Reviewing the Value-Based Purchasing Program Final Rule




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In the first of a four-part series on the value-based purchasing (VBP) program, we looked at the background and the influence of healthcare reform on this significant change in healthcare reimbursement.

Part 2 examines the final rule issued by the Centers for Medicare and Medicaid Services (CMS).

Key Provisions of the Final Rule

On April 29, 2011, CMS published the final rule for the VBP program. It establishes the regulations for the program for acute care hospitals and payment under Medicare’s inpatient prospective payment system (IPPS).

This post reviews key provisions related to the reimbursement, performance measures and time periods.


Starting in fiscal year (FY) 2013, a reduction of the IPPS program’s diagnosis-related group (DRG) payments will fund hospital payments under the VBP program. Reductions on the base DRG for each year are as follows.

  • FY2013 – 1 percent
  • FY2014 – 1.25 percent
  • FY2015 – 1.5 percent
  • FY2016 – 1.75 percent
  • FY2017 – 2 percent

CMS estimates the amount of funding at $850 million.

The amount of reimbursement depends on how well a hospital performs on defined quality measures. The hospital’s performance determines if it receives more or less than its contribution to the VBP fund.

Performance Measures

Originally, CMS proposed 18 performance measures in two categories – Process of Care and the Patient Experience. The final rule contains a total of 13 measures.

  • Process of Care – 12 measures with a 70 percent weighted factor
  • Patient Experience – the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey with a 30 percent weighted factor

The 12 clinical process of care measurements relate to acute myocardial infarction, heart failure, pneumonia, healthcare-associated infections, and surgeries.

A third category based on outcomes is planned for FY2014, and includes measurements for mortality, hospital-acquired conditions, and patient safety.

The basis for scoring is points awarded to the hospital for achievement and improvement.  To receive points for any of the measurements, hospitals must exceed the baseline threshold. The higher of the two scores (achievement or improvement) is used for the hospital’s final score.

The hospital’s total performance score determines the amount of incentive payments.

Time Periods

There are two time periods contained in the final rule for the VBP program – the baseline and performance time period.

The following are the time periods for FY2013.

  • Baseline time period is from July 1, 2009 through March 31, 2010, which allowed CMS time for developing threshold and benchmark data
  • Performance time period is from July 1, 2011 through March 31, 2012

In FY2014, with the addition of the outcomes category, the time periods extend to a full 12 months.

  • Baseline time period is from July 1, 2009 through June 30, 2010
  • Performance time period is from July 1, 2011 through June 30, 2012

Reporting Requirements

CMS requires a minimum level of reporting for hospitals to qualify for incentive payments.

  • Submission of at least 10 cases per clinical process measure
  • Submission of at least four of the measures
  • Submission of at least 100 HCAHPS surveys

In the next part of our four-part series, we will discuss the impact of anesthesia services on the value-based purchasing program.

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