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Can Hospitals Improve their Value-Based Purchasing Scores?

April 1, 2021
April 1, 2021

A Guest Partner Blog from Todd McQueston, Executive Director of Marketing and Business Development, Wolters Kluwer

Value-based Purchasing became a healthcare topic with the implementation of the Patient Protection and Affordable Care Act (ACA) of 2010.  Although the Hospital Readmissions Reduction Program has been in the news more often, the Value-Based Purchasing (VBP) program may be more influential to hospital administrators because it provides an opportunity to receive additional payment for services rendered instead of simply penalizing poor performing hospitals.

Part of the Hospital Inpatient Quality Reporting Program, but known as the Hospital Value-Based Purchasing Program, the initiative is one of a handful established by Medicare in recent years to boost the quality of care provided by hospitals (the Hospital Readmissions Reduction Program and the Hospital Acquired Condition Reduction Program are the others most noted in the news).  

Based on a complex set of calculations from the base Diagnosis Related Group (DRG) payment, the budget neutral program is funded by CMS withholding a percentage of payments on Medicare claims and then returning all of that money to those hospitals performing the best within the program.  Given that 39.7% of a typical US hospital’s total 2012 patient revenue came from Medicare (cited by the American Hospital Association “Trends in Hospital Financing”), there is potentially millions of dollars in difference between the worst performing hospital’s penalty and the top performing hospital’s incentive payment.

So with all this money at stake, what can hospitals do to improve their Value-based Purchasing scores? 

Phased in gradually since 2012, the VBP program calculates a Total Performance Score for each hospital that is based on performance in four specific domains:

  • clinical process of care
  • patient experience of care
  • ·outcomes
  • efficiency (a new metric as of 2015)

Working to improve clinical process, patient experience, outcomes, and efficiency is nothing new to health systems. Hospitals spend lots of dollars and resource time implementing hospital-wide change programs (such as the Baldrige Program and the ANCC Magnet Designation Program), tracking and analyzing quality indicators, and responding to specific clinical issues from adverse events, quality tracking, and patient surveys.

Each hospital has its own focus on how to improve.  For example, St. Luke’s Hospital in Coaldale, PA, initiated an entire Operational Excellence program that included, among other initiatives, the development of a hospitalist model, Core Measure education and compliance, development and implementation of the Clinical Documentation Specialist, re-structuring of the Case Management Department, development of a Medical Staff Quality Improvement Committee, and development of a Patient Satisfaction Committee.

The Rockburn Institute recently completed a study that found a correlation between hospitals using specific evidence-based clinical decision support and clinical procedural improvement software systems and higher Total Performance Scores for those hospitals in the VBP program.   For example, the study, which used all hospitals in the database, indicated that hospitals using Lippincott Procedures for the entire study period have a 12% higher Total Performance Score than hospitals not using Lippincott Procedures.  Within this correlation, hospitals using the clinical procedural software showed a 23% higher Clinical Process of Care score than hospitals not using the Procedures product.

Whether hospitals are specifically focusing on improving their VBP scores or simply looking to improve clinical excellence and Patient Outcomes, the overall scores are improving.

According to a December 2014 post on the CMS Blog, “Data from the third year of the program indicates that hospitals are improving care and outcomes for Medicare beneficiaries. More hospitals this year will experience a positive change in their payments (1,714) compared to the number of hospitals that will experience a negative change (1,375) – a reversal of last year. This change indicates that many hospitals are improving the quality of care delivered to patients.”