Starting in October 2012, about 1% of the payments that hospitals receive from Medicare will be calculated based on performance on clinical quality measures and patient satisfaction scores.
Details of the new initiative, known as the Hospital Inpatient Value-Based Purchasing program, were unveiled in a final rule released by the Centers for Medicare and Medicaid Services (CMS) on April 29. The initiative was mandated by Congress under the Affordable Care Act.
Under the program, CMS will take 1% of the payments that would otherwise go to hospitals under Medicare’s Inpatient Prospective Payment System and put them in a fund to pay for care based on quality. In the first year, CMS estimates that about $850 million will be available through the fund. Medicare officials will score hospitals based on their performance on each of the measures compared to other hospitals and to how their performance has improved over time.
The program is the first step in shifting payments toward quality and away from volume, Dr. Donald Berwick, CMS administrator, said during a press conference.
"This is one of those areas where improvement of quality and reduction in cost go hand-in-hand," Dr. Berwick said. "My feeling continues to be that the best way for us to arrive at sustainable costs for the health care system is precisely through the improvement of quality of care."
Under the program, payments will be based on performance on 12 clinical process-of-care measures and a survey of patient satisfaction. Process-of-care indicators include measures such as the percentage of patients with myocardial infarction who are given fibrinolytic medication within 30 minutes of arrival at the hospital.
To evaluate patient satisfaction, a random sample of discharged patients will be surveyed about their perceptions, including physician and nurse communication, hospital staff responsiveness, pain management, discharge instructions, and hospital cleanliness.
The measures have been endorsed by such national panels as the National Quality Forum, and hospitals have already been reporting their performance on them through Medicare’s Hospital Compare website. The measures are weighted so that 70% of the payment is based on the quality measures and 30% is based on patient evaluations.
Over time, CMS officials plan to add measures focused on patient outcomes, including prevention of hospital-acquired conditions. And measures will be phased out over time if hospitals achieve consistently high compliance scores, Dr. Berwick said.
The new value-based purchasing initiative is only one way that hospital payments will be tied to quality of care. Starting in 2013, Medicare will reduce payments to hospitals if they have excess 30-day readmissions for patients who suffer heart attacks, heart failure, and pneumonia. And in 2015, hospitals could see their payments cut if they have high rates of certain hospital-acquired conditions.
The final rule on hospital value-based purchasing will be published in the Federal Register on May 6 and becomes final on July 1.