Few big winners in value-based purchasing: FY 2014

January 12th, 2015

The numbers are in from CMS’ value-based purchasing for fiscal year 2014: While half of hospitals will break even, there are more penalties than bonuses in 2014.

Value-based purchasing replaces the old system of reimbursing hospitals for the volume of Medicare patients treated. Bonuses and penalties are based on measures such as outcomes, infection control, readmissions, and, controversially, patient satisfaction scores. CMS looks at how hospitals have improved over the last two years, as well as how they compare with one another. Forty-five percent of the score is based on standard of care, 25% on mortality rates for heart attack, heart failure, and pneumonia, and 30% on patient satisfaction. Possible penalties have increased to a maximum of 2%.

There are a few more penalties than bonuses: 1,451 will see less money, while 1,231 will receive increased payments. Six hundred thirty hospitals will get a bonus, and 778 will get an outright payment decrease. Those that will break even will get a 0.2% increase or decrease.

One of the main purposes of value-based purchasing is to spur hospitals to improve quality and standard of care on certain measures. It’s a little early in the game to determine whether payment incentives will have the desired effect; for the most part, bonuses and penalties remained unchanged for hospitals. Mortality is taken into account, even though it’s not clear why some hospitals have better rates than others. And many still inwardly groan at patient satisfaction scores counting as 30% of the overall total. Russ Underwood and I have written at some length on research into the effectiveness of those scores, and the consensus seems to be that patient outcomes seem to have little effect on the patient’s overall happiness with the whole experience. While this systems seems to have pushed hospitals to focus on improving infection rates and other measures in Medicare patients, overall effectiveness remains to be seen.