Nearly 1,600 hospitals will receive bonus payments under the Value-Based Purchasing (VBP) Program in fiscal year (FY) 2018, CMS announced Friday.

Background on VBP

FY 2018 is the sixth year of the VBP Program, which adjusts Medicare inpatient reimbursements based on hospitals' performance on quality and patient experience measures.

Each year, CMS withholds a percentage of inpatient payments from each hospital to fund the program. For FY 2018, the withholding percentage was 2%. If a hospital does well by VBP metrics, it can earn back more than the withheld amount, effectively earning a bonus overall. Perform poorly, and the reverse is true.

CMS estimates approximately $1.9 billion will be available for incentive payments for FY 2018. According to CMS, the highest performing hospital in FY 2018 will see a net payment increase of about 3% while the lowest

The CFO's guide to value-based purchasing

Hospitals are assessed on their performance relative to their peers on quality and costs as well as their own performance over time. For FY 2018, the measures—each worth 25%—are:

• Clinical care;
• Safety;
• Patient and caregiver-centered experience of care; and
• Efficiency and cost reduction.

Hospital performance for FY 2018

The number of hospitals in the program declined to 2,808 in FY 2018 from 2,955 in FY 2017, according to Modern Healthcare. About half of participating hospitals will receive a payment adjustment that ranges from a negative 0.5% to positive 0.5%.

Overall, about 57% of hospitals will see bonuses in FY 2018, up from 55% in FY 2017, Modern Healthcare reports. According to Modern Healthcare, 1,196 hospitals earned bonuses in FY 2017 and FY 2018.

Meanwhile, 1,211 hospitals will face reductions in FY 2018, down from 1,343 in FY 2017, Modern Healthcare reports. According to Modern Healthcare, 938 hospitals faced penalties in FY 2017 and FY 2018.

CMS in a release said, "In FY 2018, more hospitals will receive positive payment adjustments than will receive negative payment adjustments, indicating improved quality of care and the rewarding of better value, outcomes, and innovations."

Changes for FY 2019

CMS on Friday also announced changes to the program for FY 2019. CMS said it will:

• Remove the patient safety for selected indicators composite from the safety metric; and
• Add the risk-standardized elective primary total hip arthroplasty and/or total knee arthroplasty complications measure to the clinical care metric.

However, the four metric domains and their weight will not change, CMS said (Ellison, Becker's Hospital CFO Report, 11/3; Jones Sanborn, Healthcare Finance News, 11/3; Castellucci, Modern Healthcare, 11/3; CMS release, 11/3).

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