Although the government’s value-based purchasing program is meant to reward hospitals that provide high-quality care at a lower cost, a new report finds that some hospitals with low quality scores still received bonuses because they had high efficiency scores.
The Hospital Value-based Purchasing Program, established by the Affordable Care Act, creates financial incentives for hospitals that improve quality of care and efficiency. A Government Accountability Office report (PDF) questions the methodology that the Centers for Medicare & Medicaid Services uses to determine bonuses and penalties because a review of the program during 2013 through 2017 revealed that some hospitals with high efficiency scores received bonuses despite having relatively low quality scores.
Safety-net hospitals, which have a high-proportion of low-income patients, generally scored lower in quality compared to all participating hospitals, the report found. But small and rural urban hospitals with 100 or fewer acute care beds scored higher on efficiency compared to all hospitals. In four out of the five years of the analysis, small rural and small urban hospitals were more likely to receive a bonus compared to all participating hospitals but safety-net hospitals were more likely to receive a penalty.
Furthermore, the report found that the efficiency score had a greater effect on the total performance score among hospitals that were missing one or more quality scores. The CMS methodology compensated for these missing scores by increasing the weights of all of the non-missing scores. As a result, hospitals with missing scores were more likely to receive bonuses than hospital with complete scores.
While a majority of all hospitals received a bonus or a penalty of less than 0.5% each year, the percentage of hospitals receiving a bonus greater than 0.5% increased from 4% to 29% from fiscal year 2013 to 2017. Most hospitals had a bonus or penalty of less than $100,000 in 2017.
To make sure lower-quality hospitals don’t receive bonuses going forward, the GAO recommended that CMS revise its methodology used to calculate total performance scores, as well as its method for announcing for missing quality scores. The report noted that the Department of Health and Human Services indicated it would consider revising the two methodologies.