Valuing Improvement in Value-Based Purchasing

Abstract

Background-Medicare will soon implement hospital value-based purchasing (VBP) using a scoring system that rewards both achievement (absolute performance) and improvement (performance increase over time). However, improvement is defined so as to give less credit to initial low performers than initial high performers. Because initial low performers are disproportionately hospitals in socioeconomically disadvantaged areas, these institutions stand to lose under Medicare's VBP proposal. Methods and Results-We developed an alternative improvement scale and applied it to hospital performance throughout the United States. By using 2005 to 2008 Medicare process measures for acute myocardial infarction (AMI) and heart failure (HF), we calculated hospital scores using Medicare's proposal and our alternative. Hospital performance scores were compared across 5 locational dimensions of socioeconomic disadvantage: poverty, unemployment, physician shortage, and high school and college graduation rates. Medicare's proposed scoring system yielded higher overall scores for the most locationally advantaged hospitals for 4 of 5 dimensions in AMI and 2 of 5 dimensions for HF. By using our alternative, differences in overall scores between hospitals in the most and least advantaged areas were attenuated, with locationally advantaged hospitals having higher overall scores for 3 of 5 dimensions for AMI and 1 of 5 dimensions for HF. Conclusions-Using an alternative VBP formula that reflects the principle of "equal credit for equal improvement" resulted in a more equitable distribution of overall payment scores, which could allow hospitals in both socioeconomically advantaged and disadvantaged areas to succeed under VBP. (Circ Cardiovasc Qual Outcomes. 2012;5:163-170.)

The Effect of Phase 2 of the Premier Hospital Quality Incentive Demonstration on Incentive Payments to Hospitals Caring for Disadvantaged Patients

“…Rewarding improvement may help mitigate the negative distributional impacts of P4P that threaten to widen the gap in quality of care between advantaged and disadvantaged patients. At the same time, rewarding improvement is not a panacea (Borden and Blustein ): gaps in incentive payments per discharge continued after the HQID's change in incentive design. It will be important to monitor future P4P efforts to understand how different reward structures differently impact performance, and—just as important—how those structures impact the distribution of incentive payments.…”

Rates and Predictors of 30-Day Readmission Among Commercially Insured and Medicaid-Enrolled Patients Hospitalized With Systolic Heart Failure

“…10 Finally, a better understanding of potential differences in readmission rates by payer and health plan type may help to inform hospital reimbursement policy. 11 …”

Current State of Value-Based Purchasing Programs

“…Moreover, minute details of the measures, formulas for calculating performance, and rules for defining rewards and penalties can have substantial impact on who wins and who loses, and on unintended consequences such as potentially worsening healthcare disparities. 14, 15 …”