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HHS launches hospital Value-Based Purchasing Program

The Department of Health and Human Services has launched a new initiative that will reward hospitals for the quality of care they provide to Medicare beneficiaries. HHS officials said the program would also help reduce healthcare costs. 

Authorized by the Affordable Care Act, the Hospital Value-Based Purchasing Program marks the beginning of a historic change in how Medicare pays healthcare providers and facilities, according to HHS Secretary Kathleen Sebelius. For the first time, she said, 3,500 hospitals across the country will be paid for inpatient acute care services based on care quality, not just the quantity of the services they provide.

This initiative helps support the goals of a program launched earlier this month by the HHS, called Partnership for Patients. Officials say the new public-private partnership will help improve the quality, safety and affordability of healthcare. 

 [See also: HHS announces nationwide effort to reduce medical errors.]

According to HHS officials, the Partnership for Patients has the potential over the next three years to save 60,000 lives and up to $35 billion, including up to $10 billion for Medicare. Over the next 10 years, the Partnership for Patients could reduce costs to Medicare by about $50 billion and result in billions more in Medicaid savings. 

"Changing the way we pay hospitals will improve the quality of care for seniors and save money for all of us," Sebelius said. "Under this initiative, Medicare will reward hospitals that provide high-quality care and keep their patients healthy. It's an important part of our work to improve the health of our nation and drive down costs. As hospitals work to improve their performance on these measures, all patients – not just Medicare patients – will benefit."

Under the new value-based purchasing program, in FY 2013 an estimated $850 million will be allocated to hospitals based on their performance on a set of quality measures that have been shown to improve clinical processes of care and patient satisfaction. This funding will be taken from what Medicare otherwise would have spent, and the size of the fund will gradually increase over time, resulting in a shift from payments based on volume to payments based on performance, according to the HHS.  

"Medicare is in a unique position to reward hospitals for improving the quality of care they provide," said Centers for Medicare and Medicaid Services Administrator Donald Berwick, MD. "Under this new initiative, we will reward hospitals for delivering high-quality care, treating their patients with respect and compassion, and ensuring they have the opportunity to participate in decisions about their treatment."

According to HHS, some of these measures will assess whether hospitals:

  • Ensure that patients who may have had a heart attack receive care within 90 minutes;

  • Provide care within a 24-hour window to surgery patients to prevent blood clots;

  • Communicate discharge instructions to heart failure patients; and

  • Ensure hospital facilities are clean and well-maintained.

The better a hospital does on its quality measures, the greater the reward it will receive from Medicare, Sebelius said.

The measures selected for the Hospital Value-Based Purchasing program in FY 2013 have been endorsed by national bodies of experts, including the National Quality Forum, she added. 

In the future, CMS plans to add additional measures that focus on improved patient outcomes and prevention of hospital-acquired conditions, according to Sebelius. Measures that have reached very high compliance scores would likely be replaced, continuing to raise the quality bar, she said.

[See also: Obama, GOP at odds over Medicare's future.]

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