According to the Centers for Medicare & Medicaid Services (CMS), the Hospital Value-Based Purchasing (VBP) Program is part of the long-standing effort by CMS to link Medicare's payment system to health care quality in the inpatient setting. Some hospitals are excluded from the Value-Based Purchasing Program, such as critical access, psychiatric, rehabilitation, children’s, cancer clinics and others.
The Hospital VBP Program is designed to promote better clinical outcomes for hospital patients, as well as improve their experience of care during hospital stays, while reducing costs to make care affordable. Specifically, Hospital VBP seeks to incentivize hospitals to improve the quality and safety of care that patients receive during acute-care inpatient stays.
In the FY 2023 Inpatient Prospective Payment System (IPPS)/Long Term Care Hospital Prospective Payment System final rule issued on Aug. 10, 2022, CMS determined that circumstances caused by the COVID-19 public health emergency significantly affected National Healthcare Safety Network healthcare-associated infection, Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey, and the Pneumonia 30-Day Mortality measure in the FY 2023 Hospital VBP Program. As a result, in the final rule, CMS paused those measures from the FY 2023 Hospital VBP Program. Because CMS is pausing measures, CMS believes there will not be enough data to award a Total Performance Score to any hospital in FY 2023. As a result, no hospital will have a Total Performance Score calculated and no hospital will have payments adjusted due to the Hospital VBP Program in FY 2023.
Through the Hospital-Acquired Conditions (HAC) Reduction Program, CMS reduces payments to hospitals based on their performance on measures of hospital-acquired conditions. CMS evaluates overall hospital performance using total HAC scores. Hospitals with total HAC scores in the worst-performing quartile receive a 1% payment reduction on their overall Medicare fee-for-service payments. A fact sheet related to the Hospital-Acquired Condition Reduction Program is available here.
CMS is not calculating measure scores or the Total HAC Score for any hospital in FY 2023 as finalized in the FY 2023 Inpatient Prospective Payment System/Long-Term Care Hospital Prospective Payment System (IPPS/LTCH PPS) final rule. No hospital is receiving a payment reduction for the HAC Reduction Program for FY 2023. CMS is still publicly reporting hospitals’ HAI and CMS PSI 90 results on the Care Compare website to provide transparency to the public on important infection and patient safety metrics during the COVID-19 public health emergency.
The Hospital Readmissions Reduction Program reduces payments from CMS to hospitals with excess readmissions. According to CMS, the program is designed to improve communication and coordination to better engage patients and caregivers in discharge plans and, in turn, reduce avoidable readmissions. A fact sheet related to the Hospital Readmissions Reduction Program is available here.
As finalized in the FY 2022 IPPS/LTCH PPS final rule, the Centers for Medicare & Medicaid Services (CMS) is suppressing the pneumonia readmission measure in FY 2023 HRRP payment reduction calculations due to COVID-19’s substantial impact on this measure. CMS is still calculating and publicly reporting measure results for the pneumonia readmission measure. However, the pneumonia readmission measure results do not contribute to FY 2023 payment reduction calculations. Payments within this program may be reduced by up to 3% depending on the performance outcomes for each of the six identified measures. Eighteen Wisconsin hospitals (27% of eligible hospitals) will receive no penalty this year. Nationally, this remains an area of focus, and Wisconsin performs higher than the national average (25% will have no penalty nationally). More Wisconsin hospitals had no penalty or a slight penalty than in the previous three years.