Hospital Value-Based Purchasing Program: An Introduction for Anesthesiologists

Editor's note: This article by Tony Mira, president and CEO of Anesthesia Business Consultants, an anesthesia & pain management billing and practice management services company, originally appeared in Anesthesia Business Consultants eAlerts, a free electronic newsletter. Sign-up to receive this newsletter by clicking here.


Medicare's Value-Based Purchasing (VBP) program for hospitals, mandated by the Affordable Care Act, took off upon the release of final regulations on April 29, 2011. VBP marks the start of true pay-for-performance, as opposed to pay-for-reporting, at the hospital level. The intent is to pay for better value, patient outcomes and innovations, and not simply to reward volume of services. As we enter 2012, we are halfway through the first performance period. Anesthesiologists should begin analyzing and planning how they might partner with their hospitals in achieving the scores necessary to earn VBP incentives.



The hospital scores are based on Clinical Process of Care measures (70%) and on Patient Experience of Care (30%) as measured by completed Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) surveys. Hospitals receive points for achievement and improvement for each measure in the two domains, with the greater set of points counting toward the domain total. There are 12 measures in the Clinical Process of Care domain, and 8 HCAHPS "dimensions" in the Patient Experience domain. There are several measures for which anesthesiologists can take or share responsibility, as shown in italics in the lists below. Anesthesiologists, CRNAs and AAs can also contribute to the hospital's performance on virtually all the dimensions of Patient Experience.


Clinical Process of Care Measures

  1. AMI-7a fibrinolytic therapy received within 30 minutes of hospital arrival
  2. AMI-8 primary PCI received within 90 minutes of hospital arrival
  3. HF-1 discharge instructions
  4. PN-3b blood cultures performed in the ED prior to initial antibiotic received in hospital
  5. PN-6 initial antibiotic selection for CAP in immunocompetent patient
  6. SCIP-Inf-1 prophylactic antibiotic received within one hour prior to surgical incision
  7. SCIP-Inf-2 prophylactic antibiotic selection for surgical patients
  8. SCIP-Inf-3 prophylactic antibiotics discontinued within 24 hours after surgery
  9. SCIP-Inf-4 cardiac surgery patients with controlled 6AM postoperative serum glucose
  10. SCIP-Card-2 surgery patients on a beta blocker prior to arrival that received a beta blocker during the perioperative period
  11. SCIP-VTE-1 surgery patients with recommended venous thromboembolism prophylaxis ordered
  12. SCIP-VTE-2 surgery patients who received appropriate venous thromboembolism prophylaxis within 24 hours

Dimensions of Patient Experience of Care

  1. Nurse communication
  2. Doctor communication
  3. Hospital staff responsiveness
  4. Pain management
  5. Medicine communication
  6. Hospital cleanliness & quietness
  7. Discharge information
  8. Overall hospital rating


As stated in Somnia Anesthesia's How Anesthesia Can Help Hospitals With Value-Based Purchasing: Building a Foundation for the Outcomes-Based Business Model (p.7):


The anesthesia provider is the one constant in the OR setting. Holding the anesthesia department accountable for initiatives such as patient surveys, outcomes tracking and compliance audits places responsibility on a provider who already plays a key role in the assessment and management of the patient's care. …

Anesthesia's integration throughout the continuum of a patient's care offers a partnership that makes sense in developing the quality controls and measurements needed for compliance with the VBP program and other outcomes-based programs.


Announcing the program last April, HHS Secretary Kathleen Sebelius said, "Changing the way we pay hospitals will improve the quality of care for seniors and save money for all of us …. Under this initiative, Medicare will reward hospitals that provide high-quality care and keep their patients healthy. It's an important part of our work to improve the health of our nation and drive down costs. As hospitals work to improve their performance on these measures, all patients – not just Medicare patients – will benefit.


In FY 2013, an estimated $850 million will be distributed to some 3,200 hospitals for discharges occurring on or after October 1, 2012, based on a set of quality measures that have been shown to improve clinical processes of care and patient satisfaction. These funds will come from what Medicare otherwise would have spent, i.e., CMS will offset the $850 million bonus pool by reducing total DRG payments to all participating hospitals by one percent. The size of the fund will gradually increase over time resulting in a shift from payments based on volume to payments based on performance. The percentage reduction in DRG payments will increase yearly thus:


DRG Percentage Reductions












The first performance period runs from July 2011 to April 2012. Incentive payments in Fiscal Year 2013 will be based on the VBP scores obtained during that period. For 2014, the performance period runs from July 2012 to July 2013, and there will be a new domain for outcome measures.


Hospitals will be scored based on their performance on each measure and dimension relative to other hospitals (latitudinally) and on how their performance on each measure has improved over time (longitudinally). Combining the latitudinal and longitudinal assessments avoids the problem of rewarding a low achiever who improves over a high achiever with no margin for improvement. The scoring system is complicated, occupying 59 of the 72 slides presented in CMS' July 27, 2011 Open Door Forum: Hospital Value-Based Purchasing, Fiscal Year 2013 Overview, to which we refer interested readers.


Last July CMS proposed a number of changes to the VBP program for 2014, including the addition of measures for hospital-acquired infections and an efficiency measure that would reward or penalize hospitals based on their per-patient Medicare spending. In the face of strong provider opposition, particularly from the American Hospital Association, CMS deleted the hospital-acquired conditions measure and liberalized the efficiency measure.


There is so much at stake in the VPB program, and so much room for improvement in the quality and safety of care in hospitals, that one can expect measures to be added and the scored performance bar to be raised continually. As noted in a Fact Sheet released by CMS on April 29 entitled "Administration Implements New Health Reform Provision to Improve Care Quality, Lower Costs,"

Hospital payments account for the largest share of Medicare spending, and Medicare is the largest single payer for hospital services. In 2009, more than 7 million Medicare beneficiaries experienced more than 12.4 million inpatient hospitalizations. One in seven Medicare patients will experience some "adverse" event such as a preventable illness or injury while in the hospital. One in three Medicare beneficiaries who leave the hospital today will be back in the hospital within a month. Every year, as many as 98,000 Americans die from errors in hospital care.

In addition to adding to the suffering of patients and their caregivers, these errors lead to significant unnecessary health care spending. Medicare spent an estimated $4.4 billion in 2009 to care for patients who had been harmed in the hospital, and readmissions cost Medicare another $26 billion.


As a specialty with an admirable and lengthy history of improving safety, and one in which teamwork is well understood and highly valued, anesthesiology has a major role to play in helping hospitals meet their obligations under VPB. The New Year is an auspicious time to begin preparing for that responsibility.


Learn more about Anesthesia Business Consultants.


More Articles Featuring Anesthesia Business Consultants:

PQRS 2012 for Anesthesiologists and Pain Specialists

How Will the Affordable Care Act Affect Anesthesiologists After the Supreme Court Rules?

Impact of the Final Medicare Fee Schedule Rule for 2012 on Anesthesiologists

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