CHANGES IN PERFORMANCE IN THE HOSPITAL VALUE BASED PURCHASING PROGRAM AFTER THE ADDITION OF AN EFFICIENCY DOMAIN

Purpose: In an effort to reward hospitals for high value care, CMS recently added their first episode-based metric of cost -- Medicare Spending per Beneficiary (MSPB) -- to the Hospital Value-based Purchasing (HVBP) Program; we describe what types of hospitals performed well on the MSPB metric, and how adding the MSPB metric to the HVBP Program in FY 2015 changed what types of hospitals received penalties and bonuses

Method: A descriptive cross-sectional and longitudinal analysis of hospital performance in the HVBP Program in 2014 and 2015, using publicly available data from CMS’ Hospital Compare and the American Hospital Association. Each year, participating hospitals receive either a financial bonus or penalty based on their overall performance in the HVBP program. All HVBP performance metrics were based on only quality before the addition of MSPB in FY 2015. We examined how receipt of a bonus vs. penalty differed across hospital characteristics and CMS definitions of performance (i.e., high, medium, low cost (or quality)), and how this changed over time. 

Result: Among the 2,679 hospitals in our sample, 44 were low cost, 1,368 were medium cost, and 1,267 were high cost hospitals in 2015. Post-acute care (PAC) spending accounted for $9,323 (47%) of total episode costs in high cost hospitals compared to $5,130 (38%) for the low cost hospitals. Skilled-nursing facility and readmission costs were the greatest drivers of differences in PAC costs. Adding a cost metric to HVBP rewarded low-cost hospitals which tend to be smaller, non-profit, non-teaching, and rural, as they were more likely to receive bonuses (100% in 2015 vs. 38% in 2014).  Some low-quality hospitals gained bonuses because they were also low cost, as 17% of low quality hospitals received a bonus in 2015 compared to 0% in 2014.  Similarly, the emphasis on value over quality penalized high-cost hospitals, which tend to be larger and for-profit.  Some high-quality hospitals lost bonuses or became penalized because of their high cost.

Conclusion:

The addition of MSPB to the HVBP program increased the likelihood of hospitals with low PAC costs receiving bonuses. Since there is very little association between quality and cost and no quality threshold to receive bonuses, low quality hospitals were also more likely to receive bonuses.