More than 1,300 hospitals will face payment penalties under the Value-Based Purchasing (VBP) Program in fiscal year (FY) 2017, CMS announced Tuesday.
Background on VBP
FY 2017 is the fourth year of the VBP program, which adjusts Medicare inpatient reimbursements based on hospitals' performance on quality and patient experience measures.
Each year, a percentage of inpatient payments are withheld from each hospital to fund the program. For FY 2017 the withholding percentage was 2 percent. If a hospital does well by VBP metrics, it can earn back more than the withheld amount, effectively earning a bonus overall. Perform poorly, and the reverse is true.
Approximately $1.8 billion will be available for incentive payments in FY 2017. "After taking into account the statutorily mandated 2 percent withhold, the highest performing hospital in FY 2017 will receive a net increase in payments of slightly more than 4 percent, and the lowest performing hospital will incur a net reduction of 1.83 percent," CMS said in a release.
Hospitals are evaluated on their performance relative both to other hospitals and to their own performance in previous years. In 2017, CMS evaluated hospital performance in four weighted domains:
- Clinical Care (30 percent);
- Patient and Caregiver Centered Experience of Care/Care Coordination (25 percent);
- Safety (20 percent); and
- Efficiency and Cost Reduction (25 percent).
Hospital performance in 2017
About 3,000 hospitals participated in VBP in FY 2017, about half of which will receive payment adjustments within a range of negative 0.5 and positive 0.5 percent.
All told, more than 1,600 hospitals will receive a positive payment adjustment.
According to a Modern Healthcare analysis of CMS data, 55 percent of hospitals will receive bonuses in FY 2017, compared with 59 percent in FY 2016. Among the 2,879 hospitals that participated in VBP in both FY 2016 and FY 2017, more than half will receive lower payment adjustments in FY 2017 than in the prior year.
About 1,250 hospitals earned bonuses in both FY 2016 and FY 2017, while 875 hospitals were penalized both years. "By comparison, 437 hospitals that earned bonuses last year were docked in 2017, and 315 hospital[s] penalized in the last round will receive bonuses next year," Elizabeth Whitman reports for Modern Healthcare.
Reaction to the data
Nancy Foster, the American Hospital Association's VP of quality and patient safety policy, said the VBP results show "how progress on quality can be accelerated when pay-for-performance programs reward both achievement and improvement."
However, the data concerned some experts. Francois de Brantes, executive director of the Health Care Incentives Improvement Institute, noted that CMS rewarded fewer hospitals, and many institutions failed to move up in the rankings over time.
De Brantes said the VBP program is flawed because it creates a "tournament-style" competition. Because hospitals are compared to one another, he said, they don't have a "specific target" for performance improvements. Even if a hospital improves, it could end up "in the middle of the pack" if other hospitals improve as well.
Changes for next fiscal year
Along with the VBP results, CMS announced several changes to the VBP program for FY 2018, including a reshuffling of some quality measures into new categories and the removal of others.
CMS plans to add a "Care Transition dimension" based on HCAHPS survey data to the Caregiver Centered Experience of Care/Care Coordination domain. Also, CMS will equally weight each quality domain in FY 2018 (Whitman, Modern Healthcare, 11/1; CMS release, 11/1; AHA News Now, 11/1; Ellison, Becker's Hospital CFO, 11/1).