Most in Hospital Value-Based Purchasing Program to get higher payments next year

By | December 5, 2018

Dive Brief:

  • CMS has released Hospital Value-Based Purchasing (VBP) Program results for 2019 showing that almost 60% of hospitals participating in the payment incentive program will see a “small change” (between -0.5% and 0.5%) in Inpatient Prospective Payment System reimbursement. 
  • Just over half of those affected hospitals (55%) are set to receive higher Medicare reimbursement, with the average net increase in payment adjustments being 0.61%. The average net decrease for the minority of hospitals is -0.39%. CMS estimates making $ 1.9 billion available for the program in 2019, the same as estimated for 2018. 
  • While fewer hospitals are set to receive incentive bonuses in 2019 than the 57% from the year before, the data suggest slight improvements in quality and value for the 2,800 hospitals that take part in the program. The average total performance scores for participating hospitals increased to 38.1 from 37.4 in FY 2018, with rural hospitals receiving above-average TPS scores compared to their urban peers, according to CMS.  

Dive Insight:

The efficacy and impact of the VBP initiative has been contested since the its implementation in 2012. The Government Accountability Office in a 2015 analysis of the first three years of the program, concluded VBP had a minimal effect on quality at the majority of participating hospitals, which at the time, saw their Medicare payment rates fluctuating by less than half a percentage point.

Last year, about half of hospitals earned incentive payment increases through the program, with average adjustments landing between -0.5% and 0.5%. Notably, about 200 hospitals have dropped out of VBP since rates were last set. Considering the average rate adjustments for 2019, GAO’s criticisms from 2015 still stand.

VBP is one of many incentive-based reporting programs used under Medicare, created under the Affordable Care Act. Providers and hospital groups have been vocal in their criticisms of reporting measures, the sheer number of programs and, specifically, the administrative burden they create.

The Medicare Payment Advisory Commission (MedPAC), the congressional agency tasked with analyzing Medicare and the healthcare delivery system, recommended in its annual June report that CMS consolidate VBP and three other hospital payment incentive programs currently used under Medicare, including the Hospital Inpatient Quality Reporting Program, Hospital-Acquired Condition Reduction Program and the Hospital Readmissions Reduction Program, though the agency determined the last has ultimately been successful in its stated mission.

Geographic-based payment adjustments have also been a topic of contention in recent years. According to CMS data, rural hospitals performed better in safety, engagement and cost reduction, earning them an average TPS four points greater than the national average. Urban hospitals, however, performed better in clinical care.

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