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Value-based purchasing takes hold: More than half of hospitals paid as part of the program

Smaller and rural hospitals outpace urban providers in performance measures -- except for clinical care.

Susan Morse, Managing Editor

More providers will receive the benefit of the $1.9 billion available in payments than those that will get a negative adjustment from the hospital value-based purchasing program, the Centers for Medicare and Medicaid Services announced today.

For FY 2019, 55 percent, more than 1,550 hospitals, will receive higher Medicare payments.

The highest performing hospital will receive a net increase of 3.67 percent, and the lowest performing hospital will get a net decrease  of 1.59 percent.


The program results will be publicly displayed on the next update of the Hospital Compare website.

Value-based purchasing is among many programs Medicare has established to pay for the quality of care rather than the quantity of services provided to patients.

It adjusts what Medicare pays hospitals under the inpatient prospective payment system.


Hospitals may earn an increase, receive a decrease, or have no change to their Medicare inpatient prospective payment system payment.

The amount of incentive payments depends on each hospital's total performance score. For FY 2019, the average total performance score increased from 37.4 in 2018 to 38.1, indicating improved quality of care and value.

The total performance score is based on four measurements, including clinical care; safety; person and community engagement, and efficiency and cost reduction. Each measurement domain makes-up 25 percent of the score.

Almost 60 percent of hospitals will see a small change of between -0.5 and 0.5 percent in their inpatient prospective payment system  payment.

The average net payment adjustment is 0.17 percent. The average net increase in payment adjustments is 0.61 percent, and the average net decrease in payment adjustments is -0.39 percent.

For fiscal year 2019, the law requires that CMS reduce a portion of the base operating diagnosis-related group, or DRG payment amount, for each discharge by 2 percent.

Also, the estimated total of these reductions must be the amount redistributed to participating hospitals based on their performance on a previously-announced set of quality and cost measures.

On average, rural hospitals and also smaller hospitals, performed better in the safety, person and community engagement, and efficiency and cost reduction domains, while urban hospitals performed well in the clinical care domain.


This is the seventh year of the hospital VBP program, affecting payment for inpatient stays to approximately 2,800 hospitals across the country.

Twitter: @SusanJMorse
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