The program is budget-neutral and the $850 million that will be available for hospital incentive payments during the program's first year will come from an across-the-board 1% reduction in hospitals' base operating DRG payments. That number will jump to 2% in 2017, HHS said.
Some providers and groups praised the program, which marks a dramatic shift from the current inpatient prospective payment system and the Hospital Inpatient Quality Reporting Program, which rewards hospitals for reporting quality data.
“Today's payment system is riddled with perverse incentives that reward high volume and high profit-margin services, regardless of value, outcomes or appropriateness,” said Christine Bechtel, vice president of the National Partnership for Women & Families. Bechtel spoke at an HHS news briefing on behalf of the Campaign for Better Care, an advocacy organization that emphasizes healthcare quality and accessibility.
“This rule is a much needed effort to begin attacking this problem at its root,” Bechtel said.
Dr. Charles O'Brien, president of 478-bed Sanford University of South Dakota Medical Center, Sioux Falls, said his hospital is familiar with the program's measures and he does not anticipate a problem complying. “We don't have many worries, since we've been working on the core elements of these for some time,” O'Brien said.
The value-based purchasing program, which is mandated by the Patient Protection and Affordable Care Act, sets up a framework to reward hospitals for their performance on selected quality measures. To determine payments for 2013, the CMS will monitor hospitals during a performance period that runs from July 1, 2011, through March 31, 2012.
Based on scores calculated during the nine-month performance period, hospitals will begin to receive incentive payments for discharges occurring on or after October 1, 2012. The CMS said it will notify hospitals of their estimated incentive payment for 2013 at least 60 days prior to that date.
For 2013, the CMS plans to measure hospitals using 12 clinical process-of-care measures, in areas such as surgical care, pneumonia care and prevention of healthcare-associated infections. That's five fewer measures than the agency originally included in the proposed rule, leaving out aspirin at discharge for heart attack patients, pneumococcal vaccination for pneumonia care and several others that the agency deemed “topped out,” meaning the majority of hospitals had reached a high level of performance on them.
The healthcare reform law requires that any measure that is used for value-based purchasing must have appeared on Hospital Compare, the CMS' consumer quality information website, for at least one year.
In addition, the agency will measure hospitals' patient experience scores, using the Hospital Consumer Assessment of Healthcare Providers and Systems survey. Those HCAHPS scores, which measure patients' impressions of hospital cleanliness, communication with clinicians and other factors, will be given a weight of 30% in the final scoring. The clinical process-of-care measures will be given the remaining weight of 70%.
That weighting ratio is identical to the one the CMS included in its proposed rule, and for many industry groups the agency's refusal to lower the weight given to the HCAHPS measures is a big problem.
“We remain concerned with CMS' decision to weight the patient experiences of care survey data at 30% of hospitals' total scores,” the American Hospital Association said in a statement. “We believe the HCAHPS methodology should be refined to ensure that no hospital is systematically biased against performing well on these measures. Until that refinement occurs, the HCAHPS measures should receive less weight.”
According to Joanna Kim, the AHA's senior associate director for policy, the worry is that certain healthcare organizations, such as academic medical centers, might be at a disadvantage when it comes to patient experience scores simply because of the patient populations they serve.
Chip Kahn, president and CEO of the Federation of American Hospitals, lauded the program as something “solid and needed,” but he also expressed concern about the weight given to HCAHPS scores.
“Regional differences are one of the reasons we felt so strongly that the thrust of the program needed to be about clinical care as opposed to patient experiences,” Kahn said. “It could lead to some arbitrary results.”
There were other worries too. For 2014, the CMS plans to base incentive payments on three mortality measures, two composite measures from HHS' Agency for Healthcare Research and Quality, and eight hospital-acquired condition measures.
Those hospital-acquired condition measures, which include incidences of air embolisms, late-stage pressure ulcers and blood incompatibility, open the door for a double penalty for hospitals, said Beth Feldpush, a senior associate director of policy for the AHA.
In initial comments about the proposed rule in January, Feldpush warned of the potential for “double jeopardy” because the healthcare reform law already mandates a penalty of 1% of Medicare payments, starting in 2015, for hospitals that have the highest hospital-acquired condition rates. In spite of comments, the CMS made no changes.
“Our biggest concern continues to be the inclusion of hospital-acquired conditions,” said Feldpush, following the release of the final rule.
When calculating the scores for each measure, the CMS says it will recognize both achievement and improvement. Hospitals' improvement scores will be assessed based on the change from their baseline performance. Achievement scores, on the other hand, will be calculated based on hospitals' performance compared with the threshold and benchmark scores for all other hospitals.
The threshold, or minimum to earn achievement points for each measure, will be set at the 50th percentile of hospital scores observed during the baseline period.
—with Andis Robeznieks and Rich Daly