This report from the Government Accountability Office (GAO) examines the effectiveness of the Centers for Medicare and Medicaid Services (CMS) Hospital Value-Based Purchasing (HVBP) program. The GAO found that the bonuses and penalties received by the vast majority of the approximately 3,000 hospitals eligible for the HVBP program amounted to less than 0.5 percent of applicable Medicare payments each year. In Fiscal Year 2015, the third year of the HVBP program, only 15 percent of the hospitals received bonuses larger than 0.5 percent (and 8 percent of the hospitals received penalties larger than 0.5 percent). Safety net hospitals, which provide a significant amount of care to the poor, consistently had lower median payment adjustments—that is, smaller bonuses or larger penalties—than hospitals overall in the program’s first three years. However, this gap narrowed over time.
Officials from selected hospitals that GAO interviewed reported that the HVBP program generally reinforced ongoing quality improvement efforts, but did not lead to 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 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. 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.
While the GAO found that the hospitals’ performance on the quality measures currently included in the HVBP program did not change significantly, the GAO noted that there were significant improvements on quality measures that are part of a separate incentive program that focuses on hospital readmissions and imposes only penalties. The 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. However, understanding the extent of that impact depends on the results of future research.