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Available at: Using peer groups to convert hospital value incentive program points to
rewards and penalties (cont.)
beneficiaries. We withhold 2 percent of each of the
hospital’s total base IPPS payments. We also add 1
percent of IPPS payments to the withhold amount to
create an enhanced pool of dollars from a portion of
the current-law update. Since Hospital A has fewer
discharges, its contribution to the pool of dollars is
less than Hospital B’s contribution. The total HVIP
enhanced bonus pool to be redistributed for this peer
group is equivalent to 3 percent of combined payments
to the two hospitals ($1.95 million). The payment
multiplier is calculated, which, after conversion to
dollars, results in recovering the entire $1.95 million
TABLE 15–5 withhold dollars. For Peer Group 1, each HVIP point
earns a 0.39 percent payment adjustment. Thus,
Hospital A earns a payment adjustment of 3.90 percent,
which is equal to $195,000 (or a reward of $95,000
greater than the hospitals withhold) (Step 5). Hospital
B earns a payment adjustment of 2.93 percent, which
is equal to $1,755,000. Both hospitals receive a reward,
but relative to the 2 percent withhold, Hospital A has
a greater positive payment adjustment because its
performance is higher. The entire $1.95 million pool is
distributed to the hospitals in the peer group. ■ Example of converting HVIP points to payment
adjustments for a peer group’s hospitals
Peer Group 1
(500 discharges) HVIP points (Step 1)
Total base IPPS payments
2 percent withhold of IPPS payments
1 percent of IPPS payments from current-law payment update
Total HVIP enhanced pool of dollars for peer group (3 percent of
IPPS payments) (Step 3)
Payment multiplier (Step 4)
Hospital HVIP-based adjustment (Step 5)
Reward or penalty relative to 2 percent withhold
Note: Hospital B
(5,000 discharges) 10.0 7.5 $5,000,000 $60,000,000 $100,000 $1,200,000 $50,000 $600,000
$1,950,000 0.39% adjustment per point
3.90% ($195,000) 2.93% ($1,755,000) +1.90% (+$95,000) +0.93% (+$555,000) HVIP (hospital value incentive program), IPPS (inpatient prospective payment system). This example assumes the peer group has two hospitals (Step 2). We also compared HVIP payments for other categories of
hospitals with existing quality programs. Under the HVIP,
large urban hospitals and major teaching hospitals would,
on average, receive rewards rather than the penalties
they receive under the current programs. For example,
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penalty under current programs; under the HVIP, with a
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5– 2 Compared with existing quality payment programs, the potential
HVIP makes payment adjustments more equitable for hospitals
grouped by share of fully dual-eligible beneficiaries 1-X Average payment adjustment
(in percent) 1.5 Average payment adjustment under
potential HVIP model (3 percent pool) Average payment adjustment under
potential HVIP model (6 percent pool) 1.0 0.5 0.0 –0.5 –1.0 –1.5 Note: Average payment adjustments
under existing programs Peer Group 1
(lowest share of
fully dual-eligible beneficiaries) Peer Group 3 Peer Group 6 Peer Group 10
(highest share of
fully dual-eligible beneficiaries) HVIP (hospital value incentive program). The existing quality programs include the Hospital Readmissions Reduction Program (HRRP), Hospital-Acquired Condition
Reduction Program (HACRP), and Hospital Value-based Purchasing (VBP) Program. The HRRP and HACRP are penalties, and the VBP Program is budget neutral. The
average HVIP adjustment is the sum of each hospital’s HVIP adjustment after the withhold divided by the sum of each hospital’s base payment. The HVIP is budget
neutral. Peer groups are assigned based on the share of the hospital’s Medicare patients who are fully eligible for Medicare and Medicaid benefits for a majority of
the year. Fully dual-eligible beneficiaries qualify for the full range of Medicaid benefits. Source: MedPAC analysis of Medicare fee-for-service hospital quality data, 2014–2017. percent pool and a 1.39 percent positive adjustment with a
6 percent HVIP pool of dollars.
Relatively efficient providers (as defined by the
Commission) also receive more of a reward from the
HVIP compared with other hospitals. Under the HVIP
model with a 3 percent pool of dollars, efficient hospitals
would receive, on average, a 1.23 percentage point
reward, while less efficient hospitals would receive a 0.96
percentage point reward. There is more of a difference
between the HVIP payment adjustments when using a 6
percent pool of dollars. Efficient providers would receive a
1.46 percentage point reward, while less efficient hospitals
would receive, on average, a 0.92 percent payment
adjustment. As seen with the peer grouping, compared
with the existing quality payment programs, the HVIP
adjustments more equitable
Note: Note makes
are in InDesign.
Source: 444 R e d e s i g n i n g M e d i c a r e ’s h o s p i t a l q u a l i t y i n c e n t i v e p r o g r a m s among hospitals that serve different populations and
hospitals deemed more efficient than others. Recommendation to redesign hospital
quality incentive programs
Consistent with the Commission’s principles, the HVIP
links payment to quality of care to reward providers for
offering high-quality care to beneficiaries. A single quality
payment program for hospitals, such as our HVIP model,
would be simpler to administer and would produce more
equitable results compared with the existing quality
payment programs. The HVIP, as a single program,
would eliminate the complexity of overlapping program
requirements, would focus on outcomes, and would ...
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