Three years into value-based purchasing, hospitals have little to show for it

Medicare's value-based purchasing program, under which hospitals are financially rewarded or penalized based on care outcomes, has not led to substantial improvements in care its first three years, according to a report from the Government Accountability Office (GAO).

Although the program has had a financial impact on most U.S. hospitals in some form, the actual financial effect has been minimal, the report finds, with nearly 75 percent of hospitals seeing an increase or decrease in Medicare payments of less than half a percentage point in the fiscal year ending Sept. 30. The median bonus payment was $39,000, while the median penalty came to $56,000.

More financially successful hospitals tend to outpace others under value-based purchasing, according to the GAO, which found hospitals with a net income margin of more than 5 percent received average bonuses of 0.23 percent, while those that broke even either earned no extra payments or paid penalties. Meanwhile, safety-net providers trailed other hospitals but since the program began, they have made progress in closing the gap, according to the report. Small urban hospitals, meanwhile, saw larger median payment adjustments than hospitals as a whole all three years, while small rural hospitals saw adjustments roughly the same as hospitals in general the first two years and higher in the final year.

The authors of the report added that changes in hospital performance on quality measures may emerge in the future, especially as the program adds new quality measures and reduces the weight given to clinical process measures, which hospitals had little room to improve on. Hospital groups have long protested that various CMS quality measures, including preventable readmissions, penalize hospitals for factors beyond their control.

A report released this week found the shift from fee-for-service to value-based care is proceeding at a slower pace than expected, with many providers waiting on the sidelines to see which value-based models work better before assuming the risk that comes with losing a predictable revenue stream, FierceHealthFinance previously reported.

To learn more:
- read the report (.pdf)