Abstract P116: Valuing Improvement in Value-Based Purchasing

Abstract

Background Medicare will soon implement hospital value-based purchasing (VBP) nationwide, with a scoring system that values both achievement (absolute performance on measures) and improvement (performance increase over time). Yet the way that improvement is defined in one VBP proposal gives less credit to initial low performers than initial high performers. Since initial low performers are disproportionately hospitals in socioeconomically disadvantaged areas, these institutions stand to lose under that proposal. We suggest a simple change to the VBP scoring proposal that awards equal credit for equal improvement, and test the impact of that modification on hospital scores in areas of locational advantage and disadvantage. Methods The Medicare 2007 Report to Congress proposed scoring methodology uses a fixed achievement scale for all hospitals and a variable improvement scale unique to each hospital, with the highest score determining the final blended score. We modified the formula to create a fixed improvement scale, mirroring the achievement scale. Using 2005-2008 CMS composite process measure performance for acute myocardial infarction (AMI) and heart failure (HF), we calculated hospital scores using both the original and modified approaches. The most and least locationally advantaged hospitals were compared across 5 locational dimensions: poverty, unemployment, physician shortage, high school graduates, and college graduates. Results The least advantaged hospitals demonstrated greater absolute improvement over time. The original formula yielded higher blended scores for the most locationally advantaged hospitals for 4/5 dimensions in AMI and 2/5 for HF. After implementing the modified formula, differences on blended scores between hospitals in the most and least advantaged areas existed in 3/5 dimensions in AMI and 1/5 dimensions for HF. Conclusions Compared to a proposed VBP formula, use of a modified formula that reflects the principle of “equal credit for equal improvement,” resulted in a relatively equitable distribution of blended payment scores. This modification could be incorporated into Medicare's hospital VBP program, allowing hospitals in both socioeconomically advantaged and disadvantaged areas to succeed.