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Preparing for CMS' Value-Based Purchasing

In October 2012, the Centers for Medicare and Medicaid Services (CMS) will launch value-based purchasing, which will impact discharge payment structures for all short-term acute care hospitals.

To determine total performance and ultimately payments, CMS will use 17 clinical process-of-care measures and eight measures from the Hospital Assessment of Healthcare Providers and Systems survey on patients’ total care experience. CMS’ value-based purchasing is yet another example that quality is the common denominator when it comes to changes with healthcare and payment reform.

Value-based purchasing will create an appreciation for reliable, accurate data that identifies intelligent opportunities for hospitals to implement quality improvement activities and increase cash flow. Hospitals and health systems that don’t start to prepare now will pay those that do – literally.

Beginning in fiscal year 2013, CMS will review measures and withhold one percent of base operating Diagnosis Related Group (DRG) payments for qualifying hospitals. That metric will gradually increase to two percent of base DRG by 2017. Incentives for hospitals meeting the required measures will be derived directly from withheld funds.

Hospital and health system leaders need to get ready now to cross the October 1, 2012 date and feel confidently prepared by stopping, looking and listening.

It’s crucial to stop and reflect on the value-based purchasing changes.  Right now is the time to educate parties involved with the patient care cycle about what will change, and how all patient touch points will impact hospital balance sheets. Stop and make time to inform your executives and leaders about value-based purchasing, and be sure you have proper resources in place that will provide staff with intelligence in an instant, come October next year.

Look at your own performance data and quality initiatives and compare it to your peers. How do your readmissions rates and patient satisfaction scores stack up to industry benchmarks? According to your data, where are there opportunities for improvement? Also, be sure to examine relevant metrics that can be negotiated with payers and try to create some consistencies so all efforts are aligned.

Finally, take a look at DRG payments and calculate the impact of one percent, and eventually two percent of losses. Is your hospital or health system stable enough to endure that kind of financial turmoil? If not, how will you recoup those losses?

Stay informed and listen for updates from CMS related to value-based purchasing, and be on alert for new and evolving technology that will make reporting easier. Listen to those in your hospital or health system that work closely with patient data, and be open minded to their ideas about what success looks like when complying with new CMS regulations.

Most importantly, take into consideration what patients are saying. Listen to what’s going well and what’s not going well for them – and do something about it now.

Jim Bohnsack is vice president of TransUnion Healthcare.

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