1. Raso, Rosanne MS, RN, NEA-BC

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Just a few years ago, we were in the infancy of the Centers for Medicare and Medicaid Services' (CMS) Value-Based Purchasing (VBP) program and it wasn't affecting our financial bottom lines that significantly.1 VBP was anticipated to advance over the years, getting bigger and more widespread, and nursing teams all over the country began their engagement. The importance and universality of nursing's contribution to value and quality was evident. Those expectations have become inescapably true; VBP is here to stay, and it's an integral part of the transformation of our healthcare system.

Figure. No caption a... - Click to enlarge in new windowFigure. No caption available.

Pay-for-performance now extends much farther than its launch with the CMS-based VBP program, which was originally focused primarily on process measures and "only" touched 1% of Medicare revenue. The concept of revenue risk based on value has taken hold-it's pervasive in other CMS programs, state agendas, bundled payment plans, insurance and managed care payment strategies, and more. The "volume-to-value" shift is real and has become an essential part of nursing's performance framework, validated by research that continues to demonstrate our economic value.2


The basics

Dr. Donald Berwick began the CMS's journey of evolving from a payment organization to one whose vision was to improve the health and healthcare of all Americans during his 18-month leadership of the CMS from 2010 to 2011. His "Triple Aim" (Figure 1) has become the mantra for healthcare reform:

Figure 1:. The Tripl... - Click to enlarge in new windowFigure 1:. The Triple Aim

* improve the experience


* improve health


* decrease costs.3



The Affordable Care Act (ACA) of 2010 began healthcare redesign in our country with multiple approaches under two critical goals: reforming health insurance and reforming delivery/payment systems. VBP is one of the elements of payment reform. It allows the CMS to "purchase" value when it pays for healthcare, in contrast to paying for services based on volume alone, which is the "fee-for-service" model.


Why did we get to the point that far-reaching government action was needed? There's no question that we needed healthcare reform. The number of readmissions and adverse events among Medicare beneficiaries was costly-worth over $30 billion in 2009 alone-and not indicative of a quality healthcare system. In that same year, 7 million Medicare beneficiaries had more than 12 million hospitalizations. Total Medicare expenditures in 2009 were $506 billion.


You may recall that pay-for-performance began with the Deficit Reduction Act of 2005-requiring the CMS to publicly report hospitals' performance measures-and was then compounded by the ACA that required VBP. This isn't new anymore. Hospitals have been reporting required data to the Medicare Hospital Inpatient Quality Reporting program, and VBP is based on segments of that data. The shared public data are available on the Hospital Compare website (, which contains multiple tabs with process, outcome, patient experience, volume, and efficiency measures.


In 2005, we started with 10 core measures and were rewarded for just reporting them; now we have close to 100 measures in several domains and may be penalized for the same issue across multiple value-based programs. Measures must be publicly reported for 1 year before they're included in the CMS VBP program.


The Hospital Compare website has seven tabs of information for each hospital:


* General information


-This includes several miscellaneous details such as the use of a "safe surgical checklist" and the ability to receive and track lab results using a certified electronic health record system (a Meaningful Use requirement).


* Survey of patient experiences (Hospital Consumer Assessment of Healthcare Providers and Systems survey, commonly known as HCAHPS)


- All eight dimensions from the original survey, such as nurse-physician communication and responsiveness, can be graphed and compared with state and national averages. The newer Care Transitions survey questions aren't included on the website yet.


* Timely and effective care


- Ten areas of care are now included, which go much further than the top four to which we were accustomed for years (acute myocardial infarction [AMI], heart failure [HF], the Surgical Care Improvement Project [SCIP], and pneumonia [PN]). At this time, you can look at six additional areas: ED dwell times, influenza vaccination rates, pediatric asthma care, stroke, deep vein thrombosis (DVT), and early elective deliveries. Multiple measures are included in each section.


* Readmissions, complications, and deaths


* Use of medical imaging


* Medicare payment


* Number of Medicare patients.



Most of the experience, process, outcome, and efficiency measures are approximately 1 year old by the time they're posted, making current comparisons not possible.


Progression over time

VBP was designed as an incentive program-not a penalty-and is budget neutral to the government. A percentage of Medicare revenue is withheld, kept in a pool, and then distributed back based on results for the various measures, or total performance score. The top half of hospitals get a graduated earn-back and reward, whereas the lower half loses money (also in a graduated way) depending on performance ranking. The progression of the withhold increases over time, from 1% in fiscal year (FY) 2013 to 2% in FY 2017. (See Figure 2.) In the current fiscal year (2015), the withhold is 1.5%.

Figure 2:. VBP withh... - Click to enlarge in new windowFigure 2:. VBP withhold for FY 2013 to FY 2017

The government's fiscal year is October 1 to September 30; FY 2016 begins October 1, 2015. This pay-for-performance strategy is just the beginning of the continuum toward providers assuming full risk for total healthcare costs. Greater risk models, such as Accountable Care Organizations, bundled payments, and shared savings, are very different as compared with traditional fee-for-service payment models. Taking revenue risk for performance aligns incentives to achieve the Triple Aim.


In addition to the progression of Medicare revenue at risk, the measures and domains are also evolving quickly. (See Figure 3.) In the first year, 70% of the indicators were process-based and included many of the priority core measures, such as AMI and HF care, as well as the SCIP measures. The other 30% was based on HCAHPS survey results. Now in the third year (FY 2015), we have four domains with the addition of outcomes and efficiency, and the weight of the process measures has decreased to only 20%.

Figure 3:. Shifting ... - Click to enlarge in new windowFigure 3:. Shifting VBP domains toward outcomes and efficiency, FY 2013 to FY 2017

The domains and measures for the current fiscal year are:


* Patient experience (30%)-no change in the eight dimensions


- communication with nurses


- communication with physicians


- responsiveness of hospital staff


- pain management


- communication about medications


- cleanliness and quietness of the hospital environment


- discharge information


- overall rating


* Processes of care (20%)-same 12 measures




* fibrinolytics within 30 minutes of arrival


* percutaneous coronary intervention within 90 minutes of arrival*


- HF


* discharge instructions*


- PN


* blood cultures in the ED before initial antibiotic*


* initial antibiotic selection


- SCIP (one measure removed from FY 2014)


* pre-op beta-blocker


* prophylactic antibiotic within 1 hour of incision*


* prophylactic antibiotic selection


* prophylactic antibiotic discontinued within 24 hours of end of surgery


* controlled post-op blood glucose in cardiac surgery patients*


* post-op urinary catheter removal by day 2


* DVT prophylaxis within 24 hours of surgery


* Outcomes (30%)-3 measures:


- 30-day mortality for AMI, HF, and PN


- NEW central line-associated bloodstream infection (CLABSI) measured using a standardized infection ratio comparing the actual number of CLABSI with the predicted number based on a standard population that has been risk-adjusted


- NEW "PSI-90," the patient safety indicator composite claims-based measure from the Agency for Healthcare Research and Quality (AHRQ) that includes eight complications (not 90 as the name suggests)


* pressure ulcers


* iatrogenic pneumothorax


* CLABSI (counts twice in the outcome domain, once on its own and also in the PSI-90 composite score)


* post-op hip fracture


* post-op pulmonary embolism or DVT


* post-op sepsis


* post-op wound dehiscence


* accidental puncture or laceration


* NEW Efficiency (20%)


- Medicare Spending per Beneficiary (MSPB), a claims-based measure that includes all payments for Part A (hospital) and Part B (medical) from 3 days before an admission through 30 days after hospital discharge; postacute care paid by Medicare is included, such as inpatient rehabilitation.



Changes for FY 2016 consist of removal of the five starred (*) aforementioned process measures. Other modifications consist of adding a new process measure for influenza screening/immunization and three more hospital-acquired infection (HAI) outcome measures to include catheter-associated urinary tract infections (CAUTI) and two surgical site infections (abdominal hysterectomy and colon surgery).


Looking to FY 2017, a new domain will be added for safety. (See Figure 3). It contains the familiar HAIs (CLABSI/CAUTI) and the PSI-90 composite, which are being moved from the outcomes domain. In addition, methicillin-resistant Staphylococcus aureus and Clostridium difficile rates will be added to the new safety domain. The outcomes domain will be left with 30-day mortality.


Keeping score

Scoring rules remain the same as in the program's first year and are quite complicated.1 There are minimum numbers of cases required so it's possible that your organization may have a domain or a subset of a domain excluded from your score.


In brief, the maximum performance score is 100 based on the total of each domain multiplied by its % weight factor. You can earn points by an "achievement" methodology, comparing yourself with all hospitals in the country, or by an "improvement" method that compares you with yourself, whichever is higher. The CMS' VBP is the only value-based program that gives any credit for improvement.


Baseline measurement periods are 1 to 2 years before the performance period, which is at least 1 year earlier than the affected fiscal year. The performance period for FY 2015 was predominantly in 2013, and the performance period for FY 2016 was over by the end of 2014. This means that the work you're doing right now to improve your indicators is affecting scores for FY 2017, starting in October 2016. That may seem far into the future, but it clearly isn't-you're impacting Medicare revenue for years to come based on your current performance.


To receive achievement points for an indicator, you must reach the threshold level, usually the 50th percentile of all hospitals. An example of the threshold for an HCAHPS indicator in FY 2015 was 77% for nursing communication, which is the start for receiving any points at all. To earn maximum points for the indicator, you must meet the benchmark, which is the mean of the top decile of all hospitals' performance-a high goal. Using the same example, the benchmark for FY 2015 was 86%. Therefore, in order to receive achievement points, you must score at least 77% and for maximum points, you must score at least 86% during the performance period.


To receive improvement points, the threshold is your own baseline and the benchmark remains the same. For the MSPB efficiency indicator, the threshold is the median and the benchmark is the mean of the lowest decile. This makes sense because you desire lower spending compared with the rest of the country. The same is true for the adverse outcome measures-you want to be in the lowest decile.


Many of the process measures have a 100% national benchmark; as a result, you must have 100% compliance-or 0% failure-to achieve full points for the measure. Some examples of FY 2015 benchmarks are:


* 100% for both AMI measures (process)


* 100% for both prophylactic pre-op antibiotic selection and administration (process)


* 0% CLABSI (outcomes)


* 83% overall rating of the hospital (patient experience).



The days of being satisfied with a 90% compliance rate or its corollary, a 10% failure rate, are long gone. Consistency and high reliability for "always" events are needed.


One last score is limited to the patient experience domain: the consistency score, which represents 20% of the total. It hasn't changed since the inception of VBP. Your lowest ranking dimension in this domain determines consistency points. You may be reaching the benchmark in communication, responsiveness, pain management, and overall, which makes you think that you're doing well, but if your environment of care results aren't the same, you'll lose significant credit. You must be over the 50th percentile in all areas to get the full 20%. Therefore, every patient experience dimension matters and consistency counts. The actual calculations are complicated and can be found in CMS presentations and publications.4,5


Colliding penalties

There are multiple value-based Medicare programs now in effect besides VBP. The hospital-acquired conditions (HAC) penalty began this fiscal year at a 1% reduction.6 Medicare is penalizing over 700 hospitals with the highest rates of potentially avoidable patient harm in the following areas: CLABSI/CAUTI (65%) and the AHRQ PSI-90 (35%). Of course, these are the same outcome indicators in the VBP program, akin to "double jeopardy" for hospitals. CLABSI is a "triple jeopardy" adverse outcome because it counts twice in VBP and now also in the HAC program. (See Table 1.)

Table 1: Outcome mea... - Click to enlarge in new windowTable 1: Outcome measures count multiple times in penalty programs

Hospitals in the worst performing quartile nationally received a 1% reduction in Medicare payments. This method means that no matter what the results are around the country, 25% of hospitals will be penalized. The performance periods used in the calculations were 2 years long: 2012 to 2013 for the HAIs and all the way back to July 2011 to June 2013 for the PSI-90.


The Hospital Readmissions Reduction Program is another reimbursement penalty program.7 For the purposes of this program, a readmission is defined as an admission within 30 days of a discharge from the same or another hospital. In the first 2 years of the program (FY 2013 and FY 2014), readmissions in the diagnostic categories of AMI, HF, and PN were included. In FY 2015, chronic obstructive pulmonary disease, total knee arthroplasty, and total hip arthroplasty were added, and the penalty rose to 3%. A risk adjustment method used by the National Quality Forum is utilized to determine an "excess readmission ratio." Most hospitals (78%) received a negative adjustment that's on all Medicare discharges, not just the diagnoses used in the calculation. Although readmissions rates are declining nationwide, this program is here to stay.


Colliding penalties of up to 5.5% in all three programs this fiscal year resulted in only approximately 25% of hospitals breaking even, although 55% of hospitals earned back their VBP withhold plus bonuses. (See Figure 4.) Average combined penalties for large hospitals over 400 beds were $1.2 million and $130,000 for small hospitals.8 For VBP alone, 1,714 hospitals were rewarded and 1,375 were penalized. More than half actually fell into a relative breakeven for VBP, with small changes up or down. When pay-for-performance was only reflected in 1% VBP, the financial penalties may not have been significant enough to trigger change; that isn't the case now.

Figure 4:. Multiple ... - Click to enlarge in new windowFigure 4:. Multiple penalties mount over time

Changing the culture

Driving outcomes and high reliability is an unrelenting journey. We know from numerous improvement projects locally and nationally that certain success themes prevail.9 Leadership at every level is critical, as well as using team approaches that engage all stakeholders. Resources and tools are readily available through many sources, such as Hospital Engagement Networks, the Institute for Healthcare Improvement's website, your HCAHPS vendor, collaboratives, professional organizations, and much more. Data must be available in real time and dashboards or score cards help drive performance when they're practical, meaningful, and used appropriately. "Baking in," or hardwiring processes, works. Key is a laser focus on goals and accountability for them at every level. Accepting the status quo or any failure is contrary to the desirable culture.


The positive impact of "adequate" nurse staffing is clear; however, there's no evidence-based universal staffing plan for an individual unit or service.2 Use national and local benchmarks, expert recommendations, internal work processes, your workforce characteristics, and your outcomes to determine and justify your needs.


The future

The U.S. Secretary of Health and Human Services, Sylvia Burwell, recently published the department's goals for value-based payment.10 The new goals are 30% of fee-for-service payments will be tied to value by 2016 and 50% by 2018. To facilitate the transition, the CMS also announced the creation of a new voluntary learning network for organizations called the Health Care Payment Learning and Action Network. Efforts to achieve the Triple Aim aren't limited to the CMS; state Medicaid and commercial payers are equally engaged.


The Secretary has named three primary strategies, all familiar to us: incentives for quality, integrated care coordination, and accessibility of health information. In the same week, a national group of healthcare systems and insurers also vowed the same-to move the bulk of payments to value-based reimbursement. Forward-thinking organizations have been focusing on value for years and are ahead of the curve.


Another possible change in the value-based model is to include patient-reported measures. This isn't simply asking about the experience of care, but whether the patient's symptoms, functional status, and/or quality of life improved after the care. Not only is the CMS looking at this for VBP, it's also a required capability for Meaningful Use Stage 3. That's true patient-centeredness.


This is our roadmap for the present and the future, not outdated fee-for-service episodic models of care delivery. It's much bigger than the VBP program alone, which started the groundswell for pay-for-performance. Nursing's contribution is huge. Our time to be part of the evolution (or maybe the revolution) toward healthcare reform and transformation is here.




1. Raso R. Value-based purchasing: what's the score? Reward or penalty, step up to the plate. Nurs Manage. 2013;44(5):28-34. [Context Link]


2. Keepnews DM. Mapping the economic value of nursing. [Context Link]


3. Fleming C. Don Berwick's vision: the triple aim. [Context Link]


4. How to read your FY 2015 hospital value-based purchasing (VBP) percentage payment summary report. [Context Link]


5. Centers for Medicare and Medicaid Services. National provider call: hospital value-based purchasing. [Context Link]


6. Centers for Medicare and Medicaid Services. Hospital-acquired condition (HAC) reduction program. [Context Link]


7. Centers for Medicare and Medicaid Services. Readmissions reduction program. [Context Link]


8. Rau J. 1,700 hospitals win quality bonuses from Medicare, but most will never collect. [Context Link]


9. New York State Partnership for Patients. NYSPFP guiding principles. [Context Link]


10. Burwell SM. Setting value-based payment goals-HHS efforts to improve U.S. health care. N Engl J Med. 2015;372(10):897-899. [Context Link]