Each year most hospitals in the United States are subject to significant impacts on their revenues based on their performance in three Centers for Medicare and Medicaid programs. These programs are based on the concept of moving from volume to value-based reimbursements. The programs include the Hospital-Acquired Conditions Reduction Program (HACs), Hospital Readmission Reduction Program (HRRP) and the Value-Based Purchasing Program (VBC). These performance-based programs require hospitals to report specific quality and cost metrics yearly. Their numbers are weighted against the performance of all other hospitals required to participate.

CMS changed the program requirements for reporting and performance during the COVID-19 pandemic, but many of these supportive changes will expire for future performance years. As hospitals struggle with maintaining revenue, now is the time to revisit historical and future performance opportunities to ensure that penalties are avoided and potential additional revenue can be secured.  This focus must persist despite hospitals’ staffing and patient care challenges in the post-pandemic environment.

Baseline performance evaluation is the best place to start with a deep understanding of the program benchmarks, methodology and reporting structure. Hospitals should examine their pre- and post-pandemic performance to gauge future performance improvement opportunities.  The programs are designed to reward based on both current evaluation period performance and improvement in some cases. The information is available in hospital-specific reports provided to the facility. 

The second step in improvement should focus on each program and developing an in-depth understanding of how the data is governed, captured and reported in the facility. The first program to review is the Hospital-Acquired Conditions (HAC) program that involves understanding the reporting of the CMS Patient Safety and Adverse Composite score (PSI-90) and infection measures, including Central Line Associated Blood Stream Infections (CLABSI), Catheter-Associated Urinary Tract Infections (CAUTI), Surgical Site Infections (SSI), Methicillin-resistant Staphylococcus aureus bacteremia (MRSA) and Clostridium difficile infection (CDI). Hospitals that perform above the 75^th percentile, allowing for winsorization and comparative performance, will be penalized after FY 2023 by a 1% payment reduction.   

The second program to focus on is the Hospital Readmissions Reduction Program (HRRP). It is based on a 30-day risk-standardized unplanned readmission ratio that includes acute myocardial infarction (AMI), chronic obstructive pulmonary disease (COPD), heart failure (HF), Pneumonia (excluded in FY 2023 payment), coronary artery bypass graft surgery and total hip and knee arthroplasty (THA/TKA). Payment penalties are calculated based on peer performance and can represent a 0-3% payment reduction. Much of the program is also about ensuring that the provider is capturing and coding all comorbid conditions that could impact the readmission risks. 

The third program to analyze is the Value-Based Purchasing (VBP) program. It is divided into four categories, including:

• Clinical Outcomes 25%
• Person and Community Engagement 25%
• Safety 25%
• Efficiency and Cost Reduction 25%

The VBP program is the only program that may allow a hospital to gain greater reimbursement than is withheld from the facility at the beginning of the fiscal year.  If the facility’s performance values are higher than the benchmark, achievement thresholds may receive more than the 2% withholding from the facility. The VBP metrics include some metrics utilized in the other programs along with performance on measures from the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) and the Medicare Spending per Beneficiary (MSPB) measure. 

Once the historical and current performance is understood, the task of developing performance improvement plans for each area could potentially impact scoring in the three programs. This involves bringing together multidisciplinary teams from across the hospital and educating the team members on the metrics, performance and opportunities for improvement. It is common for a facility to involve several workgroups to brainstorm, test and implement performance improvement projects in each critical area. While a significant undertaking, the financial impact of successful improvement can make a substantial difference in the hospital’s bottom line. 

The team at ProspHire has worked with hospitals on performance improvement in these areas. Our deep clinical knowledge, clinical staff experts and project management specialists have helped hospitals realize substantial enhancements tied to CMS programs. We can help your hospital focus on improving clinical care and performance metrics in the future. To connect with a ProspHire professional, fill out the form in the right column.