Study: Most Hospitals Will Break Even Under Value-Based Purchasing
A study published this week in the journal Health Affairs suggests that the value-based purchasing program will have only a small effect on hospital payments when it launches in October, Kaiser Health News reports (Rau, Kaiser Health News, 9/4).
Background on the VBP program
Established by the Affordable Care Act, the VBP program beginning Oct. 1 will withhold 1% of Medicare payments for about 3,000 U.S. hospitals. Those hospitals then can earn the withheld payments -- which will total $850 million in the first year -- based on their performance on certain quality measures and on patient experience surveys (Dwoskin, Bloomberg Businessweek, 9/6).
Overall, the ACA requires that the VBP program be budget neutral, so total hospital Medicare payments will not change.Â
The study -- authored by University of Pennsylvania professor Rachel Werner and UC-SanÂ Francisco professor R. Adams Dudley -- calls the VBP program the "largest Medicare quality improvement initiative for hospitals to date."
To assess the program's potential impact on individual hospitals' payments, Werner and Dudley modeled it using 2009 hospital data obtained from CMS' Hospital Compare database.
After calculating 3,018 hospitals' projected payment changes under the VBP program's final rule, they found that about 51% of hospitals would have received higher payments and 49% would have received lower payments.Â Â Â Â Â Â Â Â Â Â Â Â Â
However, the researchers also found that:
- 65% of hospitals would have experienced a payment change between -0.25% and 0.24%;
- 3% of hospitals would have received a payment decrease larger than 0.5%; and
- 2.4% would have received a payment increase larger than 0.5%.
Altogether, only eight hospitals in the study would have seen payment changes greater than 0.75% in 2009. The hospitals with the largest percentage loss would have forgone $125,000 in payments, while the hospitals with the largest percentage gain would have earned $55,381 in payments (Werner/Dudley, Health Affairs, 9/4).
Experts Weigh In
According to Kaiser Health News, some experts -- including Werner and Dudley -- say that the VBP reimbursement changes will be too small to encourage hospitals to change.
"We have this tendency to just do things half-heartedly," said Urban Institute Senior Fellow Robert Berenson, who noted that the United Kingdom ties up to 30% of primary care physicians' income to care quality. "It certainly got behavior change," he said of the British policy.
However, American Hospital Association Vice President Nancy Foster said the bonus sizes are less important than the program's message.
"It's really about hospitals learning what they can do to improve the care they deliver and the outcomes their patients have," she said, adding, "You can see that fromÂ the significant improvements that occurred over the last five or so years simply from publication of good, realizable quality measures" (Kaiser Health News, 9/4).ÂThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.