CMS program would base hospital pay on performance

CMS is proposing a new quality-reporting program which would cut Medicare payments to hospitals, but give money back if the hospitals performed well on the agency's quality measures. The new "value-based purchasing" program would withhold a percentage of each discharge or DRG payment. For the first year of the program, which would require approval from Congress, CMS would begin by paying hospitals just for reporting. In year two, however, CMS would base rewards 50 percent on hospital reporting, and 50 percent on how well they met quality standards. By the third year, incentives would be based completely on performance. This effort would build on the existing hospital quality reporting program instituted in 2005.

To learn more about the proposal:
- read this Modern Healthcare piece
- read the CMS report (.pdf)

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