The Value-Based Purchasing program was put in place to encourage hospitals to improve the quality of patient care. The program requires that 2% of Medicare payments to hospitals be set aside for incentive payments. Essentially, all hospitals put 2% of their Medicare payments into a pool. Hospitals that perform well receive more than 2% back while those hospitals performing worse than average receive less.

For a hospital looking to improve their Value-Based Purchasing total performance score, it can be difficult to determine where to allocate finite resources given the number of measures used to calculate the final score. Assuming it is possible to focus on improving only a limited number measures, the intuitive choice is to address the measures with the lowest scores. In some cases, however, focusing improvement efforts on stronger scores actually maximizes the total performance score. It is the relationship between the measures and national standards that complicates identifying where improvement helps most.

In a recent white paper, Sean Ramsdale of Management Information Analytics discusses a methodology for identifying measures to be prioritized for improvement. For an in-depth discussion, please download the full white paper; this article only a description of domains and measures and a brief summary of key findings.

Understanding Hospital Value-Based Purchasing Rating Domains and Measures

Hospitals are rated based on around 22 measures – every year a few measures are added and dropped. The measures are grouped into four domains. Beginning in FY2018, a hospital needs to have scores in three of four domains to be included in the Value-Based Purchasing program.

Clinical Care Domain

The Clinical Care Domain consists of three 30-day mortality measures, which are actually shown as survival rates. For these measures, a higher score is better.

Safety Domain

The safety domain has a total of eight measures: six health-care associated infection rates, the rate of elective deliveries prior to 39 weeks of gestation and the AHRQ PSI-90, a composite score of eight patient safety and adverse event indicators. For all of these measures, a lower score is better.

Patient- and Caregiver- Centered Experience of Care/Care Coordination Domain

The Patient Experience domain is eight questions from the HCAHPS (Hospital Consumer Assessment of Healthcare Providers and Systems) survey. The performance measures are the percent of respondents who gave a “top box” or most positive reply. In FY2018, the 3-Item Care Transition measure was added to the domain. This is a composite measure from a separate three question survey. Higher scores are better for Patient Experience measures.

Efficiency and Cost Reduction Domain

This domain has only one measure: Medicare spending per beneficiary (MSPB). This measure is risk-adjusted average cost for Medicare inpatient episodes. MSPB includes all Part A and Part B claims that occur 1 to 3 days prior to, during or 1 to 30 days after a Medicare hospital admission. Lower MSPB results in a higher domain score.

Key Findings

There is no one domain or measure that holds the key to Hospital Value-Based Purchasing success. The domains are all equally weighted, so a high score is worth the same in one domain as another. Within the domains, no one measure or set of measures that predict overall success can be identified.

In fact, which measures to prioritize for improvement efforts vary from facility to facility. With the exception of the Efficiency and Cost Reduction domain, a domain’s measures can be sorted into strengths and weaknesses by comparing the facility’s measure scores to national standards. Knowing the strengths and weaknesses, along with baseline domain scores is the basis for allocating limited resources for improvement efforts.

Downloading the full white paper provides an in-depth look at this methodology with supporting data and graphs. It’s worth a read.