Posts Tagged ‘Hospital Value-Based Purchasing program’

CMS’ Value-Based Purchasing Program Is In the Works

Wednesday, March 28th, 2012

The Department of Health and Human Services (HHS) is formulating a new initiative to reward hospitals for the quality of care they provide to Medicare patients and reduce healthcare costs.  Authorized by the Patient Protection and Affordable Care Act (ACA), the Hospital Value-Based Purchasing program marks an historic change in how Medicare pays healthcare providers and facilities — for the first time, 3,500 hospitals nationwide will be paid for inpatient acute-care services based on care quality, not just the quantity of the services they provide.

This initiative supports the objectives of the Partnership for Patients, a public-private partnership that will help improve the quality, safety and affordability of health care for all Americans.  The partnership has the potential to save 60,000 lives and up to $35 billion in U.S. healthcare costs over the next three years, including up to $10 billion for Medicare.  Over the next ten years, the Partnership for Patients could reduce costs to Medicare by about $50 billion and result in billions more in Medicaid savings.

“Changing the way we pay hospitals will improve the quality of care for seniors and save money for all of us,” said HHS Secretary Kathleen Sebelius.  “Under this initiative, Medicare will reward hospitals that provide high-quality care and keep their patients healthy. It’s an important part of our work to improve the health of our nation and drive down costs.  As hospitals work to improve their performance on these measures, all patients – not just Medicare patients – will benefit.”

The Hospital Value-Based Purchasing initiative is just one part of a broad effort by the Obama Administration to improve the quality of health care for all Americans, using important new tools provided by the ACA.  The Partnership for Patients brings together hospitals, doctors, nurses, pharmacists, employers, unions, and state and federal government committed to keeping patients from getting injured or sicker in the health care system and improving transitions between care settings.  The Centers for Medicare and Medicaid Services (CMS) is investing up to $1 billion to drive these changes.  Additionally, proposed rules allowing Medicare to pay new Accountable Care Organizations (ACOs) to improve coordination of patient care are also expected to result in better care and lower costs.

In essence, the program rewards hospitals that perform well on quality measures relating both to clinical process of care and to patient experience of care, or those making improvements in their performance on those measures.  Hospitals that meet performance criteria will receive higher compensation.  The hospital value-based purchasing program, which is expected to become effective in fiscal 2013 for payments for discharges occurring on or after October 1, 2012, would make value-based incentive payments based on how much the hospitals’ performance improves certain quality measures during a baseline timeframe.  The better a hospital’s performance or improvement during the performance period, the higher the hospital’s value-based incentive payment would be, according to CMS.

According to CMS estimates, approximately 50 percent of the facilities participating in this Hospital Inpatient Value-Based Purchasing program will receive a net increase in their Medicare payments.  The other half will see a net decrease.  Neither the increase nor the decrease will exceed one percent in the first year, CMS said.  The better-performing hospitals in the first year have the potential to receive value-based incentive payments totaling as much as two percent of Medicare reimbursement, or a net one percent extra,  CMS sees the program as “the next step in promoting higher quality care for Medicare beneficiaries.”  When the program gets underway, CMS said, the government will reward hospitals on the basis of “actual quality performance,” and not just data.

Jean Moody-Williams, director of the Quality Improvement Group within CMS’ Office of Clinical Standards and Quality, said the Hospital VBP Program is funded by a one percent withholding from participating hospitals’ diagnosis-related group (DRG) payments; hospitals excluded from the program will not have that one percent withheld from their DRG payments.  “The goal of CMS through the Hospital Value-Based Purchasing Program is to link payments to quality outcomes,” Williams said.  “We really are starting to get away from asking, ‘How much did you do?’ to ‘How well did you do and how was it for the patient?'”

The American Hospital Association (AHA) has serious reservations about the program, noting that “CMS has not met its requirements with respect to certain measures.  This failure will unfairly and adversely impact the hospital field and even undermine the intent of the law, which is to provide opportunities for hospitals to improve their performance.”

According to the AHA, the problem “is exacerbated in the outpatient PPS (prospective payment system) rulemaking cycle because it builds on policies that fail to comply with the law’s requirements.” AHA also expressed concern with how the agency handled the notice and comment process for the hospital VBP program, which “made significant changes to this program in three separate regulations,” and suggested that the agency choose a single regulation in which it will make any future changes to the program.

Medicare Proposes Cutting Medicare Physician Reimbursement in 2012

Wednesday, July 20th, 2011

Medicare physician reimbursements may be slashed by as much as 30 percent.  The Centers for Medicare & Medicaid Services (CMS) has proposed changes that will update payment policies and rates for physicians, dialysis facilities and for services to Medicare beneficiaries in hospital outpatient departments, and cut Medicare payments to home health agencies.  CMS’ proposed rule for Medicare payments to physicians and non-physician practitioners includes a 29.5 percent payment rate cut next year.  “This payment cut would have serious consequences and we cannot and will not allow it to happen,” said CMS Administrator Donald M. Berwick in a statement. “We need a permanent (Sustainable Growth Rate) fix to solve this problem once and for all.  That’s why the president’s budget and his fiscal framework call for averting these cuts and why we are determined to pass and implement a permanent and sustainable fix.”  Additionally, CMS proposed a 3.35 percent cut in Medicare payments to home health agencies; a 1.8 percent increase in payment rates for dialysis treatments; a 1.5 percent increase in hospital outpatient rates; and a 0.9 percent increase in ambulatory-surgery center payments.

CMS’ proposed 2012 Physician Fee Schedule includes updated payment policies for physicians and nonphysician practitioners.  CMS estimates total payments under the Medicare Physician Fee Schedule for 2012 will be $80 billion.  In updating the Physician Fee Schedule, CMS must comply with the Sustainable Growth Rate formula, which is estimated to reduce Medicare payments to physicians by 29.5 percent.  In previous physician fee schedules, payment cuts through the SGR have been cancelled through legislation.  Additionally, CMS plans to recover $10 million next year by reducing payments for chiropractic codes by approximately two percent as part of the budget neutrality requirement of the Medicare Prescription Drug, Improvement and Modernization Act of 2003.

Another component of the proposed rule would create a process for certain physician-owned hospitals to apply for an exception to the Patient Protection and Affordable Care Act’s (ACA) ban on capacity expansions at such facilities.  The proposed rule also would amend the Medicare Electronic Health Record Incentive Program to let eligible hospitals and critical-access hospitals report clinical quality measures in 2012 through an electronic reporting pilot.

Additionally, CMS has issued a proposed rule that would update payment policies and rates for services furnished to Medicare beneficiaries in hospital outpatient departments and ambulatory surgical centers starting next calendar year.  The rule helps emphasize the importance of beneficiaries being able to receive quality care without regard to the care setting.  “The CMS is committed to using every tool at its disposal to create incentives that will improve the quality and safety of care received by Medicare beneficiaries, wherever that care is provided,” Berwick said.

The rules include proposals that would strengthen the Hospital Value-Based Purchasing program,  as required by the ACA and whose purpose is to improve the safety and quality of patient care and make healthcare more affordable.  The program — established through a CMS final rule — ties a portion of a hospital’s payment for inpatient stays under the Inpatient Prospective Payment System,  a method of reimbursement in which Medicare payment is made based on a predetermined, fixed amount.