Launching today: Hospital readmission penalties, VBP program

Hospitals could face pay cuts from two ACA programs starting today

CMS on Monday started implementing two Affordable Care Act (ACA) programs that target quality of care and readmission rates in hospitals in a broader effort to improve quality and cut costs.

According to Politico, the programs represent the largest government efforts to shift hospital payments away from a pay-for-service model toward a pay-for-performance model.

CMS launches the VBP program

Under the Hospital Value-Based Purchasing (VBP) Program, Medicare will withhold 1% of its regular reimbursements to about 3,000 acute-care hospitals. Those hospitals can then earn the withheld payments—which will total $850 million in the first year—based on their performance on certain quality measures and on patient experience surveys.

Overall, the ACA requires that the VBP program be budget neutral, so total hospital Medicare payments will not change.             

CMS launches the readmissions reductions program

Under the Hospital Readmissions Reductions Program, Medicare will withhold up to 1% of regular reimbursements to hospitals if they have too many patient readmissions for certain medical conditions within 30 days of discharge. At the beginning, the payments will be based on readmissions for three conditions: heart attacks, heart failure and pneumonia.

According to government estimates, about two-thirds of hospitals serving Medicare beneficiaries will face the penalties averaging around $125,000 per facility in 2013.

The penalty--which will grow to 2% next year and 3% in October 2015—is expected to total about $280 million this year, "Capsules" reports (Norman, Politico, 10/1; Rau, "Capsules," Kaiser Health News, 10/1; Alonso-Zaldivar, AP/Contra Costa Times, 10/1).


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