Few Calif. Hospitals Will Profit From CMS’ Performance Programs

Fewer than 800 of the roughly 1,700 hospitals that earned quality performance bonuses under the Affordable Care Act's value-based purchasing program this year will reap the benefits because of penalties levied by two additional Medicare quality programs, according to a Kaiser Health News analysis, KHN reports.

Background

Under the VBP program, CMS calculates an incentive payment for each hospital based on its performance on quality and patient experience measures, such as patient satisfaction, lower mortality rates and how much Medicare pays for each patient (Rau, Kaiser Health News, 1/22).

The payment for each hospital is relative to a "withhold," meaning a certain percentage of inpatient payments are withheld from each hospital to fund the program. Some hospitals could recoup a portion of the payments that were withheld, while others could break even or receive extra funds (California Healthline, 10/1/12).

Meanwhile, under the Hospital-Acquired Condition Reduction Program, CMS has assessed rates of 10 patient injuries at hospitals, including:

• Bed sores;
• Blood clots;
• Blood stream infections;
• Collapsed lungs;
• Cuts that occur during or after surgery;
• Patient falls; and
• Urinary tract infections.

CMS calculates each facility's HAC score on a scale from one to 10, with 10 being the greatest rate of patient harm. Hospitals that scored a seven or higher are being penalized a full 1% of their inpatient revenues as of Oct. 1, 2014 (California Healthline, 12/19/14).

Similarly, the Hospital Readmissions Reductions Program penalizes hospitals with excess readmissions for patients with acute myocardial infarctions, heart failure and pneumonia (California Healthline, 10/3/14).

VBP is the only one of the three ACA penalty programs to offer bonuses for strong performance. About 1,600 hospitals were exempt from the programs because they are critical access hospitals or are paid differently by Medicare.

Analysis: Few VBP Hospitals Will Receive Bonuses

According to the KHN analysis, nearly 1,700 hospitals -- or 55% of all graded hospitals -- earned bonuses in the VBP program for providing quality of care comparatively higher than other institutions reviewed by CMS, while 1,360 hospitals were penalized.

However, fewer than 800 hospitals will see benefits from such bonuses because they performed poorly on readmissions and HAC quality measures.

In California, the analysis found that out of the 283 hospitals assessed, 49% will receive a bonus, while 52% will receive a penalty. The analysis found 1% of hospitals assessed in California will break even.

Eric Fontana, a practice manager at The Advisory Board Company, said that when all of the incentive programs are combined, large hospitals with more than 400 beds are likely to receive an average bonus of $213,000 and be docked about $1.2 million across the three penalty programs. The Advisory Board publishes California Healthline.

Meanwhile, he said small hospitals with 200 or fewer beds will see an average bonus payment of about $32,000 and an average penalty of $131,000.

Overall, just 28% of hospitals will come out even or make a profit through the programs (Kaiser Health News, 1/22).