GAO Releases Report on Evaluation Methodology in Hospital Value-Based Purchasing Program

King & Spalding
Contact

On June 30, 2017, the Government Accountability Office (GAO) released a report on the Hospital Value-Based Purchasing (HVBP) program, which evaluates hospital performance on quality and efficiency measures, and provides incentives for participating hospitals to improve their quality of care and to become more cost efficient. Over the past five years, CMS has made modifications to its evaluation methodology to attempt to achieve a balance between quality and cost efficiency. GAO concludes that rather than achieving this balance, CMS’s methodology has resulted in bonuses for some lower-quality hospitals because the cost efficiency score is having a disproportionate effect on the total performance score. The GAO report focuses on the evaluation methodology and proposes action for CMS to take to ensure that lower-quality hospitals do not qualify for bonuses.

The HVBP program was enacted as part of the Patient Protection and Affordable Care Act (PPACA) and provides payment adjustments—bonuses and penalties—to about 3,000 participating hospitals based on performance on quality and efficiency (i.e., Medicare spending per beneficiary) measures. In general, safety-net hospitals, which serve a high proportion of low-income patients, scored lower in quality than other participating hospitals, whereas small rural and small urban hospitals (100 or fewer acute-care beds) scored higher on efficiency than other participating hospitals. Moreover, safety-net hospitals consistently received a smaller percentage of bonuses and paid a greater share of penalties than small rural and small urban hospitals.

The GAO report found that some hospitals with high efficiency scores received bonuses even though they had low quality scores. In addition, the methodology resulted in hospitals that were missing one or more quality scores being more likely to receive bonuses than hospitals with complete scores, because the efficiency score had a disproportionate effect on the total score.

To ensure that the HVBP program achieves a balance of quality and efficiency and minimizes payment of bonuses to hospitals with lower quality scores, GAO recommended that CMS:

  • Revise the methodology for calculating hospitals’ total performance score, or take other actions so that the efficiency score does not have a disproportionate effect on the total performance score; and
  • Revise the practice of proportional redistribution used to correct for missing domain scores so that it no longer provides lower-quality scoring hospitals with bonuses.

In response to the GAO report, CMS indicated that it would examine these issues and consider revising these methodologies. The GAO report is available here.

Written by:

King & Spalding
Contact
more
less

King & Spalding on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide