Tuesday, 06 October 2015 06:31

GAO Report Reveals Lukewarm Results of VBP Initiative in Early Going

Written by Mark Spivey, VBPmonitor Correspondent

The Government Accountability Office (GAO) has released a detailed report revealing that the federal Hospital Value-Based Purchasing (HVBP) initiative produced minimal changes to Medicare payments and created no significant shifts in quality-of-care markers during its first several years of implementation.

But that doesn’t mean that anyone is giving up on it just yet.

“Shifts in quality trends could emerge in the future as the HVBP program continues to evolve,” the report noted – striking a more optimistic tone than often is achieved by the federal agency that provides auditing, evaluation, and investigative services for Congress. “For example, new quality measures will be added, and the weight placed on clinical process measures – on which hospitals had little room for improvement – will be substantially reduced.”

The GAO first analyzed Centers for Medicare & Medicaid Services (CMS) data on the bonuses and penalties awarded to each of the nation’s approximately 3,000 HVBP-eligible hospitals from the 2013 fiscal year through the 2015 fiscal year in rendering its findings. Most of those hospitals, the GAO found, received a bonus or penalty from the HVBP program of less than 0.5 percent of applicable Medicare payments in each of the first three years of the program.

“Small hospitals and hospitals with better financial performance generally had higher payment adjustments – that is, larger bonuses or smaller penalties,” the report read. “Among the subgroups we analyzed, we found that safety net hospitals received lower payment adjustments compared to hospitals overall, but the gap narrowed over time. Small rural and small urban hospitals had similar or better results than hospitals overall.”

In dollar terms, most of these annual bonuses or penalties amounted to less than $50,000, the report noted. During the 2015 fiscal year, for example, more than half of hospitals received bonuses or penalties amounting to less than that sum, while 72 percent of hospitals had adjustments of less than $100,000.

“The size of bonuses or penalties, when measured dollars, is a function of both the percentage bonus or penalty and the total amount of applicable Medicare payments a hospital is owed,” the report read. “In the aggregate, the HVBP program redistributed about $140 million from hospitals that received penalties to hospitals that received bonuses in 2015.”

The GAO only had access to quality-of-care data for the 2013 and 2014 fiscal years at the time its report was published last week, but that small window into performance metrics wasn’t encouraging. 

“Analysis … shows that it (HVBP) did not noticeably alter the existing trends in hospitals’ performance on any of the quality measures used to determine HVBP payment adjustments that we examined. This lack of apparent change applied to all of the clinical process, patient experience, and outcomes measures included in the program’s payment formula that had sufficient available data points for us to assess,” the report read. “In general, trends observed for each measure before the HVBP program took effect in October 2012 remained largely unchanged after the program’s implementation, as shown by changes over time in the median hospital quality score for each measure.”

On clinical process measures, hospitals did show improvement – but that trend began before implementation of the HVBP program, the GAO added. These measures assess the extent to which hospitals correctly follow certain processes to treat patients, for example by selecting an appropriate initial antibiotic for a pneumonia patient.

For many quality measures not included in the HVBP program, the GAO determined that trends in performance remained unchanged during the aforementioned two fiscal years, but there were exceptions in the case of three measures that together comprise a separate incentive program exclusively targeting hospital readmissions and imposing only penalties.

“The timing of changes in readmission trends provides some indication that the use of financial incentives in quality improvement programs may, under certain circumstances, promote enhanced quality of care,” the report noted. “However, understanding the extent of that impact depends on the results of future research.”

Officials from selected hospitals GAO interviewed reported that the HVBP program generally reinforced ongoing quality improvement efforts, but did not lead to any major changes in focus. In addition, hospital officials cited a variety of factors that affected their capacity to improve quality. For example, officials from most hospitals the GAO contacted reported challenges related to using information technology (IT) systems – including electronic health records – to make quality improvements.

“In contrast, other hospital officials said their IT systems aided their quality performance efforts, such as by helping to collect clinical data needed to track progress on quality measures,” the report read. “Hospital officials described such factors as affecting their hospital’s quality improvement efforts as a whole, rather than being specifically linked to implementation of the HVBP program.”

View the entire 49-page GAO report in its entirety.

Mark Spivey is a national correspondent for VBPmonitor. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..