The Medicare Payment Advisory Commission on Thursday recommended that Congress pass legislation to consolidate most of Medicare's value-based quality programs and boost payments for high-performing hospitals.
The panel voted unanimously to recommend Congress place the hospital quality initiatives into one program called the Hospital Value Incentive Program (HVIP), which would link Medicare payments to the quality of care hospitals provide. The new incentive program would consolidate the existing programs to dispel confusion and overlapping requirements.
The commission aimed for the program to start in 2020 and would boost the payment rate for acute care hospitals by 2% compared to this year to provide greater funding for quality rewards. Hospitals would then all contribute into the Hospital Value Incentive Program, which would redistribute the money to hospitals that perform well on quality measures.
The recommendation said that compared to current law it would increase spending on quality programs from $750 million to $2 billion in 2020 and by $5 billion to $10 billion over five years.
The consolidated program, if enacted by Congress, would merge three programs on hospital readmissions, value-based purchasing and hospital-acquired conditions together. It would also eliminate the inpatient quality reporting program because it was obsolete.
The program would reward hospitals on the same quality performance targets. It includes the five quality measures that the three existing programs evaluate: mortality, spending, patient experience, hospital-acquired conditions and readmissions.
Each of hospital would get a score based on a scale of 0 to 10 for each quality measure, then it would receive a total HVIP score based on the average of all points across each of the five quality measures.
The new HVIP program would score all hospitals based on the same performance targets, but it would account for differences in a patient's social risk factors like unemployment when determining whether the hospital meets current targets.
Hospitals that serve more dual-eligible Medicare and Medicaid patients would also get a larger percentage increase in payments per point.
The program will divide hospitals into certain peer groups. A hospital in a peer group would have roughly the same number of patients and dual eligible patients as other hospitals in the group. Those groups will have a pool of funds that will be distributed based on each hospital's HVIP score.
The incentive payments will come from withholding 2% of total base payments from each hospital and taking 1% of Medicare inpatient spending.
Hospitals will have the choice to withhold 2% or 5% of their base payment, giving them the opportunity to enter a 3% or 5% pool, with Medicare's 1% inpatient spending contribution.
MedPAC estimates that 95% of hospitals in the 3% pool will score quality payments, and Medicare will spend more in incentive payments than it withheld.
In the 6% pool, 82% of hospitals will qualify for the incentive payment. That still would outweigh the total withholdings, MedPAC said.
While the panel members voted unanimously for the recommendation, there was disagreement on whether the new program could be implemented in 2020, which commission staff ultimately recommended.
"I think doing this for 2020 seems quick just given how we deal with other issues," commission member Warner Thomas said. "I am not sure if CMS can move quick enough to get this put in place."
MedPAC staff said that if Congress moves quickly then the new quality program could be implemented by 2020.