GE Healthcare Camden Group Insights Blog

Value-Based Purchasing in 2015: Bonuses Up / Penalties Down

Posted by Matthew Smith on Dec 19, 2014 10:03:00 AM

Value-Based Purchasing, More hospitals will see a payment bump than a penalty in the coming year under Medicare's value-based purchasing program, according to newly released federal data for more than 3,000 U.S. facilities.

A total of 1,698 hospitals will have their Medicare payments boosted in 2015, 467 more than in 2014, according to a Modern Healthcare analysis of data the CMS posted Wednesday. The posted adjustments, however, range between 0.01% and 2.09%, which suggests there could be some anomalies in the data. Under the structure of the program, payments should adjust up or down as much as 1.5% for fiscal 2015. Modern Healthcare has reached out to CMS about why bonuses for more than 40 hospitals in the CMS data surpass that maximum. 

A total of 1,360 U.S. hospitals will have their Medicare payments docked next year. The cuts will range from 0.01% to 1.24%. The number of hospitals facing cuts represents only a slight improvement over last year, when 1,400 hospitals were penalized under the program. The average penalty for 2015 is negative 0.30%. That's higher than the minus 0.26% in 2014 and minus 0.21% adjustments in 2013.

The CMS launched the value-based purchasing program in October 2012 in a major effort under the Patient Protection and Affordable Care Act to reimburse hospitals for quality that marked a shift from pay-for-reporting initiatives such as the Hospital Inpatient Quality Reporting Program. 

The program is budget-neutral because it draws its funds from an across-the-board reduction in base operating DRG payments. For 2015, that cut increased to 1.5% from 1.25% in 2014 and it will grow incrementally each year until reaching 2% in 2017. The 1.5% reduction produced a pool of $1.4 billion. 

The current adjustments are based on hospitals' performance across 26 measures of clinical processes; patient satisfaction; and outcomes, including use of preoperative antibiotics, doctor-patient communication and mortality rates. They include 12 clinical process-of-care measures; eight patient-experience dimensions; five outcome measures; and one efficiency measure on spending per beneficiary.

Health policy leaders at the American Hospital Association are reviewing the data but say upon initial review the findings are positive. “There's nothing surprising here,” said Nancy Foster, the AHA's vice president for quality and patient safety policy. “We see that hospitals continue to improve on their performance on these measures, and some measures are getting to the point where we've achieved such high levels that there's very little room for additional improvement.”

Topics: Medicare, CMS, Value-Based Purchasing

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