A June survey by Forbes Insights shows that almost three-quarters – or 73 percent – of C-suite executives interviewed said they completely or somewhat agreed that providers must immediately begin shift their focus from volume to value.
 

For the first time under the federal Hospital Value-Based Purchasing program, created by the Affordable Care Act, 3,500 hospitals nationwide will be compensated for inpatient care services based upon the quality of the care they provide to Medicare recipients rather than the sheer volume of Medicare patients they serve.

An estimated $850 million will be allocated to hospitals based on their overall performance on a set of quality measures that have been shown to improve clinical processes of care and patient satisfaction. Payments will begin in fiscal year 2013 for discharges occurring on or after Oct. 1 of this year.

Under the program, the Centers for Medicare and Medicaid will make value-based incentive payments to acute care hospitals, based either on how well the hospitals perform on certain quality measures or how much the hospitals' performance improves on certain quality measures from their performance during a baseline period, according to CMS. The higher a hospital's performance or improvement during the performance period for a fiscal year, the higher the hospital's incentive payment for that fiscal year would be.
 

[Ed Note: Learn more about best practices in hospital value-based purchasing during the two-part webinar series: Improving HCAHPS: Satisfying Patients – and Your Bottom Line on June 27; and Boosting Quality Process Measures: Steps to Success for Your Hospital.]
 

Hospitals located in the 50 states and the District of Columbia as well as acute-care hospitals in Maryland are eligible to participate in the program. To be eligible, hospitals must report on at least four Hospital Value-Based Purchasing measures during the performance period, with a minimum of 10 cases per measure.

Psychiatric, rehabilitation, long-term care, children’s, and cancer hospitals are not included in the program. Hospitals cited by the Secretary of the Department of Health and Human Services for deficiencies during the performance period that pose an immediate jeopardy to patients’ health or safety are also not eligible for participation.
 

Incentive Payments

At least 60 days before Oct. 1, CMS will notify each hospital participating in the program of its estimated value-based incentive payment for each patient discharge in fiscal year 2013, and on Nov. 1, hospitals will be notified of their exact incentive payment for that year. The first round of incentive payments will be based on a hospital’s performance during the period from July 1, 2011, to March 31, 2012. In future years, the performance period will be a full year.

While the exact value-based incentive payment will depend on each hospital’s total performance score, CMS estimates that roughly half of participating hospitals will receive a net increase in payments as a result of this rule and the rest will receive a net decrease in payments. CMS estimates that no participating hospital will receive more than a net 1-percent decrease in payments in the first year of the program.
 

Measuring Performance

CMS has adopted 13 of 45 quality measures tracked in the Hospital Inpatient Quality Reporting Program for the fiscal year 2013 Hospital VBP Program. These quality measures include hospitals practices and procedures related to treating acute myocardial infarction, heart failure, healthcare-associated infections and surgeries.

For fiscal 2014, CMS has adopted an additional three measures that assess mortality outcomes related to heart attack, heart failure and pneumonia.
 

If a hospital does not provide services appropriate to a specific measure, then that measure does not apply to that hospital.
 

Barriers for Providers

While the Hospital VBP Program is meant to improve the quality of care for Medicare patients, providers have indicated concerns for implementing this new program. According to the Forbes Insight study, 38 percent of respondents said they completely or somewhat agreed that VBP is likely to become a disruptive innovation. In addition, C-suite executives indicated that fully engaging their doctors would be the top barrier to VBP participation.

Meanwhile, 65 percent of surveyed executives believed that consumer financial incentives are key to making VBP successful, but 67 percent also thought that consumers won't know when that success arrives, since they can't judge the value of medical care accurately.
 

A common theme among respondents was that VBP will require seamless communications, with 49 percent indicating that they chose system integration across all applications while 47 percent elected health information exchange as their top IT spending priorities for VBP over the next three years.