Elsevier

Health Policy

Volume 118, Issue 3, December 2014, Pages 413-421
Health Policy

Value-based purchasing and hospital acquired conditions: Are we seeing improvement?

https://doi.org/10.1016/j.healthpol.2014.10.003Get rights and content

Highlights

  • Value-Based Purchasing and quality indicators are evaluated.

  • Mixed results are reported for hospital characteristics and quality indicators.

  • Total performance scores and quality indicators of interest do not correlate well.

Abstract

Objective

To determine if the Value-Based Purchasing Performance Scoring system correlates with hospital acquired condition quality indicators.

Data sources/study setting

This study utilizes the following secondary data sources: the American Hospital Association (AHA) annual survey and the Centers for Medicare and Medicaid (CMS) Value-Based Purchasing and Hospital Acquired Conditions databases.

Study design

Zero-inflated negative binomial regression was used to examine the effect of CMS total performance score on counts of hospital acquired conditions. Hospital structure variables including size, ownership, teaching status, payer mix, case mix, and location were utilized as control variables.

Data collection

The secondary data sources were merged into a single database using Stata 10.

Principal findings

Total performance scores, which are used to determine if hospitals should receive incentive money, do not correlate well with quality outcome in the form of hospital acquired conditions.

Conclusions

Value-based purchasing does not appear to correlate with improved quality and patient safety as indicated by Hospital Acquired Condition (HAC) scores. This leads us to believe that either the total performance score does not measure what it should, or the quality outcome measurements do not reflect the quality of the total performance scores measure.

Introduction

It is reported that the United States currently spends approximately 17.9% of the national GDP on health services with projected increases of up to 19.6% by 2021 [1]. This level of spending has spurred a reevaluation of the way in which our system operates, particularly when continually rising health care costs are paired with poor or inadequate outcomes. The U.S., compared to other developed countries, ranks poorly on several key quality outcome measures such as infant mortality and childhood obesity. In addition, the U.S. received a poor overall score on 2011s National Scorecard on U.S. Health System Performance [2]. The question and issue at hand is: how can the U.S. achieve better quality outcomes while also reducing health care cost and expenditures?

Process management techniques including Total Quality Management (TQM), Six Sigma, and a variety of additional flavors of process evaluation and enhancement procedures were believed to be hospitals’ answer to poor clinical outcomes and high costs. Through better processes, health systems have attempted to improve outcomes. However, despite these efforts hospitals are still responsible for poor quality indicators such as iatrogenic infections, poor work processes, long wait times, and a host of other issues [2], [3].

Finding a solution to our cost and outcome issues as well as creating a health system that provides safe, quality care which all can access has become a focal point for patients, policy makers, and healthcare providers. Safety, quality and access, while historically maintaining some level of concern to those seeking and providing care, have gained attention primarily due to cost and reports of patients being harmed during the care process. The Institute of Medicine's (IOM) To Err is Human: Building a Safer Health System [4] and Crossing the Quality Chasm [5] highlight areas where health care is lacking. These reports spearheaded a renewed focus on safe, quality care, ultimately contributing to the passage of the Patient Protection and Affordable Care Act of 2010.

One currently proposed solution involves incentivizing organizations to pursue value through either the ability to acquire higher reimbursements or the threat of losing current reimbursement if a certain quality and cost level is not met. As part of the Patient Protection and Affordable Care Act of 2010, the Hospital Inpatient Value-Based Purchasing Program (VBP) was signed into law [6]. VBP is an incentive arrangement through The Centers for Medicaid and Medicare Services (CMS), in which hospitals and other providers, are rewarded for adhering to quality standards or providing value in the delivery of services. This approach to achieving better performance relies on behavior modification through motivation for higher pay [7].

Section snippets

Background

Several studies have demonstrated that incentives such as Pay for Performance (P4P) do indeed have a positive effect in hospitals’ adherence to improving quality and safety [8], [9], [10], [11], [12]. For instance, in 2003, CMS initiated a three-year P4P initiative to determine its effectiveness in hospitals. This study evaluated the effect that P4P had on mortality rates for hip and knee replacement, pneumonia, heart bypass, heart failure, and heart attack. Specifically, it tracked a set of

Data sources

The 2012–2013 American Hospital Association (AHA) database, the 2012–2013 Hospital Acquired Conditions Database, the Financial Year 2013 Final Rule Standardizing File, and the 2013 Hospital Value-Based Purchasing (HVBP) Total Performance Scores Database through CMS will be utilized to conduct this analysis. The AHA database includes information on hospital characteristics, demographics, services, and expenses from over 6000 hospitals in the US [24]. The HAC database focuses on eight

Results

The final sample included 2927 hospitals with complete observations for all the study variables. Table 3 provides descriptive statistics for all the independent variables. For the hospitals in this analysis, the mean total performance score was 55.39. 19% were Medicaid patients and 51% were Medicare patients, and the average case mix index was a 1.51. Regarding organization control, 14% were government (non-federal) owned hospitals, 64% were not-for-profit hospitals, and 22% were for-profit

Discussion

The aim of hospital value-based purchasing is to improve the quality of care that patients receive by utilizing financial payment incentives. This study however, did not find strong evidence that the TPS used for the financial payment incentives from CMS was significantly correlated to patients’ quality of care as measured by HACs. In addition, while CMS adopts VBP strategies in an effort to lower its expenses in the long term, it is critical to recognize that they may also increase costs or be

Limitations and future research

While this research does include a robust set of data allowing for generalizability, it does not have specific enough data to control for all issues which may affect the TPS's correlation with the quality outcomes measured in this study. For instance, specific patient variables such as age, gender, ethnicity, and deprivation could influence the TPS and ultimately influence the inferences in this study. Furthermore, the manner by which the data used in this study is reported could provide a

Conclusion

P4P and VBP do stand as a possible step forward in the need for greater value in the American health care delivery system. The research presented in this study indicates that the current VBP system does not correlate with HACs well. Measurement and quality indicators do need more research, as does the implications of P4P and VBP on rural, safety net, and other similarly sized and resourced facilities. What is also necessary is a better understanding of how the future of VBP which will include

Conflicts of interest

No conflicts of interests declared.

Source of funding

None declared.

Acknowledgments

This research was supported in part by a grant from the University of North Florida's Brooks College of Health Research Program (grant no. 230318) and funded in part by Brooks Health Foundation (grant no. 1312-002).

References (39)

  • Medicaid, C.f.M.a

    NHE fact sheet

    (2013)
  • T.C. Fund

    Why not the best? Results from the National Scorecard on U.S. Health System Performance, 2011

    Commonwealth Fund

    (2011)
  • National Center for Health Statistics

    Health United States, 2008 with chartbook

    (2009)
  • L.T. Kohn et al.

    To err is human: building a safer health system

    (2000)
  • IOM

    Crossing the quality chasm: a new health system for the 21st century

    (2001)
  • Medicaid, C.f.M.a

    Frequently asked questions hospital value-based purchasing program

    (2013)
  • M. Fottler et al.

    Motivating people

  • J.T. Berthiaume

    Aligning financial incentives with “get with the guidelines” to improve cardiovascular care

    American Journal of Managed Care

    (2004)
  • A. Mehrotra et al.

    Pay for performance in the hospital setting: what is the state of the evidence?

    American Journal of Medical Quality

    (2009)
  • T.A. Nahra et al.

    Cost-effectiveness of hospital pay-for-performance incentives

    Medical Care Research and Review

    (2006)
  • K.L. Reiter et al.

    Hospital responses to pay-for-performance incentives

    Health Services Management Research

    (2006)
  • S. Duckett et al.

    Pay for performance in Australia: Queensland's new clinical practice improvement payment

    Journal of Health Services Research and Policy

    (2008)
  • P. Lindenauer et al.

    Public reporting and pay for performance in hospital quality improvement

    New England Journal of Medicine

    (2007)
  • S. Glickman et al.

    Pay for performance, quality of care, and outcomes in acute myocardial infarction

    JAMA: Journal of the American Medical Association

    (2007)
  • D. Burda

    The perfection injection

    Modern Healthcare

    (2008)
  • M.B. Rothberg et al.

    Choosing the best hospital: the limitations of public quality reporting

    Health Affairs

    (2008)
  • K.M. Sautter

    The early experience of a hospital-based pay-for-performance program

    Journal of Healthcare Management

    (2007)
  • G. Davidson et al.

    Hospital size, uncertainty, and pay-for-performance

    Health Care Financing Review

    (2007)
  • S. Shortell et al.
  • Cited by (20)

    • Pay for performance in the inpatient sector: A review of 34 P4P programs in 14 OECD countries

      2016, Health Policy
      Citation Excerpt :

      This pattern was not observed for patient satisfaction [73]. Similarly, Spaulding, Zhao and Haley were unable to identify a correlation between the total performance scores and patient safety and quality in the domain of hospital-acquired conditions [96]. It has to be taken into account that the results originate from the initial phase of the HVBP program.

    • Trends in mortality, length of stay, and hospital charges associated with health care–associated infections, 2006-2012

      2016, American Journal of Infection Control
      Citation Excerpt :

      The lack of progress in treatment and outcomes increases the importance of reducing the prevalence of these conditions. This was the goal of the CMS's 2008 payment policy change and of multiple other initiatives.23-25 To the extent that these policy and practice changes disproportionately prevented infections in patients who were comparatively healthier in ways that we could not control in these data, the trends in outcomes over time that we observed could be confounded by changes in the characteristics of patients acquiring infections.

    View all citing articles on Scopus
    1

    Tel.: +1 904 620 1444; fax: +1 904 620 1035.

    2

    Tel.: +1 904 620 4016; fax: +1 904 620 1035.

    View full text