CMS Issues Final Hospital Value-Based Purchasing Rules


On April 29, 2011, the Centers for Medicare & Medicaid Services (CMS) released its final rule to implement a hospital value-based purchasing (VBP) program as mandated by the Affordable Care Act (ACA) of 2010. The program, which applies to payments for hospital discharges occurring on or after October 1, 2012, is designed to reward hospitals that score well on certain quality care measures with higher payments. Although CMS received over 300 comments to the proposed rule, the final rule is largely unchanged. The text of the final rule is available here (see full alert below for link).

The VBP program builds on quality measures already reported by hospitals under the Medicare Hospital Inpatient Quality Reporting Program (Hospital IQR Program), as well as borrowing heavily from a 2007 CMS report entitled “Plan to Implement a Medicare Hospital Value-Based Purchasing Program.” Pursuant to the ACA, VBP program incentive payments will be funded by reducing hospitals’ base operating diagnosis related group (DRG) payments by 1% in federal fiscal year (FY) 2013, rising to 2% by FY 2017, all of which will be paid out as incentives. The Hospital IQR Program will operate in parallel to the VBP program, and a hospital must continue to participate in the reporting program to avoid payment reductions under that program.

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