U.S. hospitals that are putting quality over quantity will fare well next year for their efforts. Out of  approximately 2,800 hospitals across the country, more than 1,550 will see an increase in their 2019 Medicare payments. For the rest? Well, the news isn’t so good.

Where Does the Money Come From?

The Centers for Medicare & Medicaid Services (CMS) reduces a portion of the base operating Diagnosis-Related Group (DRG) payment amounts otherwise applicable to a participating hospital for each discharge by 2 percent. These reductions are redistributed to participating hospitals based on their performance on a pre-established set of quality and cost measures. CMS estimates the total amount available for value-based incentive payments next year is approximately $1.9 billion.

The VBP adjusts what Medicare pays hospitals under the Inpatient Prospective Payment System (IPPS) based on:

• How well the hospital performed—compared to their peers—on healthcare quality and cost measures during a performance period; and
• How much the hospital improved the quality of care provided to patients over time.

The Total Performance Score (TPS) for each hospital is based on their performance scores in each of four measurement domains. Each domain contributes 25 percent to the TPS. The measurement domains for the 2019 Hospital VBP Program are:

• Clinical Care
• Safety
• Person and Community Engagement
• Efficiency and Cost Reduction

Past Performance Pays Off for Most

CMS states in a Dec. 3 Fact Sheet, “In FY 2019, more hospitals will receive positive payment adjustments than will receive negative payment adjustments.”

Specifically:

• Almost 60 percent of hospitals will see a small change (between -0.5 and 0.5 percent) in their 2019 IPPS payments this year;
• The average net payment adjustment is 0.17 percent;
• The average net increase in payment adjustments is 0.61 percent;
• The average net decrease in payment adjustments is -0.39 percent;
• The highest performing hospital will receive a net increase in IPPS payments of 3.67 percent; and
• The lowest performing hospital will incur a net decrease in IPPS payments of 1.59 percent.

CMS has posted the Hospital VBP Program incentive payment adjustment factors for each participating hospital for 2019 on their website in Table 16B.