Government and Regulations

Policy Corner


The 2010 Affordable Care Act (ACA) mandates a hospital value-based purchasing (VBP) program to begin this time next year. But hospitalists should start preparing now to be integral parts of the program in their hospitals.

Though the ACA provision states the VBP program for hospital payments will begin with discharges on Oct. 1, 2012, performance on clinical quality and patient experience measures began impacting hospitals’ bottom lines on July 1, 2011. The VBP’s “baseline period” actually lasted from July 1, 2009, through March 31, 2010. The performance period started July 1 and will last through March 31, 2012.

On Aug. 2, 2012, CMS will notify hospitals of estimated performance scores, delivering the actual performance scores on Nov. 1, 2012. The result: Payments for any discharge on or after Oct. 1, 2012 (the beginning of fiscal-year 2013), will be paid based on the performance period currently under way.

Hospitalists and program leaders might wonder how an ACA provision could start before the ACA was passed. The HVBP program actually is a transition of the well-established “Reporting Hospital Quality Data for Annual Payment Update,” or pay-for-reporting program, which in 2003 initially provided a 0.4% payment differential for public reporting through the Hospital Compare website. The 2005 Deficit Reduction Act increased the payment to 2%, and authorized CMS to develop a HVBP plan for FY2009—it just didn’t materialize.

The ACA created the HVBP program with the intention of transforming Medicare from a passive payor to an active purchaser of higher-quality, more efficient healthcare. In essence, Medicare wants to pay for performance rather than simply accurate reporting.

So hospitalists once again are faced with partnering with their hospitals to ensure payout. Reducing a hospital’s base operating Medicare Severity Diagnosis Related Groups (MS-DRG) by the applicable percentage, which will be phased in through 2017 (starting at 1% in 2013 and increasing 0.25% each year), will generate the HVBP’s source of ongoing incentive payments.

To help, SHM this month launched the “Hospital Value-Based Purchasing Toolkit.” It will help hospitalists and hospital executives gain a better understanding of what all the information above really means (including performance measures), and what to expect when your performance scores arrive.

The toolkit is different from any other product SHM has ever produced, as subscribers will be added to their own social collaboration network, similar to a tool like LinkedIn, putting them in touch with our panel of experts and other subscribers across the nation. We also will be putting on a series of roundtables: short presentations from a subject or quality-measure expert, followed by an opportunity to ask questions of our HVBP panel. All of the information will be based on best practices pulled from case studies we have spent the last 12 months scouring the country for. Most important, the best practices will be hospitalist-relevant. The free portal to the toolkit, which includes detailed background information on each piece of the program, can be accessed at

A subscription to the full toolkit can be purchased through the SHM store.

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