CMS Hospital Value-Based Purchasing Program Results – FFY2017

From: CMS News Room – 11/1/16

Press Release Excerpt:

Hospital Value-Based Purchasing Program Overview

The Hospital Value-Based Purchasing (VBP) Program adjusts what Medicare pays hospitals under the Inpatient Prospective Payment System (IPPS) based on the quality of care they provide to patients. For fiscal year (FY) 2017, the law requires that the applicable percent reduction, the portion of Medicare payments available to fund the program’s value-based incentive payments, increase from 1.75 to 2 percent of the base operating Medicare Severity Diagnosis-Related Group (MS-DRG) payment amounts for all participating hospitals. We estimate that the total amount available for value-based incentive payments for FY 2017 discharges will be approximately $1.8 billion.

The Hospital VBP Program is one of many Affordable Care Act programs Medicare has established to pay for the quality of care rather than the quantity of services provided to patients. The Hospital VBP Program is part of our long-standing effort to structure Medicare payments to improve care across the entire healthcare delivery system, including hospital inpatient care. In FY 2017, more hospitals will receive positive payment adjustments, indicating improved quality of care and a strong example of better care, smarter spending, and healthier people in action.

Fiscal Year 2017 Hospital VBP Program Results

The domains for the FY 2017 Hospital VBP Program and the weighting for these domains were:

  • Clinical Care
  • Outcomes (25 percent)
  • Process (5 percent)
  • Patient and Caregiver Centered Experience of Care/Care Coordination (25 percent)
  • Safety (20 percent)
  • Efficiency and Cost Reduction (25 percent)

We have posted the Hospital VBP incentive payment adjustment factors for FY 2017 in Table 16B, available at:

This is the fifth year of the Hospital VBP Program, affecting payment for inpatient stays in approximately 3,000 hospitals across the country. Hospitals’ payments will depend on:

  • How well they performed – compared to their peers – on important healthcare quality and resource use measures during a performance period.
  • How much they have improved the quality of care provided to patients over time.

For FY 2017, more hospitals will have an increase in their base operating MS-DRG payments than will have a decrease. In total, over 1,600 hospitals will have a positive payment adjustment.

For FY 2017, about half of hospitals will see a small change in their base operating MS-DRG payments (between -0.5 and 0.5 percent). After taking into account the statutorily mandated 2 percent withhold, the highest performing hospital in FY 2017 will receive a net increase in payments of slightly more than 4 percent, and the lowest performing hospital will incur a net reduction of 1.83 percent.

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