Hospitals now have the final set of Value Based Purchasing rules governing how they will be paid based on quality performance, which will weight clinical measures at 70% and patient experience measures at 30%.
In a news briefing on the rules Friday, Centers for Medicare & Medicaid Services administrator Donald Berwick, MD, called the new rules "a historic change. For the first time, hospitals around the country are going be paid for inpatient acute services based on healthcare quality, not on just on the quantity of services they provide. "
Beginning in fiscal year 2013 hospitals will continue to receive payment from Medicare, but will receive an across-the-board cut in reimbursement of 1%. That amount, estimated at about $850 million, will be used to reward improvement and achievement under the program.
"Changing the way we pay hospitals will improve the quality of care for seniors and save money for all of us," U.S. Health and Human Services Secretary Kathleen Sebelius said in a statement released to the media. "Under this initiative, Medicare will rewards hospitals that provide high-quality care and keep their patients healthy. It's an important part of our work to improve the health of our nation and drive down costs.
"As hospitals work to improve their performance on these measures, all patients – not just Medicare patients – will benefit."
In the briefing, Berwick added:
"In 2009, more than 700 million Medicare beneficiaries were in the hospital. And [there were] more than 12.4 million hospitalizations. Quality for these people varies. Many suffer adverse events, such as those we're going to be tackling with Partnership for Patients, and others lack benefit from care due to unreliability in quality of care.
"These forms of problems in quality cost money and increase suffering. Medicare spent an estimated $4.4 billion in 2009 to care for patients who had been harmed in hospitals. And readmissions, many of which are unnecessary, cost another $26 billion. So this is one of those areas where improvement of quality and reduction in cost go hand in hand."
CMS administrator Don Berwick said that the many comments from providers received in recent months were taken into account, including concerns about the weight given to patient experience. However, administration officials said that they wanted to give appropriate weight to the patient's input.
CMS will reward or penalize 3,500 hospitals paid under the Inpatient Prospective Payment System on the basis of their ability to provide higher quality care starting in October, 2012.
The new rules were required under section 3001 of the Patient Protection and Affordable Care Act, although details awaited a final review by CMS.
The final rules call for the first year's measurement to be based on 12 clinical process of care measures and scores recorded under the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS). In Fiscal 2014, CMS will include three mortality outcome measures, eight hospital acquired condition measures and two composite measures set by the Agency for Healthcare Research and Quality.
Scores will be assessed for hospitals' achievement as well as improvement.
In a fact sheet released Friday, CMS said that for scoring on achievement, "hospitals will be measured based on how much their current performance differs from all other hospitals' baseline period performance.
Points will then be awarded based on the hospital's performance compared to the threshold and benchmark scores for all hospitals. Points will only be awarded for achievement if the hospital's performance during the performance period exceeds a minimum rate called the 'threshold,' which is defined by CMS as the 50th percentile of hospital scores during the baseline period.
For scoring on improvement, hospitals will be assessed based on how much their current performance changes from their own baseline period performance. Points will then be awarded based on how much distance they cover between that baseline and the benchmark score. Points will only be awarded for improvement if the hospital's performance improved from their performance during the baseline period.
Berwick singled out provisions in the new rules that will reward hospitals for improvements in how patients experience their care. He said reimbursement will be based on "How satisfied are patients with the experience of the care in the hospital using modern ways for patients to talk back to all of us about the experiences they had using systematic, well developed and scientific surveys."
Blair Childs, spokesman for Premier Healthcare Alliance, applauded the rules but said Premier is "disappointed that CMS essentially ignored comments from the field on the proposed Medicare value-based purchasing (VBP) rule and did not adjust its policies accordingly."
He added, " a 30 percent weighting is excessive, since research shows that high-acuity or depressed patients score their experience at a lower level. Because of this, we believe that CMS' policy will disadvantage hospitals that take on complex patients."
CMS plans to add additional measures in time. Specifically, measures will assess whether hospitals:
- Ensure that patients who may have had a heart attack receive care within 90 minutes;
- Provide care within a 24-hour window to surgery patients to prevent blood clots;
- Communicate discharge instructions to heart failure patients; and
- Ensure hospital facilities are clean and well maintained.
The American Hospital Association said in a statement that it "supports the general direction of CMS' rule, but we are disappointment that our recommendations to improve the VPB program were ignored."
Additionally, the group said it has "serious concerns about specific components of the plan, such as the inclusion of hospital-acquired conditions in the VBP program, the weighting of the patient experiences of care survey data, and the required minimum number of patient cases to participate in the program."
For example, the AHA said that the decision to weight patient experiences of care at 30% could result in hospitals being "systematically biased against performing well on these measures. Until that refinement occurs, the HCAHPS measures should receive less weight."
Additionally, the AHA said it "strongly opposes the inclusion of HAC measures in both the VBP program and the future HAC penalties provision because of the opportunity for hospitals to be penalized twice on the same measures and we are disappointed that CMS included them in the final rule."
CMS also refused to accept the AHA's recommendation that a minimum of 25 cases on any value-based measurement be required for that hospital to be included. But CMS held on to the language in its proposed rule, that hospitals with fewer than 10 cases would be excluded. "We are disappointed that CMS did not follow our recommendation."