CMS’ Value-Based Purchasing (VBP) program was launched in 2013 to create financial incentives and penalties encouraging hospitals to improve care, outcomes, and efficiency. Affecting nearly 3,000 hospitals, each facility is scored on multiple aspects of care, including patient experience, clinical processes, cost efficiency, and outcomes. The program pits hospitals’ performances against each other or its own historical performance, with the lowest-performing organizations suffering up to a two percent Medicare reimbursement cut, while the highest are given reimbursement bonuses.
The top 10 hospitals with the highest VBP scores tended to be smaller with lower case mix indexes (CMIs), representing lower-acuity patients. The median number of staffed beds and median CMI at the top ten hospitals were 42 and 1.2, respectively, compared to 159 and 1.3 at hospitals with the lowest VBP scores. Larger hospitals with higher CMIs tend to have more adverse patient outcomes, which partially explains their worse VBP performance. Not all measures in the VBP are risk adjusted, such as infection rates, though official CMS policy holds that certain negative events should rarely happen regardless of patient risk.
There appears to be little correlation between net patient revenue and VBP scoring, with the top 10 highest-scoring hospitals averaging a mere $44M compared to the total hospital average of $292M. One possible explanation is that the top performers are smaller and treat fewer patients. This allows physicians to provide top-tier care but does not necessarily bring in as much revenue as larger hospitals that treat a greater number of patients.
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