CMS on Tuesday announced that over 1,500 hospitals will receive bonuses in fiscal year (FY) 2020 under Medicare's Value-based Purchasing (VBP) Program.

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Background on VBP

FY 2020 is the eighth year of the VBP Program, which adjusts Medicare inpatient reimbursements based on approximately 2,700 hospitals' performance scores on quality and patient experience measures.

Each year, CMS withholds a percentage of inpatient payments from each hospital to fund the program. For FY 2020, 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. Hospitals that perform poorly can have their payments further reduced.

The VBP program assesses hospitals on their performance relative to their peers on quality and costs, as well as on hospitals' own performance over time. For FY 2020, the measures—each worth 25%—are:

• Clinical outcomes;
• Efficiency and cost reduction;
• Person and community engagement; and
• Safety.

Hospital performance for FY 2020

This year's results under the VBP Program are roughly the same as last year's, with about 55% of participating hospital receiving bonuses, "Transformation Hub" reports.

CMS in a fact sheet said the average net payment adjustment for hospitals is 0.16%, with the best-performing hospital seeing a 2.93% payment increase and the worst-performing hospital seeing a 1.72% payment decrease. The average payment increase for hospitals in FY 2020 is 0.6%, while the average payment decrease is 0.39%.

Just under 60% of hospitals will see their payments either increase or decrease by less than half a percentage point, CMS said. Overall, the agency will pay $1.9 billion in incentive payments to hospitals under the VPB Program in FY 2020.

CMS also said the average total performance score under the program increased in FY 2020 to 38.5, compared with an average total performance score of 38.1 in FY 2019. Small and rural hospitals performed especially well, with an average total performance score of 42.8, according to CMS (Brady, "Transformation Hub," Modern Healthcare, 10/29; King, FierceHealthcare, 10/29; CMS fact sheet, 2019).