1. Jennifer Faerberg Director Health Care Affairs jfaerberg@aamc.org Medicare Hospital Value-Based Purchasing (VBP) Program – Proposed Rule Published January 13, 2011 (76 Fed. Reg. 2454) Comments Due: March 8, 2011

2. Final Rule will be effective October 1, 2012 Move from pay-for-reporting to pay-for-performance Must meet thresholds based on achievement or improvement to receive incentive payment Phased-in reduction to base DRG payment to fund incentive pool: 1% for FY2013 increasing by quarter increments annually up to 2% in FY2017 Applies to base DRG payment only; does not affect IME, DSH and outlier payments Budget neutral – all funds are returned to hospitals Federal Register Notice (published on January 13)  http://www.gpo.gov/fdsys/pkg/FR-2011-01- 13/pdf/2011-454.pdf http://www.gpo.gov/fdsys/pkg/FR-2011-01- 13/pdf/2011-454.pdf Overview

3. Measures/Dimension Domains Total Performance Score Process 17 Process Measures HCAHPS 8 Dimensions Outcomes (FY2014) 21 measures Structure of VBP Scoring Baseline period = July 1, 2009 – March 31, 2010 Performance period = July 1, 2011 – March 31, 2012

4. Patient Care Domains FY 20013 FY 20014 (%TBD) Process Measures 70% HCAHPS 30% Outcomes HCAHPS Process Measures

5. FY 2013 17 clinical process of care measures 8 HCAHPS dimensions (aka ”Patient Satisfaction”) FY 2014 (FY2013 measures plus): Hospital Acquired Conditions, Patient Safety Indicators 30-day mortality (AMI, HF, PN) Efficiency Medicare Spending per Beneficiary Measures

6. Points for achievement and improvement; whichever is higher = score Achievement points based on actual performance compared to threshold and benchmark Improvement points based on actual performance compared to baseline Consistency points (HCAHPS only) based on performance across dimensions Threshold = median (50 th percentile) Benchmark = mean of top decile of performance in baseline period (95 th percentile for HCAHPS) Scoring Methodology

7. 3 Scenarios: Performance Exceeds Benchmark Performance Between Threshold & Benchmark Performance Below Threshold Achievement vs. Improvement Threshold Benchmark Threshold Benchmark Threshold Benchmark Full Achievement Points Partial Achievement Points OR Possible Improvement Points Possible Improvement Points – No Achievement Points

8. Notification of estimated value based payment 60 days prior to October 1, 2012 Notification of actual value based payment November 1, 2012 CMS processing systems updated in January 2013 Reduction/bonus (per discharge) Timing of Initial Incentive Payments

9. Weighting of measure domains (Process vs. HCAHPS) Percentile scoring (consistency points) in HCAHPS Where to set thresholds and benchmarks Proposed FY2014 measures Hospital Acquired Conditions AHRQ Patient Safety measures Efficiency Medicare spending per beneficiary Issues and concerns