at stake.
A $50 million hospital could lose $1 million a year, Ladely explains. The loss affects profitability, operations, and the ability to secure capital, he says. “The ramifications of losing that magnitude of dollars are significant.” Conversely, the bonus money can have a positive impact on all these areas. Moreover, hospitals able to do well in the VBP program are more likely to do well in their private payers’ pay-for-performance programs, so even more incentives are at stake.
It’s not just the incentives and penalties that make a difference, Bogen notes. There is the reputational cost for the hospital. It’s difficult to establish a price tag on that, but the ability to maintain long-term financial health for a hospital constantly residing in the lower quartile will be threatened, he warns. “The reputation of the organization and its related clinical staff is at risk, which has a potential impact far greater than any financial penalties being imposed.”
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