Journal of Healthcare Management - January/February 2016 - (Page 11)

V A L U E - B A S E D C A R E Understanding Value-Based Incentive Models and Using Performance as a Strategic Advantage Tawnya Bosko, DHA, vice president, population health practice, GE Healthcare Camden Group, Los Angeles, California; Mark Dubow, independent healthcare consultant; and Teresa Koenig, MD, senior medical officer, Medical Mutual of Ohio, Cleveland T he Centers for Medicare & Medicaid Services (CMS) implemented hospital quality incentive and penalty programs as part of the Affordable Care Act, and they are the starting points for transitioning to value-based payment. Not only do the programs affect hospitals' bottom line, but they also could affect their market position because of the transparency of results. Thus, creating an effective strategy to succeed under these programs is important. The authors address some important questions about the CMS incentive and penalty programs. What upside benefits and downside penalties do the CMS incentive and penalty models offer hospitals? The CMS quality- and value-based incentive and penalty models will collectively put up to 6% of hospitals' Medicare payments at risk by 2017 (Rau, 2015). The three CMS programs are the Value-Based Purchasing (VBP) program, the Hospital Readmissions Reduction Program (HRRP), and the Hospital-Acquired Conditions (HAC) program. As part of healthcare reform, these programs are designed to transition hospitals to more value-based reimbursement by incentivizing or penalizing providers on the basis of their performance on certain quality metrics. These three programs reflect a fundamental change in how Medicare reimburses hospitals for services and in how hospitals manage and monitor quality performance. The VBP program is the only one of the three that has upside benefits in providing a bonus; the HRRP and HAC programs are strictly penalty programs for hospitals that do not perform well under the criteria established by CMS. The VBP program is technically a payment redistribution program in that eligible hospitals contribute a set percentage of base operating payments to a VBP payment pool; the percentage is 1.75% for fiscal year (FY) 2016 and 2% for FY 2017. This VBP payment pool is used to provide a bonus to hospitals for performance on the VBP criteria, which are grouped into the domains of process of care, outcomes, patient experience, and efficiency. Thus, all hospitals pay into the pool, and if they do not perform well, their "bonus" could be less than the amount of their contribution (i.e., 11

Table of Contents for the Digital Edition of Journal of Healthcare Management - January/February 2016

Journal of Healthcare Management - January/February 2016
Contents
Interview With Nancy Borkowski, DBA, FACHE, CPA, Professor in the Department of Health Services Administration, University of Alabama at Birmingham
Developing Physician Leaders Through Professional Associations
Understanding Value-Based Incentive Models and Using Performance as a Strategic Advantage
Exploring Business Strategy in Health Information Exchange Organizations
The Effects of Hospital-Level Factors on Patients’ Ratings of Physician Communication
A Review of Tools to Assist Hospitals in Meeting Community Health Assessment and Implementation Strategy Requirements
The Capital Budgeting Process of Healthcare Organizations: A Review of Surveys

Journal of Healthcare Management - January/February 2016