26490 Federal Register / Vol. 76, No. 88 / Friday, May 6, 2011 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 422 and 480 

[CMS–3239–F] 

RIN 0938–AQ55 

Medicare Program; Hospital Inpatient 

Value-Based Purchasing Program 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule implements a 

Hospital Inpatient Value-Based 

Purchasing program (Hospital VBP 

program or the program) under section 

1886(o) of the Social Security Act (the 

Act), under which value-based incentive 

payments will be made in a fiscal year 

to hospitals that meet performance 

standards with respect to a performance 

period for the fiscal year involved. The 

program will apply to payments for 

discharges occurring on or after October 

1, 2012, in accordance with section 

1886(o) (as added by section 3001(a) of 

the Patient Protection and Affordable 

Care Act, as amended by the Health 

Care and Education Reconciliation Act 

of 2010 (collectively known as the 

Affordable Care Act)). Scoring in the 

Hospital VBP program will be based on 

whether a hospital meets or exceeds the 

performance standards established with 

respect to the measures. By adopting 

this program, we will reward hospitals 

based on actual quality performance on 

measures, rather than simply reporting 

data for those measures. 

DATES: Effective Date: These regulations 

are effective on July 1, 2011. 

FOR FURTHER INFORMATION CONTACT: 

Allison Lee, (410) 786–8691. 

Table of Contents 

I. Background 

A. Overview 

B. Hospital Inpatient Quality Data 

Reporting Under Section 501(b) of Public 

Law 108–173 

C. Hospital Inpatient Quality Reporting 

Under Section 5001(a) of Public Law 

109–171 

D. 2007 Report to Congress: Plan To 

Implement a Medicare Hospital ValueBased Purchasing Program 

E. Provisions of the Affordable Care Act 

II. Provisions of the Final Rule and Response 

to Comments 

A. Overview of the Proposed Rule 

B. Overview of the Hospital Value-Based 

Purchasing Program 

C. Performance Period 

D. Measures 

E. Performance Standards 

F. Methodology for Calculating the Total 

Performance Score 

G. Applicability of the Value-Based 

Purchasing Program to Hospitals 

H. The Exchange Function 

I. Hospital Notification and Review 

Procedures 

J. Reconsideration and Appeal Procedures 

K. FY 2013 Validation Requirements for 

Hospital Value-Based Purchasing 

L. Additional Information 

M. QIO Quality Data Access 

III. Collection of Information Requirements 

IV. Economic Analyses 

A. Regulatory Impact Analysis 

B. Regulatory Flexibility Act Analysis 

C. Unfunded Mandates Reform Act 

Analysis 

V. Federalism Analysis 

Acronyms 

Because of the many terms to which 

we refer by acronym in this final rule, 

we are listing the acronyms used and 

their corresponding meanings in 

alphabetical order below: 

ACM Appropriate Care Model 

AHRQ Agency for Healthcare Research and 

Quality 

AMI Acute Myocardial Infarction 

CCN CMS Certification number 

CLABSI Central line-associated 

bloodstream infections 

CMMI Center for Medicare and Medicaid 

Innovation 

CMS Centers for Medicare & Medicaid 

Services 

CV Coefficient of variation 

DRA Deficit Reduction Act of 2005 

DRG Diagnosis-Related Group 

EHR Electronic Health Record 

EKG Electrocardiogram 

FISMA Federal Information Security and 

Management Act 

HAC Hospital acquired conditions 

HAI Healthcare-associated infections 

HCAHPS Hospital Consumer Assessment of 

Healthcare Providers and Systems 

HF Heart Failure 

HIPAA Health Insurance Portability and 

Accountability Act 

HOP QDRP Hospital Outpatient Quality 

Data Reporting Program 

IPPS Inpatient prospective payment 

systems 

IQI Inpatient Quality Indicator 

IQR Inpatient Quality Reporting 

MMA Medicare Prescription Drug, 

Improvement and Modernization Act of 

2003 

NQF National Quality Forum 

PMA Patient-mix adjustment 

PN Pneumonia 

POA Present on Admission 

PQRI Physician Quality Reporting Initiative 

PRRB Provider Reimbursement Review 

Board 

PSI Patient Safety Indicator 

QIO Quality Improvement Organization 

QRS Quality Review Study 

RFA Regulatory Flexibility Act 

RHQDAPU Reporting Hospital Quality Data 

for the Annual Payment Update Program 

RIA Regulatory Impact Analysis 

SCIP Surgical Care Improvement 

SDPS Standard Data Processing System 

SES Socioeconomic status 

SSI Surgical site infections 

VBP Value-Based Purchasing 

I. Background 

A. Overview 

The Centers for Medicare & Medicaid 

Services (CMS) promotes higher quality 

and more efficient health care for 

Medicare beneficiaries. In recent years, 

we have undertaken a number of 

initiatives to lay the foundation for 

rewarding health care providers and 

suppliers for the quality of care they 

provide by tying a portion of their 

Medicare payments to their performance 

on quality measures. These initiatives, 

which include demonstration projects 

and quality reporting programs, have 

been applied to various health care 

settings, including physicians’ offices, 

ambulatory care facilities, hospitals, 

nursing homes, home health agencies, 

and dialysis facilities. The overarching 

goal of these initiatives is to transform 

Medicare from a passive payer of claims 

to an active purchaser of quality health 

care for its beneficiaries. 

This effort is supported by our 

adoption of an increasing number of 

widely-agreed upon quality measures 

for purposes of our existing quality 

reporting programs. We have worked 

with stakeholders to define measures of 

quality in almost every setting. These 

measures assess structural aspects of 

care, clinical processes, patient 

experiences with care, and, 

increasingly, outcomes. 

We have implemented quality 

measure reporting programs that apply 

to various settings of care. With regard 

to hospital inpatient services, we 

implemented the Hospital IQR program. 

In addition, we have implemented 

quality reporting programs for hospital 

outpatient services through the Hospital 

Outpatient Quality Reporting program 

(HOQR), formerly known as the 

Hospital Outpatient Quality Data 

Reporting Program (HOP QDRP), and for 

physicians and other eligible 

professionals through the Physician 

Quality Reporting System (formerly 

referred to as the Physician Quality 

Reporting Initiative or PQRI). We have 

also implemented quality reporting 

programs for home health agencies and 

skilled nursing facilities based on 

conditions of participation, and an endstage renal disease quality incentive 

program that links payment to 

performance. 

This new program will necessarily be 

a fluid model, subject to change as 

knowledge, measures and tools evolve. 

We view the Hospital VBP program 

under section 1886(o) as the next step 

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in promoting higher quality care for 

Medicare beneficiaries and transforming 

Medicare into an active purchaser of 

quality health care for its beneficiaries. 

In developing this rule as well as 

other value-based quality initiatives, 

CMS applied the following principles 

for the development and use of 

measures and scoring methodologies. 

Purpose 

CMS views value-based purchasing as 

an important step toward revamping 

how care and services are paid for, 

moving increasingly toward rewarding 

better value, outcomes, and innovations 

instead of merely volume. 

Use of Measures 

• Public reporting and value-based 

payment systems should rely on a mix 

of standards, process, outcomes, and 

patient experience measures, including 

measures of care transitions and 

changes in patient functional status. 

Across all programs, CMS seeks to move 

as quickly as possible to using primarily 

outcome and patient experience 

measures. 

• To the extent possible and 

recognizing differences in payment 

system maturity and statutory 

authorities, measures should be aligned 

across Medicare’s and Medicaid’s public 

reporting and payment systems. CMS 

also seeks to develop a focused core-set 

of measures appropriate to each specific 

provider category that reflects the level 

of care and the most important areas of 

service furnished by that provider. 

• The collection of information 

should minimize the burden on 

providers to the extent possible. As part 

of that effort, CMS will continuously 

seek to align its measures with the 

adoption of meaningful use standards 

for health information technology (HIT). 

• To the extent practicable, measures 

used by CMS should be nationally 

endorsed by a multi-stakeholder 

organization. Measures should also be 

aligned with best practices among other 

payers and the needs of the end users 

of the measures. 

Scoring Methodology 

• Providers should be scored on their 

overall achievement relative to national 

or other appropriate benchmarks. In 

addition, scoring methodologies should 

consider improvement as an 

independent goal. 

• Measures or measurement domains 

need not be given equal weight, but over 

time, scoring methodologies should be 

weighted more heavily towards 

outcome, patient experience, and 

functional status measures. 

• Scoring methodologies should be 

reliable, as straightforward as possible, 

and stable over time and enable 

consumers, providers, and payers to 

make meaningful distinctions among 

providers’ performance. 

Comment: A number of commenters 

expressed their general support for these 

principles. One commenter provided 

additional remarks on the principles 

and made a number of comments on the 

interactions between the principles, 

including risk adjustment, measure 

reliability, patient experience of care 

measures, and measure endorsement. 

For example, this commenter expressed 

agreement with our stated principle that 

public reporting and value-based 

payment systems should rely on a mix 

of standards, processes, outcome and 

payment experience measures. In 

supporting this principle, the 

commenter related that health and 

health care are complex, which requires 

a multifaceted accountability 

framework. This commenter also 

supported our statement that scoring 

methodologies should be reliable, as 

straightforward as possible, and stable 

over time. The commenter further 

remarked that VBP relies on the support 

of consumers in the marketplace to 

drive improvement, and that consumers 

must understand the measures and how 

they are used in order to make informed 

decisions. 

Response: We appreciate the 

comments and input on these 

principles, and will keep them in mind 

as we continue to enhance, develop and 

implement the Hospital VBP program, 

other quality reporting programs, and 

other value-based incentive programs. 

Comment: A number of commenters 

stated that CMS must ensure that valuebased purchasing programs foster the 

development of innovative, quality care 

and provide an adequate level of 

reimbursement for innovative medical 

technologies. One commenter reiterated 

that value-based purchasing programs 

should not place the provision of lower 

cost services and products in conflict 

with what is best for the patient. 

Response: We agree that value-based 

purchasing programs should not hinder 

innovation and should result in 

improved patient care. We believe that 

the Hospital VBP program will drive 

improvements in the quality of care for 

Medicare beneficiaries, including the 

provision of innovative technologies, 

because of its financial incentives for 

providers to provide high-quality, 

patient-centered care coupled with high 

levels of patient satisfaction. We note 

that our measure development and 

selection activities take into account 

national priorities, including those 

established by the National Priorities 

Partnership and the Department of 

Health and Human Services, as well as 

other widely accepted criteria 

established in the medical literature. We 

will continue to seek to align all of our 

quality initiatives to promote highquality care and continued innovation. 

We intend to monitor this program over 

time for unintended consequences. 

Comment: One commenter requested 

that CMS extend the 60-day comment 

period. 

Response: We decline to extend the 

comment period. Based on the volume 

and depth of comments we received in 

response to the Hospital Inpatient VBP 

proposed rule, we believe that 

commenters had ample opportunity to 

submit meaningful comments on our 

proposals and did so. Specifically, we 

received comments discussing a wide 

range of issues on nearly every aspect of 

that proposed rule, including its 

potential impact on the health care 

system, the provision of high-quality 

medical care and effects on patient 

satisfaction. We received comments 

from a wide range of stakeholders, 

including hospitals, health care 

providers, professional associations, 

trade groups, advocacy organizations, 

Medicare beneficiaries, private citizens, 

and others. We have had a sufficient 

opportunity to consider the issues 

raised by the commenters and have 

taken their comments into account in 

developing this final rule. 

Comment: One commenter stated that 

‘‘the specific process for how the agency 

proposes to achieve ‘transparency’ is not 

described or attained,’’ and that the 

proposed rule did not offer sufficient 

information and disclosure of the 

‘‘methods and data the agency proposes 

to use’’ in developing the Hospital VBP 

program. 

Response: We disagree. We believe 

that we have been transparent in making 

public our goals for the Hospital VBP 

program and numerous documents that 

informed our rulemaking on this 

program, including the 2007 Report to 

Congress, Congressional testimony and 

public listening session transcripts. We 

also believe that the proposed rule 

contains detailed information regarding 

the data and analyses we considered in 

developing our proposals. 

However, because we seek to ensure 

that the continued development of the 

Hospital VBP program take place in as 

transparent a manner as possible, we 

will make available additional 

information regarding our analyses, 

study results, and methods and will 

inform the public accordingly. 

We have addressed specific issues 

relating to the use of measures, scoring 

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methodology, and other aspects of the 

Hospital VBP program below. 

B. Hospital Inpatient Quality Data 

Reporting Under Section 501(b) of 

Public Law 108–173 

Section 501(b) of the Medicare 

Prescription Drug, Improvement, and 

Modernization Act of 2003 (MMA), 

Public Law 108–173, added section 

1886(b)(3)(B)(vii) to the Act. This 

section established the original 

authority for the Hospital IQR program 

and revised the mechanism used to 

update the standardized amount for 

inpatient hospital operating costs. 

Specifically, section 1886(b)(3)(B)(vii)(I) 

of the Act provided for a reduction of 

0.4 percentage points to the applicable 

percentage increase (sometimes referred 

to at that time as the market basket 

update) for FY 2005 through FY 2007 

for a subsection (d) hospital if the 

hospital did not submit data on a set of 

10 quality indicators established by the 

Secretary as of November 1, 2003. It also 

provided that any reduction applied 

only to the fiscal year involved, and 

would not be taken into account in 

computing the applicable percentage 

increase for a subsequent fiscal year. 

The statute thereby established an 

incentive for many subsection (d) 

hospitals to submit data on the quality 

measures established by the Secretary. 

We implemented section 

1886(b)(3)(B)(vii) of the Act in the FY 

2005 IPPS final rule (69 FR 49078) and 

codified the applicable percentage 

increase change in § 412.64(d) of our 

regulations. We adopted additional 

requirements for the Hospital IQR 

program in the FY 2006 IPPS final rule 

(70 FR 47420). 

C. Hospital Inpatient Quality Reporting 

Under Section 5001(a) of Public Law 

109–171 

1. Change in the Reduction to the 

Applicable Percentage Increase 

Section 5001(a) of the Deficit 

Reduction Act of 2005 (DRA), Public 

Law 109–171, further amended section 

1886(b)(3)(B) of the Act to, among other 

things, revise the mechanism used to 

update the standardized amount for 

hospital inpatient operating costs by 

adding a new section 1886(b)(3)(B)(viii) 

to the Act. Specifically, sections 

1886(b)(3)(B)(viii)(I) and (II) of the Act, 

as added by the DRA, provided in part 

that the applicable percentage increase 

for FY 2007 and each subsequent fiscal 

year shall be reduced by 2.0 percentage 

points for a subsection (d) hospital that 

does not submit quality data in a form 

and manner and at a time specified by 

the Secretary. Section 

1886(b)(3)(B)(viii)(I) of the Act also 

provided that any reduction in a 

hospital’s applicable percentage 

increase will apply only with respect to 

the fiscal year involved, and will not be 

taken into account for computing the 

applicable percentage increase for a 

subsequent fiscal year. 

In the FY 2007 IPPS final rule (71 FR 

48045), we amended our regulations at 

§ 412.64(d)(2) to reflect the 2.0 

percentage point reduction required 

under the DRA. 

2. Selection of Quality Measures 

Section 1886(b)(3)(B)(viii)(V) of the 

Act, before it was amended by section 

3001(a)(2)(B) of the Affordable Care Act, 

required that, effective for payments 

beginning FY 2008, the Secretary add 

other measures that reflect consensus 

among affected parties, and to the extent 

feasible and practicable, have been set 

forth by one or more national consensus 

building entities. The National Quality 

Forum (NQF) is a voluntary consensus 

standard-setting organization with a 

diverse representation of consumer, 

purchaser, provider, academic, clinical, 

and other health care stakeholder 

organizations. The NQF was established 

to standardize health care quality 

measurement and reporting through its 

consensus development process. We 

have generally adopted NQF-endorsed 

measures for purposes of the Hospital 

IQR program. However, we believe that 

consensus among affected parties also 

can be reflected by other means, 

including consensus achieved during 

the measure development process, 

consensus shown through broad 

acceptance and use of measures, and 

consensus achieved through public 

comment. 

Section 1886(b)(3)(B)(viii)(VI) of the 

Act authorizes the Secretary to replace 

any quality measures or indicators in 

appropriate cases, such as when all 

hospitals are effectively in compliance 

with a measure, or the measures or 

indicators have been subsequently 

shown to not represent the best clinical 

practice. We interpreted this provision 

to give us broad discretion to replace 

measures that are no longer appropriate 

for the Hospital IQR program. 

We adopted 45 measures under the 

Hospital IQR program for the FY 2011 

payment determination. Of these 

measures, 27 are chart-abstracted 

process of care measures, which assess 

the quality of care furnished by 

hospitals in connection with four topics: 

Acute Myocardial Infarction (AMI); 

Heart Failure (HF); Pneumonia (PN); 

and Surgical Care Improvement (SCIP) 

(75 FR 50182). Fifteen of the measures 

are claims-based measures, which assess 

the quality of care furnished by 

hospitals on the following topics: 30- 

day mortality and 30-day readmission 

rates for Medicare patients diagnosed 

with AMI, HF, or PN; Patient Safety 

Indicators/Inpatient Quality Indicators/ 

Composite Measures; and Patient Safety 

Indicators/Nursing Sensitive Care. 

Three of the measures are structural 

measures that assess hospital 

participation in cardiac surgery, stroke 

care, and nursing sensitive care 

systemic databases. Finally, the Hospital 

Consumer Assessment of Healthcare 

Providers and Systems (HCAHPS) 

patient experience of care survey is 

included as a measure for the FY 2011 

payment determination. 

The technical specifications for the 

Hospital IQR program measures, or links 

to Web sites hosting technical 

specifications, are contained in the 

CMS/The Joint Commission 

Specifications Manual for National 

Hospital Inpatient Quality Measures 

(Specifications Manual). This 

Specifications Manual is posted on the 

CMS QualityNet Web site at https:// 

www.QualityNet.org/. We maintain the 

technical specifications by updating this 

Specifications Manual semiannually, or 

more frequently in unusual cases, and 

include detailed instructions and 

calculation algorithms for hospitals to 

use when collecting and submitting data 

on required measures. These 

semiannual updates are accompanied by 

notifications to users, providing 

sufficient time before the effective date 

of the change in order to allow users to 

incorporate changes and updates to the 

specifications into data collection 

systems. 

3. Public Display of Quality Measures 

Section 1886(b)(3)(B)(viii)(VII) of the 

Act, as amended by section 

3001(a)(2)(C) of the Affordable Care Act, 

requires that the Secretary establish 

procedures for making information 

regarding measures submitted under the 

Hospital IQR program available to the 

public after ensuring a hospital has the 

opportunity to review its data. To meet 

this requirement, we display most 

Hospital IQR program data on the 

Hospital Compare Web site, http:// 

www.hospitalcompare.hhs.gov, after a 

30-day preview period. An interactive 

Web tool, this Web site assists 

beneficiaries by providing information 

on hospital quality of care to those who 

need to select a hospital. It further 

serves to encourage beneficiaries to 

work with their doctors and hospitals to 

discuss the quality of care hospitals 

provide to patients, thereby providing 

an additional incentive to hospitals to 

improve the quality of care that they 

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furnish. The Hospital Compare Web site 

currently makes public information on a 

wide range of measures, including 

clinical process of care measures, risk 

adjusted outcome measures, the 

HCAHPS patient experience of care 

survey, and structural measures. 

However, data that we believe is not 

suitable for inclusion on Hospital 

Compare because it is not salient or will 

not be fully understood by beneficiaries, 

as well as data for which there are 

unresolved display or design issues, 

may be made available on other CMS 

Web sites that are not intended to be 

used as an interactive Web tool, such as 

http://www.cms.hhs.gov/ 

HospitalQualityInits/. In such 

circumstances, affected parties are 

notified via CMS listservs, CMS e-mail 

blasts, national provider calls, and 

QualityNet announcements regarding 

the release of preview reports followed 

by the posting of data on a Web site 

other than Hospital Compare. 

D. 2007 Report to Congress: Plan To 

Implement a Medicare Hospital ValueBased Purchasing Program 

Section 5001(b) of the DRA required 

the Secretary to develop a plan to 

implement a value-based purchasing 

program for subsection (d) hospitals. In 

developing the plan, we were required 

to consider the on-going development, 

selection, and modification process for 

measures of quality and efficiency in 

hospital inpatient settings; the 

reporting, collection, and validation of 

quality data; the structure, size, and 

sources of funding of value-based 

payment adjustments; and the 

disclosure of information on hospital 

performance. 

On November 21, 2007, we submitted 

the Report to Congress: Plan to 

Implement a Medicare Hospital ValueBased Purchasing Program, which is 

available on the CMS Web site. The 

report discusses options for a plan to 

implement a Medicare hospital valuebased purchasing program that builds 

on the Hospital IQR program. We 

recommended replacing the Hospital 

IQR program with a new program that 

would include both a public reporting 

requirement and financial incentives for 

better performance. We also 

recommended that a hospital valuebased purchasing program be 

implemented in a manner that would 

not increase Medicare spending. 

To calculate a hospital’s total 

performance score under the plan, we 

analyzed a potential performance 

scoring model that incorporated 

measures from different quality 

‘‘domains,’’ including clinical process of 

care and patient experience of care. We 

examined ways to translate that score 

into an incentive payment by making a 

portion of the base DRG payment 

contingent on performance. We 

analyzed criteria for selecting 

performance measures and considered a 

potential phased approach to transition 

from Hospital IQR to value-based 

purchasing. In addition, we examined 

redesigning the current data 

transmission process and validation 

infrastructure, including making 

enhancements to the Hospital Compare 

Web site, as well as an approach to 

monitor the impact of value-based 

purchasing. 

E. Provisions of the Affordable Care Act 

Section 3001(a) of the Affordable Care 

Act added a new section 1886(o) to the 

Act, which requires the Secretary to 

establish a hospital value-based 

purchasing program under which valuebased incentive payments are made in a 

fiscal year to hospitals meeting 

performance standards established for a 

performance period for such fiscal year. 

Both the performance standards and the 

performance period for a fiscal year are 

to be established by the Secretary. 

Section 1886(o)(1)(B) of the Act directs 

the Secretary to begin making valuebased incentive payments under the 

Hospital VBP program to hospitals for 

discharges occurring on or after October 

1, 2012. These incentive payments will 

be funded for FY 2013 through a 

reduction to FY 2013 base operating 

DRG payments for each discharge of 1.0 

percent, as required by section 

1886(o)(7). Section 1886(o)(1)(C) 

provides that the Hospital VBP program 

applies to subsection (d) hospitals (as 

defined in section 1886(d)(1)(B)), but 

excludes from the definition of the term 

‘‘hospital,’’ with respect to a fiscal year: 

(1) A hospital that is subject to the 

payment reduction under section 

1886(b)(3)(B)(viii)(I) for such fiscal year; 

(2) a hospital for which, during the 

performance period for the fiscal year, 

the Secretary cited deficiencies that 

pose immediate jeopardy to the health 

and safety of patients; and (3) a hospital 

for which there is not a minimum 

number (as determined by the Secretary) 

of applicable measures for the 

performance period for the fiscal year 

involved, or for which there is not a 

minimum number (as determined by the 

Secretary) of cases for the applicable 

measures for the performance period for 

such fiscal year. 

II. Provisions of the Final Rule and 

Response to Comments 

A. Overview of the January 7, 2011 

Hospital Inpatient VBP Program 

Proposed Rule 

On January 7, 2011, we issued a 

proposed rule that proposes to 

implement a Hospital VBP program 

under section 1886(o) of the Act (76 FR 

2454, January 13, 2011). Specifically, we 

proposed to initially adopt for the FY 

2013 Hospital VBP program 18 

measures that we have already adopted 

for the Hospital IQR program, 

categorized into two domains, as 

follows: 17 of the measures would be 

clinical process of care measures, which 

we would group into a clinical process 

of care domain, and 1 measure would be 

the HCAHPS survey, which would fall 

under a patient experience of care 

domain. With respect to the clinical 

process of care and HCAHPS measures, 

we proposed to use a three-quarter 

performance period from July 1, 2011 

through March 31, 2012 for the FY 2013 

Hospital VBP payment determination. 

We proposed to determine whether 

hospitals meet the performance 

standards for the selected measures by 

comparing their performance during the 

performance period to their 

performance during a three-quarter 

baseline period of July 1, 2009 through 

March 31, 2010. We also proposed to 

initially adopt for the FY 2014 Hospital 

VBP program three outcome measures. 

With respect to the outcome measures, 

we proposed to use an 18-month 

performance period from July 1, 2011 to 

December 31, 2012. Furthermore, for 

these outcome measures, we proposed 

to establish performance standards and 

to determine whether hospitals meet 

those standards by comparing their 

performance during the performance 

period to their performance during a 

baseline period of July 1, 2008 to 

December 31, 2009. 

We also proposed to adopt 8 Hospital 

Acquired Condition measures and 9 

AHRQ Patient Safety Indicator and 

Inpatient Quality Indicator outcome 

measures. We further proposed to begin 

the performance period for each of these 

proposed measures 1 year after we 

included the measure on the Hospital 

Compare Web site. 

In general, we proposed to implement 

a methodology for assessing the total 

performance of each hospital based on 

performance standards, under which we 

would score each hospital based on 

achievement and improvement ranges 

for each applicable measure. 

Additionally, we proposed to calculate 

a total performance score for each 

hospital by combining the greater of the 

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hospital’s achievement or improvement 

points for each measure to determine a 

score for each domain, multiplying each 

domain score by a proposed weight 

(clinical process of care: 70 percent, 

patient experience of care: 30 percent), 

and adding together the weighted 

domain scores. We proposed to convert 

each hospital’s Total Performance Score 

into a value-based incentive payment 

utilizing a linear exchange function. 

We provided a 60-day public 

comment period in which we received 

approximately 319 timely comments 

from hospitals, health care facilities, 

advocacy organizations, researchers, 

patients, and other individuals and 

organizations. Summaries of the public 

comments, as well as our responses to 

those comments, are set forth below. 

Comment: A number of commenters 

requested clarification on the 

interaction between the Hospital IQR 

program and the Hospital VBP program. 

Commenters specifically requested that 

we explain more fully how the penalties 

under the two programs will interact, as 

well as clarify if we intend to continue 

the Hospital IQR program in the future. 

Response: The Affordable Care Act 

did not repeal section 

1886(b)(3)(B)(viii), the statutory 

authority for the Hospital IQR program, 

and that program will continue to exist 

side-by-side with the Hospital VBP 

program. However, we note that 

beginning in FY 2015, the reduction to 

the applicable percentage increase 

under the Hospital IQR program 

changes from a straight 2.0 percentage 

point reduction to a reduction equal to 

‘‘one quarter of such applicable 

percentage increase’’ (determined 

without regard to several other 

applicable statutory reductions). 

We also note that under section 

1886(o)(1)(C)(I), hospitals that are 

subject to the Hospital IQR program 

payment reduction for a fiscal year are 

excluded from the definition of 

‘‘hospital’’ for purposes of the Hospital 

VBP program for that fiscal year. We 

interpret this provision to mean that a 

hospital that does not meet the 

requirements of the Hospital IQR 

program with respect to a fiscal year 

and, as a result, will receive a reduction 

to the applicable percentage increase for 

that fiscal year, will not be subject to the 

reduction to its base operating DRG 

payment amount under the Hospital 

VBP program for that fiscal year or be 

eligible to receive a value-based 

incentive payment for that fiscal year. 

Comment: Some commenters 

requested that CMS delay 

implementation of the Hospital VBP 

program. A number of commenters 

urged CMS to adopt the implementation 

calendar discussed in 2007 Report to 

Congress, in which the first performance 

period would begin April 1, 2013. 

Response: We are statutorily required 

to begin making value-based incentive 

payments under the Hospital VBP 

program to hospitals for discharges 

occurring on or after October 1, 2012 

under section 1886(o)(1)(B) of the Act. 

Thus, the first performance period must 

begin before April 1, 2013, which is the 

time suggested by the commenters. As 

we stated in the proposed rule, in 

determining what performance period to 

propose to adopt, we were cognizant 

that hospitals submit data on the chart 

abstracted measures adopted for the 

Hospital IQR Program on a quarterly 

basis, and for that reason, we believed 

that the performance period should 

commence at the beginning of a quarter. 

We also recognized that we needed to 

balance the length of the performance 

period for collecting measure data with 

the need to undertake the rulemaking 

process in order to establish the 

performance period and provide the 

public with an opportunity to 

meaningfully comment on that 

proposal. With these considerations in 

mind, we proposed July 1, 2011 as the 

start of the performance period. 

Comment: Some commenters 

requested additional information on 

how we will educate consumers about 

the Hospital VBP program. 

Response: We understand how crucial 

it is to communicate clearly and 

consistently with all stakeholders in 

order to provide accurate and timely 

information about the Hospital VBP 

program. We believe that 

communicating in a way that promotes 

transparency and understanding of the 

Hospital VBP program will help reduce 

confusion and misunderstanding while 

enhancing the program’s success. 

To this end, we will be undertaking 

an extensive outreach and education 

campaign to ensure that all stakeholders 

understand how the Hospital VBP 

program works. In addition to providing 

information on www.cms.gov and 

www.medicare.gov, as well as through 

other existing mechanisms that we use 

to communicate with the public such as 

newsletters, e-mail blasts, listserv 

communications, special forums, and 

webinars, an important element of this 

campaign will be a new Hospital VBP 

page on http://www.cms.gov. In 

addition, as required under sections 

1886(o)(10)(A) and (B), hospital specific 

and aggregate information for the 

Hospital VBP program will be made 

available on the Hospital Compare Web 

site. 

Comment: One commenter stated that 

the Hospital VBP program statutory 

authority overlaps with other provisions 

of the Affordable Care Act and asked 

CMS to address the various incentives 

created by the Affordable Care Act, how 

it intends to differentiate among 

separate policies, and how it will ensure 

that incentives will not overlap or be 

duplicative. The commenter specifically 

cited efforts to increase productivity and 

efficiency through Accountable Care 

Organizations, market basket reductions 

for productivity, penalties related to 

hospital-acquired conditions, and 

payment reductions for readmissions. 

Response: While there may be specific 

areas of overlap addressed by the 

various statutory provisions and 

policies, the legislative requirements, 

programs, and policies cited by the 

commenter represent interrelated but 

distinct areas of efforts to improve 

quality in the Medicare program. We 

will continue to monitor the 

interactions between the policies cited 

by the commenter and will continue 

discussions with stakeholders on this 

topic. 

Comment: One commenter stated that 

all purchaser/payer value-based 

strategies and programs should be 

supported and encouraged through the 

Center for Medicare and Medicaid 

Innovation (CMMI). 

Response: Created by the Affordable 

Care Act and launched on November 16, 

2010, the CMMI will examine new ways 

of delivering health care and paying 

health care providers that can save 

money for Medicare and Medicaid 

while improving the quality of care. 

CMMI will consult a diverse group of 

stakeholders including hospitals, 

doctors, consumers, payers, States, 

employers, advocates, relevant federal 

agencies and others to obtain direct 

input and build partnerships for its 

upcoming work. We agree that CMMI is 

an important contributor in developing 

innovative strategies for value-based 

purchasing programs, and look forward 

to continuing to leverage the Center’s 

resources and expertise in future years 

of the Hospital VBP program. 

Comment: One commenter suggested 

that we establish a ‘‘Pay to Share’’ pool 

under which funding would be 

provided to enable higher-rated 

hospitals to instruct lower-rated 

hospitals on best practices. 

Response: While we appreciate the 

comment, we do not believe we have 

the statutory authority under the Act to 

implement such a program at this time. 

C. Performance Period 

Section 1886(o)(4) of the Act requires 

the Secretary to establish a performance 

period for a fiscal year that begins and 

ends prior to the beginning of such 

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fiscal year. In considering various 

performance periods that could apply 

for purposes of the fiscal year 2013 

payment adjustments, we recognized 

that hospitals submit data on the chartabstracted measures adopted for the 

Hospital IQR program on a quarterly 

basis, and for that reason, we proposed 

that the performance period commence 

at the beginning of a quarter. We also 

recognized that we must balance the 

length of the period for collecting 

measure data with the need to 

undertake the rulemaking process in 

order to propose a performance period 

and provide the public with an 

opportunity to meaningfully comment 

on that proposal. With these 

considerations in mind, we concluded 

that July 1, 2011 is the earliest date that 

the performance period could begin. 

Therefore, we proposed to use the 

fourth quarter of FY 2011 (July 1, 2011 

through September 30, 2011) and the 

first and second quarters of FY 2012 

(October 1, 2011 through March 31, 

2012) as the performance period for the 

clinical process of care and HCAHPS 

measures we proposed to initially adopt 

for the FY 2013 Hospital VBP program. 

Under the proposed approach, hospitals 

would be scored based on how well 

they perform on the clinical process of 

care and patient experience measures 

during this performance period. For the 

three mortality outcome measures 

currently specified for the Hospital IQR 

program for the FY 2011 payment 

determination (MORT–30–AMI, MORT– 

30–HF, MORT–30–PN) that we 

proposed to adopt for the FY 2014 

Hospital VBP program payment 

determination, we proposed to establish 

a performance period of July 1, 2011 to 

December 31, 2012. We also proposed to 

begin the performance period for the 8 

proposed HAC measures and 9 

proposed AHRQ Patient Safety Indicator 

(PSI) and Inpatient Quality Indicator 

(IQI) outcome measures 1 year after 

those measures were included on the 

Hospital Compare Web site. The 

proposed HAC and AHRQ measures 

were included on Hospital Compare on 

March 3, 2011. 

Comment: A number of commenters 

requested that we adopt a 12-month 

performance period for the proposed 

mortality measures rather than the 

proposed 18-month performance period. 

Some were concerned that seasonal 

fluctuations in mortality rates would 

impact the measure rates if an 18-month 

performance period were used instead 

of a 12-month period. 

Response: We proposed to use an 18- 

month performance period (July 1, 2011 

through December 31, 2012) for the 

three proposed mortality measures in 

order to be able to increase the 

reliability of the measure rates by 

including more cases. However, in 

response to the commenters’ concern 

about how the use of a period that is not 

equal to a year (or multiple years) could 

introduce seasonal fluctuations into the 

measure rates, we conducted additional 

reliability analyses on the hospital-level 

risk standardized mortality rates for the 

proposed 30-day mortality measures 

using 12 months, 18 months, and 24 

months, and have concluded that 12 

months of data provides moderate to 

high reliability for the Heart Failure and 

Pneumonia 30-day mortality measures, 

and is sufficiently reliable for the AMI 

30-day mortality measure. Therefore, we 

are finalizing a 12-month performance 

period of July 1, 2011 to June 30, 2012 

for the three proposed 30-day mortality 

measures for the FY 2014 Hospital VBP 

payment determination. 

Comment: Some commenters 

expressed concern about the proposed 

baseline period for the FY 2014 

mortality outcome measures. 

Commenters noted that the proposed 

18-month baseline period would lead to 

data overlap during each program year. 

Response: For the reasons noted 

above, we are finalizing a 12-month 

performance period of July 1, 2011 to 

June 30, 2012 for the three proposed 30- 

day mortality measures for the FY 2014 

Hospital VBP payment determination. 

In accordance with our proposal that 

hospital performance should be 

evaluated based on how well hospitals 

performed during the same quarters in 

a baseline period, we are finalizing a 12- 

month baseline period for the mortality 

outcomes measures’ performance 

standards calculations from July 1, 2009 

to June 30, 2010. We believe that this 

change will address commenters’ 

concerns about seasonal fluctuations in 

the data or overlap between program 

years. 

Comment: Some comments requested 

that we require 2–3 years’ worth of data 

for outcome measures to ensure that the 

measures do not result in any 

unintended consequences. 

Response: As noted above, our 

reliability analyses for the proposed 30- 

day mortality measures indicate that 

using 12-months of data yields 

sufficient reliability (moderate to high) 

for the HF, PN and AMI 30-day 

mortality measures. We believe this 

time frame will enable us to calculate 

the measures using reliable data. CMS 

will monitor this policy to ensure that 

negative consequences do not occur as 

a result of the shortened performance 

period and, if indicated, would consider 

proposing to lengthen the performance 

period for future program years. 

Comment: Many commenters 

generally supported our performance 

period proposals given the statutory 

deadlines. 

Response: We thank commenters for 

their support. 

Comment: Some commenters 

suggested that we use 12-month 

performance periods for all measures as 

soon as possible. 

Response: We anticipate proposing to 

use a full year as the performance 

period for all measures in the future. 

After considering the public 

comments, we are finalizing a 

performance period of July 1, 2011 

through March 31, 2012 that will apply 

to the clinical process of care and 

patient experience measures for the FY 

2013 Hospital VBP program. With 

respect to the FY 2014 Hospital VBP 

program, we are finalizing a 12-month 

performance period of July 1, 2011 

through June 30, 2012 that will apply to 

the three 30-day mortality measures 

(AMI, HF, PN) that we are finalizing 

below. We are also finalizing our 

proposal to adopt a performance period 

that begins 1 year after any HAC and/ 

or AHRQ measures that are specified for 

the Hospital IQR program are included 

on Hospital Compare, and in accordance 

with that finalized policy, the 

performance period for the 8 finalized 

HAC measures and 2 finalized AHRQ 

measures (discussed below) will begin 

on March 3, 2012. We intend to propose 

the end performance period date for the 

8 finalized HAC measures and 2 

finalized AHRQ measures in the CY 

2012 Outpatient Prospective Payment 

System proposed rule. 

D. Measures 

Section 1886(o)(2)(A) of the Act 

requires the Secretary to select for the 

Hospital VBP program measures, other 

than readmission measures, from the 

measures specified for the Hospital IQR 

program. Section 1886(o)(2)(B)(i) of the 

Act requires the Secretary to ensure that 

the selected measures for FY 2013 

include measures on the following 

specified conditions or topics: AMI; HF; 

PN; surgeries, as measured by the 

Surgical Care Improvement Project 

(SCIP); HAIs; and the HCAHPS survey. 

Section 1886(o)(2)(C)(i) of the Act 

provides that the Secretary may not 

select a measure with respect to a 

performance period for a fiscal year 

unless the measure has been specified 

under section 1886(b)(3)(B)(viii) of the 

Act and included on the Hospital 

Compare Web site for at least 1 year 

prior to the beginning of the 

performance period. Section 

1886(o)(2)(C)(ii) of the Act provides that 

a measure selected under section 

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1886(o)(2)(A) of the Act shall not apply 

to a hospital if the hospital does not 

furnish services appropriate to the 

measure. 

In the FY 2011 IPPS/RY 2011 

LTCHPPS Final Rule (75 FR 50188), we 

stated that in future expansions and 

updates to the Hospital IQR program 

measure set, we will be taking into 

consideration several important goals. 

These goals include: (1) Expanding the 

types of measures beyond process of 

care measures to include an increased 

number of outcome measures, efficiency 

measures, and patients’ experience of 

care measures; (2) expanding the scope 

of hospital services to which the 

measures apply; (3) considering the 

burden on hospitals in collecting chartabstracted data; (4) harmonizing the 

measures used in the Hospital IQR 

program with other CMS quality 

programs to align incentives and 

promote coordinated efforts to improve 

quality; (5) seeking to use measures 

based on alternative sources of data that 

do not require chart abstraction or that 

utilize data already being reported by 

many hospitals, such as data that 

hospitals report to clinical data 

registries, or all payer claims databases; 

and (6) weighing the relevance and 

utility of the measures compared to the 

burden on hospitals in submitting data 

under the Hospital IQR program. 

In addition, we stated in the proposed 

rule our belief that we must act with all 

speed and deliberateness to expand the 

pool of measures used in the Hospital 

VBP program. This goal is supported by 

at least two Federal reports 

documenting that tens of thousands of 

patients do not receive safe care in the 

nation’s hospitals. For this reason, we 

proposed to adopt measures for the 

Hospital VBP program relevant to 

improving care, particularly as these 

measures are directed toward improving 

patient safety, as quickly as possible. 

We believe that speed of 

implementation is a critical factor in the 

success and effectiveness of this 

program. 

The Hospital VBP program that we 

proposed to implement has been 

developed with the focused intention to 

motivate all subsection (d) hospitals to 

which the program applies to take 

immediate action to improve the quality 

of care they furnish to their patients. 

Because we view as urgent the necessity 

to improve the quality of care furnished 

by these hospitals, and because we 

believe that hospitalized patients in the 

United States currently face patient 

safety risks on a daily basis, we 

proposed to adopt an initial measure set 

for the Hospital VBP program. However, 

we also proposed to add additional 

measures to the Hospital VBP program 

in the future in such a way that their 

performance period would begin 

immediately after they are displayed on 

Hospital Compare for a period of time 

of at least one year, but without the 

necessity of notice and comment 

rulemaking. We proposed this because 

of the urgency to improve the quality of 

hospital care, and in order to minimize 

any delay to take substantive action in 

favor of patient safety. 

We stated that for the Hospital IQR 

Program, we give priority to quality 

measures that assess performance on: (a) 

Conditions that result in the greatest 

mortality and morbidity in the Medicare 

population; (b) conditions that are high 

volume and high cost for the Medicare 

program; and (c) conditions for which 

wide cost and treatment variations have 

been reported, despite established 

clinical guidelines. In addition, we 

stated that we seek to select measures 

that address the six quality aims of 

effective, safe, timely, efficient, patient 

centered, and equitable healthcare. 

Current and long term priority topics 

include: Prevention and population 

health; safety; chronic conditions; high 

cost and high volume conditions; 

elimination of health disparities; 

healthcare-associated infections and 

other adverse healthcare outcomes; 

improved care coordination; improved 

efficiency; improved patient and family 

experience of care; effective 

management of acute and chronic 

episodes of care; reduced unwarranted 

geographic variation in quality and 

efficiency; and adoption and use of 

interoperable health information 

technology. 

We also stated that these criteria, 

priorities, and goals are consistent with 

section 1886(b)(3)(B)(viii)(X) of the Act, 

as added by section 3001(a)(2)(D) of the 

Affordable Care Act, which requires the 

Secretary, to the extent practicable and 

with input from consensus 

organizations and other stakeholders, to 

take steps to ensure that the Hospital 

IQR program measures are coordinated 

and aligned with quality measures 

applicable to physicians and other 

providers of services and suppliers 

under Medicare. 

As discussed in the Hospital Inpatient 

VBP Program proposed rule (76 FR 

2459), to determine which measures to 

propose to initially adopt for the FY 

2013 Hospital VBP program, we 

examined whether any of the eligible 

Hospital IQR measures should be 

excluded from the Hospital VBP 

program measure set because hospital 

performance on them is ‘‘topped out,’’ 

meaning that all but a few hospitals 

have achieved a similarly high level of 

performance on them. We stated our 

belief that measuring hospital 

performance on topped-out measures 

would have no meaningful effect on a 

hospital’s total performance score. 

We also stated that scoring a toppedout measure for purposes of the Hospital 

VBP program would present a number 

of challenges. First, as discussed below, 

we proposed that the benchmark 

performance standard for all measures 

would be performance at the mean of 

the top decile of hospital performance 

during the baseline period. We noted in 

the Hospital Inpatient VBP Program 

proposed rule that, when applied to a 

topped-out measure, this proposed 

benchmark would be statistically 

indistinguishable from the highest 

attainable score for the measure and, in 

our view, could lead to unintended 

consequences as hospitals strive to meet 

the benchmark. Examples of unintended 

consequences could include, but would 

not be limited to, inappropriate delivery 

of a service to some patients (such as 

delivery of antibiotics to patients 

without a confirmed diagnosis of 

pneumonia), unduly conservative 

decisions on whether to exclude some 

patients from the measure denominator, 

and a focus on meeting the benchmark 

at the expense of actual improvements 

in quality or patient outcomes. Second, 

we stated that we have found that for 

topped-out measures, it is significantly 

more difficult to differentiate among 

hospitals performing above the median. 

Third, because a measure cannot be 

applied to a hospital unless the hospital 

furnishes services appropriate to the 

measure, we stated our belief that data 

reporting under the Hospital VBP 

program would not be the same for all 

hospitals. To the extent that a hospital 

could report a higher proportion of 

topped-out measures, for which its 

scores would likely be high, we stated 

that we believed such a hospital would 

be unfairly advantaged in the 

determination of its Total Performance 

Score. 

To determine whether an eligible 

Hospital IQR measure is topped out, we 

initially focused on the top distribution 

of hospital performance on each 

measure and noted if their 75th and 

90th percentiles were statistically 

indistinguishable. Based on our 

analysis, we identified 7 topped-out 

measures: AMI–1 Aspirin at Arrival; 

AMI–5 Beta Blocker at Discharge; AMI– 

3 ACEI or ARB at Discharge; AMI–4 

Smoking Cessation; HF–4 Smoking 

Cessation; PN–4 Smoking Cessation; 

and SCIP–Inf–6 Surgery Patients with 

Appropriate Hair Removal. We then 

observed that two of these measures 

identified as topped out (AMI–3 ACEI or 

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ARB at Discharge and HF–4 Smoking 

Cessation) had significantly lower mean 

scores than the others, which led us to 

question whether our analysis was too 

focused on the top ends of distributions 

and whether additional criteria that 

could account for the entire distribution 

might be more appropriate. To address 

this, we analyzed the truncated 

coefficient of variation (CV) for each of 

the measures. The CV is a common 

statistic that expresses the standard 

deviation as a percentage of the sample 

mean in a way that is independent of 

the units of observation. Applied to this 

analysis, a large CV would indicate a 

broad distribution of individual hospital 

scores, with large and presumably 

meaningful differences between 

hospitals in relative performance. A 

small CV would indicate that the 

distribution of individual hospital 

scores is clustered tightly around the 

mean value, suggesting that it is not 

useful to draw distinctions between 

individual hospital performance scores. 

We used a modified version of the CV, 

namely a truncated CV, for each 

measure, in which the 5 percent of 

hospitals with the lowest scores, and the 

5 percent of hospitals with highest 

scores were first truncated (set aside) 

before calculating the CV. This was 

done to avoid undue effects of the 

highest and lowest outlier hospitals, 

which if included, would tend to greatly 

widen the dispersion of the distribution 

and make the measure appear to be 

more reliable or discerning. For 

example, a measure for which most 

hospital scores are tightly clustered 

around the mean value (a small CV) 

might actually reflect a more robust 

dispersion if there were also a number 

of hospitals with extreme outlier values, 

which would greatly increase the 

perceived variance in the measure. 

Accordingly, the truncated CV was 

added as an additional criterion 

requiring that a topped-out measure also 

exhibit a truncated CV < 0.10. Using 

both the truncated CV and data showing 

whether hospital performance at the 

75th and 90th percentiles was 

statistically indistinguishable, we 

reexamined the available measures and 

determined that the same seven 

measures continue to meet our proposed 

definition for being topped-out. 

Our analysis of the impact of 

including the topped-out measures 

discussed above indicated that their use 

would mask true performance 

differences among hospitals and, as a 

result, would fail to advance our 

priorities for the Hospital VBP program. 

We therefore proposed to not include 

these 7 topped-out measures (AMI–1 

Aspirin at Arrival; AMI–5 Beta Blocker 

at Discharge; AMI–3 ACEI or ARB at 

Discharge; AMI–4 Smoking Cessation; 

HF–4 Smoking Cessation; PN–4 

Smoking Cessation; and SCIP–Inf–6 

Surgery Patients with Appropriate Hair 

Removal) in the list of measures we 

proposed to initially adopt for the FY 

2013 Hospital VBP program. We sought 

comment on that proposal. 

We also examined and sought 

comment on whether the following 

outcome measures adopted for the 

Hospital IQR program were appropriate 

for inclusion in the FY 2013 Hospital 

VBP program. These measures are as 

follows: (1) AHRQ PSIs, IQIs and 

composite measures; (2) AHRQ PSI and 

nursing sensitive care measure; and (3) 

AMI, HF, and PN mortality measures 

(Medicare patients). We stated our belief 

that these outcome measures provide 

important information relating to 

treatment outcomes and patient safety. 

We also stated in the proposed rule that 

we believe that adding these outcome 

measures would significantly improve 

the correlation between patient 

outcomes and Hospital VBP 

performance. However, because under 

section 1886(o)(2)(C)(i) of the Act, we 

may only select measures if they have 

been included on Hospital Compare for 

a least 1 year prior to the beginning of 

the performance period, we stated that 

the AHRQ PSIs, IQIs and composite 

measures, and the AHRQ Nursing 

Sensitive Care measure were not yet 

eligible for inclusion in the FY 2013 

Hospital VBP program. Although these 

measures are currently specified for the 

Hospital IQR program, we 

acknowledged that as of the time we 

issued the proposed rule, they did not 

meet the one year Hospital Compare 

inclusion requirement. 

We also considered whether the 

current publicly-reported 30-day 

mortality claims-based measures (Mort– 

30–AMI, Mort–30–HF, Mort–30–PN) 

should be included in the FY 2013 

Hospital VBP program. The mortality 

measures assess hospital-specific, riskstandardized, all-cause 30-day mortality 

rates for patients hospitalized with a 

principal diagnosis of heart attack, heart 

failure, and pneumonia. All-cause 

mortality is defined for purposes of 

these measures as death from any cause 

within 30 days after the index 

admission date, regardless of whether 

the patient died while still in the 

hospital or after discharge. The eligible 

clinical process of care measures we 

considered covered AMI, HF, PN, and 

surgeries as measured by the SCIP. 

Therefore, we believe that they meet the 

requirements of section 

1886(o)(2)(B)(i)(I)(aa)–(dd) of the Act, 

which requires us to include measures 

covering these conditions or procedures. 

Section 1886(o)(2)(B)(i)(ee) of the Act 

also requires the Secretary to select for 

purposes of the FY 2013 Hospital VBP 

program measures that cover HAIs ‘‘as 

measured by the prevention metrics and 

targets established in the HHS Action 

Plan to Prevent Healthcare-Associated 

Infections (or any successor plan) of the 

Department of Health and Human 

Services.’’ The SCIP measures discussed 

above were developed to support 

practices that have demonstrated an 

ability to significantly reduce surgical 

complications such as HAIs. 

Compliance with the selected SCIP 

infection measures is also included as a 

targeted metric in the HHS Action Plan 

to Prevent Healthcare-Associated 

Infections issued in 2009, available on 

the HHS Web site. As a result, we 

believe that the SCIP–Inf–1; SCIP–Inf–2; 

SCIP–Inf–3; and SCIP–Inf–4 measures 

we have adopted for the Hospital IQR 

program meet the requirement in 

section 1886(o)(2)(B)(i)(I)(ee); we 

proposed to adopt them for the FY 2013 

Hospital VBP program and to categorize 

them under the HAI condition topic 

instead of under the SCIP condition 

topic. 

Under section 1886(o)(2)(B)(i)(II), the 

Secretary must select measures for the 

FY 2013 Hospital VBP program related 

to the HCAHPS survey. CMS partnered 

with AHRQ to develop HCAHPS. The 

HCAHPS survey is the first national, 

standardized, publicly reported survey 

of patients’ experience of hospital care, 

and we proposed to adopt it for the FY 

2013 Hospital VBP program. HCAHPS, 

also known as the CAHPS® Hospital 

Survey, is a survey instrument and data 

collection methodology for measuring 

patients’ perceptions of their hospital 

experience. 

The HCAHPS survey asks discharged 

patients 27 questions about their recent 

hospital stay that are used to measure 

the experience of patients across 10 

dimensions in the Hospital IQR 

program. The survey contains 18 core 

questions about critical aspects of 

patients’ hospital experiences 

(communication with nurses and 

doctors, the responsiveness of hospital 

staff, the cleanliness and quietness of 

the hospital environment, pain 

management, communication about 

medicines, discharge information, 

overall rating of the hospital, and 

whether they would recommend the 

hospital). The survey also includes four 

items to direct patients to relevant 

questions if a patient did not have a 

particular experience covered by the 

survey, such as taking new medications 

or needing medicine for pain. Three 

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items in the survey are used to adjust for 

the mix of patients across hospitals, and 

two items related to race and ethnicity 

support congressionally-mandated 

reports on disparities in health care. 

The HCAHPS survey is administered 

to a random sample of adult patients 

across medical conditions between 48 

hours and 6 weeks after discharge; the 

survey is not restricted to Medicare 

beneficiaries. Hospitals must survey 

patients throughout each month of the 

year. The survey is available in official 

English, Spanish, Chinese, Russian and 

Vietnamese versions. The survey and its 

protocols for sampling, data collection 

and coding, and file submission can be 

found in the HCAHPS Quality 

Assurance Guidelines, Version 5.0, 

which is available on the official 

HCAHPS Web site, http:// 

www.hcahpsonline.org. 

AHRQ carried out a rigorous, 

scientific process to develop and test the 

HCAHPS instrument. This process 

entailed multiple steps, including: A 

public call for measures; literature 

review; cognitive interviews; consumer 

focus groups; stakeholder input; a threestate pilot test; small-scale field tests; 

and soliciting public comments via 

several Federal Register notices. In May 

2005, the HCAHPS survey was endorsed 

by the NQF, and in December 2005, the 

Federal Office of Management and 

Budget gave its final approval for the 

national implementation of HCAHPS for 

public reporting purposes. CMS adopted 

the entire HCAHPS survey as a measure 

in the Hospital IQR program in October 

2006, and the first public reporting of 

HCAHPS results occurred in March 

2008. The survey, its methodology, and 

the results it produces are in the public 

domain. 

As previously discussed, in 

determining what clinical process of 

care measures to propose, we analyzed 

the impact of including topped-out 

measures and determined that their use 

would mask true performance 

differences among hospitals, thus failing 

to advance our quality priorities. As a 

result, we proposed to exclude 7 

topped-out measures (AMI–1 Aspirin at 

Arrival; AMI–5 Beta Blocker at 

Discharge; AMI–3 ACEI or ARB at 

Discharge; AMI–4 Smoking Cessation; 

HF–4 Smoking Cessation; PN–4 

Smoking Cessation; and SCIP–Inf–6 

Surgery Patients with Appropriate Hair 

Removal) from the list of measures we 

proposed to initially adopt for the FY 

2013 Hospital VBP program. 

We did not propose to adopt the 

current Hospital IQR structural 

measures because we believe that these 

measures require further development if 

they are to be used for the Hospital VBP 

program. Therefore, we solicited public 

comment on the possible utility of 

adopting structural measures for the 

Hospital VBP program measure set and 

how these measures might contribute to 

the improvement of patient safety and 

quality of care. 

Finally, we proposed to exclude the 

PN–5c measure from the Hospital VBP 

program. We do not believe that this 

measure is appropriate for inclusion 

because it could lead to inappropriate 

antibiotic use. We proposed retiring this 

measure, as well as several other 

measures that we will not adopt for the 

Hospital VBP program, from the 

Hospital IQR program in the FY 2012 

IPPS/LTCH PPS proposed rule 

scheduled for publication on May 5, 

2011. 

We proposed to initially select 17 

clinical process of care measures and 

the HCAHPS measure for inclusion in 

the FY 2013 Hospital VBP program. The 

proposed list of initial measures is 

provided in Table 1. 

TABLE 1—PROPOSED MEASURES FOR FY 2013 HOSPITAL VBP PROGRAM

Measure ID Measure description 

Clinical Process of Care Measures 

Acute myocardial infarction 

AMI–2 ........................... Aspirin Prescribed at Discharge. 

AMI–7a ......................... Fibrinolytic Therapy Received Within 30 Minutes of Hospital Arrival. 

AMI–8a ......................... Primary PCI Received Within 90 Minutes of Hospital Arrival. 

Heart Failure 

HF–1 ............................. Discharge Instructions. 

HF–2 ............................. Evaluation of LVS Function. 

HF–3 ............................. ACEI or ARB for LVSD. 

Pneumonia 

PN–2 ............................ Pneumococcal Vaccination. 

PN–3b .......................... Blood Cultures Performed in the Emergency Department Prior to Initial Antibiotic Received in Hospital. 

PN–6 ............................ Initial Antibiotic Selection for CAP in Immunocompetent Patient. 

PN–7 ............................ Influenza Vaccination. 

Healthcare-associated infections 

SCIP–Inf–1 ................... Prophylactic Antibiotic Received Within One Hour Prior to Surgical Incision. 

SCIP–Inf–2 ................... Prophylactic Antibiotic Selection for Surgical Patients. 

SCIP–Inf–3 ................... Prophylactic Antibiotics Discontinued Within 24 Hours After Surgery End Time. 

SCIP–Inf–4 ................... Cardiac Surgery Patients with Controlled 6AM Postoperative Serum Glucose. 

Surgeries 

SCIP–Card–2 ............... Surgery Patients on a Beta Blocker Prior to Arrival That Received a Beta Blocker During the Perioperative Period. 

SCIP–VTE–1 ................ Surgery Patients with Recommended Venous Thromboembolism Prophylaxis Ordered. 

SCIP–VTE–2 ................ Surgery Patients Who Received Appropriate Venous Thromboembolism Prophylaxis Within 24 Hours Prior to Surgery 

to 24 Hours After Surgery. 

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Federal Register / Vol. 76, No. 88 / Friday, May 6, 2011 / Rules and Regulations 26499 

1Proposed dimensions of the HCAHPS survey for 

use in the FY 2013 Hospital VBP program are: 

Communication with Nurses, Communication with 

Doctors, Responsiveness of Hospital Staff, Pain 

Management, Communication about Medicines, 

Cleanliness and Quietness of Hospital Environment, 

Discharge Information and Overall Rating of 

Hospital. 

TABLE 1—PROPOSED MEASURES FOR FY 2013 HOSPITAL VBP PROGRAM—Continued 

Measure ID Measure description 

Patient Experience of Care Measures 

HCAHPS ...................... Hospital Consumer Assessment of Healthcare Providers and Systems Survey.1

In the Hospital Inpatient VBP Program 

proposed rule, we solicited public 

comments on our intention to add 

measures to the Hospital VBP Program 

as rapidly as possible for their 

availability in future performance 

periods. To that end, we proposed to 

implement a subregulatory process to 

expedite the timeline for adding 

measures to the Hospital VBP program 

beginning with the FY 2013 program. 

Under this proposed process, we could 

add any measure to the Hospital VBP 

program if that measure is adopted 

under the Hospital IQR program and has 

been included on Hospital Compare for 

at least 1 year. We proposed that the 

performance period for all of these 

measures would start exactly 1 year 

after the date these measures were 

publicly posted on Hospital Compare, 

consistent with section 1886(o)(2)(C)(i). 

Under this proposed subregulatory 

process for adopting new Hospital VBP 

program measures, we would solicit 

comments from the public on the 

appropriateness of adopting 1 or more 

Hospital IQR measures for the Hospital 

VBP program. We would also assess the 

reported Hospital IQR measure rates 

using the criteria we used to select the 

measures for the initial FY 2013 

Hospital VBP measure set and would 

notify the public regarding our findings. 

We stated that we would propose to set 

performance period end dates for any 

measure we selected for future Hospital 

VBP program years in rulemaking. 

We also proposed to implement a 

subregulatory process to retire Hospital 

VBP measures. Under the proposed 

process, we would post our intention to 

retire measures on the CMS Web site at 

least 60 days prior to the date that we 

would retire the measure. Also, as we 

do with respect to Hospital IQR 

measures that we believe pose 

immediate patient safety concerns if 

reporting on them is continued, we 

proposed that we would notify hospitals 

and the public of the retirement of the 

measure and the reasons for its 

retirement through the usual hospital 

and QIO communication channels used 

for the Hospital IQR program, which 

include e-mail blasts to hospitals and 

the dissemination of Standard Data 

Processing System (SDPS) memoranda 

to QIOs, as well as post the information 

on the QualityNet Web site. We would 

then confirm the retirement of the 

measure from the Hospital VBP program 

measure set in a rulemaking vehicle. We 

made this proposal because it would 

allow us to ensure that the Hospital VBP 

program measure set focuses on the 

most current quality improvement and 

patient safety priorities. We solicited 

public comment on our proposals and 

other methods that allow for the 

addition of measures to the Hospital 

VBP program as rapidly as possible in 

order to improve quality and safety for 

patients. 

In addition, we sought public 

comment on efficiency measures 

required for inclusion in the Hospital 

VBP program for value-based incentive 

payments made with respect to 

discharges occurring during FY 2014 or 

a subsequent fiscal year. Specifically, 

we requested comment on what services 

should be included and what should be 

excluded in a ‘‘Medicare spending per 

beneficiary’’ calculation, and what, if 

any, type(s) of hospital segmentation or 

adjustment should be considered in 

such a measure. We also solicited 

comment on approaches for measuring 

internal hospital efficiency. We took 

these comments into account in the 

development of the Medicare spending 

per beneficiary measure that we 

proposed to adopt in the FY 2012 IPPS/ 

LTCH PPS proposed rule scheduled for 

publication on May 5, 2011, available at 

http://www.ofr.gov/inspection.aspx?

AspxAutoDetectCookieSupport=1). 

The public comments we received are 

set forth below. 

Comment: Some commenters agreed 

with our proposed measure set and our 

proposal to exclude PN–5c and 

structural measures. 

Response: We thank the commenters 

for their support. We believe that the 

structural measures we have adopted for 

the Hospital IQR program require 

further development before we can 

consider adopting them for the Hospital 

VBP program, including the 

development of an appropriate scoring 

methodology. We also believe that the 

inclusion of PN–5c measure could lead 

to inappropriate antibiotic use. We also 

note that we have proposed to retire the 

PN–5c measure from the Hospital IQR 

program in the FY 2012 IPPS/LTCH PPS 

proposed rule scheduled for publication 

on May 5, 2011 for the same reason that 

we proposed to not include it in the 

Hospital VBP program measure set. 

Comments: Some commenters noted 

that CMS is retiring PN–2 

(Pneumococcal Vaccination) and PN–7 

(Influenza Vaccination) from the 

Hospital IQR Program and asked why 

these measures were included in the 

proposed rule. These commenters 

wanted to know how the retirement of 

these measures from the Hospital IQR 

Program would affect how these 

measures were collected and scored 

under the Hospital VBP program. Other 

commenters were concerned about 

including pneumonia vaccination 

measures in the Hospital VBP program 

measure set because they stated that 

there may be clinical reasons why a 

physician does not want a patient to 

receive the vaccination. The 

commenters suggested adding an 

‘‘allowable value’’ or allowable code to 

the measure specifications to avoid 

penalizing the hospital for that 

situation. 

Response: Commenters are correct in 

that we finalized our retirement of PN– 

2 (Pneumococcal Vaccination) and PN– 

7 (Influenza Vaccination) beginning 

with the FY 2014 Hospital IQR program 

payment determination (75 FR 50211), 

and hospitals will no longer be required 

to submit data on these measures 

beginning with January 1, 2012 

discharges (75 FR 50221). Because these 

measures will cease to continue being 

Hospital IQR program measures midway 

through the performance period we are 

finalizing for the FY 2013 Hospital VBP 

program, we do not believe that we can 

include them in the FY 2013 Hospital 

VBP measure set. 

Comment: One commenter requested 

clarification on whether we proposed to 

include SCIP–Inf–6 in the FY 2013 

Hospital VBP measure set. 

Response: Table 2 of the Hospital 

Inpatient VBP proposed rule (76 FR 

2462) listed our proposed measures for 

FY 2013, and Table 2 of this Final Rule 

lists the finalized measures. As we 

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26500 Federal Register / Vol. 76, No. 88 / Friday, May 6, 2011 / Rules and Regulations 

explained in the Hospital Inpatient VBP 

proposed rule (76 FR 2461), we 

proposed not to adopt SCIP–Inf–6 for 

the Hospital VBP program because we 

concluded that the measure had 

achieved a ‘‘topped out’’ status. 

Comment: A commenter suggested 

that the proposed clinical process of 

care measures are flawed, suggesting 

that hospitals might choose not to 

submit records that could adversely 

impact their total performance score 

when submitting quality data. 

Response: All Hospital VBP program 

measures must be selected from the 

measures specified under the Hospital 

IQR program, and the data that we will 

use to calculate a hospital’s total 

performance score for the clinical 

process of care measures will be the 

same data that the hospital submitted on 

those measures under the Hospital IQR 

program. 

We allow hospitals to submit Hospital 

IQR clinical process of care measure 

data either by abstracting the necessary 

data elements from all qualifying cases 

or by submitting data elements taken 

from a sample of those cases. If the 

hospital chooses to submit a sample, the 

sample must meet the population and 

sample requirements outlined in the 

Specifications Manual. This 

Specifications Manual is posted on the 

CMS QualityNet Web site at https://

www.QualityNet.org/. The purpose of 

these requirements is to ensure that the 

sample is statistically valid. We also 

note that we have adopted a process for 

validating clinical process of care 

measure data submitted under the 

Hospital IQR program, and we stated in 

the Hospital Inpatient VBP program 

proposed rule our belief that this 

process will also assure us that the same 

data is accurate for purposes of 

assessing hospital performance under 

the Hospital VBP program. 

Comment: Several commenters asked 

if CMS will monitor ‘‘topped-out’’ 

measures to ensure that they remain 

‘‘topped-out’’. 

Response: At this time, we do not 

have a mechanism in place to monitor 

whether measures we do not adopt for 

the Hospital VBP program on the basis 

that they are topped-out remain toppedout. We will consider such monitoring 

in the future. 

Comment: Some commenters 

suggested that CMS include in the 

Hospital VBP program measures that 

meet the definition of ‘‘topped out’’ 

because some hospitals will still be able 

to demonstrate improvement on them. 

Response: As detailed in the Hospital 

Inpatient VBP proposed rule (76 FR 

2460), we proposed to define a ‘‘topped 

out’’ measure as a measure for which 

hospital performance at the 75th and 

90th percentiles are statistically 

indistinguishable, and the truncated CV 

was set at <0.10. We believe that if a 

measure is ‘‘topped out,’’ there is no 

room for improvement for the vast 

majority of hospitals, and that 

measuring hospital performance on that 

measure will not have a meaningful 

effect on a hospital’s Total Performance 

Score. For that reason, we proposed to 

exclude 7 topped-out measures from the 

FY 2013 Hospital VBP measure set. 

Comment: We received several 

comments asking us to re-run our 

analysis of ‘‘topped-out’’ measures using 

more recent data to determine if any 

other measures also met that status. 

Response: At the time we issued the 

Hospital Inpatient VBP proposed rule, 

the most recent data that was available 

to assess whether the proposed 

measures met our proposed definition of 

‘‘topped out’’ was data from July 1, 2008 

through March 31, 2009 which was the 

most recent validated data available and 

publicly displayed under the Hospital 

IQR program. However, since that time, 

data from the period that we proposed 

to set as the baseline period for the FY 

2013 proposed measures has been 

validated (that is, data from the period 

July 1, 2009 to March 31, 2010). 

Therefore, in response to these 

comments, we analyzed all of the 

proposed FY 2013 measures to see if 

any of them met our proposed definition 

of ‘‘topped out’’ using this more recent 

data. We determined that three 

additional measures: AMI–2: Aspirin 

Prescribed at Discharge; HF–2: 

Evaluation of LVS Function; and HF–3: 

ACEI or ARB for LVSD meet our 

proposed definition of ‘‘topped-out’’ 

based on this more recent data. Because 

one of our goals for the Hospital VBP 

program is to ensure that hospital 

performance can be meaningfully 

measured and distinguished, we believe 

that it is appropriate to exclude these 

three additional measures from the FY 

2013 Hospital VBP measure set based on 

this more recent analysis. 

Comment: Some commenters 

suggested that we consider SCIP–Inf–2 

and PN–3b for ‘‘topped out’’ status. 

Other commenters stated, generally, that 

other measures should be considered for 

‘‘topped-out’’ status, particularly those 

on which the difference between 

median performance and top 

performance is small. One commenter 

stated that it had calculated 

achievement thresholds and benchmark 

scores for the proposed measures using 

data available on Hospital Compare that 

most closely matched data from CMS’ 

proposed baseline period. The 

commenter stated that its analysis 

showed that with respect to several 

measures, hospital scores were clustered 

at a high level of achievement, and 

suggested that such measures should 

also be considered as ‘‘topped out.’’ 

Response: As discussed above, we 

examined all of the proposed measures 

using data from the baseline period that 

we are finalizing in this final rule, and 

determined that three additional 

measures (AMI–2, HF–2, HF–3) are 

topped-out based on this data. As for 

other measures, including SCIP–Inf–2 

and PN–3b, for which performance is 

high but which do not meet the 

proposed definition of ‘‘topped-out’’ 

based on the more recent data, the data 

show that hospital performance on these 

measures can still be meaningfully 

distinguished. For this reason, we 

believe that it is appropriate to include 

these measures in the FY 2013 Hospital 

VBP measure set. 

Comment: One commenter suggested 

that we not include the HF–1 measure 

(Discharge Instructions) from the 

Hospital VBP program because the 

measure does not measure clinical care 

provided, but instead measures 

administrative processes. Another 

commenter suggested that we exclude 

AMI–2, HF–1, HF–2 and SCIP–VTE–2 

from the Hospital VBP program because 

these measures do not represent a 

significant improvement in the clinical 

practices required to deliver high value 

health care. 

Response: We disagree. The HF–1 

measure, Discharge Instructions, 

assesses several critical elements 

important to a discharged patient: 

Activity level, diet, discharge 

medications, follow-up appointment, 

weight monitoring, and what to do if 

symptoms worsen. These elements are 

critical to ensuring that patients 

continue to receive appropriate, highquality health care services after their 

discharge from the hospital. We believe 

that SCIP–VTE–2 is important for the 

Hospital VBP program because the 

optimal start of pharmacologic 

prophylaxis in surgical patients can 

significantly decrease the mortality and 

morbidity associated with blood clot 

formation. 

As described above, we are not 

finalizing our proposal to include AMI– 

2 and HF–2 in the FY 2013 Hospital 

VBP measure set because based on an 

analysis involving data from the 

proposed baseline period, these 

measures meet our proposed definition 

of ‘‘topped-out.’’ 

Comment: One commenter suggested 

that we review the technical 

specifications for AMI–7a and AMI–8a 

to ensure that intervention timing is 

based on diagnosis by EKG. 

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Federal Register / Vol. 76, No. 88 / Friday, May 6, 2011 / Rules and Regulations 26501 

Response: The intervention timing for 

both AMI–7a and AMI–8a runs from the 

time of arrival, not the time of diagnosis 

by EKG. Specifically, the specifications 

for the AMI–7a measure state that AMI 

patients with ST-segment elevation or 

Left bundle branch block (LBBB) on the 

EKG closest to arrival time receiving 

fibrinolytic therapy during the hospital 

stay have a time from hospital arrival to 

fibrinolysis of 30 minutes or less. 

Similarly, the specifications for the 

AMI–8a measure state that AMI patients 

with ST-segment elevation or LBBB on 

the ECG closest to arrival time receiving 

primary PCI during the hospital stay 

have a time from hospital arrival to PCI 

of 90 minutes or less. These 

specifications can be found on the 

QualityNet Web site (http:// 

www.qualitynet.org). We note that these 

specifications are based on clinical 

guidelines adopted by the American 

College of Cardiology (ACC) clinical 

guidelines for ST elevation MI. 

Comment: Some commenters 

expressed support for our exclusion of 

structural measures. Others suggested 

that we consider using specific 

structural measures in the future such as 

participation in a systematic database or 

registry. 

Response: We believe these measures 

require further analysis of how they 

could be scored, and how they would 

impact a hospital’s total performance 

score before they can be adopted for the 

Hospital VBP program. We intend to 

consider these issues as the Hospital 

VBP program evolves. 

Comment: One commenter suggested 

including the three smoking cessation 

measures adopted for the Hospital IQR 

program (AMI–4, HF–4, PN–4), despite 

their ‘‘topped out’’ status, because of the 

risk that hospitals will not focus on 

these measures and overall performance 

could begin to decline. 

Response: These measures meet our 

proposed definition of topped-out 

status. As we have stated, we do not 

believe that measuring performance on 

a topped-out measure produces a 

meaningful differentiation of hospital 

performance. We also note that we have 

proposed to retire these measures from 

the Hospital IQR measure set in the FY 

2012 IPPS/LTCH PPS proposed rule 

scheduled for publication on May 5, 

2011. Therefore, we are excluding these 

measures from the Hospital VBP 

measure set. We will consider the 

feasibility of proposing to adopt a global 

smoking cessation measure for the 

Hospital VBP program. 

Comment: A number of commenters 

supported our proposal to include PN– 

6 and PN–3b in the Hospital VBP 

measure set, stating that these measures 

encourage use of new technologies after 

patient diagnosis. 

Response: We appreciate the support, 

and we believe that the inclusion of 

these measures will help promote the 

provision of quality care by promoting 

appropriate laboratory testing (taking of 

blood cultures to facilitate selection of 

the most effective antibiotic for the 

patient) and actual selection of 

appropriate antibiotics based on patient 

data. 

Comment: Some commenters 

supported our proposal to use SCIP 

measures to capture HAIs. 

Response: We thank commenters for 

their support. As discussed in the 

Hospital Inpatient VBP Program 

proposed rule (76 FR 2461), the SCIP 

measures were developed to support 

practices that have demonstrated an 

ability to significantly reduce surgical 

complications such as HAIs. 

Compliance with the proposed SCIP 

infection measures is also included as a 

targeted metric in the HHS Action Plan 

to Prevent Healthcare-Associated 

Infections issued in 2009, a copy of 

which is available on the HHS Web site. 

Comment: One commenter suggested 

that measures should assess services 

regularly provided by rural hospitals 

and hospitals that do not perform 

surgeries. 

Response: The measures selected for 

the Hospital VBP program address 

services provided by subsection (d) 

hospitals, including rural hospitals and 

hospitals that do not perform surgeries. 

For example, the HCAHPS dimensions 

measure patients’ experiences of care at 

hospitals; none of the dimensions are 

surgery-specific. Additionally, 

pneumonia and other conditions such 

as heart failure and acute myocardial 

infarction are treated by rural hospitals. 

Comment: A number of commenters 

called on CMS to use the Joint 

Commission’s accountability criteria for 

measure selection, which include strong 

scientific evidence of improved 

outcomes, proximity to impacted 

outcomes, accurate assessment of 

evidence-based processes and minimal 

adverse effects. 

Response: In August 2010, The Joint 

Commission published an article in the 

New England Journal of Medicine 

discussing the criteria that should be 

used to define a measure that is used for 

accountability and public reporting 

purposes versus criteria that is used to 

define measures used strictly for 

performance improvement. The Joint 

Commission identified four criteria a 

measure must have in order to have the 

greatest positive impact on patient 

outcomes. These criteria include: 

Research, Proximity, Accuracy, and 

Adverse Effects. Further information on 

the Joint Commission’s accountability 

criteria may be found at http://

www.jointcommission.org/about/Join

tCommissionFaqs.aspx?CategoryId=31. 

We generally agree with the Joint 

Commission’s list of criteria that would 

apply to measures used for 

accountability purposes and considered 

this criteria in determining whether 

certain measures may warrant 

retirement from the Hospital IQR 

program. However, we do not agree with 

their exclusion of HF–1 from the list of 

accountability measures as we believe 

HF–1 assesses a hospital’s compliance 

with providing critical information to 

patients at the time of their discharge, 

including instructions regarding activity 

level, diet, discharge medications, 

follow-up appointment, weight 

monitoring, and what to do if symptoms 

worsen. As stated above, we believe that 

this information is critical for hospitals 

to provide in order to facilitate 

appropriate self-care and provider 

follow up care after a patient is 

discharged from the hospital. 

Comment: A number of commenters 

recommended that we analyze measures 

against pre-established, agreed-upon 

criteria to ensure that they are relevant 

to value-based purchasing and will 

improve health outcomes for patients. 

Some commenters suggested that our 

goal should be to find the most 

appropriate ways to tie measures to 

patient benefits. Some commenters 

argued that current measures which we 

have proposed to adopt for the Hospital 

VBP program do not sufficiently impact 

health outcomes. Other commenters 

wondered if any measures are ‘‘paperonly’’ and do not reflect the actual 

provision of quality medical care. 

Response: To ensure that measures 

assess the quality of care provided to 

Medicare beneficiaries, we agree that 

measures should be scrutinized by 

experts and evaluated against objective 

criteria. We believe that these elements 

have been incorporated into our 

measure selection process in a variety of 

ways, including through endorsement 

by consensus-developing entities and 

through notice and public comment 

rulemaking. For example, most of the 

measures that we have selected for the 

Hospital IQR program, (which make 

them candidates for the Hospital VBP 

program) are endorsed by the NQF, the 

entity with a contract with the Secretary 

under Section 1890(a) of the Act. To the 

extent that we have determined that 

measurement is needed in a specified 

area for which there are no NQF 

endorsed measures, we give due 

consideration to measures endorsed or 

adopted by different consensus 

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26502 Federal Register / Vol. 76, No. 88 / Friday, May 6, 2011 / Rules and Regulations 

2See ‘‘Hospital Survey Shows Improvements in 

Patient Experience.’’ M.N. Elliott, W.G. Lehrman, 

E.H. Goldstein, L.A. Giordano, M.K. Beckett, C.W. 

Cohea and P.D. Cleary. Health Affairs, 29 (11): 

2061–2067. 2010. 

organizations before specifying the 

measure. We also consider whether the 

measures meet the goals of the National 

Priorities Partnership, enable the 

Department to further its strategic goals 

and initiatives, and whether they are 

adopted by the HQA. This has resulted 

in our adoption of meaningful measures 

that assess the quality of care furnished 

by hospitals. 

Comment: A few commenters were 

concerned that the HCAHPS scores 

publicly reported on Hospital Compare 

differ by bed size, type of hospital and 

geography and thought the HCAHPS 

scores should be adjusted for these 

factors. These commenters thought 

HCAHPS needs to be vetted more to 

understand these differences to ensure 

that HCAHPS is a reliable measure. 

Response: Although we recognize that 

HCAHPS results differ by bed size and 

other hospital characteristics, we do not 

interpret these differing results to mean 

that the survey should be risk adjusted. 

HCAHPS results also differ among 

hospitals with the same characteristics, 

which we view as evidence that the 

results account for differences in the 

quality of care received by patients. In 

general, risk adjustment models control 

for exogenous factors that are beyond 

the control of a hospital, not for hospital 

characteristics that are endogenous, or 

within their control. 

We also believe that the HCAHPS 

survey has been thoroughly vetted, 

including through reviews in peerreviewed journals and through notice 

and comment rulemaking when we 

adopted it for the Hospital IQR program, 

and it is endorsed by the NQF. 

Comment: One commenter questioned 

whether top-box responses in the 

HCAHPS survey are appropriate for 

urban, safety net hospitals that serve 

culturally diverse patients and may not 

be able to ‘‘always’’ communicate well 

with their patients. 

Response: The ‘‘top-box’’ response to 

HCAHPS survey items is the most 

positive response that a patient can 

provide (often presented in the survey 

as ‘‘Always’’). Medicare does not have an 

indicator for a ‘‘safety net hospital.’’ 

However, we have examined the 

HCAHPS results submitted by urban 

hospitals, which we believe can serve as 

a rough proxy for a ‘‘safety net hospital.’’ 

Urban hospitals, particularly large ones, 

have historically not performed as well 

on HCAHPS as rural hospitals. 

However, our internal studies of 

HCAHPS results show that hospitals in 

the following urban areas scored in the 

top 25 percent of hospitals overall: New 

York City, Boston, Baltimore, Atlanta, 

Chicago, Los Angeles, San Francisco, 

San Diego, Phoenix, Dallas, Houston, 

and San Antonio. We believe that these 

results suggest that urban hospitals are 

not being disadvantaged by the 

HCAHPS measurement. 

Comment: Several commenters 

questioned the reliability of HCAHPS 

data. Some suggested that we consider 

possible negative consequences 

associated with its use. 

Response: Since its national 

implementation in October 2006, when 

hospitals began to administer the 

HCAHPS survey, our analyses of 

HCAHPS results has shown that this 

standardized, publicly reported survey 

of patients’ experience of hospital care 

is satisfactorily reliable at 100 

completed surveys using statistical 

measures of reliability that calculate the 

proportion of the variance in reported 

hospital scores that is due to true 

variation between hospitals, rather than 

within hospital variation that reflects 

limited sample size. 

We also note that since public 

reporting of HCAHPS scores began 

under the Hospital IQR program[?] in 

March 2008 there have been small but 

statistically significant improvements in 

9 of 10 HCAHPS dimensions.2 In 

addition, we are aware of abundant 

anecdotal evidence that hospitals are 

engaging in quality improvement efforts 

aimed at improving the quality of the 

inpatient experience. We believe that 

HCAHPS, in part, motivates these efforts 

and expect that hospitals will continue 

to improve their patients’ experience of 

care as the incentives for doing so 

become more salient. 

We believe that setting the minimum 

number of measures and cases as low as 

is reasonable is an essential component 

of implementing the Hospital VBP 

program and will help to minimize the 

number of hospitals unable to 

participate due to not having the 

minimum number of cases for a measure 

or the minimum number of measures. 

Therefore, we also proposed that, for 

inclusion in the Hospital VBP program 

for FY 2013, hospitals must report a 

minimum of 100 HCAHPS surveys 

during the performance period. Our 

statistical analyses show that HCAHPS 

is a reliable measure of patient 

experience and, therefore, we see no 

negative consequences with its use. 

Comment: One commenter provided 

suggestions for additional items 

regarding palliative care that could be 

added to the HCAHPS instrument; 

another commenter suggested that CMS 

add questions about patient activation 

(patients’ knowledge, skills, and 

confidence for self-management), care 

coordination, shared decision-making 

and support for patient selfmanagement. 

Response: As part of our ongoing 

maintenance activities for the HCAHPS 

survey, which include assessing 

whether it needs to be updated, we will 

consider the feasibility of adding the 

suggested survey items. 

Comment: One commenter wanted to 

exclude the doctor communication 

dimension from the HCAHPS measure, 

reasoning that hospital payment under 

the IPPS should not be based in part 

upon physician behavior that it cannot 

control. 

Response: We are including the 

doctor communication dimension as an 

HCAHPS dimension because it is a key 

aspect of care from the perspective of 

consumers. In addition, many hospitals 

employ their own doctors (hospitalists) 

who are directly under the hospitals’ 

control. 

Comment: Some commenters opposed 

combining the cleanliness and quiet 

items because they are conceptually 

different and the cleanliness item is 

important for patient safety. 

Response: We thank commenters for 

their input. Although these two items 

were originally proposed to be one 

composite in the survey, we separated 

them into two individual measures for 

public reporting prior to the 2006 

national implementation because it 

made more sense for consumers to see 

‘‘clean’’ and ‘‘quiet’’ as distinct 

environmental aspects of hospitals. The 

‘‘clean’’ and ‘‘quiet’’ HCAHPS measures 

will continue to be publicly reported 

separately on Hospital Compare for the 

Hospital Inpatient Quality Reporting 

program. 

For purposes of the Hospital VBP 

program, these two items were 

combined so as not to put more weight 

on the environmental items compared to 

the rest of the HCAHPS items, which are 

composite measures (with the exception 

of Overall Rating). If the environmental 

items were separated, quietness of the 

hospital environment, for example, 

would receive as much weight as nurse 

communication, which includes 3 items 

from the HCAHPS survey. The 

combined ‘‘cleanliness and quietness’’ 

HCAHPS dimension will be publicly 

reported on Hospital Compare as part of 

the Hospital VBP program. 

Comment: Some commenters were 

concerned that the risk adjustment 

models for the HCAHPS survey are not 

adequate and do not control for the 

severity of a patient’s condition, socioeconomic status, and geographic 

differences 

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Federal Register / Vol. 76, No. 88 / Friday, May 6, 2011 / Rules and Regulations 26503 

3See ‘‘Adjusting Performance Measures To Ensure 

Equitable Plan Comparisons.’’ Zaslavsky, A.M., L.B. 

Zaborski, D.J.A. Shaul, M.J. Cioffi, and P.D. Cleary. 

Health Care Financing Review’’ 22(3): 109–26. 2001. 

Response: HCAHPS dimensions are 

currently patient-mix adjusted. We 

adjust HCAHPS data for patient 

characteristics that are not under the 

control of the hospital that may affect 

patient reports of hospital experiences. 

The goal of adjusting for patient-mix is 

to estimate how different hospitals 

would be rated if they all provided care 

to comparable groups of patients. As 

part of the endorsement process for 

HCAHPS, the NQF endorsed the 

HCAHPS patient-mix adjustment 

currently in use. 

The HCAHPS patient-mix adjustment 

(PMA) model incorporates important 

and statistically significant predictors of 

patients’ HCAHPS ratings that also vary 

meaningfully across hospitals (O’Malley 

et al., 2005). The PMA model includes 

seven variables, as follows: Selfreported health status, education, 

service line (medical, surgical, or 

maternity care), age, response percentile 

order (also known as ‘‘relative lag time,’’ 

which is based on the time between 

discharge and survey completion), 

service line by linear age interactions, 

and primary language other than 

English. Initially the model also 

included admission through an 

emergency room, but because admission 

through an emergency room is no longer 

available on the UB–92 Form, this 

adjuster is no longer available for the 

patient-mix model. We are exploring 

other options to obtain that information 

in the future. We have found that 

evaluations of care increase with selfrated health and age (at least through 

age 74), and decrease with educational 

attainment. Maternity service has 

generally more positive evaluations than 

medical and surgical services. Percentile 

response order (relative lag time) 

findings show that late responders tend 

to provide less positive evaluations than 

earlier responders. From research 

conducted during the development of 

HCAHPS, we found little evidence that 

DRG matters beyond the service line, 

which is included in the patient mix 

model. 

To further address specific concerns 

about the adjustment model, it is 

important to note that self-reported 

health status is a widely accepted 

measure of a person’s overall health 

status. In general, ‘‘how would you rate 

your health’’ is the most widely used 

single self-reported health item and is 

used in a plethora of national health 

surveys. Education also captures 

important aspects of socio-economic 

status. Income is generally not available 

to adjust survey data. 

Patient-mix adjustment is based on 

variation by patient-level factors within 

hospitals so that true differences 

between hospitals are not included in 

the adjustment.3 Controlling for 

geographic region (a hospital-level 

factor) as part of a patient-mix 

adjustment model could mask important 

differences in quality across the 

country. 

Comment: Several commenters 

suggested changing the HCAHPS 

requirements to reduce the number of 

required mailings and telephone 

attempts, allow survey administration 

while patients are still in the hospital, 

and allow electronic administration of 

the survey to reduce the cost of survey 

administration. 

Response: We know from our 

HCAHPS research that, on average, late 

responders report less positive 

experiences. For this reason, we believe 

that allowing hospitals to reduce their 

effort to obtain completed surveys by 

reducing the required number of 

mailings and telephone attempts would 

bias the HCAHPS results. Under the 

current HCAHPS requirements, which 

can be found in the HCAHPS Quality 

Assurance Guidelines available at 

www.hcahpsonline.org, the 

administration of the HCAHPS survey 

begins 48 hours following discharge to 

ensure that the patient has had an 

opportunity to return home or go to an 

alternative location. We also believe that 

allowing a hospital to administer the 

survey while the patient is still in the 

hospital has the potential to create 

biased results because the patient might 

not feel that he or she can freely answer 

the questions with hospital staff nearby. 

We note that we have tested an 

Internet version of HCAHPS. However, 

at this point, we do not believe that 

hospitals routinely collect e-mail 

addresses or that the Medicare 

population has enough experience with 

the Internet to support allowing 

hospitals to administer the survey via 

the Internet. This is a technology that 

we will continue to explore because we 

agree with the commenters that 

electronic administration of the survey 

would be less expensive for hospitals. 

Comment: One commenter was 

concerned that patients would be more 

likely to recommend larger hospitals 

due to the spectrum of services offered 

by them and, thus, smaller and rural 

hospitals would be disadvantaged by 

HCAHPS. 

Response: Because HCAHPS focuses 

on the actual experiences of care by 

asking patients about what happened 

during the hospital stay, the HCAHPS 

data are not biased by the perceptions 

of patients in terms of the range of 

services offered by different hospitals. 

In fact, smaller hospitals generally tend 

to do better on HCAHPS relative to 

larger ones. 

While most HCAHPS survey items 

assess the patient’s actual experience in 

the hospital, two survey items ask for 

the patient’s overall impressions of the 

hospital stay. Because these items are 

highly correlated and potentially draw 

on wider influences, we have proposed 

to include only one global dimension, 

Overall Rating, in the Hospital VBP 

program scoring for the HCAHPS 

measure. 

Comment: Some commenters called 

on us to make HCAHPS patient mix 

adjustment formulas public. 

Response: The HCAHPS patient-mix 

adjustment formulas are publicly 

available on http:// 

www.hcahpsonline.org. The data on 

http://www.hcahpsonline.org regarding 

the adjustments are updated quarterly. 

Comment: Some commenters opposed 

the use of 30-day mortality rates in the 

Hospital VBP program because they are 

‘‘all-cause’’ measures and do not exclude 

deaths that are not attributable to a 

hospital’s quality of care. One 

commenter questioned the use of the 

mortality measures, citing the 

possibility of unintended consequences 

and remarking that, ‘‘unless hospitals 

are provided with specific interventions 

which have been demonstrated to 

reduce morality, penalizing a hospital 

for an increase in mortality (or 

rewarding one for a decrease in 

mortality) is not rationally related to the 

operations of the hospital.’’ Other 

commenters argued that the Hospital 

VBP program should focus on outcome 

measures that are risk adjusted to 

account for extremely ill patients. 

Response: We appreciate commenters’ 

input on measures for use in the 

Hospital VBP program. The proposed 

all-cause risk adjusted 30-day mortality 

measures are endorsed by the National 

Quality Forum (NQF). There are several 

reasons why we believe it is appropriate 

for us to adopt the NQF-endorsed allcause mortality measures for the 

Hospital VBP program. 

First, from the patient perspective, 

death is the key outcome regardless of 

its cause. Second, cause of death may be 

unreliably recorded. Third, the cause of 

death may represent a complication 

related to the underlying condition. For 

example, a patient with HF who 

develops a hospital-acquired infection 

may ultimately die of sepsis and multiorgan failure. It would be inappropriate 

to consider the death as unrelated to the 

care the patient received for HF. 

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Another patient might have a 

complication leading to renal failure, 

resulting in death, and yet quality of 

care could have reduced the risk of the 

complication. A patient with PN who 

did not receive deep vein thrombosis 

prophylaxis may ultimately die of a 

pulmonary embolism. It would be 

inappropriate to consider the death as 

unrelated to the care the patient 

received for PN. Although this approach 

will include some patients whose death 

may be unrelated to their care (for 

example, a casualty in a motor vehicle 

accident), events completely unrelated 

to the admission are expected to be 

uncommon and should not be clustered 

unevenly among hospitals. 

Furthermore the NQF-endorsed 

measure methodology for all three of 

these all-cause mortality measures 

includes a risk adjustment for proteincalorie malnutrition, dementia, and 

metastatic cancer that are common 

among extremely ill patients. 

Comment: Some commenters 

suggested that we should ensure that 

measures, particularly those added in 

FY 2014, appropriately capture services 

provided by hospitals, as not all 

hospitals treat all conditions. 

Response: We agree and note that we 

proposed that hospitals must have at 

least 10 cases per measure in order to 

be scored on that measure and report on 

at least 4 measures to be included in the 

Hospital VBP program. We also believe 

that the finalized Hospital VBP 

measures capture a broad range of 

hospital services, which will enable a 

large number of hospitals to participate 

in the program. 

Comment: One commenter suggested 

that we proceed cautiously in seeking to 

adopt outcome measures for the 

Hospital VBP program, and that we first 

demonstrate their statistical reliability 

for low-volume hospitals. 

Response: We agree that acceptable 

statistical reliability is important to our 

analysis in determining what measures 

to adopt for the Hospital VBP program. 

As stated above, we conducted analyses 

on the 30-day outcome measures we are 

adopting for this program and have 

found them to be reliable for all 

hospitals for purposes of Hospital VBP 

scoring. 

Comment: One commenter suggested 

that CMS use an error bar or other visual 

display of the confidence intervals 

surrounding mortality rate performance 

similar to the displays currently used on 

Hospital Compare for mortality 

measures. 

Response: The confidence intervals 

currently shown on Hospital Compare 

are used to classify hospitals into broad 

categories for purposes of that display. 

For the Hospital VBP program, we will 

score all of the Hospital VBP measures 

using the scoring methodology that we 

finalize for the program. The use of this 

scoring methodology will result in each 

hospital being assigned a point estimate 

that reflects its score on each of the 

mortality measures, and it is those 

scores, rather than broad confidence 

intervals, that will be used for purposes 

of the public reporting. 

Comment: Some commenters 

expressed general support for the 3 

proposed 30-day mortality measures. 

Response: We thank commenters for 

their support. 

Comment: Some commenters 

suggested that we exclude some types of 

cases, including hospice or palliative 

care, from the mortality measure 

calculations. They also suggested that 

this ‘‘new’’ mortality rate measurement 

without hospice and palliative care 

patients should be displayed on 

Hospital Compare for one year prior to 

implementation. 

Response: The risk-adjusted mortality 

measure methodology excludes 

admissions for Medicare fee-for-service 

patients who elect hospice care any time 

in the 12 months prior to the index 

hospitalization, including the first day 

of the index admission. Information on 

the methodology used to calculate the 

measures can be found at http://

www.qualitynet.org/dcs/ContentServer

?c=Page&pagename=QnetPublic%2

FPage%2FQnetTier2

&cid=1163010398556. 

Comment: Many commenters opposed 

our proposal to adopt HAC measures for 

the FY 2014 Hospital VBP program, 

arguing that we will be penalizing 

hospitals on those measures both under 

the Hospital VBP program, the HAC 

policy required by Section 3008 of the 

Affordable Care Act and the Medicaid 

penalties required by Section 2702 of 

the Affordable Care Act. 

Response: We view the program 

authorized by section 3008 of the 

Affordable Care Act and the Hospital 

VBP Program as being related but 

separate efforts to reduce HACs. 

Although the Hospital VBP program is 

an incentive program that provides 

incentive-based payments to hospitals 

based on quality performance, the 

program established by section 3008 of 

ACA creates a payment adjustment 

resulting in payment reductions for the 

lowest performing hospitals. We also 

view programs that could potentially 

affect a hospital’s Medicaid payment as 

separate from programs that could 

potentially affect a hospital’s Medicare 

payment, although we intend to monitor 

the various interactions of programs 

authorized by the Affordable Care Act 

and their overall impact on providers 

and suppliers. 

Comment: Several commenters 

requested that we ensure the 

harmonization of new programs and any 

overlay or duplication in the Affordable 

Care Act, generally. 

Response: We are coordinating the 

development and implementation of all 

of these programs and will continue to 

monitor their impacts on providers and 

suppliers. 

Comment: Some commenters argued 

that CMS should analyze HAC measures 

more closely to test the validity of 

‘‘present on admission’’ (POA) diagnosis 

coding. The commenters suggested that 

CMS compare POA coding to chartreview to test the appropriateness of 

using claims-based measures for 

payment purposes. Commenters more 

generally argued that the current 

measure format does not allow for valid 

comparisons due to coding issues and 

physician behavior. 

Response: The purpose of POA coding 

is to allow better discernment of 

whether a diagnosis is a complication of 

care received in the hospital or an 

adverse event occurring in the hospital. 

Beginning in FY 2007, we have 

proposed, solicited, and responded to 

public comments and have 

implemented the Hospital Acquired 

Condition Program under section 

1886(d)(4)(D) of the Act and its 

accompanying POA coding requirement 

through the IPPS annual rulemaking 

process. For specific policies addressed 

in each rulemaking cycle, we direct 

readers to the following publications: 

the FY 2007 IPPS proposed rule (71 FR 

24100) and final rule (71 FR 48051 

through 48053); the FY 2008 IPPS 

proposed rule (72 FR 24716 through 

24726) and final rule with comment 

period (72 FR 47200 through 47218); the 

FY 2009 IPPS proposed rule (73 FR 

23547), and final rule (73 FR 48471); 

and the FY 2010 IPPS/RY 2010 LTCH 

PPS proposed rule (74 FR 24106) and 

final rule (74 FR 43782). A complete list 

of the 10 current categories of HACs is 

included in section II.F.2.of FY 2011 

IPPS/RY 2011 LTCH PPS (75 FR 50080 

through 50101). 

POA coding is also used in the 

specifications for the component 

indicators for the AHRQ Patient Safety 

composite measure we proposed to 

adopt for the Hospital VBP program for 

FY 2014. This composite measure 

consists of 8 component indicators, 

including PSI–3 (Pressure ulcer), PSI–6 

(Iatrogenic Pneumothorax), PSI–7 

(Central venous catheter-related 

bloodstream infections), PSI–8 

(Postoperative hip fracture), PSI–12 

(Postoperative pulmonary embolism or 

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deep vein thrombosis), PSI–13 

(Postoperative sepsis), PSI–14 

(Postoperative wound dehiscence), and 

PSI–15 (Accidental Puncture or 

Laceration). For each of these 

component indicators, present-onadmission coding is one of the 

exclusion criteria used to indicate 

whether a condition or an injury 

occurred before or after the patient was 

admitted to the hospital. Please refer to 

www.qualityindicators.ahrq.gov for 

further details about the technical 

specifications for these measures. We 

are using the POA information on the 

final adjudicated claim submitted by the 

hospital. These data are subject to the 

same scrutiny as other information on 

Medicare claims. 

We also note that we are currently 

evaluating the Hospital Acquired 

Condition-Present on Admission (HAC– 

POA) Program. We appreciate the 

commenters’ interest and will take it 

into consideration as we proceed with 

this evaluation. 

Comment: Some commenters noted 

that the proposed HAC measures are 

limited to the Medicare fee-for-service 

population and suggested that these 

measures should not be used in Hospital 

VBP. 

Response: The proposed HAC 

measures are calculated using only 

Medicare fee-for-service data because 

we do not currently have access to 

claims data that is submitted by 

hospitals to other payers. We also note 

that POA codes, which are required to 

calculate all of the proposed HAC 

measures and which must be included 

on Medicare Part A claims submitted to 

CMS by hospitals, may not be required 

to be included on inpatient claims 

submitted by hospitals to other payers. 

Despite this data limitation, we believe 

that the proposed HAC measures 

provide important information 

regarding patient safety events occurring 

during hospitalization, which reflect the 

quality of patient care provided, and we 

believe these measures should be 

included in the Hospital VBP program. 

Comment: Some commenters 

questioned whether value-based 

incentive payments will be available 

only to Medicare FFS and Medicare cost 

payers and not Medicare Advantage 

Organization (MAO) payers. 

Response: Value-based incentive 

payments made under the Hospital VBP 

program can be made only in the form 

of an adjustment to a subsection (d) 

hospital’s base operating DRG payment 

amount under the IPPS. 

Comment: Some commenters noted 

that the proposed HAC measures do not 

capture more than 9 diagnoses. 

Response: CMS’ current system 

limitations allow for the processing of 

only the first 9 diagnoses and 6 

procedures. While CMS accepts all 25 

diagnoses and 25 procedures submitted 

on the claims, we do not process all of 

the codes because of these system 

limitations. 

In the FY 2011 IPPS/LTCH–PPS final 

rule, we discussed our plans to accept 

and process up to 25 diagnoses and 

procedures on the hospital inpatient 

claims submitted on the 5010 format 

beginning January 1, 2011 (75 FR 50127 

through 50128). In the FY 2010 IPPS/RY 

2010 LTCH PPS final rule, we 

responded to hospitals’ requests that we 

process up to 25 diagnosis codes and 25 

procedure codes (74 FR 43798). In that 

FY 2010 IPPS/RY 2010 LTCH PPS final 

rule, we referred readers to the ICD–10 

final rule (74 FR 3328 through 3362) 

where we discuss the updating of 

Medicare systems prior to the 

implementation of ICD–10 on October 1, 

2013. We mentioned that part of the 

system updates in preparation for ICD– 

10 is the ‘‘expansion of our ability to 

process more diagnosis and procedure 

codes.’’ In the FY 2009 IPPS final rule 

(73 FR 48433 through 48444), we also 

responded to multiple requests to 

increase the number of codes processed 

from 9 diagnosis and 6 procedure codes 

to 25 diagnosis and 25 procedure codes. 

We are currently making extensive 

system updates as part of the move to 

5010, which includes the ability to 

accept ICD–10 codes. This complicated 

transition involves converting many 

internal systems prior to October 1, 

2013, when ICD–10 will be 

implemented. One important step in 

this planned conversion process is the 

expansion of our ability to process 

additional diagnosis and procedure 

codes. We are currently planning to 

complete the expansion of this internal 

system capability so that we are able to 

process up to 25 diagnoses and 25 

procedures on hospital inpatient claims 

as part of the HIPAA ASC X12 

Technical Reports Type 3, Version 

005010 (Version 5010) standards system 

update. 

Comment: Many commenters 

recommended that CMS develop risk 

adjustment methods, measure exclusion 

criteria, or stratified scoring methods to 

account for variations in measure rates 

related to patient factors or hospital 

function. Commenters argued that many 

of the proposed outcome, patient 

experience, and other measures 

including HCAHPS, HACs, and 

mortality measures are not valid 

because they lack appropriate risk 

adjustment and exclusion criteria and 

called for their exclusion from the 

Hospital VBP program. One commenter 

suggested risk adjustments should 

specifically be employed for trauma 

patients. A number of commenters 

suggested that CMS consider other risk 

adjustment models used by the 

industry, such as those promulgated by 

the Society of Thoracic Surgeons. One 

commenter suggested that we include 

‘‘median income of ZIP code of 

residence’’ in a risk adjustment 

methodology for mortality measures in 

order to account for socioeconomic 

variables that may lead to a greater rate 

of mortality. Additionally, some 

commenters suggested that CMS 

convene experts to develop a 

‘‘population adjustment’’ and adopt only 

HACs that do not rely on claims data for 

the Hospital VBP program. 

Response: For the measures that 

currently employ risk adjustment, we 

are using the risk adjustment models 

that are part of the NQF-endorsed 

measure specifications. In developing 

its risk adjustment model for the 30-day 

measures, the NQF performed an 

extensive literature review of risk 

factors employed by other models to 

inform the development of its model. 

We note that the current risk adjustment 

methodology for the three proposed 

mortality measures for FY 2014 was 

recently reevaluated and approved by 

an NQF steering committee. There is no 

risk adjustment for race and 

socioeconomic status, which we believe 

is appropriate because we do not want 

to hold hospitals with different racial or 

SES mixes to different performance 

standards. Adjusting for race or SES 

would also obscure differences that are 

important to identify if we want to 

reduce disparities where they do exist. 

We note that the NQF has issued 

guidance recommending against 

adjusting for patient characteristics such 

as socioeconomic status in outcomes 

measures, located at: http://www.quality

forum.org/docs/measure_evaluation_

criteria.aspx. We welcome collaboration 

on this issue with providers that serve 

unique patient populations and 

functions. 

Furthermore, while we understand 

that claims-based measures such as 

HAC measures have certain limitations, 

as discussed below, HAC measures were 

defined in prior rulemaking, during 

which we conducted several listening 

sessions and had the benefit of receiving 

public comment. We note that some of 

the HACs are ‘‘never’’ events and 

therefore should not be risk adjusted. 

We will consider refinements to the 

HAC measures in future years. We will 

monitor the impact of the Hospital VBP 

program on the care provided to 

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vulnerable subpopulations of patients, 

including trauma patients. 

Comment: Some commenters argued 

that the proposed HAC measures should 

be risk-adjusted before they are used in 

Hospital VBP. 

Response: Six of the 8 HACs adopted 

for the Hospital VBP program are 

considered ‘‘never events,’’ for which 

risk adjustment would not be 

appropriate because, in our view, such 

events should never happen under any 

circumstances. In the event that we do 

decide that some type of risk adjustment 

would be appropriate, we will seek 

input from the NQF as to whether or not 

this constitutes a substantive change to 

the measures, in which a formal 

consensus development process will be 

initiated. We will consider further 

refinements to the HAC measures in 

future years. We note that when we 

adopted the HAC vascular catheterassociated infection measure and the 

catheter-associated urinary tract 

infection measure in the FY 2008 IPPS 

final rule with comment period (72 FR 

47202 through 47218), there were no 

related risk-adjustments under the DRG 

payment policy reforms (72 FR 47141). 

Comment: Some commenters 

suggested that measures should be 

approved by the Hospital Quality 

Alliance (HQA) before use in the 

Hospital VBP program. 

Response: In developing the Hospital 

VBP program, we took into account the 

input of a multitude of stakeholders, 

including the HQA. The HQA is a 

national, public-private collaboration 

committed to making meaningful, 

relevant, and easily understood 

information about hospital performance 

accessible to the public and to 

informing and encouraging efforts to 

improve quality. We will also continue 

to consider HQA input as part of our 

ongoing measure selection process for 

the Hospital VBP program. 

Comment: Some commenters argued 

that the low incidence rates of HACs, 

particularly in academic medical 

centers, would lead to unstable statistics 

on which to base comparisons between 

hospitals. 

Response: Low incidence of events 

does not equate to unstable rates for 

those events. We acknowledge that the 

rates of some of the HACs, particularly 

the ones measuring ‘never events’, may 

be rare. However, because these are 

considered events that should never 

happen, reporting their prevalence, 

though rare, is still meaningful. We have 

not found that HAC incidence is 

particularly low in academic medical 

centers. We believe that all of the 

proposed HAC measures are important 

to measure and report, despite their low 

incidence rates, and that the public 

reporting of the HACs on the Hospital 

Compare Web site will encourage 

improvement. We believe that the 

Hospital VBP program must emphasize 

patient safety and improved quality of 

health care, and we believe that holding 

hospitals accountable for HACs will 

further those goals. 

Comment: Some commenters asked us 

to discuss the inclusion of HAIs in 

HACs. Specifically, the commenters 

asked us to include additional detail on 

how CMS plans to implement HHS’s 

HAI Action Plan. 

Response: Two of the eight proposed 

HAC measures (Vascular CatheterAssociated Infection and CatheterAssociated Urinary Tract Infection) 

capture HAIs. We are considering the 

feasibility of proposing to adopt all of 

the metrics listed in the HAI Action 

Plan for the Hospital IQR program in 

future years. In the FY 2011 IPPS/LTCH 

PPS final rule, we adopted two of the 

HAI measures from the HHS HAI Action 

Plan: the central line-associated 

bloodstream infection measure, for 

which reporting began with respect to 

January 2011 events; and the surgical 

site infection measure, which hospitals 

will begin reporting with respect to 

January 2012 events. In addition, we 

have proposed in the FY 2012 IPPS/ 

LTCH PPS proposed rule scheduled for 

publication on May 5, 2011, to adopt 

additional HAI measures: Catheterassociated urinary tract infection 

measure, central line insertion practices 

adherence percentage; Methicillinresistant Staphylococcus aureus 

(MRSA), Clostridium difficile (C–Diff), 

and Health Care Personnel Influenza 

Vaccination measures. All of these 

measures, if finalized for the Hospital 

IQR program, will be eligible for 

inclusion in the Hospital VBP program, 

and would allow CMS to better address 

the important topic area of Healthcare 

Associated Infections. 

Comment: Some commenters noted 

that HACs are not entirely preventable 

and argued that they should not be a 

component of quality measurement. 

Response: We believe that all 8 

proposed HAC measures assess the 

presence of hospital acquired conditions 

that are reasonably preventable if high 

quality care is furnished to the patient. 

We also believe that the incidence of 

HACs in general raise major patient 

safety issues for Medicare beneficiaries. 

According to the 2010 Department of 

Health and Human Services Office of 

the Inspector General Report, entitled 

‘‘Adverse Events in Hospitals: National 

Incidence among Medicare 

Beneficiaries,’’ an estimated 13.5 percent 

of hospitalized Medicare beneficiaries 

experienced adverse events during their 

hospital stays (OIG, November 2010, 

OEI–06–09–00090). We proposed to 

adopt 8 HAC measures for the Hospital 

VBP program because they are outcome 

measures (which are widely regarded by 

the provider community as strongly 

indicative of quality of medical care) 

that assess whether certain adverse 

events occurred during hospitalization. 

We believe that the adoption of these 

measures will facilitate our on-going 

efforts to hold hospitals accountable for 

these events, as well as reduce the 

incidence of these adverse events that 

result in harm to Medicare beneficiaries 

and higher costs of care. 

Comment: Some commenters asked us 

to explain why HACs are appropriate for 

quality measurement and scoring given 

that they are derived from billing and 

payment methods. 

Response: We believe that public 

reporting of the HACs on the Hospital 

Compare Web site will encourage 

improvement. We acknowledge that the 

incidence of HACs may be rare. 

However, many of the HACs are 

considered events that should never 

happen; reporting their prevalence, 

though rare, is still meaningful. 

Medicare fee for service claims data is 

the source for many measures that are 

NQF endorsed. This data source was 

reviewed as part of the NQF 

endorsement process for such measures, 

and has been found to be an appropriate 

data source. We also refer readers to the 

FY 2008 IPPS final rule with comment 

period (72 FR 47202 through 47218); 

section II.F. of the FY 2009 IPPS final 

rule with comment period (73 FR 48474 

through 48486); and section II.F. of the 

FY 2010 IPPS/RY 2010 LTCH PPS final 

rule (74 FR 43782 through 43785) for 

detailed discussions regarding the 

selection of the current 10 HAC 

categories. 

Comment: Some commenters 

suggested that CMS consider integrating 

HACs, complications and other causes 

of waste into an efficiency domain 

rather than in clinical process or 

outcomes. 

Response: We believe that the 

proposed HAC measures best capture 

health care quality outcomes rather than 

efficiency and are therefore best 

included in the outcome domain. 

Comment: One commenter suggested 

that we revise the definition of Falls 

and[?] Trauma. Specifically, the 

commenter suggested that the definition 

should be revised to require not only 

these injury codes, but also an e-code 

related to falls that are not POA. 

Response: We appreciate the 

suggestion to refine the definition of this 

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HAC, and will consider refinements for 

future implementation. 

Comment: Some commenters 

requested that we provide detailed 

measure specifications for the proposed 

HAC measures immediately if we intend 

to use them in the Hospital VBP 

program. 

Response: The specifications for these 

proposed measures were made available 

on QualityNet at http:// 

www.qualitynet.org earlier in the year. 

Comment: Some commenters were 

opposed to the use of Nursing Sensitive 

measures in the Hospital VBP measure 

set while others, noting that nurses 

provide numerous services to patients, 

argued that nursing sensitive measures 

are essential quality indicators. 

Response: We agree that nurses 

provide numerous services to their 

patients, and we are interested in 

nursing sensitive measures because 

those measures capture many processes 

and outcomes that are influenced by 

nursing practice. Currently, we only 

have one nursing sensitive measure in 

the Hospital IQR Program: Death among 

surgical inpatients with serious treatable 

complications (AHRQ PSI–04). We are 

also collecting the structural measure 

‘‘Participation in a Systematic Clinical 

Database Registry for Nursing Sensitive 

Care’’. We will consider adopting one or 

more measures in the nursing sensitive 

category for the Hospital IQR and 

Hospital VBP programs in the future. 

Comment: Some commenters opposed 

the use of any AHRQ PSI and IQI 

measures or their composites in 

Hospital VBP. Others suggested that 

those measures should be evaluated for 

validity and reliability as they were not 

developed to be performance measures 

and are based on claims data. Others 

noted that hospitals have encountered 

technical and programming issues with 

respect to the proposed AHRQ 

measures. 

Response: We thank commenters for 

their input. The AHRQ PSI and IQI 

measures that we proposed to adopt for 

the Hospital VBP measure set are NQF 

endorsed. In order to achieve NQF 

endorsement, measures must meet all of 

the criteria of the NQF consensus 

development process. Information on 

this process can be found at: http://

www.qualityforum.org/Measuring_

Performance/Consensus_Development_

Process.aspx. We believe this consensus 

development process includes the 

necessary steps to assure that measures 

that are NQF endorsed have been tested 

for validity and reliability of the data. 

This endorsement includes the data 

source needed to calculate the measures 

(Medicare fee for service claims). We 

believe these measures are appropriate 

for use in the Hospital VBP program as 

they meet the statutory requirements for 

inclusion and address the topic of 

patient safety, which is a high priority 

that we believe should be addressed in 

the Hospital VBP program. We also note 

that because these measures are claimsbased, no separate data reporting is 

needed. 

Comment: One commenter objected to 

the use of PSI 4, arguing that about 25 

percent of surgical patients are admitted 

with sepsis or acute illness and multiple 

organ failure for surgical exploration, 

then coded as surgical patients even if 

the surgery doesn’t find anything and 

doesn’t contribute to death. 

Response: We have not proposed to 

adopt PSI 4, Death among surgical 

inpatients with serious, treatable 

complications, for inclusion in the 

Hospital VBP program. However, we 

note that the specifications for that 

measure specifically exclude patients 

with a diagnosis of sepsis or infection in 

the primary diagnosis field and patients 

who are immunosuppressed. 

Comment: Some commenters argued 

that the proposed AHRQ measures 

amount to double-counting for purposes 

of scoring, as two of the proposed 

AHRQ measures are composites of the 

other AHRQ measures. 

Response: We appreciate commenters’ 

concerns. We agree that the use of all of 

the proposed AHRQ measures, 

including the two composite measures, 

would result in ‘‘double-counting’’ each 

of the individual measures. While each 

of the individual AHRQ measures 

capture important components of 

quality care, we believe that scoring 

hospital performance on the two 

composite measures simply and clearly 

captures the provision of high quality 

care that we wish to incentivize in the 

Hospital VBP program. Therefore, we 

are only finalizing the 2 proposed 

AHRQ composite measures, which will 

avoid any double-counting. 

Comment: Some commenters argued 

that all outcome, process, and patient 

experience measures should be posted 

on Hospital Compare for one year prior 

to use in the Hospital VBP program, and 

that, during this year, CMS should 

provide quarterly hospital preview 

reports on qualitynet.org with a 

percentile ranking for each measure in 

order to prepare for public reporting. 

Response: In accordance with 

statutory requirements, all measures 

will be included on Hospital Compare 

for at least one year prior to the 

beginning of the performance period for 

which we propose to adopt them under 

the Hospital VBP program. The process 

of care measures and HCAHPS are 

updated quarterly, and facilities that 

submit data are provided a 30-day 

preview of their data before public 

reporting occurs. The outcomes of care 

measures are updated annually, usually 

in July. The new outcomes data is 

included in the preview reports for this 

display period. As stated below, we will 

provide details on the information to be 

reported on Hospital Compare in future 

rulemaking. We will consider 

commenters’ suggestion for quarterly 

preview reports on qualitynet.org before 

public reporting. However, we believe 

that providing robust quality 

information to the public as soon as 

possible is a desired outcome of quality 

reporting and performance scoring. 

Comment: One commenter noted that 

the requirement that measures be 

included on Hospital Compare appears 

to be a significant barrier to timely 

adoption of the HAI Action Plan metrics 

in the Hospital VBP program. Other 

commenters encouraged us to accelerate 

the adoption of those metrics for the 

Hospital IQR program, Hospital 

Compare, and NQF endorsement. 

Response: We agree that the 

requirement that measures be included 

on the Hospital Compare Web site for at 

least one year before the performance 

period for them can begin under the 

Hospital VBP program has the potential 

to limit the speed at which we can 

adopt measures for the program, 

however we intend to propose to adopt 

measures that drive quality 

improvements and improve patient 

safety, such as the prevention metrics 

included in the HHS Action Plan to 

Prevent HAIs, as quickly as possible 

within that constraint. 

Comment: Some commenters argued 

that CMS’s data collection system does 

not adequately differentiate among 

conditions acquired in the hospital and 

those that are ‘‘present on admission’’ 

(POA) for purposes of scoring outcome 

measures. Commenters recommended 

that CMS allow hospitals to use POA 

claims indicators or consider other 

methods for outcome measure scoring, 

particularly since certain types of 

hospitals such as trauma centers or 

tertiary referral centers could be 

penalized on those measures because 

they receive a disproportionate share of 

transfers from other hospitals. Some 

commenters suggested that transferee 

and transferor hospitals should share in 

mortality rates for transferred patients. 

Response: We are currently using the 

POA indicator to calculate the proposed 

HAC and AHRQ patient safety 

composite measures, and we believe 

that the use of this indicator will better 

enable us to identify patient safety 

events, conditions and complications 

arising during hospital stays. We also 

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4See OEI–06–09–00090 ‘‘Adverse Events in 

Hospitals: National Incidence Among Medicare 

Beneficiaries.’’ Department of Health and Human 

Services, Office of Inspector General, November 

2010. See also, 2009 National Healthcare Quality 

Report, pp. 107–122. ‘‘Patient Safety,’’ Agency for 

Healthcare Research and Quality. 

note that, under the specifications for 

the 30-day mortality measures, if the 

primary discharge diagnosis at the 

receiving hospital matches the primary 

discharge diagnosis at the transferring 

hospital, the patients are included in the 

transferring hospital’s mortality measure 

calculations. We believe this approach 

encourages coordination between 

hospitals and their referral networks. 

Further, we believe that this approach 

promotes the best interests of the patient 

because it does not create an incentive 

for hospitals to transfer patients who are 

critically ill or at high risk of dying. 

Comment: Some commenters were 

concerned about the accuracy of claimsbased quality measures. In particular, 

they questioned how claims-based 

quality measurements will be accurate 

given hospitals’ technical and 

programming issues with the AHRQ 

measures, which are claims based rather 

than chart abstracted. 

Response: Both the AHRQ measures 

and their data source have been 

endorsed by NQF. We note that other 

quality initiatives, such as the Medicare 

End-Stage Renal Disease Quality 

Incentive Program, require reporting on 

claims-based measures. While they have 

certain limitations, claims-based 

measures provide important information 

on hospital quality of care. We also note 

that hospitals are not required to submit 

data for the AHRQ measures; rather, the 

calculations are derived from Medicare 

fee-for-service claims data. Thus, 

neither technical nor programming 

issues should arise. For the reasons 

discussed above, we are only finalizing 

the two composite AHRQ measures. 

Comment: Some commenters opposed 

our proposal to implement a 

subregulatory process for adding or 

retiring measures, calling on CMS to use 

full notice and comment rulemaking 

instead. A few commenters supported 

the proposed subregulatory process. 

Response: We appreciate the 

comments, and understand that 

stakeholder input is critical to ensuring 

that the Hospital VBP program and 

measure set improves the quality of care 

and patient safety. As stated in the 

Hospital Inpatient VBP proposed rule 

(76 FR 2458 through 2459), we believe 

that we must act with all speed and 

deliberateness to expand the pool of 

measures used in the Hospital VBP 

program. This goal is supported by at 

least two Federal reports documenting 

that tens of thousands of patients do not 

receive safe care in the nation’s 

hospitals.4

For this reason, we believe that we 

should adopt measures for the Hospital 

VBP program relevant to improving 

care, particularly as these measures are 

directed toward improving patient 

safety, as quickly as possible. 

Additionally, we believe that we should 

retire measures from the Hospital VBP 

program as quickly as possible to ensure 

that they do not detract from other 

measures that we believe will be more 

impactful in improving patient health. 

We believe that speed of 

implementation is a critical factor in the 

success and effectiveness of this 

program. 

However, we are aware of 

stakeholders’ concerns about the 

proposed subregulatory process. We 

understand commenters’ point that 

notice-and-comment rulemaking is 

important to ensure that hospitals are 

aware of the applicable measures. In 

response to those comments, we will 

not finalize the proposed subregulatory 

process for adding or retiring measures. 

Instead, we have proposed in the FY 

2012 IPPS/LTCH PPS proposed rule 

scheduled for publication on May 5, 

2011 that we might choose to propose 

to simultaneously adopt one or more 

measures for both the Hospital IQR 

Program and the Hospital VBP program. 

We refer readers to that proposal for 

further information. 

Comment: Some commenters 

suggested that we consider adopting 

quality measures covering more 

conditions to ensure that hospitals 

improve the quality of care that they 

furnish to all patients, not just those 

diagnosed with conditions covered by 

current quality measures. 

Response: We thank commenters for 

the suggestion. The Affordable Care Act 

specifically names AMI, HF, PN, SCIP, 

HAIs and HCAHPS as initial topics to be 

included in the Hospital VBP program 

in FY 2013. We will consider other 

measures and conditions for inclusion 

in the Hospital VBP program for future 

years. 

Comment: Some commenters strongly 

opposed use of the IQI stroke mortality 

measure, arguing that it is not adjusted 

for stroke severity. 

Response: We thank commenters for 

their suggestion. The current 

methodology for this measure, including 

the risk adjustment methodology is NQF 

endorsed. 

Comment: A number of commenters 

asked how hospitals will be scored and 

payments will be adjusted when 

measure specifications change. 

Response: We understand that from 

time to time measure specifications 

require updating. We maintain the 

technical specifications by updating the 

Specifications Manual semiannually, or 

more frequently in unusual cases, and 

include detailed instructions and 

calculation algorithms for hospitals to 

use when collecting and submitting data 

on required measures. While many of 

these updates or changes do not impact 

the calculation of the measures, we are 

aware that substantive changes to the 

specifications for a measure may impact 

the score a hospital receives. 

Comment: Some commenters asked if 

measure adoption will expand at a rate 

that keeps pace with hospital resources. 

Other commenters expressed concern 

that measure reporting might burden 

hospitals, while others suggested that 

we consider how difficult measures are 

for hospitals to improve upon. 

Response: We are cognizant of the 

reporting burden on hospitals associated 

with the adoption of new measures 

under both the Hospital IQR program 

and the Hospital VBP program. In 

proposing to adopt new measures for 

the Hospital IQR program, which make 

them candidates for the Hospital VBP 

program, we have emphasized on many 

occasions that we take into 

consideration the burden that additional 

reporting will have on hospitals, and we 

seek, for that reason, to limit our 

proposals to adopt chart-abstracted 

measures. We also carefully consider 

whether the benefit that we believe will 

be realized from adopting additional 

measures (such as encouraging hospitals 

to improve their performance on those 

measures) will outweigh the burden 

associated with their collection. 

Comment: Some commenters asked if 

30-day readmission rates will be 

included in the Hospital VBP program. 

Response: Measures of readmissions 

are statutorily excluded under section 

1886(o)(2)(A) of the Act and therefore 

cannot be included in the Hospital VBP 

program. 

Comment: A commenter asked if 

measure scores will be based on allpayer data or Medicare data only. Some 

commenters argued that the Hospital 

VBP program’s measures should capture 

data for all patients, not Medicare 

patients only so that hospitals are 

ranked and incentivized according to 

their care for all patients, rather than for 

Medicare patients only. 

Response: Measures in the clinical 

process and patient experience domains 

are scored using all-patient data while 

measures in the outcome domain will be 

scored using Medicare claims data only. 

Although we generally agree that allpatient data would be a preferable 

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Federal Register / Vol. 76, No. 88 / Friday, May 6, 2011 / Rules and Regulations 26509 

source of data for purposes of 

calculating all Hospital VBP measures, 

we currently do not have access to 

claims data submitted by hospitals to 

other payers. 

Comment: Some commenters 

suggested that we more forcefully 

endorse the NQF process, expressing 

concern that marginalizing the NQF 

endorsement process might discourage 

hundreds of hard working volunteers. 

Response: We work closely with the 

NQF on issues related to measure 

endorsement because that entity holds 

the contract under section 1890(a) of the 

Act. However, we note that in the case 

of a specified area or medical topic 

determined appropriate by the Secretary 

for which there is no NQF-endorsed 

measure, section 

1886(b)(3)(B)(viii)(IX)(bb) of the Act 

allows us to specify a measure that is 

not NQF-endorsed so long as due 

consideration has been given to 

measures that have been endorsed or 

adopted by a consensus organization 

identified by the Secretary. 

Comment: Several commenters 

suggested that we consider adopting a 

central line-associated blood stream 

infections measure, a surgical site 

infections measure, and/or the National 

Database of Nursing Quality Indicators 

for the Hospital VBP program. 

Response: We thank commenters for 

their input. We note that we have 

adopted a central line-associated blood 

stream infection measure (CLABSI) and 

surgical site infection measure (SSI) for 

the Hospital IQR program, and we 

anticipate proposing to adopt these 

measures for the Hospital VBP program 

in the future. The National Database of 

Nursing Quality Indicators (NDNQI) 

were previously considered for Hospital 

IQR program adoption (See 72 FR 

47351), and we remain interested in 

these measures. 

Comment: Some commenters asked us 

to explain why the current requirement 

by CMS for NHSN reporting begins with 

January 2011 events for CLABSI and 

with January 2012 events for SSI. 

Response: In response to public 

comments on the FY 2011 IPPS/LTCH 

PPS proposed rule, we adopted one 

NHSN collected measure (the CLABSI 

measure) for the FY 2013 Hospital IQR 

payment determination (with reporting 

beginning with respect to January 2011 

events) to allow hospitals to gain 

experience with the NHSN collection 

mechanism for one year before requiring 

hospitals to begin reporting a second 

measure (SSI) using that mechanism (75 

FR 50202). 

Comment: Some commenters argued 

that the FY 2013 measures do not reflect 

nurses’ contributions to patient care. 

Response: We disagree. Many of the 

process of care measures reflect the 

contributions of a broad range of 

healthcare professionals, including 

nurses. Furthermore, a number of 

measures rely heavily on nursing input 

and documentation. Additionally, one 

of the eight HCAHPS dimensions 

focuses exclusively on nurses’ role in 

communicating with patients regarding 

their care. 

Comment: One commenter suggested 

that we post measure information on 

Hospital Compare for 2 years prior to 

adopting them in the Hospital VBP 

program. 

Response: We thank the commenter 

for the input. Although we acknowledge 

that section 1886(o)(2)(C)(i) provides, in 

part, that measures must be included on 

the Hospital Compare Web site for at 

least one year prior to the performance 

period, we believe that a one year 

period is sufficient to ensure that 

hospitals, Medicare beneficiaries and 

other stakeholders are fully aware of 

and familiar with the measures before 

they are added to the Hospital VBP 

program. We also believe that any 

further delay would unnecessarily 

postpone the adoption of important 

measures for the Hospital VBP program. 

Comment: One commenter noted that 

care coordination measures are not 

included in the Hospital VBP measure 

set. 

Response: We will consider this 

comment as we seek to expand the 

Hospital VBP measure set in the future. 

Comment: One commenter called on 

us not to use the Krumholtz 

methodology for mortality measures. 

The commenter noted that this 

methodology has only been applied in 

very narrow ranges of diagnoses; may 

not be useful for comparing mortality 

rates; has weak explanatory power; 

omits variables that should be 

considered; and would be difficult if not 

impossible to generalize. 

Response: We disagree. The riskstandardized mortality rates for the 

three proposed mortality measures are 

derived from administrative data for 

Medicare patients with a principal 

discharge diagnosis of AMI, HF, and PN 

from all acute care and critical access 

hospitals in the nation. The model used 

for calculation includes several 

variables and has a relatively high 

discrimination rate. As a result we 

believe this methodology is appropriate 

to use. Additionally, this methodology 

falls within the scope of the NQFendorsement for the three proposed 

mortality measures. 

Comment: One commenter asked us 

to clarify whether hospital data reported 

on Hospital Compare that are also 

collected by the Joint Commission will 

continue to be included on Hospital 

Compare. 

Response: Yes. Many of the AMI, 

Heart Failure, Pneumonia and SCIP 

measures reported to CMS for Hospital 

IQR and publicly reported on Hospital 

Compare are also collected and utilized 

by the Joint Commission. In addition, 

hospitals can voluntarily choose to 

allow CMS to publicly report the Joint 

Commission’s children’s asthma care 

measures, which are not part of Hospital 

IQR, on Hospital Compare. We will 

continue to publicly report all Hospital 

IQR measures and other quality 

information on Hospital Compare. 

Comment: One commenter questioned 

whether the proposed clinical process of 

care measures have been tested in older 

patients and women to assure 

applicability to Medicare’s patient 

subpopulations. 

Response: The clinical process of care 

measures proposed for the Hospital VBP 

program have been tested and used in 

all patients 18 years and older which 

includes older patients and women if 

they meet criteria for inclusion in the 

measure. 

Comment: Some commenters 

recommended that CMS and outside 

experts study the measures’ actual 

impact on patients and caregivers. 

Commenters also expressed concern 

about possible unintended 

consequences for patient care due to 

measure design, such as some hospitals 

refusing to admit high-risk patients in 

an effort to improve their Total 

Performance Score. 

Response: We thank commenters for 

their input. We intend to monitor the 

initial impacts of the Hospital VBP 

program, including its impacts on costs, 

quality, outcomes, and patient 

experiences with care. We believe the 

Hospital VBP program represents a 

significant next step in aligning 

payment with the quality of care 

delivered to beneficiaries. We firmly 

believe that these efforts will increase 

the quality of care provided, resulting in 

improved health outcomes. However, 

we will monitor and evaluate the impact 

of the Hospital VBP program on access 

to and quality of care, including 

monitoring any unintended 

consequences. 

Comment: One commenter stated that 

the proposal to use electronic 

submission for measures in future years 

was misaligned with one of the 

potential future measures. The measure, 

‘‘median time from admit decision time 

to time of departure from the emergency 

department (ED) for ED patients 

admitted to inpatient status’’ differs 

from the specifications put forth by 

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26510 Federal Register / Vol. 76, No. 88 / Friday, May 6, 2011 / Rules and Regulations 

5Proposed dimensions of the HCAHPS survey for 

use in the FY 2013 Hospital VBP program are: 

Communication with Nurses, Communication with 

Doctors, Responsiveness of Hospital Staff, Pain 

Management, Communication about Medicines, 

Cleanliness and Quietness of Hospital Environment, 

Discharge Information and Overall Rating of 

Hospital. 

HITSP (Health Information Technology 

Standards) which specifies the measure 

as, Admit Decision Time to ED 

Departure Time. The difference is that 

the former does not allow for the use of 

Admit Orders Date (or Admit Orders 

Time) in the measures specification 

while the HITSP specifications do allow 

the use of this data. 

Response: We agree that the measure 

specifications for ‘‘median time from 

admit decision time to time of departure 

from the emergency department (ED) for 

ED patients admitted to inpatient status’’ 

require manual chart abstraction, and is 

specified slightly different than 

electronic health record version of the 

measure. This is because of the 

availability of the data. When 

abstracting data manually, a human 

abstractor uses specific guidelines for 

abstraction. Admit order date/time are 

not included in the chart abstracted 

version as the intent of the measure is 

to calculate throughput time (that is, 

how long the patient is in the ED) which 

is calculated from admit decision to 

departure from the Emergency 

Department. The admit decision time is 

generally found in a note written in the 

chart, and therefore, a human abstractor 

can interpret that data element per the 

guidelines for abstractions. In contrast, 

admit date/time are used in the 

electronic specifications as the two 

fields are readily available in the 

electronic health record (EHR), and 

there is no human interpretation. At this 

time, data from a progress note is not 

considered a discreet data element and 

therefore cannot be used for EHR 

abstraction. 

After consideration of public 

comments, we are finalizing our 

proposed definition of ‘‘topped out’’ for 

purposes of measure selection under the 

Hospital VBP program. We will use this 

definition to inform our measure 

proposals for future Hospital VBP 

program years and will use the most 

recently available data at the time to 

conduct our analysis. Additionally, we 

are finalizing our proposal to adopt 12 

of the 17 proposed clinical process of 

care measures for the FY 2013 Hospital 

VBP program, but for the reasons 

discussed above, are not finalizing our 

proposal to adopt the following 

measures: PN–2, PN–7, AMI–2, HF–2 

and HF–3. 

Table 2 lists the 13 measures we are 

finalizing for the FY 2013 Hospital VBP 

measure set. 

TABLE 2—FINAL MEASURES FOR FY 2013 HOSPITAL VBP PROGRAM

Measure ID Measure description 

Clinical Process of Care Measures 

Acute myocardial infarction 

AMI–7a ......................... Fibrinolytic Therapy Received Within 30 Minutes of Hospital Arrival. 

AMI–8a ......................... Primary PCI Received Within 90 Minutes of Hospital Arrival. 

Heart Failure 

HF–1 ............................. Discharge Instructions. 

Pneumonia 

PN–3b .......................... Blood Cultures Performed in the Emergency Department Prior to Initial Antibiotic Received in Hospital. 

PN–6 ............................ Initial Antibiotic Selection for CAP in Immunocompetent Patient. 

Healthcare-associated infections 

SCIP–Inf–1 ................... Prophylactic Antibiotic Received Within One Hour Prior to Surgical Incision. 

SCIP–Inf–2 ................... Prophylactic Antibiotic Selection for Surgical Patients. 

SCIP–Inf–3 ................... Prophylactic Antibiotics Discontinued Within 24 Hours After Surgery End Time. 

SCIP–Inf–4 ................... Cardiac Surgery Patients with Controlled 6AM Postoperative Serum Glucose. 

Surgeries 

SCIP–Card–2 ............... Surgery Patients on a Beta Blocker Prior to Arrival That Received a Beta Blocker During the Perioperative Period. 

SCIP–VTE–1 ................ Surgery Patients with Recommended Venous Thromboembolism Prophylaxis Ordered. 

SCIP–VTE–2 ................ Surgery Patients Who Received Appropriate Venous Thromboembolism Prophylaxis Within 24 Hours Prior to Surgery 

to 24 Hours After Surgery. 

Patient Experience of Care Measures 

HCAHPS ...................... Hospital Consumer Assessment of Healthcare Providers and Systems Survey.5

With respect to the FY 2014 Hospital 

VBP measure set, we are finalizing our 

proposal to adopt the three 30-day 

mortality claims-based measures, 

MORT–30–AMI, MORT–30–HF, and 

MORT–30–PN, as well as the 8 

proposed HAC measures. In light of the 

public comments we received regarding 

the proposed AHRQ measures and as 

discussed above, we are only finalizing 

the 2 composite measures: 

Complication/patient safety for selected 

indicators (composite) and Mortality for 

selected medical conditions 

(composite). The measures that we are 

finalizing in this final rule for the FY 

2014 Hospital VBP Program are listed in 

Table 3 below. 

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TABLE 3—FINALIZED OUTCOME MEASURES FOR THE FY 2014 HOSPITAL VBP PROGRAM

Mortality Measures (Medicare Patients): 

• Acute Myocardial Infarction (AMI) 30-day mortality rate.

• Heart Failure (HF) 30-day mortality rate.

• Pneumonia (PN) 30-day mortality rate.

AHRQ Patient Safety Indicators (PSIs), Inpatient Quality Indicators (IQIs) Composite Measures: 

• Complication/patient safety for selected indicators (composite).

• Mortality for selected medical conditions (composite).

Hospital Acquired Condition Measures: 

• Foreign Object Retained After Surgery.

• Air Embolism.

• Blood Incompatibility.

• Pressure Ulcer Stages III & IV.

• Falls and Trauma: (Includes: Fracture Dislocation Intracranial Injury Crushing Injury Burn Electric Shock).

• Vascular Catheter-Associated Infection.

• Catheter-Associated Urinary Tract Infection (UTI).

• Manifestations of Poor Glycemic Control.

As noted above, we have proposed in 

the FY 2012 IPPS/LTCH PPS proposed 

rule scheduled for publication on May 

5, 2011 to adopt an additional measure, 

Medicare spending per beneficiary, for 

the FY 2014 Hospital VBP program. We 

also intend to propose to adopt 

additional measures for the FY 2014 

Hospital VBP program in the CY 2012 

OPPS proposed rule. 

E. Performance Standards 

To determine what the performance 

standard for each proposed clinical 

process of care measure and the 

proposed HCAHPS measure should be 

for purposes of the FY 2013 Hospital 

VBP program, we analyzed the most 

reliable and current hospital data that 

we had on each of these measures by 

virtue of the Hospital IQR program. 

Because we proposed to adopt a 

performance period that was less than a 

full year for FY 2013, we were sensitive 

to the fact that hospital performance on 

the proposed measures could be affected 

by seasonal variations in patient mix, 

case severity, and other factors. To 

address this potential variation and 

ensure that the hospital scores reflect 

their actual performance on the 

measures, we believe that the 

performance standard for each clinical 

process of care measure and HCAHPS 

should be based on how well hospitals 

performed on the measure during the 

same time period in the applicable 

baseline period. In determining what 

three-quarter baseline period would be 

the most appropriate to propose to use 

for the FY 2013 Hospital VBP program, 

we wanted to ensure that the baseline 

would be as close in time to the 

proposed performance period as 

possible. We stated our belief that 

selecting a three-quarter baseline period 

from July 1, 2009 to March 31, 2010 will 

enable us to achieve this goal. We also 

believe that an essential goal of the 

Hospital VBP program is to provide 

incentives to all hospitals to improve 

the quality of care that they furnish to 

their patients. In determining what level 

of hospital performance would be 

appropriate to select as the performance 

standards for each measure, we focused 

on selecting levels that would challenge 

hospitals to continuously improve or 

maintain high levels of performance. 

As required by Section 1886(o)(3)(D), 

we specifically considered hospitals’ 

practical experience with the measures, 

particularly through the Hospital IQR 

program, examining how different 

achievement and improvement 

thresholds would have historically 

impacted hospitals, how hospital 

performance may have changed over 

time, and how hospitals could continue 

to improve. 

We proposed to set the achievement 

performance standard (achievement 

threshold) for each proposed FY 2013 

Hospital VBP measure at the median of 

hospital performance (50th percentile) 

during the baseline period of July 1, 

2009 through March 31, 2010. As 

proposed in the Hospital Inpatient VBP 

proposed rule (76 FR 2463 through 

2464), hospitals would receive 

achievement points only if they exceed 

the achievement performance standard 

and could increase their achievement 

score based on higher levels of 

performance. We believe these 

achievement performance standards 

represent achievable standards of 

excellence and will reward hospitals for 

meritorious performance on quality 

measures. We also proposed to set the 

improvement performance standard 

(improvement threshold) for each 

measure at each specific hospital’s 

performance on the measure during the 

baseline period of July 1, 2009 through 

March 31, 2010. We believe that these 

proposed improvement performance 

standards ensure that hospitals will be 

adequately incentivized to improve. 

We proposed to set the achievement 

performance standard (achievement 

threshold) for each of the proposed FY 

2014 Hospital VBP mortality measures 

at the median of hospital performance 

(50th percentile) during the baseline 

period. We proposed to set the 

improvement performance standard 

(improvement threshold) for each 

mortality measure at each specific 

hospital’s performance on each measure 

during the baseline period of July 1, 

2008 to December 31, 2009. The 

comments we received on these 

proposals and our responses are set 

forth below. 

Comment: A number of commenters 

suggested that we publish baseline 

achievement thresholds and 

benchmarks for clinical process 

measures and HCAHPS dimensions on 

Hospital Compare. 

Response: The finalized achievement 

thresholds and benchmarks that apply 

to the FY 2013 Hospital VBP program 

are provided in Table 4 of this final rule. 

We will consider the commenters 

suggestion to publish baseline 

achievement thresholds and 

benchmarks on Hospital Compare in the 

future. 

Comment: One commenter requested 

that CMS clarify whether hospitals 

lacking the minimum number of 

patients or measures would be included 

in baseline period calculations of 

thresholds and benchmarks. 

Response: The achievement 

thresholds and benchmarks will be 

calculated using data from a baseline 

period comparable in length to the 

performance period. For this reason, we 

believe that we should also use the same 

minimums for purposes of those 

calculations. 

Comment: One commenter suggested 

that we compare performance among 

similar hospitals rather than against 

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national data. Other commenters asked 

if CMS was going to adjust the baseline 

period data based on any factors such as 

geographic region. 

Response: We believe that 

achievement thresholds and 

benchmarks based on national data 

provide balanced, appropriate standards 

of high quality care for hospitals to work 

towards under the Hospital VBP 

program. Some groups of hospitals may 

perform better or worse than other 

hospitals on certain measures, but we 

do not believe it would appropriate to 

raise or lower the performance 

standards based on such observations. 

For example, we do not wish to lower 

the performance standards for a hospital 

simply because average performance in 

its local region is subpar compared to 

national performance. Similarly, we do 

not wish to raise or lower the 

performance standards for large 

hospitals, teaching hospitals, or others 

based on any observations that classes 

of hospitals differed in their average 

performance on individual measures. 

We note that consumers will be able to 

compare geographically and 

demographically similar hospitals’ 

performance on measures as they 

currently do on the Hospital Compare 

Web site. 

Comment: One commenter asked us 

to clarify the baseline periods for 

Hospital VBP program years after FY 

2013. 

Response: We intend to propose all 

future baseline periods in future 

rulemaking and specifically, intend to 

propose the FY 2014 Hospital VBP 

payment determination baseline period 

in the CY 2012 OPPS rule. 

Comment: One commenter asked how 

CMS will address hospital mergers that 

occur during the performance period. 

Response: The issue of how to address 

the calculation of the total performance 

score in the context of hospital mergers 

will be the subject of future rulemaking. 

After considering the public 

comments, we are finalizing the 

proposed definitions of the achievement 

performance standard (achievement 

threshold) and the improvement 

performance standard (improvement 

threshold) for the FY 2013 Hospital VBP 

program as displayed below in Table 4. 

Because our process for validating the 

proposed baseline period of data was 

not yet complete at the time we issued 

the proposed rule, we were unable to 

provide the precise achievement 

threshold values; instead we provided 

example achievement performance 

standards. We also stated that these 

values would be specified in the final 

rule (76 FR 2464), and they are shown 

below. 

TABLE 4—ACHIEVEMENT THRESHOLDS THAT APPLY TO THE FY 2013 HOSPITAL VBP PROGRAM MEASURES

Measure ID Measure description 

Performance 

standard 

(achievement 

threshold) 

Clinical Process of Care Measures 

AMI–7a ........................... Fibrinolytic Therapy Received Within 30 Minutes of Hospital Arrival ..................................................... 0.6548 

AMI–8a ........................... Primary PCI Received Within 90 Minutes of Hospital Arrival ................................................................. 0.9186 

HF–1 .............................. Discharge Instructions ............................................................................................................................. 0.9077 

PN–3b ............................ Blood Cultures Performed in the Emergency Department Prior to Initial Antibiotic Received in Hospital.0.9643 

PN–6 .............................. Initial Antibiotic Selection for CAP in Immunocompetent Patient ........................................................... 0.9277 

SCIP–Inf–1 ..................... Prophylactic Antibiotic Received Within One Hour Prior to Surgical Incision ........................................ 0.9735 

SCIP–Inf–2 ..................... Prophylactic Antibiotic Selection for Surgical Patients ........................................................................... 0.9766 

SCIP–Inf–3 ..................... Prophylactic Antibiotics Discontinued Within 24 Hours After Surgery End Time ................................... 0.9507 

SCIP–Inf–4 ..................... Cardiac Surgery Patients with Controlled 6AM Postoperative Serum Glucose ..................................... 0.9428 

SCIP–VTE–1 .................. Surgery Patients with Recommended Venous Thromboembolism Prophylaxis Ordered ...................... 0.9500 

SCIP–VTE–2 .................. Surgery Patients Who Received Appropriate Venous Thromboembolism Prophylaxis Within 24 

Hours Prior to Surgery to 24 Hours After Surgery.

0.9307 

SCIP–Card–2 ................. Surgery Patients on a Beta Blocker Prior to Arrival That Received a Beta Blocker During the 

Perioperative Period.

0.9399 

Patient Experience of Care Measures 

HCAHPS ........................ Communication with Nurses ................................................................................................................... 75.18% 

Communication with Doctors .................................................................................................................. 79.42% 

Responsiveness of Hospital Staff ........................................................................................................... 61.82% 

Pain Management ................................................................................................................................... 68.75% 

Communication About Medicines ........................................................................................................... 59.28% 

Cleanliness and Quietness of Hospital Environment ............................................................................. 62.80% 

Discharge Information ............................................................................................................................. 81.93% 

Overall Rating of Hospital ....................................................................................................................... 66.02% 

We are also finalizing the 

achievement thresholds for the three 

mortality measures, (displayed as 

survival rates) in Table 5 below based 

on a 12-month baseline period from July 

1, 2009 to June 30, 2010: 

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TABLE 5—ACHIEVEMENT THRESHOLDS FOR THE FY 2014 HOSPITAL VBP PROGRAM MORTALITY OUTCOME MEASURES

(DISPLAYED AS SURVIVAL RATES) 

Measure ID Measure description 

Performance 

standard 

(achievement 

threshold) 

Mortality Outcome Measures 

MORT–30–AMI .............. Acute Myocardial Infarction (AMI) 30-Day Mortality Rate ...................................................................... 84.8082% 

MORT–30–HF ................ Heart Failure (HF) 30-Day Mortality Rate ............................................................................................... 88.6109% 

MORT–30 PN ................ Pneumonia (PN) 30-Day Mortality Rate ................................................................................................. 88.1795% 

F. Methodology for Calculating the Total 

Performance Score 

1. Statutory Provisions 

Section 1886(o)(5)(A) of the Act 

requires the Secretary to develop a 

methodology for assessing each 

hospital’s total performance based on 

performance standards with respect to 

the measures selected for a performance 

period. Using such methodology, the 

Secretary must provide for an 

assessment for each hospital for each 

performance period. 

Section 1886(o)(5)(B) of the Act sets 

forth 5 requirements related to the 

scoring methodology developed by the 

Secretary under section 1886(o)(5)(A). 

Specifically, section 1886(o)(5)(B)(i) 

requires the Secretary to ensure that the 

application of the scoring methodology 

results in an appropriate distribution of 

value-based incentive payments among 

hospitals receiving different levels of 

hospital performance scores, with 

hospitals achieving the highest hospital 

Total Performance Scores receiving the 

largest value-based incentive payments. 

Section 1886(o)(5)(B)(ii) provides that, 

under the methodology, the hospital 

Total Performance Score must be 

determined using the higher of the 

applicable hospital’s achievement or 

improvement score for each measure. 

Section 1886(o)(5)(B)(iii) requires that 

the hospital scoring methodology 

provide for the assignment of weights 

for categories of measures as the 

Secretary deems appropriate. Section 

1886(o)(5)(B)(iv) prohibits the Secretary 

from setting a minimum performance 

standard in determining the hospital 

performance score for any hospital. 

Finally, section 1886(o)(5)(B)(v) requires 

that the hospital performance score for 

a hospital reflect the measures that 

apply to the hospital. 

2. Additional Factors for Consideration 

As discussed in the Hospital Inpatient 

VBP Program proposed rule, in addition 

to statutory requirements, we also 

considered several additional factors 

when developing the proposed 

performance scoring methodology for 

the Hospital VBP program. First, we 

stated our belief that it is important that 

the performance scoring methodology is 

straightforward and transparent to 

hospitals, patients, and other 

stakeholders. 

Hospitals must be able to clearly 

understand performance scoring 

methods and performance expectations 

to maximize quality improvement 

efforts. 

The public must understand 

performance score methods to utilize 

publicly reported information when 

choosing hospitals. 

Second, we stated our belief that the 

scoring methodologies for all Medicare 

Value-Based Purchasing programs, 

including (but not limited to) the End 

Stage Renal Disease Quality Incentive 

Program should be aligned as 

appropriate given their specific 

statutory requirements. This alignment 

will facilitate the public’s 

understanding of quality information 

disseminated in these programs and 

foster more informed consumer decision 

making about health care. Third, we 

stated our belief that differences in 

performance scores must reflect true 

differences in performance. In order to 

ensure this in the proposed Hospital 

VBP Program, we assessed the 

quantitative characteristics of the 

measures we are proposing to use to 

calculate the Total Performance Score, 

including the current state of measure 

development, distribution of current 

hospital performance in the proposed 

measure set, number of measures, and 

the number and grouping of measure 

domains. Fourth, we stated that we 

must appropriately measure both 

quality achievement and improvement 

in the Hospital VBP program. Section 

1886(o)(5)(B)(ii) of the Act specifies that 

performance scores under the Hospital 

VBP program be calculated utilizing the 

higher of achievement and improvement 

scores for each measure; that explicit 

direction has implications for the design 

of the performance scoring 

methodology. We must also consider the 

impact of performance scores utilizing 

achievement and improvement on 

hospital behavior due to payment 

implications. Fifth, we stated that we 

wished to eliminate unintended 

consequences for rewarding 

inappropriate hospital behavior and 

outcomes to patients in our performance 

scoring methodology. Sixth, we stated 

that we wished to utilize the most 

currently available data to assess 

hospital improvement in a performance 

score methodology. We believe that 

more current data would result in a 

more accurate performance score, but 

recognize that hospitals require time to 

abstract and collect quality information. 

We also require time to process this 

information accurately. 

The methodology proposed in the 

Hospital Inpatient VBP Program 

proposed rule for calculating the 

improvement score relies on a 

comparison of the hospital’s 

performance during the performance 

period against its performance during a 

baseline period rather than a 

comparison of the hospital’s 

performance during a particular year 

against its performance during a 

previous year (as was outlined in the 

2007 Report to Congress). 

We stated that we planned to propose 

future annual updates to the baseline 

period through future rulemaking. We 

recognize that comparing a payment 

year’s performance period with the 

previous year’s performance period may 

be a better estimate of incremental 

improvement. 

In the Hospital Inpatient VBP Program 

proposed rule, we solicited comment on 

the merits and impact of all of the 

factors related to our performance score 

methodology alternatives, including the 

choice of how to define the baseline 

year. 

We welcomed suggestions on 

improving the simplicity of the Hospital 

VBP program performance score 

methodology and its alignment with 

other CMS quality initiatives. 

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6The report may be found at http://www.cms.gov/ 

AcuteInpatientPPS/downloads/HospitalVBPPlan

RTCFINALSUBMITTED2007.pdf. 

3. Background 

In November 2007, CMS published 

the 2007 Report to Congress.6 In 

addition to laying the groundwork for 

hospital value-based purchasing, the 

2007 Report to Congress analyzed and 

presented a potential performance 

scoring methodology (called the 

Performance Assessment Model) for the 

Hospital VBP program. The Performance 

Assessment Model combines scores on 

individual measures across different 

quality categories or ‘‘domains’’ (for 

example, clinical process of care, 

patient experience of care) to calculate 

a hospital’s Total Performance Score. 

The Performance Assessment Model 

provides a methodology for evaluating a 

hospital’s performance on each measure 

based on the higher of an attainment 

score in the measurement period or an 

improvement score, which is 

determined by comparing the hospital’s 

current measure score with a baseline 

period of performance. 

The use of an improvement score is 

intended to provide an incentive for a 

broad range of hospitals that participate 

in the Hospital VBP program by 

awarding points for showing 

improvement on measures, not solely 

for outperforming other hospitals. 

Under the Performance Assessment 

Model, measures are grouped into 

domains, for example, clinical process 

of care (which could include AMI, HF, 

PN, and SCIP) and patient experience of 

care (for example, HCAHPS). 

A score is calculated for each domain 

by combining the measure scores within 

that domain, weighting each measure 

equally. The domain score reflects the 

percentage of points earned out of the 

total possible points for which a 

hospital is eligible. A hospital’s Total 

Performance Score is determined by 

aggregating the scores across all 

domains. In aggregating the scores 

across domains, the domains could be 

weighted equally or unequally, 

depending on the policy goals. The 

Total Performance Score is then 

translated into the percentage of the 

Hospital VBP incentive payment earned 

using an exchange function, which 

aligns payments with desired policy 

goals. 

4. FY 2013 Hospital VBP Program 

Scoring Methodology 

As stated in the Hospital Inpatient 

VBP Program proposed rule, we believe 

that the Performance Assessment Model 

presented and analyzed in the 2007 

Report to Congress provides a useful 

foundation for developing the FY 2013 

Hospital VBP program performance 

scoring methodology that comports with 

the requirements in section 1886(o) of 

the Act. The Performance Assessment 

Model outlines an approach that we 

believe is well-understood by patient 

advocates, hospitals and other 

stakeholders, was developed during a 

year-long process that involved 

extensive stakeholder input, and was 

presented by us to Congress. Since 

issuing the report, we have conducted 

further, extensive research on a number 

of important methodology issues for the 

Hospital VBP program, including the 

impact of topped-out measures on 

scoring, appropriate case minimum 

thresholds for measures, appropriate 

measure minimum thresholds per 

domain, and other issues required to 

ensure a high level of confidence in the 

scoring methodology (all of which we 

discussed in this Final Rule). 

After carefully reviewing and 

evaluating a number of potential 

performance scoring methodologies for 

the Hospital VBP program, we proposed 

to use a Three-Domain Performance 

Scoring Model, although we proposed 

that only two domains would receive 

weight in FY 2013. This methodology is 

very similar to the Performance 

Assessment Model; however, it 

incorporates an outcome measure 

domain in addition to the clinical 

process of care and patient experience 

of care domains. 

While we did not propose to adopt 

any outcome measures for the FY 2013 

Hospital VBP program, we proposed to 

adopt these measures as part of an 

outcome measures domain for FY 2014. 

The proposed Three-Domain 

Performance Scoring Model includes 

setting benchmarks and thresholds, 

scoring hospitals on achievement and 

improvement for three domains (clinical 

process of care, patient experience of 

care, and outcomes), weighting the 

domains, and calculating the hospital 

Total Performance Score. 

a. Setting Performance Benchmarks and 

Thresholds 

As stated above, section 

1886(o)(5)(B)(ii) of the Act requires that 

under the Hospital VBP program 

performance scoring methodology, 

hospital performance scores be 

determined using the higher of 

achievement or improvement scores for 

each measure. With respect to scoring 

hospital performance on the proposed 

clinical process of care and outcome 

measures, we propose to use a 

methodology based on the scoring 

methodology set forth in the 2007 

Report to Congress Performance 

Assessment Model. 

In the Hospital Inpatient VBP Program 

proposed rule, we proposed that 

hospitals will receive points along an 

achievement range, which is a scale 

between the achievement threshold (the 

minimum level of hospital performance 

required to receive achievement points) 

and the benchmark (the mean of the top 

decile of hospital performance during 

the baseline period). In determining the 

improvement score, we proposed that 

hospitals will receive points along an 

improvement range, which is a scale 

between the hospital’s prior score on the 

measure during the baseline period and 

the benchmark. 

Under this methodology, we proposed 

to establish the benchmarks and 

achievement thresholds for the FY 2013 

Hospital VBP program using national 

data from a three-quarter baseline 

period of July 1, 2009 through March 31, 

2010. 

To define a high level of hospital 

performance on a given measure, we 

proposed to set the benchmark at the 

mean of the top decile of hospital scores 

on the clinical process of care, and 

outcome measures during the baseline 

period. For the patient experience of 

care measures, we proposed to set the 

benchmark at the 95th percentile of 

hospital performance during the 

baseline period. We stated that this 

would ensure that the benchmark 

represents demonstrably high but 

achievable standards of excellence; in 

other words, the benchmark will reflect 

observed scores for the highestperforming hospitals on a given 

measure. 

We proposed to set the achievement 

threshold at the 50th percentile of 

hospital performance on the measure 

during the baseline period. Hospitals 

will have to score at or above this 

achievement threshold to earn 

achievement points. 

Comment: We received many 

comments stating that the proposed 

benchmarks were too high. Some 

commenters stated that this was 

evidenced by the fact that for many of 

the proposed measures, performance at 

the benchmark would require hospitals 

to achieve 100 percent success on the 

measure. In addition to stating that this 

level of performance could be too 

difficult for some hospitals to achieve, 

some commented that this would serve 

as an inappropriate benchmark in light 

of the fact that the measures do not 

incorporate all clinically relevant 

exclusion criteria based on every 

patient’s particular situation. One 

commenter supported setting the 

benchmark at the 80th percentile in the 

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baseline period for the patient 

experience of care domain to ensure that 

every hospital has a chance of exceeding 

the benchmark. 

Response: As we stated in the 

Hospital Inpatient VBP program 

proposed rule, the benchmark is 

intended to represent an empiricallydemonstrated level of excellent 

performance during the baseline period 

(76 FR 2471), and we believe that this 

standard represents achievable 

excellence for all hospitals during the 

performance period. We recognize that 

some of the proposed clinical process of 

care measures do not meet our criteria 

for topped-out status but still have a 

benchmark of 100 percent success. 

We consider a benchmark to be an 

empirically-observed level of excellent 

performance to which we believe 

hospitals generally should aspire. Using 

the proposed definition of a benchmark 

(mean value for the top 10 percent of 

hospitals during the baseline period), 

typically only about 5 percent of all 

hospitals will be observed to have 

achieved the benchmark level for an 

individual measure during the baseline 

period. However, any number of 

hospitals could score at or above the 

benchmark during the performance 

period, and under the proposed 

performance scoring methodology, such 

hospitals would receive the full 10 

points on the measure. A benchmark 

level of 100 percent is a special case in 

which at least 10 percent of hospitals 

achieved a 100 percent success rate on 

the measure during the baseline period. 

When a benchmark for a measure is 100 

percent, at least half of all reporting 

hospitals will receive at least some 

achievement points on the measure 

(assuming no general degradation of 

performance among hospitals), which is 

the same as every other measure. 

Arbitrarily setting benchmark levels (for 

example, at 80th percentile) would 

undermine its empirically-based 

definition, as would, for example, 

arbitrarily setting the benchmark at 100 

percent for every measure. 

As stated above, when a benchmark is 

100 percent, at least 10 percent of 

hospitals would have to have achieved 

100 percent on the measure during the 

baseline period; this suggests that 

achieving 100 percent success on a 

measure is not prohibitively difficult as 

a portion of hospitals will have actually 

achieved that standard. In rare 

instances, a hospital might not provide 

a process covered by a clinical process 

of care measure because none of those 

measures currently allow for blanket 

discretionary exclusions that would 

enable a hospital to exclude a case 

based on any conceivable set of 

circumstances. As a result, a measure 

calculation might capture a rare case 

that arguably could have been excluded, 

such as a case where the patient was 

allergic to all indicated drugs, or the 

patient refused services and/or asked to 

be discharged against medical advice. 

As new information becomes available 

concerning possible unintended 

consequences of measures, their 

specifications can be reviewed and 

revised as necessary, including the 

addition of supplemental exclusion 

criteria. This process is ongoing and, we 

believe, is a better way to deal with rare 

cases instead of setting a benchmark at 

an indiscriminate, low value such as the 

80th percentile. 

All measures have limitations and it 

is therefore possible that a hospital, in 

the unfortunate but rare instance in 

which it provides what it believes is the 

best quality of care, will fail to achieve 

the benchmark. It is partly for this 

reason that we proposed to set the 

achievement performance standard for 

each measure at the achievement 

threshold rather than the benchmark. 

We also emphasize that a hospital’s 

value-based incentive payment is based 

on its Total Performance Score, not on 

performance at the benchmark for every 

measure. Our analysis indicates that 

small differences in points on a single 

measure caused by missing the 

benchmark have little impact on the 

distribution of incentive payments and 

rank correlation of hospitals. 

Comment: One commenter argued 

that high-performing hospitals ‘‘who 

already beat national benchmarks’’ have 

incentives to perform poorly ‘‘in the 

short term’’ so that they can then win 

improvement points and receive higher 

payments. 

Response: We assume that the 

commenter is suggesting a scenario in 

which a high-performing hospital might 

attempt to intentionally score lower on 

one or more measures during the 

baseline period in order to score 

improvement points during the 

performance period. First, we expect all 

Medicare hospitals to provide highquality care to their patients regardless 

of whether they are included in the 

Hospital VBP program or not. 

Furthermore, we disagree that highachieving hospitals would have an 

incentive to lower their performance in 

order to win improvement points in the 

Hospital VBP program. We note that 

under the proposed Three-Domain 

Scoring Methodology, the maximum 

number of achievement points possible 

on a given measure is higher (10 points) 

for achieving the benchmark, than the 

maximum number of improvement 

points possible (9 points). It is difficult 

to envision a scenario in which a highperforming hospital would earn more 

overall points on a measure (that is, the 

higher of achievement and improvement 

points) by intentionally lowering its 

performance during the baseline period 

and increasing performance during the 

performance period versus simply 

maintaining high performance during 

the baseline period and seeking to 

maintain or improve on that 

performance during the performance 

period. However, we plan to closely 

monitor and evaluate the impact of the 

Hospital VBP program on the quality of 

care provided to Medicare beneficiaries. 

After consideration of the public 

comments, we are finalizing as 

proposed the definition of the 

benchmark as the mean of the top decile 

of hospital performance during the 

baseline period for the clinical process 

of care and outcome measures. In 

response to numerous public comments 

(further discussed below) requesting 

greater uniformity between the scoring 

of clinical process of care measures, 

outcome measures, and HCAHPS 

dimensions, we are also finalizing the 

definition of the benchmark as the mean 

of the top decile of performance during 

the baseline period for the patient 

experience of care domain. 

The finalized benchmarks for the 

clinical process of care and patient 

experience of care domains for the FY 

2013 Hospital VBP Program are 

provided below in Table 6. The 

finalized benchmarks for the three 30- 

day mortality outcome measures for the 

FY 2014 Hospital VBP Program are 

provided below in Table 7. 

TABLE 6—BENCHMARKS THAT APPLY TO THE FY 2013 HOSPITAL VBP PROGRAM MEASURES

Measure ID Measure description Benchmark 

Clinical Process of Care Measures 

AMI–7a ........................... Fibrinolytic Therapy Received Within 30 Minutes of Hospital Arrival ..................................................... 0.9191 

AMI–8a ........................... Primary PCI Received Within 90 Minutes of Hospital Arrival ................................................................. 1.0 

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TABLE 6—BENCHMARKS THAT APPLY TO THE FY 2013 HOSPITAL VBP PROGRAM MEASURES—Continued 

Measure ID Measure description Benchmark 

HF–1 .............................. Discharge Instructions ............................................................................................................................. 1.0 

PN–3b ............................ Blood Cultures Performed in the Emergency Department Prior to Initial Antibiotic Received in Hospital.1.0 

PN–6 .............................. Initial Antibiotic Selection for CAP in Immunocompetent Patient ........................................................... 0.9958 

SCIP–Inf–1 ..................... Prophylactic Antibiotic Received Within One Hour Prior to Surgical Incision ........................................ 0.9998 

SCIP–Inf–2 ..................... Prophylactic Antibiotic Selection for Surgical Patients ........................................................................... 1.0 

SCIP–Inf–3 ..................... Prophylactic Antibiotics Discontinued Within 24 Hours After Surgery End Time ................................... 0.9968 

SCIP–Inf–4 ..................... Cardiac Surgery Patients with Controlled 6AM Postoperative Serum Glucose ..................................... 0.9963 

SCIP–VTE–1 .................. Surgery Patients with Recommended Venous Thromboembolism Prophylaxis Ordered ...................... 1.0 

SCIP–VTE–2 .................. Surgery Patients Who Received Appropriate Venous Thromboembolism Prophylaxis Within 24 

Hours Prior to Surgery to 24 Hours After Surgery.

0.9985 

SCIP–Card–2 ................. Surgery Patients on a Beta Blocker Prior to Arrival That Received a Beta Blocker During the 

Perioperative Period.

1.0 

HCAHPS ........................ Communication With Nurses .................................................................................................................. 84.70% 

Communication With Doctors ................................................................................................................. 88.95% 

Responsiveness of Hospital Staff ........................................................................................................... 77.69% 

Pain Management ................................................................................................................................... 77.90% 

Communication About Medicines ........................................................................................................... 70.42% 

Cleanliness and Quietness of Hospital Environment ............................................................................. 77.64% 

Discharge Information ............................................................................................................................. 89.09% 

Overall Rating of Hospital ....................................................................................................................... 82.52% 

TABLE 7—FINAL BENCHMARKS FOR THE FY 2014 HOSPITAL VBP PROGRAM MORTALITY OUTCOME MEASURES

(DISPLAYED AS SURVIVAL RATES) 

Measure ID Measure description Benchmark 

Mortality Outcome Measures 

MORT–30–AMI .............. Acute Myocardial Infarction (AMI) 30-Day Mortality Rate ...................................................................... 86.9098% 

MORT–30–HF ................ Heart Failure (HF) 30-Day Mortality Rate ............................................................................................... 90.4861% 

MORT–30 PN ................ Pneumonia (PN) 30-Day Mortality Rate ................................................................................................. 90.2563% 

b. Calculating Achievement, 

Improvement Points, and Consistency 

Points 

We proposed a scoring methodology 

that would assign an achievement and 

improvement score to each hospital for 

each of the clinical process of care and 

outcome measures that apply to the 

hospital, and for each HCAHPS 

dimension. We proposed that a hospital 

will earn 0–10 points for achievement 

based on where its performance for the 

measure fell relative to the achievement 

threshold and the benchmark. 

We proposed that a hospital would 

earn 0–9 points based on how much its 

performance on the measure during the 

performance period improved from its 

performance on the measure during the 

baseline period. A unique improvement 

range for each measure would be 

established for each hospital that 

defines the distance between the 

hospital’s baseline period score and the 

national benchmark for the measure. 

The scoring methodology we 

proposed to implement for HCAHPS 

includes achievement, improvement, 

and consistency points. We proposed 

that for the FY 2013 Hospital VBP 

program hospitals may earn from 0–20 

consistency points based on the lowest 

of its 8 HCAHPS dimension scores. 

We refer readers to the Hospital 

Inpatient VBP Program proposed rule 

(76 FR 2470–2487) for the details of the 

proposed scoring methodologies and 

examples of how hospital total 

performance scores are calculated under 

the Three-Domain Performance Scoring 

Model. 

Our responses to public comments are 

provided below. 

Comment: One commenter asked us 

to outline the scoring model for 

outcome measures before proposing 

their use. 

Response: As detailed in the Hospital 

Inpatient VBP Program proposed rule 

(76 FR 2466), we proposed that the 

outcome domain would be scored using 

the same methodology that we proposed 

to use to score the clinical process of 

care domain. That methodology is 

finalized in this final rule. 

Comment: We received numerous 

comments asking CMS to more closely 

align the scoring methodologies and 

formulas used to calculate points in the 

clinical process of care and patient 

experience of care domains. 

Commenters specifically suggested that 

we use percentages rather than 

percentiles in the HCAHPS scoring 

methodology and questioned why we 

chose different methodologies to 

calculate the benchmarks in the clinical 

process of care and patient experience 

of care domains. These commenters 

suggested that the patient experience of 

care scoring model laid out in the 

proposed rule was too complex and 

differed too greatly from the clinical 

process of care scoring model. 

Commenters also suggested that CMS 

create greater uniformity in Hospital 

VBP scoring formulas across the 

domains, including the formulation of 

the benchmarks. 

Response: In the initial analyses of 

HCAHPS data for the 2007 Report to 

Congress, which was based on about 

500 hospitals and three quarters of 

HCAHPS results, we found that a few 

small hospitals achieved much higher 

HCAHPS scores than most. Thus, a nonpercentile approach for HCAHPS would 

have led to a skewed distribution of 

achievement points (most clustered at 

the low end and few high scores). At the 

time of the 2007 Report to Congress, the 

percentile approach did a better job of 

spreading out the achievement points. 

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When we re-examined this issue in 

response to comments to the Hospital 

Inpatient VBP Program proposed rule, 

we found that our current data, which 

is based upon over 3,000 hospitals with 

several years of experience using 

HCAHPS, show that the distribution of 

scores has changed over time and that 

there is no longer a skewed distribution 

of achievement points using a nonpercentile approach. 

Therefore, we will abandon the use of 

percentiles for calculating the 

benchmark in HCAHPS in Hospital VBP 

and instead will finalize the use of 

percentages of top-box scores in our 

HCAHPS calculations. As stated below, 

we believe that this change will both 

simplify the calculation of HCAHPS 

scores and will make HCAHPS scoring 

more comparable to that of the clinical 

process of care and outcome measures 

in the Hospital VBP program. 

In response to numerous comments 

received, we are finalizing the definition 

of the benchmark for each measure in 

the patient experience of care domain as 

the mean of the top decile of hospital 

performance on the measure (for 

purposes of the HCAHPS measure, this 

would be each HCAHPS dimension) 

during the baseline period. We believe 

this policy results in more uniform 

scoring methodologies across domains 

and appropriately reflects our decision 

to abandon the use of percentiles in the 

patient experience of care domain. We 

have made technical changes to the 

formulas used to calculate achievement 

and improvement points reflecting these 

finalized policies below. 

As shown in Table 8, for each of the 

8 HCAHPS dimensions we are finalizing 

for the FY 2013 Hospital VBP program, 

scores will be based on the publiclyreported proportions of best category 

(‘‘top-box’’) responses. (As noted above, 

top-box responses, as publicly reported 

on the Hospital Compare Web site, are 

the most positive responses to HCAHPS 

survey questions and are adjusted for 

patient-mix and survey mode). Please 

note that the ‘‘Cleanliness and 

Quietness’’ dimension is the average of 

the publicly reported stand-alone 

‘‘Cleanliness’’ and ‘‘Quietness’’ ratings. 

TABLE 8—EIGHT HCAHPS DIMENSIONS FOR THE FY 2013 HOSPITAL VBP PROGRAM

Dimension (composite or stand-alone item) Constituent HCAHPS survey items 

1. Communication with Nurses (% ‘‘Always’’) ................................................................................................... Nurse—Courtesy/Respect. 

Nurse—Listen. 

Nurse—Explain. 

2. Communication with Doctors (% ‘‘Always’’) .................................................................................................. Doctor—Courtesy/Respect. 

Doctor—Listen. 

Doctor—Explain. 

3. Responsiveness of hospital staff (% ‘‘Always’’) ............................................................................................ Bathroom Help. 

Call Button. 

4. Pain management (% ‘‘Always’’) .................................................................................................................. Pain Control. 

Help with Pain. 

5. Communication about Medicines (% ‘‘Always’’) ........................................................................................... New Medicine—Reason. 

New Medicine—Side Effects. 

6. Hospital Cleanliness & Quietness (% ‘‘Always’’) .......................................................................................... Cleanliness and Quietness. 

Discharge—Help. 

I. Discharge Information (% ‘‘Yes’’).

7. Overall rating (% ‘‘9 or 10’’) .......................................................................................................................... Discharge—Systems. 

8. Overall Rating of Hospital (% ‘‘9 or 10’’) ...................................................................................................... Overall Rating. 

Comment: Some commenters 

recommended that HCAHPS be 

excluded from the Hospital VBP 

program until an examination and 

public vetting of the scoring 

methodology takes place. 

Response: The scoring methodology 

proposed for HCAHPS was part of the 

original Report to Congress in 2007 and 

was subject to stakeholder input 

through multiple listening sessions. The 

final methodology described in this 

final rule is more similar to the clinical 

process of care scoring methodology 

since it now uses percentages not 

percentiles. The notice and comment 

rulemaking process for this rule has 

allowed the public to vet CMS’ 

proposals. In response to public 

comments, CMS is making an additional 

change to the HCAHPS scoring 

methodology (this change is discussed 

below). 

Comment: Many commenters opposed 

our proposal to use consistency points 

in the patient experience of care 

domain. Others suggested that we 

consider using consistency points in the 

clinical process of care domain. 

Response: For reasons detailed in the 

2007 Report to Congress and the 

Hospital Inpatient VBP Program 

proposed rule (76 FR 2472), we believe 

that consistency points recognize and 

reward consistent achievement across 

HCAHPS dimensions. By offering 

hospitals additional incentives to 

achieve across all HCAHPS dimensions, 

consistency points promote wider 

systems changes within hospitals to 

improve quality. We will consider 

developing consistency points for the 

clinical process of care domain in the 

future. However, we note that applying 

consistency points in that domain 

would be methodologically challenging. 

All hospitals must report all dimensions 

of the HCAHPS survey, and for that 

reason, all hospitals will earn scores on 

all dimensions on which we can use to 

fairly reward consistency. Applying 

consistency points to the clinical 

process of care domain when different 

numbers of measures might apply to 

different hospitals may result in unfair 

distributions of consistency points. We 

welcome input on an appropriate 

methodology for clinical process of care 

consistency points. 

Comment: A number of commenters 

suggested technical changes to the 

formulas proposed to be used to 

calculate achievement and improvement 

points. In suggesting these technical 

changes, commenters pointed out that 

under the proposed formulas for clinical 

process of care and outcome measure 

scoring, a hospital with a score equal to 

the achievement threshold would 

receive a score of .5, which rounds to 1, 

while a hospital with a score equal to 

the benchmark would receive a score of 

9.5, which rounds to 10. Commenters 

pointed out that this formula effectively 

creates a scale of 0.5 to 9.5 instead of a 

scale from 1 to 10. These commenters 

urged CMS to modify the formula so 

that the scale ‘‘starts’’ at 1 instead of 0.5, 

and urged CMS to make similar 

modifications for the formula used to 

calculate improvement points for the 

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clinical process of care and outcome 

measures. 

Response: The formula for 

achievement points reflects the 

description of how points are assigned 

to hospitals with scores between the 

threshold and benchmark values. For 

such hospitals, the range between the 

achievement threshold and benchmark 

values is partitioned into 9 equally 

spaced intervals and a hospital is 

awarded from 1 to 9 points, depending 

on which of the nine equally spaced 

intervals its score falls. The offered 

alternatives satisfy much of this 

description, but fail to meet the equalspacing property. In particular, if we 

revised the scale along the lines 

suggested by the commenters, the 

interval of scores needed to receive one 

point would be only half as large as the 

remaining eight intervals. As a result, 

the number of hospitals receiving one 

point would be reduced and our ability 

to distinguish among hospitals on the 

lower end of the scale would also be 

reduced. 

Regarding the specific comment that 

the scoring scale starts with only 0.5, we 

note that, in fact, hospitals scoring 

within the achievement range start with 

a score of ‘‘round (.5).’’ The ‘‘round’’ 

function is part of the formula and 

cannot be ignored without significantly 

altering the resulting calculations, 

which would prevent us from 

implementing equal spacing within the 

achievement and improvement ranges 

as described above. We note that within 

the formula, any value that ends in .5 

rounds to the next higher integer, so 

‘‘round(.5)’’ equals 1 and a hospital 

scoring at the achievement threshold 

receives 1 point on that measure. 

Likewise, a score of 4.5 rounds to 5, and 

so on. 

The formula for improvement points 

is similar except that it divides the 

range between the hospital’s baseline 

score and the benchmark into 9 equallyspaced intervals and awards a hospital 

a score between 0 and 9 improvement 

points. Again, the round function is part 

of the formula and needs to be 

acknowledged (with the similar 

stipulation that values ending in .5 

round to the next higher integer). Thus, 

a hospital with a score exactly equal to 

its improvement threshold receives a 

score of round (¥.5), which would 

equal 0 points. 

Comment: One commenter 

recommended that the point 

conversions and reconversion steps be 

removed from the mathematical 

calculations, and that CMS develop a 

more direct calculation method rather 

than scoring hospitals with points based 

on measure rates and later converting 

point totals into domain scores. 

Response: The point calculations used 

to score hospitals on performance 

measures reflect our intent to provide a 

more[?] robust measure scoring 

methodology than[?] is possible with a 

more direct score calculation. We 

believe that the point conversions from 

raw measure scores to the 0–10 and 0– 

9 achievement and improvement ranges, 

respectively, enable us to more clearly 

communicate assessments of hospital 

performance to hospitals and the public. 

We note that the point calculations 

allow us to easily calculate and combine 

points earned for both achievement and 

improvement, as well as compare 

hospitals earning points on different 

measures in cases when the relevant 

achievement ranges may differ 

substantially. We will evaluate the 

impact of the scoring methodology and 

will continue to examine alternative 

scoring methodologies for future years 

of the program. 

Comment: Some commenters 

suggested that the proposed scoring 

methodology undervalues improvement, 

and that establishing a lower 

‘‘improvement benchmark’’ would be 

more appropriate so that the 

improvement range is the same for every 

hospital. 

Response: We believe establishing a 

lower benchmark would undervalue 

achievement by lowering the standard 

by which hospitals may achieve 10 

points as well as the importance of 

improving to the highest level of care. 

Setting a separate, lower benchmark for 

the improvement range might also 

encourage higher achieving hospitals to 

underperform, as they would be 

rewarded more highly for achieving a 

lower level of improvement. A higher 

benchmark also allows every hospital to 

improve as much as possible and to the 

highest level of care. 

Comment: Some commenters agreed 

with our proposal to exclude the 

‘‘Would You Recommend’’ item in the 

HCAHPS performance score and to 

include only the Overall Rating because 

they believe that ‘‘recommend’’ is 

properly characterized as a measure of 

expectations. Other commenters thought 

both the Overall Rating and ‘‘Would You 

Recommend’’ should be included. One 

commenter thought the Overall Rating 

should receive more weight than the 

other HCAHPS dimensions because the 

commenter viewed it as an outcome 

measure. 

Response: We decided to include only 

the Overall Rating and not the ‘‘Would 

You Recommend’’ item in the HCAHPS 

measure because the two global ratings 

are highly correlated and the ‘‘Would 

You Recommend’’ item is more likely to 

measure expectations and other factors 

rather than the actual patient 

experience. It is important to note that, 

while there is a high correlation 

between these items overall, there can 

still be divergence for some hospitals. 

Thus for purposes of the Hospital IQR 

program, these two dimensions will be 

reported separately. 

With regard to giving greater weight to 

the Overall Rating item, we believe that 

the Overall Rating item is no more of an 

outcome than the other HCAHPS items, 

so it has been given the same weight as 

the other HCAHPS dimensions in the 

Hospital VBP scoring formula. 

Compared to the other HCAHPS 

dimensions, the Overall Rating focuses 

on the overall experience, while the 

other dimensions focus on specific 

aspects of the hospital stay. 

As discussed above, we are finalizing 

an HCAHPS scoring approach that does 

not use percentiles, and instead will 

adopt an approach that uses the 

percentage of top-box scores for scoring 

a hospital’s HCAHPS calculations. We 

believe that this change will both 

simplify the calculation of HCAHPS 

scores and will make the HCAHPS 

scoring more comparable to that of the 

clinical process of care and outcome 

measures. 

Accordingly, after considering public 

comments, we are finalizing the scoring 

methodology as follows: 

Hospitals will receive an achievement 

and improvement score for each of the 

clinical process of care and outcome 

measures that apply to them, and for 

each HCAHPS dimension. Hospital will 

earn between 0–10 points for 

achievement based on where its 

performance for the measure falls 

relative to the achievement threshold 

and the benchmark according to the 

following formula: 

[9 * ((Hospital’s performance period 

score ¥ achievement threshold)/ 

(benchmark ¥ achievement 

threshold))] + .5, where the hospital 

performance period score falls in 

the range from the achievement 

threshold to the benchmark 

All achievement points will be rounded 

to the nearest whole number (for 

example, an achievement score of 4.5 

would be rounded to 5). If a hospital’s 

score is: 

• Equal to or greater than the 

benchmark, the hospital will receive 10 

points for achievement. 

• Equal to or greater than the 

achievement threshold (but below the 

benchmark), the hospital will receive a 

score of 1–9 based on a linear scale 

established for the achievement range 

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(which distributes all points 

proportionately between the 

achievement threshold and the 

benchmark so that the interval in 

performance between the score needed 

to receive a given number of 

achievement points and one additional 

achievement point is the same 

throughout the range of performance 

from the achievement threshold to the 

benchmark). 

• Less than the achievement 

threshold (that is, the lower bound of 

the achievement range), the hospital 

will receive 0 points for achievement. 

Hospitals will earn between 0–9 

points based on how much their 

performance on the measure during the 

performance period improves from their 

performance on the measure during the 

baseline period according to the 

following formula: 

[10 * ((Hospital performance period 

score ¥ Hospital baseline period 

score)/(Benchmark ¥ Hospital 

baseline period score))] ¥ .5, where 

the hospital performance score falls 

in the range from the hospital’s 

baseline period score to the 

benchmark 

All improvement points will be rounded 

to the nearest whole number. 

If a hospital’s score on the measure 

during the performance period is: 

• Greater than its baseline period 

score but below the benchmark (within 

the improvement range), the hospital 

will receive a score of 0–9 based on the 

linear scale that defines the 

improvement range. 

• Equal to or lower than its baseline 

period score on the measure, the 

hospital will receive 0 points for 

improvement. 

Hospitals will earn between 0–20 

consistency points on the HCAHPS 

measure based on the lowest of its 8 

HCAHPS dimension scores. 

A hospital will receive 0 consistency 

points if its performance on one or more 

HCAHPS dimensions during the 

performance period is at least as poor as 

the worst-performing hospital’s 

performance on that dimension during 

the baseline period. A hospital will 

receive a maximum score of 20 

consistency points if its performance on 

all 8 HCAHPS dimensions is at or above 

the achievement threshold. 

Based on comments discussed above, 

consistency points will be awarded 

proportionately based on the single 

lowest of a hospital’s 8 HCAHPS 

dimension scores during the 

performance period compared to the 

achievement threshold (the 50th 

percentile of the baseline performance 

score) for that specific HCAHPS 

dimension. If the lowest score is less 

than the achievement threshold, then 

the score is based on the distance 

between the achievement threshold 

(50th percentile of baseline) and the 

floor (0th percentile of baseline). If all 

8 of a hospital’s dimension scores 

during the performance period are at or 

above the achievement threshold (50th 

percentile of hospital performance in 

the baseline period), then that hospital 

will earn all 20 consistency points. 

(That is, if the lowest of a hospital’s 

eight HCAHPS dimension scores is at or 

above the 50th percentile of hospital 

performance on that dimension during 

the baseline period, then that hospital 

will earn the maximum of 20 

consistency points). If the lowest score 

a hospital receives on an HCAHPS 

dimension is at or below the floor of 

hospital performance on that dimension 

during the baseline period, then 0 

consistency points will be awarded to 

that hospital. Otherwise, consistency 

points will be awarded proportionately 

according to the distance of the 

performance period score for that 

dimension between the floor and the 

achievement threshold. 

We define the lowest dimension score 

as the lowest value across the eight 

HCAHPS dimensions using the 

following formula: 

((Hospital’s performance period score— 

floor)/(achievement threshold— 

floor)). 

The formula for the HCAHPS 

consistency points score is as follows: 

(20 * (lowest dimension score)¥0.5), 

rounded to the nearest whole 

number, with a minimum of zero 

and a maximum of 20 consistency 

points. 

Consistency points will be rounded to 

the nearest whole number (for example, 

9.5 consistency points would be 

rounded to 10 points). 

Table 9 below displays floors, 

achievement thresholds, and 

benchmarks for HCAHPS consistency 

points applicable to FY 2013 using a 

baseline period of July 1, 2009–March 

31, 2010. 

TABLE 9—HCAHPS 1 TOP-BOX SCORES 2 REPRESENTING THE FLOOR (MINIMUM), ACHIEVEMENT THRESHOLD (50TH PERCENTILE) AND BENCHMARK (MEAN OF TOP DECILE) FOR HOSPITAL VALUE-BASED PURCHASING: BASELINE PERIOD

(JULY 1, 2009–MARCH 31, 2010) 

HCAHPS dimension Floor 

(minimum) 

Achievement 

threshold (50th 

percentile) 

Benchmark 

(mean of top 

decile) 

Communication with Nurses ........................................................................................................ 38.98 75.18 84.70 

Communication with Doctors ....................................................................................................... 51.51 79.42 88.95 

Responsiveness of Hospital Staff ................................................................................................ 30.25 61.82 77.69 

Pain Management ........................................................................................................................ 34.76 68.75 77.90 

Communication about Medicines ................................................................................................ 29.27 59.28 70.42 

Hospital Cleanliness & Quietness ............................................................................................... 36.88 62.80 77.64 

Discharge Information .................................................................................................................. 50.47 81.93 89.09 

Overall Rating of Hospital ............................................................................................................ 29.32 66.02 82.52 

1 Includes IPPS hospitals with 100+ completed surveys from patients discharged between July 2009 and March 2010 (3,211 hospitals). Scores 

have been adjusted for survey mode and patient-mix. 2 ‘‘Top-box’’ score is the percentage of patients who chose the most positive response to HCAHPS survey items. 

As stated above, we also note that, to 

achieve greater uniformity of scoring for 

all of the domains, we are finalizing the 

definition of the benchmark as the mean 

of the top decile of performance on the 

HCAHPS dimensions, rather than the 

95th percentile of performance as we 

had proposed. 

We have provided three examples 

describing how the clinical process of 

care and outcome measures will be 

scored. These examples are similar to 

those that were provided in the Hospital 

Inpatient VBP proposed rule (76 FR 

2467–2470), but illustrate scoring on a 

different measure since PN–2, used in 

the proposed rule, is now topped-out. 

Three more examples illustrate how the 

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finalized scoring methodology will be 

applied to the HCAHPS dimensions. 

The clinical process of care examples 

use AMI–7a ‘‘Fibrinolytic Therapy 

Received Within 30 Minutes of Hospital 

Arrival,’’ while the HCAHPS examples 

are based on the ‘‘Doctor 

Communication’’ dimension. 

Figure 1 shows measure scoring for 

Hospital B. The benchmark calculated 

for AMI–7a in this case was 0.9191 (the 

mean value of the top decile during the 

baseline period), and the achievement 

threshold was 0.6548 (the performance 

of the median or the 50th percentile 

hospital during the baseline period). 

Hospital B’s performance rate of 0.93 

during the performance period for this 

measure exceeds the benchmark, so 

Hospital B would earn 10 points (the 

maximum) for achievement. The 

hospital’s performance rate on a 

measure is expressed as a decimal. In 

the illustration, Hospital B’s 

performance rate of 0.93 means that 93 

percent of applicable patients received 

Fibrinolytic Therapy within 30 minutes 

of arrival. (Because Hospital B has 

earned the maximum number of points 

possible for this measure, its 

improvement score would be 

irrelevant.) 

Figure 2 shows the scoring for another 

hospital, Hospital I. As can be seen 

below, the hospital’s performance on 

this measure went from 0.4297 (below 

the achievement threshold) in the 

baseline period to 0.8163 (above the 

achievement threshold) in the 

performance period. Applying the 

achievement formula, Hospital I would 

earn 6 points for this measure, 

calculated as follows: 

[9 * ((0.8163¥0.6548)/ 

(0.9191¥0.6548))] + 0.5 = 5.5 + 0.5 = 6 

points. 

However, because Hospital I’s 

performance during the performance 

period is also greater than its 

performance during the baseline period, 

it would be scored based on 

improvement as well. According to the 

improvement formula, based on 

Hospital I’s period-to-period 

improvement, from 0.4297 to 0.8163, 

Hospital I would earn 7 points, 

calculated as follows: 

[10 * ((0.8163¥0.4297)/ 

(0.9191¥0.4297))]¥0.5 = 7.9¥0.5 = 

7.4, rounded to 7 points. 

Because the higher of the two scores is 

used for determining the measure score, 

Hospital I would receive 7 points for 

this measure (rounded to the nearest 

whole number). 


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In Figure 3 shown below, Hospital L’s 

performance on AMI–7a drops from 

0.72 to 0.64 (a decline of 0.08 points). 

Because this hospital’s performance 

during the performance period is lower 

than the achievement threshold of 

0.6548, it receives 0 points based on 

achievement. It would also receive 0 

points for improvement, because its 

performance during the performance 

period is lower than its performance 

during the baseline period. In this 

example, Hospital L would receive 0 

points for the measure. 


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Figure 4 shows Hospital B’s scoring 

on the doctor communication 

dimension. It scores a 90 percent, which 

exceeded the benchmark. Thus, 

Hospital B would earn the maximum of 

10 points for achievement. Because this 

is the highest number of achievement 

points the hospital could attain for this 

dimension, its improvement from its 

baseline period score on this measure 

would not be relevant. 


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Figure 5 shows that Hospital I’s 

performance on the doctor 

communication dimension rose from 

77.19 percent during the baseline period 

to 82.07 percent during the performance 

period. Because Hospital I’s 

performance during the performance 

period exceeds the achievement 

threshold of 79.42 percent, Hospital I’s 

score would fall within the achievement 

range. According to the achievement 

scale, Hospital I would earn 3 

achievement points, calculated as 

follows: 

[9 * ((82.07¥79.42)/(88.95¥79.42))] + 

0.5 = 2.5 + 0.5 = 3 

However, in this case, the hospital’s 

performance in the performance period 

has improved from its performance 

during the baseline period, so Hospital 

I would be scored based on 

improvement as well as achievement. 

Applying the improvement scale, 

Hospital I’s period-to-period 

improvement from 77.19 percent to 

82.07 percent would earn 3.65 

improvement points, which would be 

rounded to 4 points calculated as 

follows: 

[10 * ((82.07¥77.19)/ 

(88.95¥77.19))]¥0.5 = 3.65 

Using the greater of the two scores, 

Hospital I would receive 4 points for 

this dimension (rounded to the nearest 

whole number). 


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In Figure 6, Hospital L’s performance 

in the baseline period was at 11 percent, 

and its performance declined in the 

performance period to 6 percent. 

Because Hospital L’s performance 

during the performance period is lower 

than the achievement threshold of 79.42 

percent, it would receive 0 points based 

on achievement. Hospital L would also 

receive 0 points for improvement 

because its performance during the 

performance period is lower than its 

performance during the baseline period. 


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c. The Total Domain Score and the Total 

Performance Score 

We proposed to group the measures 

for the Hospital VBP program into 

domains, which we proposed to define 

as categories of measures by measure 

type. Because the clinical process of 

care and outcome measure performance 

scores will be based only on the 

measures that apply to the hospital, we 

proposed to normalize the domain 

scores across hospitals by converting the 

points earned for each domain to a 

percentage of total points. We proposed 

that the points earned for each measure 

that applies to the hospital would be 

summed (weighted equally) to 

determine the total earned points for the 

domain. 

For purposes of the Hospital VBP 

program in FY 2013, we also proposed 

that only two domains will be scored, 

the clinical process of care and patient 

experience of care. In determining how 

to appropriately weight quality measure 

domains, we considered a number of 

criteria. Specifically, we considered the 

number of measures that we proposed to 

include in each domain and the 

reliability of individual measure data. 

We also considered the systematic 

effects of alternative weighting schemes 

on hospitals according to their location 

and characteristics (for example, by 

region, size, and teaching status) and 

Departmental quality improvement 

priorities. We strongly believe that 

outcome measures are important in 

assessing the overall quality of care 

provided by hospitals. However, for 

reasons outlined in the Hospital 

Inpatient VBP Program proposed rule 

(76 FR 2461), we did not propose to 

include outcome measures in the FY 

2013 Hospital VBP program. Taking all 

of these considerations into account, we 

proposed the use of a 70 percent clinical 

process of care and 30 percent patient 

experience of care (HCAHPS) weighting 

scheme for the FY 2013 Hospital VBP 

program. We proposed this weighting 

scheme because the proposed clinical 

process of care measures comprise all 

but one of the measures we proposed to 

include in the FY 2013 Hospital VBP 

program. We believe assigning a 30 

percent weight to the patient experience 

of care domain is appropriate because 

the HCAHPS measure is comprised of 

eight dimensions that address different 

aspects of patient satisfaction. 

We solicited public comment on the 

domain weighting approach and 

calculation of the total performance 

score, as well as the utility and 

appropriateness of alternative methods. 

Comment: Some commenters 

suggested that we weight Total 

Performance scores by ‘‘opportunities to 

provide care,’’ rather than equally 

weighting each measure within each 

domain. 

Response: We thank commenters for 

their suggestion. However, we believe 

that weighting each measure within a 

domain equally will encourage hospitals 

to consider each of them equally in their 

quality improvement initiatives. We 

also believe that weighting by the 

number of opportunities, the suggested 

alternative, would overemphasize the 

SCIP measures, which often have 

opportunity counts that are much larger 

than the corresponding counts for 

measures related to other topics or 

conditions. 

Comment: Many commenters opposed 

our proposal to weight the patient 

experience of care domain at 30 percent, 

arguing that the HCAHPS survey 

composing the domain is subjective, 

and is not sufficiently risk adjusted for 


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patient characteristics or other factors. 

Those commenters suggested various 

proposed weights but generally called 

on us to lower the patient experience of 

care domain weight. One commenter 

suggested that we weight the patient 

experience of care domain higher than 

30 percent of the Total Performance 

Score. A few commenters supported our 

proposal. 

Response: We appreciate the 

commenters’ suggestions. However, we 

disagree with weighting the patient 

experience of care domain either higher 

or lower than proposed. As we detailed 

in the Hospital Inpatient VBP Program 

proposed rule (76 FR 2475), we 

considered many factors when 

determining the appropriate domain 

weights for the FY 2013 program, 

including the number of measures in 

each domain, the reliability of 

individual measure data, systematic 

effects of alternative weighting schemes 

on hospitals according to their location 

and characteristics, and Departmental 

quality improvement priorities. We also 

believe that delivery of high-quality, 

patient-centered care requires us to 

carefully consider the patient’s 

experience in the hospital inpatient 

setting. 

Comment: Some commenters 

suggested that CMS should convene 

focus groups of Medicare beneficiaries 

to determine the relative importance of 

clinical process of care and patient 

experience of care domains for 

weighting. 

Response: We believe that we have 

received significant public input to 

inform our approach for weighing each 

domain. Many public comments on the 

proposed rule discussed the weighing 

and relative importance of the domains, 

and supported the proposed weighting 

distribution. We will, however, 

continue to monitor the weighing 

distribution between domains and will 

consider commenters’ suggestions as the 

program goes forward and new 

measures and domains are added. 

Comment: Commenters suggested that 

we place greater weight on outcome 

measures compared to clinical process 

of care measures and that we emphasize 

overall rating dimensions of the 

HCAHPS survey over other dimensions. 

Response: We will take the 

commenters’ suggestion to weight the 

outcome domain more heavily than the 

clinical process of care domain as we 

develop our weighting proposals for the 

FY2014 Hospital VBP program. 

However, as we stated earlier, we 

believe that all measures within a 

domain should be weighted equally in 

order to encourage hospitals to improve 

their performance on all of them. 

Based on the comments we received, 

we are finalizing the calculation of the 

clinical process of care and outcome 

domain scores as follows: 

1. For each domain: 

Total earned points for domain = Sum 

of points earned for all applicable 

domain measures 

2. Each hospital also has a 

corresponding universe of total possible 

points for each of the clinical process 

and outcome domains calculated as 

follows: 

Total possible points for domain = Total 

number of domain measures that 

apply to the hospital multiplied by 

10 points 

3. For each domain, the total domain 

score would be calculated as a 

percentage, as follows: 

Domain score = Total earned points for 

domain divided by Total possible 

points for domain multiplied by 

100 percent. 

We are also finalizing the calculation 

of the patient experience of care domain 

score as follows: 

1. For each of the eight dimensions, 

determine the larger of the 0–10 

achievement score and the 0–9 

improvement score; 

2. Sum these 8 values to arrive at a 0– 

80 HCAHPS base score; 

3. Calculate the 0–20 HCAHPS 

consistency score; 

4. To arrive at the HCAHPS total 

earned points, or HCAHPS overall score, 

sum the HCAHPS base score and the 

consistency score. 

In summary, the overall HCAHPS 

performance score is calculated as 

follows: 

HCAHPS total earned points = HCAHPS 

base score + consistency score. 

After consideration of public 

comments, we are finalizing the 

calculation of a hospital’s Total 

Performance Score as follows: 

Multiply the hospital’s performance 

score for each domain by the weight 

for that domain (70 percent clinical 

process of care, 30 percent patient 

experience of care), and add those 

weighted scores together. 

d. Alternative Performance Scoring 

Models 

We discussed our analysis of several 

alternative performance scoring models 

in addition to the model proposed (76 

FR 2476–2478). We solicited public 

comments on the proposed model as 

well as the other potential performance 

scoring models. The comments we 

received on these models and our 

responses are set forth below. 

Comment: While agreeing with the 

analysis of scoring models considered in 

the proposed rule, one commenter asked 

that CMS consider including aspects of 

the Appropriate Care Model (ACM) in 

the Hospital VBP program scoring 

methodology, perhaps by creating a 

hybrid model in which a portion of the 

overall performance score is determined 

by an ACM-like measure of patient-level 

appropriate care. 

Response: The ACM, also referred to 

as the ‘‘all-or-none’’ model, is intended 

to be a more patient-centric method of 

assessing hospital performance on the 

clinical process of care measures (see 76 

FR 2476–2478). 

The ACM creates sub-domains by 

topic for the clinical process measures 

and is distinguished from the other two 

models described in the Hospital 

Inpatient VBP Program proposed rule 

(namely, the Three-Domain Performance 

Scoring Model and the Six-Domain 

Performance Scoring Model) in that it 

requires complete mastery for each topic 

area (‘‘all-or-none’’) in the clinical 

process of care domain at the patient 

level. 

Under the ACM, the patient 

encounter, rather than the clinical 

process of care measure itself, becomes 

the scored ‘‘event,’’ with a hospital 

receiving 1 point if it successfully 

provides to a patient the applicable 

processes under all of the measures 

within an applicable topic area, or 0 

points if it fails to furnish one or more 

of the applicable processes. The 

hospital’s condition-specific ACM score 

is the proportion of patients with the 

condition who receive the appropriate 

care as captured by the process 

measures that fall within the topic area. 

As discussed in the proposed rule, in 

the Three-Domain Performance Scoring 

Model, the scoring of the clinical 

process of care measures in a single 

clinical process of care domain is 

consistent with the current level of 

precision on the measures. 

We believe that given the current set 

of measures available for adoption into 

the Hospital VBP program at this time, 

the intermediate scores created at the 

condition or topic level under the ACM 

would convey a false sense of precision 

about the quality of care provided for 

that condition. The ACM sets a high bar 

for quality improvement and sends a 

strong signal about complete mastery for 

each individual topic area (‘‘all-ornone’’) at the patient level. 

On the other hand, we stated our 

belief that for complex patients or 

patients for whom one or more 

processes are not needed, the ACM 

model may provide a disincentive to 

providing quality care. The ACM is 

considered to be ‘‘patient focused’’ 

rather than ‘‘opportunity focused.’’ Due 

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to its all-or-nothing scoring approach, 

the ACM loses patient information that 

would have some effect on the total 

performance score under the ThreeDomain Performance Scoring Model, 

under which hospitals would receive 

credit for all of the measures for which 

it met the performance standard. 

Furthermore, as a result of all-ornothing scoring, the ACM approach 

captures whether a patient received 

appropriate care, but it does not 

describe the extent of lacking care. 

Since the unit of scoring is the patient 

encounter, and the hospital earns a 

clinical process of care domain score of 

zero for a patient if the hospital fails to 

provide any of the applicable processes 

covered by the measures in the 

applicable topic area, we believe that 

the hospital is likely to become aware of 

all of the processes the patient requires 

in order to treat the condition, rather 

than thinking in terms of individual 

opportunities. 

We will continue analyzing 

alternative performance scoring models, 

including the ACM, and will consider 

proposing to implement scoring models 

other than the Three-Domain 

Performance Scoring Model in the 

future. As the industry continues to 

develop sets of measures that capture 

many aspects of quality for various 

conditions, we will seek to examine 

more patient-centered scoring 

methodologies and measures, and will 

certainly consider hybrid models such 

as the one described by the commenter. 

G. Applicability of the Value-Based 

Purchasing Program to Hospitals 

Section 1886(o)(1)(C) of the Act 

specifies how the value-based 

purchasing program applies to 

hospitals. For purposes of the Hospital 

VBP program, the term ‘‘hospital’’ is 

defined under section 1886(o)(1)(C)(i) as 

a ‘‘subsection (d) hospital,’’ (as defined 

in section 1886(d)(1)(B) of the Act). 

Section 1886(d)(1)(B) of the Act defines 

a ‘‘subsection (d) hospital’’ as a ‘‘hospital 

located in one of the fifty States or the 

District of Columbia.’’ The term 

therefore does not include hospitals 

located in the territories or hospitals 

located in Puerto Rico. Section 

1886(d)(9)(A) of the Act separately 

defines a ‘‘subsection (d) Puerto Rico 

hospital’’ as a hospital that is located in 

Puerto Rico and that ‘‘would be a 

subsection (d) hospital if it were located 

in one of the 50 states.’’ Therefore, 

because 1886(o)(1)(C) does not refer to 

‘‘subsection (d) Puerto Rico hospitals,’’ 

the Hospital VBP program would not 

apply to hospitals located in Puerto 

Rico. The statutory definition of a 

subsection (d) hospital under section 

1886(d)(1)(B), however, does include 

inpatient, acute care hospitals located in 

the State of Maryland. These hospitals 

are not currently paid under the IPPS in 

accordance with a special waiver 

provided by section 1814(b)(3) of the 

Act. Despite this waiver, the Maryland 

hospitals continue to meet the 

definition of a ‘‘subsection (d) hospital’’ 

because they are hospitals located in 

one of the 50 states. Therefore we 

proposed that the Hospital VBP program 

will apply to acute care hospitals 

located in the State of Maryland unless 

the Secretary exercises discretion 

pursuant to 1886(o)(1)(C)(iv), which 

states that ‘‘the Secretary may exempt 

such hospitals from the application of 

this subsection if the State which is paid 

under such section submits an annual 

report to the Secretary describing how a 

similar program in the State for a 

participating hospital or hospitals 

achieves or surpasses the measured 

results in terms of patient health 

outcomes and cost savings established 

under this subsection.’’ 

The statutory definition of a 

subsection (d) hospital also does not 

apply to hospitals and hospital units 

excluded from the IPPS under section 

1886(d)(1)(B) of the Act, such as 

psychiatric, rehabilitation, long term 

care, children’s, and cancer hospitals. In 

order to identify hospitals, we proposed 

that, for purposes of this provision, we 

would adjust payments to hospitals as 

they are distinguished by provider 

number in hospital cost reports. We 

proposed that payment adjustments for 

hospitals be calculated based on the 

provider number used for cost reporting 

purposes, which is the CMS 

Certification Number (CCN) of the main 

provider (also referred to as OSCAR 

number). Payments to hospitals are 

made to each provider of record. 

Comment: Several commenters, 

including national and state hospital 

associations, expressed their support of 

our proposal to apply the Hospital VBP 

program to subsection (d) hospitals in 

accordance with the statutory 

requirement. Clarification was requested 

regarding whether critical access 

hospitals (CAHs) and subsection (d) 

hospitals that are in CMS 

demonstrations for their inpatient 

payment, such as the Rural Community 

Hospital Demonstration Program, are to 

be included in the Hospital VBP 

program. 

Response: For purposes of the 

Hospital VBP program, the term 

‘‘hospital’’ is defined under section 

1886(o)(1)(C)(i) as a ‘‘subsection (d) 

hospital,’’ (as defined in section 

1886(d)(1)(B) of the Act). Section 

1886(d)(1)(B) of the Act defines a 

‘‘subsection (d) hospital’’ as a ‘‘hospital 

located in one of the fifty States or the 

District of Columbia.’’ This does not 

include IPPS hospitals in Puerto Rico. 

We are finalizing that we shall identify 

these hospitals by the CMS Certification 

Number (CCN) of the main Provider 

(also referred to as OSCAR number), 

calculate, and make the payment 

adjustments based on this identification. 

CAHs are designated under section 

1820(c); therefore, consistent with 

section 1886(o)(1)(C)(i), which limits 

participation in the Hospital VBP 

program to subsection (d) hospitals, 

they are ineligible to participate in the 

Hospital VBP program. 

Hospitals that participate in the Rural 

Community Hospital Demonstration 

Program are subsection (d) hospitals; 

therefore, the Hospital VBP program 

would apply to them. To the extent 

there are other demonstrations 

involving subsection (d) hospitals, we 

will need to evaluate each individual 

demonstration to determine how it 

might potentially overlap with the 

Hospital VBP program. 

Comment: Several commenters 

requested that CMS exempt hospitals in 

Maryland from the Hospital VBP 

program. Commenters described current 

quality efforts in Maryland relating to 

quality reporting, hospital-acquired 

conditions, and readmissions. Some 

stated that ‘‘requiring Maryland to 

comply with the federal program in 

addition to the existing State programs 

would be burdensome and duplicative.’’ 

Several commenters noted that the State 

intended to submit a report pursuant to 

section 1886(o)(1)(C)(iv). 

Response: Our proposal was to apply 

the Hospital VBP program to acute care 

hospitals in Maryland paid under the 

1814(b)(3) waiver unless the Secretary 

exercised her discretion to exempt these 

hospitals. We intend to make this the 

subject of future rulemaking. 

Inpatient acute care hospitals located 

in the State of Maryland are not 

currently paid under the IPPS in 

accordance with a special waiver 

provided by section 1814(b)(3) of the 

Act. Despite this waiver, Maryland 

hospitals continue to meet the 

definition of a ‘‘subsection (d) hospital’’ 

under section 1886(d)(1)(B) of the Act 

because they are hospitals located in 

one of the 50 states. While these 

hospitals are not subject to the payment 

reduction under the Hospital IQR 

program, all or nearly all of them submit 

data to Hospital Compare on a voluntary 

basis. Therefore, we do not believe that 

requiring these hospitals to participate 

in the Hospital VBP program would 

create an additional or duplicative 

burden for them. Section 

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1886(o)(1)(C)(iv) of the Act grants the 

Secretary discretion to exempt hospitals 

paid under section 1814(b)(3) from the 

Hospital VBP program, but only if the 

State which is paid under such section 

submits ‘‘an annual report to the 

Secretary describing how a similar 

program in the State for a participating 

hospital or hospitals achieves or 

surpasses the measured results in terms 

of patient health outcomes and cost 

savings established under this 

subsection.’’ To facilitate future 

rulemaking on this topic, we believe 

that this report should be received prior 

to the Secretary’s consideration of 

whether to exercise discretion under 

section 1886(o)(1)(C)(iv) of the Act. 

According to section 1886(o)(1)(B) of 

the Act, the Hospital VBP program 

applies to discharges occurring on or 

after October 1, 2012. Therefore, in 

response to public comment, we are 

adopting the following procedure for 

submission of the state report in order 

for a hospital within the state to be 

exempt from the Hospital VBP program: 

a State shall submit, in writing and 

electronically, a report pursuant to 

section 1886(o)(1)(C)(iv) in a timeframe 

such that allows it to be received no 

later than October 1, 2011, which is the 

beginning of the fiscal year prior to the 

beginning of FY 2013. The statute 

requires the report to describe how a 

‘‘similar program in the State for a 

participating hospital or hospitals 

achieves or surpasses the measured 

results in terms of patient health 

outcomes and cost savings.’’ We request 

that the report be as specific as possible 

in describing the quality (and other) 

measures included and in describing the 

results achieved over an applicable time 

period, noting that for the initial report 

the applicable time period would likely 

be before and after implementation of 

the State program. In response to 

commenters’ discussion of 

readmissions-related quality efforts in 

Maryland, we point out that 

1886(o)(2)(A) specifically excludes 

measures of readmissions from the 

Hospital VBP program. 

Section 1886(o)(1)(C)(ii) sets forth a 

number of exclusions to the definition 

of the term ‘‘hospital.’’ First, under 

section 1886(o)(1)(C)(ii)(I), a hospital is 

excluded if it is subject to the payment 

reduction under section 

1886(b)(3)(B)(viii)(I) (the Hospital IQR 

program) for the applicable fiscal year. 

Therefore, any hospital that is subject to 

the Hospital IQR program payment 

reduction because it does not meet the 

requirements for the Hospital IQR 

program will be excluded from the 

Hospital VBP program for such fiscal 

year. We are concerned about the 

possibility of hospitals deciding to ‘‘opt 

out’’ of the Hospital VBP program by 

choosing to not submit data under the 

Hospital IQR program, thereby avoiding 

both the base operating DRG payment 

reduction and the possibility to receive 

a value-based incentive payment, 

although we recognize that these 

hospitals would still be subject to the 

Hospital IQR program reduction to their 

applicable percentage increase for the 

fiscal year. We intend to track hospital 

participation in the Hospital IQR 

program and welcome public input on 

this issue. 

With respect to hospitals for which 

we have measure data from the 

performance period but no measure data 

from the baseline period (perhaps 

because these hospitals were either not 

open during the baseline period or 

otherwise did not participate in the 

Hospital IQR program during that 

period), we proposed that these 

hospitals will still be included in the 

Hospital VBP program, but that they 

will be scored based only on 

achievement. We invited public 

comments on this approach and 

requested input on how to score 

hospitals without baseline performance 

data using this and other approaches. 

Under section 1886(o)(1)(C)(ii)(II), a 

hospital is excluded if it has been cited 

by the Secretary for deficiencies during 

the performance period that pose 

immediate jeopardy to the health or 

safety of patients. We proposed to 

interpret this provision to mean that any 

hospital that is cited by CMS through 

the Medicare State Survey and 

Certification process for deficiencies 

during the performance period (for 

purposes of the FY 2013 Hospital VBP 

program, the performance period is July 

1, 2011–March 31, 2012) that pose 

immediate jeopardy to patients will be 

excluded from the Hospital VBP 

program for the fiscal year. We also 

proposed to use the definition of the 

term ‘‘immediate jeopardy’’ that appears 

in 42 CFR 489.3. 

Section 1886(o)(1)(C)(ii)(III) requires 

the Secretary to exclude for the fiscal 

year hospitals that do not report a 

minimum number (as determined by the 

Secretary) of measures that apply to the 

hospital for the performance period for 

the fiscal year. 

Section 1886(o)(1)(C)(ii)(IV) requires 

the Secretary to exclude for the fiscal 

year hospitals that do not report a 

minimum number (as determined by the 

Secretary) of cases for the measures that 

apply to the hospital for the 

performance period for the fiscal year. 

In determining the minimum number 

of reported measures and cases under 

sections 1886(o)(1)(C)(ii)(III) and (IV), 

the statute requires the Secretary to 

conduct an independent analysis of 

what minimum numbers would be 

appropriate. To fulfill this requirement, 

we commissioned Brandeis University 

to perform an independent analysis that 

examined technical issues concerning 

the minimum number of cases per 

measure and the minimum number of 

measures per hospital needed to derive 

reliable performance scores. This 

analysis examined hospital performance 

scores using data from 2007 through 

2008 and 2008 through 2009. The 

researchers tested different minimum 

numbers of cases and measures and 

concluded that the most important 

factor in setting minimum thresholds for 

the Hospital VBP program is to 

determine a combination of thresholds 

that allows the maximum number of 

hospitals to be scored reliably. We note 

that such reliability depends on the 

combination of the two thresholds. For 

example, if we allowed the number of 

cases per measure to be small (for 

example, 5 cases), we might still have 

reliable overall scores if there were a 

sufficiently large number of measures. 

The independent analysis indicated 

that a smaller number of cases would 

yield less reliable results for any given 

measure, ultimately affecting results, 

when the measures were combined to 

create the domain scores. Because the 

finalized Hospital VBP program scoring 

methodology aggregates information 

across all of the measures, the analysis 

considered various thresholds for the 

minimum number of cases to include in 

a measure. We recognized that lowering 

the minimum number of cases required 

for each measure would allow a greater 

number of hospitals to participate in the 

Hospital VBP program. The analysis 

explored whether a lower threshold for 

each individual measure might be 

sufficient to make composite measures 

(that is, measures based on aggregations 

of individual measures), more 

statistically reliable. 

Brandeis researchers checked the 

reliability of the total performance score 

for hospitals with only 4 measures. One 

approach was to randomly select 4, 6, 

10, or 14 measures and to compare the 

reliabilities that are determined using 

these different sets of measures per 

hospitals. The research found that using 

4 randomly selected measures per 

hospital did not greatly reduce betweenhospital reliability (particularly in terms 

of rank ordering) from what would have 

been determined using 10 or 14 

measures. Examining hospitals with at 

least 10 cases for each clinical process 

measure, the analysis compared the 

reliability of clinical process measure 

scores for hospitals according to the 

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number of such measures reported. 

Whisker plots and reliability scores 

revealed comparable levels of variation 

in the process scores for hospitals 

reporting even a small number of 

measures as long as the minimum of 10 

cases per clinical process measure was 

met. Based on this analysis, we 

proposed to establish the minimum 

number of cases required for each 

measure under the proposed Three 

Domain Performance Scoring Model at 

10, which we believe will allow us to 

include more hospitals in the Hospital 

VBP program. 

When examining the minimum 

number of measures necessary to derive 

reliable performance scores, the 

independent analysis revealed that the 

distribution of performance scores 

varied depending on the number of 

measures reported per hospital. The 

whisker plots and reliability scores 

demonstrated a clear difference in the 

distribution of scores for hospitals 

reporting 4 or more measures compared 

with those reporting fewer than 4 

measures. 

We believe that setting the minimum 

number of measures and cases as low as 

is reasonable is an essential component 

of implementing the Hospital VBP 

program and will help to minimize the 

number of hospitals unable to 

participate due to not having the 

minimum number of cases for a measure 

or the minimum number of measures. 

Therefore, as we stated above, we 

proposed to exclude from hospitals’ 

Total Performance Score calculation any 

measures on which they report fewer 

than 10 cases. We also proposed to 

exclude from the Hospital VBP program 

any hospitals to which less than 4 of the 

measures apply. 

We also proposed that, for inclusion 

in the Hospital VBP program for FY 

2013, hospitals must report a minimum 

of 100 HCAHPS surveys during the 

performance period. The reliability of 

HCAHPS scores was determined 

through statistical analyses conducted 

by RAND, the statistical consultant for 

HCAHPS. RAND’s analysis indicates 

that HCAHPS data does not achieve 

adequate reliability with a sample of 

less than 100 completed surveys to 

ensure that true hospital performance 

rather than random ‘‘noise’’ is measured. 

RAND’s analysis indicates that HCAHPS 

data are significantly below 85 percent 

reliability levels across all HCAHPS 

dimensions with a sample of less than 

100 completed surveys. 

As proposed in the Hospital Inpatient 

VBP Program proposed rule (76 FR 

2481), hospitals reporting insufficient 

data to receive a score on either the 

clinical process of care or HCAHPS 

domains will not receive a Total 

Performance Score for the FY 2013 

Hospital VBP program. 

We solicited public comments on our 

proposals regarding the minimum 

numbers of cases and measures 

necessary for hospitals’ inclusion in the 

Hospital VBP program. We note that 

hospitals excluded from the Hospital 

VBP program will be exempt from the 

base operating DRG payment reduction 

required under section 1886(o)(7) as 

well as the possibility for value-based 

incentive payments. 

We also note that the independent 

analysis conducted by Brandeis only 

looked at clinical process of care 

measures and for that reason, we 

intended that our proposal for the 10 

case and 4 measure minimums apply 

only to those measures. We intend to 

make a separate proposal on what 

specific minimum numbers of cases and 

measures should apply to the outcome 

domain in future rulemaking. To the 

extent that the comments to the Hospital 

Inpatient VBP proposed rule pertained 

to what specific minimums would be 

appropriate for the outcome domain, we 

will take them into consideration as we 

develop our proposal. We will address 

the comments in this final rule insofar 

as they relate to what minimum 

numbers would be appropriate for the 

clinical process of care and patient 

experience of care domains. 

Comment: Some commenters asked if 

very small hospitals will be subjected to 

the 1.0 percent reduction in base 

operating DRG amounts without being 

eligible for value-based incentive 

payments. 

Response: Hospitals to which the 

Hospital VBP program does not apply 

will not receive a reduction to their base 

operating DRG amounts. 

Comment: Many commenters asked 

that new hospitals not be included in 

the Hospital VBP program until they 

have sufficient time to implement all of 

their quality initiatives and begin 

meeting the requirements under the 

Hospital IQR program, and that new 

hospitals be given the opportunity to be 

scored on improvement during their 

first year of participation in the Hospital 

VBP program. Several other commenters 

objected to the inclusion of any 

hospitals that did not have sufficient 

measure data from the baseline period 

with which to calculate improvement 

scores, claiming that it would be unfair 

to deny these hospitals the opportunity 

to receive potentially higher scores 

based on improvement points. One 

commenter asked whether a hospital 

assigned a CCN in January 2010 would 

be scored based on a shorter baseline 

period or scored based only on 

achievement. 

Response: We recognize the 

commenters’ concerns regarding the fair 

treatment of all hospitals in the Hospital 

VBP program and the desire that all 

hospitals be given the opportunity to 

earn improvement points. However, we 

do not believe that we have authority to 

exclude these hospitals from the 

Hospital VBP program; section 

1886(o)(1)(C)(ii) of the Act sets forth 

specific exclusions to the term 

‘‘hospital’’ for purposes of the program, 

and none of these exclusions relate to 

hospitals that do not have baseline 

performance measure data. If a hospital 

does not have a minimum number of 

cases on a given measure in the baseline 

period, then we interpret the hospital to 

have ‘‘no measure data from the baseline 

period’’ with which to calculate an 

improvement threshold. In such a case, 

the hospital would not be scored on 

improvement for that measure. If, 

however, a hospital reports the 

minimum number of cases during the 

applicable baseline period on a given 

measure—whether such data was 

obtained throughout the entire baseline 

period or only over a portion of such 

period—then the hospital’s data during 

the performance period would be 

compared to its baseline period 

performance for the purpose of 

determining improvement points for 

that measure. Hospitals not scored on 

improvement for a given measure will 

still have the opportunity to score up to 

10 achievement points on that measure. 

As noted above, we believe it is 

important to include as many hospitals 

as possible in order to successfully 

implement the Hospital VBP program 

and succeed in achieving the Hospital 

VBP program goals. Thus, the program 

will apply to hospitals, as that term is 

defined in section 1886(o)(1)(C)(i), and 

provided that none of the exclusions in 

section 1886(o)(1)(C)(ii) apply. 

Comment: Commenters suggested that 

CMS should develop a new value-based 

purchasing program specific to cancer 

centers. Other commenters suggested 

that CMS consider promoting diseasespecific quality programs across all care 

settings. 

Response: We thank the commenters 

for their input. We will certainly take 

their suggestions under advisement for 

future quality improvement efforts. We 

note that the Affordable Care Act 

requires the Secretary to implement a 

number of new value-based purchasing 

and quality reporting initiatives across 

various health care settings, including 

quality reporting programs for cancer 

care hospitals and psychiatric hospitals, 

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based purchasing efforts in the home 

health and skilled nursing settings. 

Comment: Several commenters 

requested improvements to or 

clarification of the Medicare State 

Survey and Certification Process prior to 

its use in the Hospital VBP program. 

Response: We proposed to interpret 

the statutory exclusion at Section 

1886(o)(1)(C)(ii)(II) to mean that any 

hospital that is cited by CMS through 

the Medicare State Survey and 

Certification process for deficiencies 

during the performance period that pose 

immediate jeopardy to patients will be 

excluded from the Hospital VBP 

program for the fiscal year. We proposed 

to use the definition of the term 

‘‘immediate jeopardy’’ that appears in 42 

CFR § 489.3. We intend to further 

evaluate the application of this 

definition to the Hospital VBP context 

and may make additional proposals 

related to the ‘‘immediate jeopardy’’ 

exclusion in section 1886(o)(1)(C)(ii)(II) 

in future rulemaking. 

Comment: Many commenters 

suggested different numbers of 

minimum cases for hospitals to be 

included in Hospital VBP, arguing that 

10 cases per clinical process measure 

are insufficient to produce reliable 

measure scores. A number of 

commenters argued that CMS should 

use the same reliability criteria it uses 

for purposes of displaying measure 

information on Hospital Compare for 

purposes of defining the minimum case 

threshold for the Hospital VBP program. 

Response: There are currently no 

minimum case thresholds for the 

clinical process of care measures 

reported on Hospital Compare, and all 

clinical process of care data, regardless 

of sample size, are made publicly 

available. We recognize that there is 

currently a footnote added where the 

Hospital IQR reported clinical process 

of care measure rates are based on less 

than 25 cases, and we note that we 

originally believed that this footnote 

was appropriate based on the work we 

did in developing the Hospital Compare 

display parameters for Hospital IQR 

data. However, the more recent 

independent analysis that was 

completed as part of the development of 

the Hospital Inpatient VBP proposed 

rule indicates that the clinical process of 

care measure data is reliable with fewer 

than 25 cases, and we plan to revise the 

footnote on Hospital Compare. 

Comment: Many commenters called 

on us to publish the independent 

analysis we used to determine the 

appropriate minimum numbers of cases 

and measures for the Hospital VBP 

program. 

Response: To the extent that these 

analyses are not subject to privilege, we 

will make available additional 

information, including the study results 

and methods, and will inform the public 

when such information is available. 

Comment: One commenter asked 

whether we had considered the impacts 

of the proposed measure and case 

minimums on hospitals’ ability to 

compete for value-based incentive 

payments. 

Response: As detailed in the Hospital 

Inpatient VBP proposed rule (76 FR 

2480), we considered many factors 

when developing the measure and case 

minimums, including the reliability of 

Total Performance Scores, the number 

of hospitals included in the program, 

and the impact on small hospitals under 

various scenarios. We believe that 

reliable clinical process of care and 

patient experience of care domain 

scores can be generated based on the 

proposed minimum numbers of cases, 

measures, and completed HCAHPS 

surveys, and that hospitals will be able 

to fairly compete for value-based 

incentive payments. 

Comment: Some commenters 

suggested that we should consider other 

performance measures for hospitals 

with few cases. 

Response: We note that section 

3001(b)(2) of the Affordable Care Act 

requires the Secretary to establish a 

value-based purchasing demonstration 

program for hospitals that are excluded 

from the Hospital VBP program because 

they do not have the minimum number 

of cases or measures. 

Comment: One commenter suggested 

that CMS require hospitals to submit a 

minimum of 300 HCAHPS surveys per 

year in order to be included in Hospital 

VBP; another commenter questioned 

whether 100 completed HCAHPS 

surveys will still be the minimum 

number required in the future should 

Hospital VBP move to a 12-month 

performance period rather than the 9- 

month performance period finalized for 

the FY 2013 Hospital VBP program. 

Another commenter was concerned that 

the HCAHPS exclusion of patients 

discharged to a nursing home would not 

permit hospitals to achieve a sufficient 

number of completed surveys. 

Response: Because of reliability 

concerns, if a hospital has less than 100 

completed surveys, we will not 

calculate an HCAHPS performance 

score for the Hospital VBP program (and 

thus will exclude the hospital from the 

Hospital VBP program). The 

requirement for 100 completed surveys 

pertains to both the 9 month and 12 

month performance periods as the 100 

survey requirement is based upon the 

reliability of the data, not the number of 

calendar quarters. In either time period, 

we want to ensure that we have reliable 

data to measure performance. Using 

statistical measures of reliability that 

calculate the proportion of the variance 

in reported hospital scores that is due to 

true variation between hospitals, rather 

than within hospital variation that 

reflects limited sample size, HCAHPS 

data have been found to be unreliable 

when a hospital achieves under 100 

survey completes. 

Patients that are discharged to nursing 

homes are excluded from the survey due 

to numerous problems that have been 

encountered by HCAHPS survey 

vendors and self-administering 

hospitals in contacting nursing home 

patients. We have also found, based on 

our own research on this topic, that the 

response rate for nursing home residents 

is extremely low. By increasing their 

sampling of patients not discharged to 

nursing homes, hospitals can achieve a 

sufficient number of completed surveys. 

Based on the comments we received, 

we are finalizing our proposals 

regarding the applicability of the 

Hospital VBP program to hospitals, 

including calculating and making 

payment adjustments for this provision 

using the CCN of the main provider and 

making payments to each provider of 

record. Further, we adopt the 

procedures noted above for submission 

of the report required under section 

1886(o)(1)(C)(iv) and note that we 

intend to make the question of whether 

to exempt Maryland hospitals from the 

Hospital VBP program the subject of 

future rulemaking. 

We are also finalizing a policy to 

exclude from a hospital’s total 

performance score its score on any 

clinical process measure for which it 

reports fewer than 10 cases, and to 

exclude from the Hospital VBP program 

any hospital to which less than 4 of the 

clinical process measures apply. We are 

also finalizing our proposal to exclude 

from the FY 2013 Hospital VBP program 

a hospital that reports fewer than 100 

HCAHPS surveys during the 

performance period. Finally, we are 

finalizing our proposal to score 

hospitals only based on achievement if 

we have measure data from the 

performance period but no measure data 

from the baseline period. However, as 

discussed above, we will interpret ‘‘no 

measure data from the baseline period’’ 

to include data that does not meet the 

minimum measure and case thresholds 

that we are adopting in this final rule for 

the clinical process of care and patient 

experience of care domains. We believe 

that calculating an improvement 

threshold requires at least as much data 

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as is required for calculating measure 

scores during the performance period in 

order to ensure valid comparisons 

between the two periods. We further 

believe that the analyses we 

commissioned to determine the 

minimum number of cases, measures, 

and completed HCAHPS surveys during 

the performance period can be 

appropriately applied to requiring these 

minimums in the baseline period to 

create an improvement threshold. 

H. The Exchange Function 

Section 1886(o)(6) of the Act governs 

the calculation of value-based incentive 

payments under the Hospital VBP 

program. Specifically, section 

1886(o)(6)(A) requires that in the case of 

a hospital that meets or exceeds the 

performance standards for the 

performance period for a fiscal year, the 

Secretary shall increase the base 

operating DRG payment amount (as 

defined in section 1886(o)(7)(D)), as 

determined after application of a 

payment adjustment described in 

section 1886(o)(7)(B)(i), for a hospital 

for each discharge occurring in the fiscal 

year by the value-based incentive 

payment amount. Section 1886(o)(6)(B) 

defines the value-based incentive 

payment amount for each discharge in 

a fiscal year as the product of (1) the 

base operating DRG payment amount for 

the discharge for the hospital for such 

fiscal year, and (2) the value-based 

incentive payment percentage for the 

hospital for such fiscal year. Section 

1886(o)(6)(C)(i) provides that the 

Secretary must specify a value-based 

incentive payment percentage for each 

hospital for a fiscal year, and section 

1886(o)(6)(C)(ii) provides that in 

specifying the value-based incentive 

payment percentage, the Secretary must 

ensure (1) that the percentage is based 

on the hospital’s performance score, and 

(2) that the total amount of value-based 

incentive payments to all hospitals in a 

fiscal year is equal to the total amount 

available for value-based incentive 

payments for such fiscal year under 

section 1886(o)(7)(A), as specified by 

the Secretary. 

Section 1886(o)(7) of the Act 

describes how the value-based incentive 

payments are to be funded. Under 

section 1886(o)(7)(A), the total amount 

available for value-based incentive 

payments for all hospitals for a fiscal 

year must be equal to the total amount 

of reduced payments for all hospitals 

under section 1886(o)(7)(B), as 

estimated by the Secretary. Section 

1886(o)(7)(B)(i) requires the Secretary to 

adjust the base operating DRG payment 

amount for each hospital for each 

discharge in a fiscal year by an amount 

equal to the applicable percent of the 

base operating DRG payment amount for 

the discharge for the hospital for such 

fiscal year, and further requires that the 

Secretary make these reductions for all 

hospitals in the fiscal year involved, 

regardless of whether or not the hospital 

has been determined to have earned a 

value-based incentive payment for the 

fiscal year. With respect to FY 2013, the 

term ‘‘applicable percent’’ is defined as 

1.0 percent, but the amount gradually 

rises to 2.0 percent by FY 2017 (section 

1886(o)(7)(C)). 

The 2007 Report to Congress 

introduced the exchange function as the 

means to translate a hospital’s total 

performance score into the percentage of 

the value-based incentive payment 

earned by the hospital. We believe that 

the selection of the exact form and slope 

of the exchange function is of critical 

importance to how the incentive 

payments reward performance and 

encourage hospitals to improve the 

quality of care they provide. 

As illustrated in Figure 7, we 

considered four mathematical exchange 

function options: straight line (linear); 

concave curve (cube root function); 

convex curve (cube function); and Sshape (logistic function). 

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In determining which of these 

exchange functions would be most 

appropriate for translating a hospital’s 

Total Performance Score into a valuebased incentive payment percentage, we 

carefully considered four aspects of 

each option. 

First, we considered how each option 

would distribute the value-based 

incentive payments among hospitals. 

Under section 1886(o)(7)(A) of the Act, 

the total amount available for valuebased incentive payments for all 

hospitals for a fiscal year must be equal 

to the total amount of reduced payments 

for all hospitals for such fiscal year, as 

estimated by the Secretary. We 

interpreted this section to mean that the 

redistribution of a portion of the IPPS 

payments to all hospitals under the 

Hospital VBP program must be 

accomplished in a way that is estimated 

to be budget neutral, without increasing 

or decreasing the aggregate overall IPPS 

payments made to all hospitals. As a 

result, if we award higher value-based 

incentive payments to higher 

performing hospitals, less money is 

available to make value-based incentive 

payments to lower performing hospitals. 

The reverse is also true. If we give 

higher value-based incentive payments 

to lower performing hospitals, less 

money is available to reward higher 

performing hospitals. The form and 

slope of each exchange function also 

affects the level of value-based incentive 

payments available to hospitals at 

various performance levels. Under both 

the cube and logistic functions, lower 

incentive payments are available to 

lower performing hospitals and 

aggressively higher payments are 

available for higher performing 

hospitals. These functions therefore 

distribute more incentive payments to 

higher performing hospitals. Under the 

cube root function, payments stay at 

relatively lower levels for higher 

performing hospitals; this function 

distributes more incentive payments to 

lower performing hospitals. The linear 

function moves more aggressively to 

higher levels for higher performing 

hospitals than the cube root function, 

but not as aggressively as the logistic 

and cube functions. It therefore 

distributes more incentive payments to 

higher performing hospitals than the 

cube root function, but not as 

aggressively as the logistic and cube 

functions. 

Second, we considered the potential 

differences between the value-based 

incentive payment amounts for 

hospitals that do poorly and hospitals 

that do very well. Due to the fact that 

the cube root function distributes lower 

payment amounts to higher performing 

hospitals, the cube root function creates 

the narrowest distribution of incentive 

payments across hospitals. The linear is 

next, followed by the logistic. The cube 

function, which most aggressively 

moves to higher payment levels for 

higher performing hospitals, creates the 

widest distribution. 

Third, we considered the different 

marginal incentives created by the 

different exchange function shapes. In 

the case of the linear shape, the 

marginal incentive does not vary for 

higher or lower performing hospitals. 

The slope of the linear function is 

constant, so any hospital with a Total 

Performance Score that is 0.1 higher 

than another hospital would receive the 

same increase in its value-based 

incentive payment across the entire 

Total Performance Score range. For the 

other shapes, the slope of the exchange 

function creates a higher or lower 

marginal incentive for higher or lower 

performing hospitals. Steeper slopes at 

any given point on the function indicate 

greater marginal incentives for hospitals 


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to improve scores and obtain higher 

payments at that point, while flatter 

slopes indicate smaller marginal 

incentives. If the slope is steeper at the 

low end of performance scores than at 

the high end, as with the cube root 

function, hospitals at the low end have 

a higher marginal incentive to improve 

than hospitals at the high end. If the 

slope is steeper at the high end, as with 

the cube function, hospitals have a 

higher marginal incentive to improve at 

the high end than they do at the low 

end. 

Fourth, we weighed the relative 

importance of having the exchange 

function be as simple and 

straightforward as possible. 

Taking all of these factors into 

account, we proposed to adopt a linear 

exchange function for the purpose of 

calculating the percentage of the valuebased incentive payment earned by each 

hospital under the Hospital VBP 

program. The linear function is the 

simplest and most straightforward of the 

mathematical exchange functions 

discussed above. The linear function 

provides all hospitals the same marginal 

incentive to continually improve. The 

linear function rewards higher 

performing hospitals more aggressively 

than the cube root function, but not as 

aggressively as the logistic and cube 

functions. We proposed the function’s 

intercept at zero, meaning that hospitals 

with scores of zero will not receive any 

incentive payment. Payment for each 

hospital with a score above zero will be 

determined by the slope of the linear 

exchange function, which will be set to 

meet the budget neutrality requirement 

of section 1886(o)(6)(C)(ii)(II) of the Act, 

that the total amount of value-based 

incentive payments equal the estimated 

amount available under section 

1886(o)(7)(A). In other words, we 

proposed to set the slope of the linear 

exchange function for FY 2013 so that 

the estimated aggregate value-based 

incentive payments for FY 2013 are 

equal to 1.0 percent of the estimated 

aggregate base operating DRG payment 

amounts for FY 2013. We proposed that 

analogous estimates will be done for 

subsequent fiscal years. 

We believe that our proposed linear 

exchange function ensures that all 

hospitals have strong incentives to 

continually improve the quality of care 

they provide to their patients. We may 

revisit the issue of the most appropriate 

exchange function in future rulemaking 

as we gain more experience under the 

Hospital VBP program. We solicited 

public comments on our exchange 

function and the resulting distribution 

of value-based incentive payments. 

We noted in the Hospital Inpatient 

VBP Program proposed rule that, in 

order evaluate the different exchange 

functions, we needed to estimate the 

value-based incentive payment amount. 

As stated above, section 1886(o)(6)(B) of 

the Act defines the value-based 

incentive payment amount as equal to 

the product of the base operating DRG 

payment amount for each discharge for 

the hospital for the fiscal year and the 

value-based incentive payment 

percentage specified by the Secretary for 

the hospital for the fiscal year. Section 

1886(o)(7)(D)(i) defines the base 

operating DRG payment with respect to 

a hospital for a fiscal year as, unless 

certain special rules apply, ‘‘the 

payment amount that would otherwise 

be made under subsection (d) 

(determined without regard to 

subsection (q)) for a discharge if 

[subsection (o)] did not apply; reduced 

by any portion of such payment amount 

that is attributable to payments under 

paragraphs (5)(A), (5)(B), (5)(F) and (12) 

of subsection (d); and such other 

payments under subsection (d) 

determined appropriate by the 

Secretary.’’ Therefore, for estimation 

purposes, to calculate base operating 

DRG payments, we estimated the total 

payments using Medicare Part A claims 

data and subtracted from this number 

the estimates of payments made as 

outlier payments (authorized under 

section 1886(d)(5)(A)), indirect medical 

education payments (authorized under 

section 1886(d)(5)(B)), disproportionate 

share hospital payments (authorized 

under section 1886(d)(5)(F)), and lowvolume hospital adjustment payments 

(authorized under section 1886(d)(12)). 

We note that this approximation of base 

operating DRG payments made for the 

purpose of estimating the value-based 

payment amount to evaluate the 

different exchange functions is not a 

policy proposal. We will propose a 

definition of the term ‘‘base operating 

DRG payment amount’’ under section 

1886(o)(7)(D), as well as how we would 

implement the special rules for certain 

hospitals described in section 

1886(o)(7)(D)(ii), in future rulemaking. 

We solicited public comment to inform 

our intended future policymaking on 

this issue. 

Furthermore, section 1886(o)(7)(A) 

states that the total amount available for 

value-based incentive payments for all 

hospitals for a fiscal year shall be equal 

to the total amount of reduced payments 

for all hospitals for such fiscal year. To 

calculate the total amount of reduced 

payments, section 1886(o)(7)(B) states 

that the base operating DRG payment 

amount shall be reduced by an 

applicable percent as defined under 

section 1886(o)(7)(C). This applicable 

percent is 1.0 percent for FY 2013, 1.25 

percent for FY 2014, 1.5 percent for FY 

2015, 1.75 percent for FY 2016, and 2.0 

percent for FY 2017 and subsequent 

years. To develop an estimation of the 

value-based incentive payment amount 

for the purposes of evaluating the 

different exchange functions, we used 

the FY 2013 1.0 percent as the 

applicable percent. We multiplied an 

estimate (described above) of the total 

aggregate base operating DRG payments 

for hospitals as defined under section 

1886(o)(1)(C) by 1.0 percent in order to 

derive the total amount available for 

value-based incentive payments that 

was used in the evaluation of the four 

exchange functions. 

The comments we received on this 

proposal and our responses are set forth 

below. 

Comment: The majority of 

commenters, including MedPAC, 

expressed support for our proposed 

linear exchange function with an 

intercept of zero during the initial years 

of the Hospital VBP program. The 

reasons cited by these commenters 

included that a linear exchange function 

appropriately incentivizes both highand low-performing hospitals; it is more 

straightforward than the alternative 

functional forms discussed in the 

Hospital Inpatient VBP Program 

proposed rule (that is cube, cube root, 

and logistic); and it provides a relatively 

more even distribution of incentive 

payments. Many commenters indicated 

that we should consider revisiting the 

issue of the exchange function once we 

have actual data and experience under 

an implemented Hospital VBP program. 

Some of these commenters, including 

MedPAC, suggested that over time we 

could consider providing stronger 

incentives to lower performing hospitals 

depending on the initial experience and 

data. 

A few commenters did not support 

the use of the linear exchange function 

with an intercept of zero. These 

commenters indicated that we need to 

provide greater incentives to lower 

performing hospitals in the initial 

implementation, such as through the 

use of a cube root exchange function. 

Commenters also requested 

transparency with respect to the slope of 

the linear exchange function for FY 

2013 and the associated issues of budget 

neutrality, payment impacts, and the 

maximum performance-based payment 

adjustment that can be made to a 

hospital’s base operating DRG payment 

amount. They also requested additional 

operational detail on how CMS will 

distribute the incentive payment 

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26534 Federal Register / Vol. 76, No. 88 / Friday, May 6, 2011 / Rules and Regulations 

amounts to the hospitals once they have 

been determined. 

Response: We agree with the 

commenters who supported our 

proposed linear exchange function. It 

provides all hospitals with the same 

marginal incentive to continually 

improve. It more aggressively rewards 

higher performing hospitals than the 

cube root function, but not as 

aggressively as the logistic and cube 

functions. It is also the simplest and 

most straightforward of the 

mathematical exchange functions 

discussed in the Hospital Inpatient VBP 

Program proposed rule. 

We disagree with the commenters 

who stated that we need to provide 

greater incentives to lower performing 

hospitals in the initial implementation 

of the Hospital VBP program, such as 

through the use of a cube root exchange 

function. At this time we believe it 

would be prudent to examine the 

experience and data from the initial 

implementation of the program before 

considering increasing the incentives to 

lower performing hospitals. We note 

that increasing the incentives to lower 

performing hospitals would result in 

decreased incentives for higher 

performing hospitals due to the 

requirement in section 

1886(o)(6)(C)(ii)(II) of the Act that the 

total amount available for value-based 

incentive payments under section 

1886(o)(6) for all hospitals for a fiscal 

year be equal to the total amount of 

reduced payments for all hospitals 

under section 1886(o)(7)(B) for such 

fiscal year, as estimated by the 

Secretary. 

With respect to the slope of the linear 

exchange function for FY 2013, we fully 

intend to provide the final exchange 

function slope once our actuaries have 

the data necessary to calculate it. As 

noted in the Hospital Inpatient VBP 

Program proposed rule (76 FR 2483), 

our actuaries will calculate the slope of 

the linear exchange function for FY 

2013 so that the estimated aggregate 

value-based incentive payments for FY 

2013 are equal to 1.0 percent of the 

estimated aggregate base operating DRG 

payment amounts for FY 2013. It is not 

possible for our actuaries to calculate 

the final slope of the linear exchange 

function until we have the data from the 

performance period. 

As we have indicated previously, we 

intend to propose a definition of the 

base operating DRG payment amount in 

future rulemaking. We also intend to 

provide additional operational detail 

concerning how hospitals will receive 

the value-based incentive payments in a 

future rule. 

As requested by many commenters, 

we would consider revisiting the issue 

of the exchange function depending on 

the actual data and experience under 

the implemented Hospital VBP program. 

Comment: One commenter argued 

that an increasing proportion of hospital 

payments should be tied to 

performance, eventually even above the 

2.0 percent margin. 

Response: Section 1886(o)(7)(C) of the 

Act provides for an annual increase in 

the funding for available value-based 

incentive payments from FY 2013 to FY 

2017, adjusting the applicable percent of 

base operating DRG payments available 

for value-based incentive payments as 

follows: with respect to FY 2013, 1.0 

percent; with respect to FY 2014, 1.25 

percent; with respect to FY 2015, 1.5 

percent; with respect to FY 2016, 1.75 

percent; and with respect to FY 2017 

and succeeding fiscal years, 2 percent. 

In effect, this will tie an increasing 

proportion of hospital payments to 

performance on quality measures. CMS 

does not have authority to increase the 

base DRG operating payment withhold 

amount above 2.0 percent. 

After considering the public 

comments, we are finalizing the 

exchange function as proposed. 

I. Hospital Notification and Review 

Procedures 

Section 1886(o)(8) of the Act requires 

the Secretary to inform each hospital of 

the adjustments to payments to the 

hospital for discharges occurring in a 

fiscal year as a result of the calculation 

of the value-based incentive payment 

amount (section 1886(o)(6)) and the 

reduction of the base operating DRG 

payment amount (section 

1886(o)(7)(B)(i)) not later than 60 days 

prior to the fiscal year involved. We 

proposed to notify hospitals of the 1.0 

percent reduction to their respective FY 

2013 base operating DRG payments for 

each discharge in the FY 2013 IPPS rule, 

which will be finalized at least 60 days 

prior to the beginning of FY 2013. We 

expect to propose to incorporate this 

reduction into our claims processing 

system in January 2013, which will 

allow the 1.0 percent reduction to be 

applied to the FY 2013 discharges, 

including those that have occurred 

beginning on October 1, 2012. We will 

address the operational aspects of the 

reduction as part of the FY 2013 IPPS 

rule. 

Because the performance period 

would end only six months prior to the 

beginning of FY 2013, CMS will not 

know each hospital’s exact Total 

Performance Score or final value-based 

incentive payment adjustment 60 days 

prior to the start of the 2013 fiscal year 

on October 1, 2012. Therefore, we 

proposed to inform each hospital 

through its QualityNet account at least 

60 days prior to October 1, 2012 of the 

estimated amount of its value-based 

incentive payment for FY 2013 

discharges based on estimated 

performance scoring and value-based 

incentive payment amounts, which will 

be derived from the most recently 

available data. We also proposed that 

each hospital participating in the 

Hospital VBP program establish a 

QualityNet account if it does not already 

have one for purposes of the Hospital 

IQR program. We further proposed to 

notify each hospital of the exact amount 

of its value-based incentive payment 

adjustment for FY 2013 discharges on 

November 1, 2012. The value-based 

incentive payment adjustment would be 

incorporated into our claims processing 

system in January 2013, which will 

allow the value-based incentive 

payment adjustment to be applied to the 

FY 2013 discharges, including those 

that have occurred beginning on 

October 1, 2012. 

Section 1886(o)(10)(A)(i) of the Act 

requires the Secretary to make 

information available to the public 

regarding individual hospital 

performance in the Hospital VBP 

program, including: (1) hospital 

performance on each measure that 

applies to the hospital; (2) the 

performance of the hospital with respect 

to each condition or procedure; and (3) 

the hospital’s Total Performance Score. 

To meet this requirement, we proposed 

to publish hospital scores with respect 

to each measure, each hospital’s 

condition-specific score (that is, the 

performance score with respect to each 

condition or procedure, for example, 

AMI, HF, PN, SCIP, HAI), each 

hospital’s domain-specific score, and 

each hospital’s Total Performance Score 

on the Hospital Compare Web site. We 

note that we did not propose to use a 

hospital’s condition-specific score for 

purposes of calculating its Total 

Performance Score under the ThreeDomain Performance Scoring Model. 

Section 1886(o)(10)(A)(ii) of the Act 

requires the Secretary to ensure that 

each hospital has the opportunity to 

review and submit corrections related to 

the information to be made public with 

respect to the hospital under section 

1886(o)(10)(A)(i) prior to such 

information being made public. As 

stated above, we proposed to derive the 

Hospital VBP measures data directly 

from measure data submitted by each 

hospital under the Hospital IQR 

program. We proposed that the 

procedures we adopt for the Hospital 

IQR program will also be the procedures 

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that hospitals must follow in terms of 

reviewing and submitting corrections 

related to the information to be made 

public under section 1886(o)(10) of the 

Act. 

With respect to the FY 2013 Hospital 

VBP program, we proposed to make 

each hospital’s Hospital VBP 

performance measure score, conditionspecific score, domain-specific score, 

and Total Performance Score available 

on the hospital’s QualityNet account on 

November 1, 2012. We proposed to 

remind each hospital via the hospital’s 

secure QualityNet account of the 

availability of its performance 

information under the Hospital VBP 

program on this date. Pursuant to 

section 1886(o)(10)(A)(ii), we proposed 

to provide hospitals with 30 calendar 

days to review and submit corrections 

related to their performance measure 

scores, condition-specific scores, 

domain-specific scores and Total 

Performance Score. 

Section 1886(o)(10)(B) requires the 

Secretary to periodically post on the 

Hospital Compare Web site aggregate 

information on the Hospital VBP 

program, including: (1) the number of 

hospitals receiving value-based 

incentive payments under the program 

as well as the range and total amount of 

such value-based incentive payments; 

and (2) the number of hospitals 

receiving less than the maximum valuebased incentive payment available for 

the fiscal year involved and the range 

and amount of such payments. We 

proposed to post aggregate Hospital VBP 

information on the Hospital Compare 

Web site in accordance with Section 

1886(o)(10)(B) of the Act. We will 

provide further details on reporting 

aggregated information in the future. 

The comments we received on this 

proposal and our responses are set forth 

below. 

Comment: Some commenters 

expressed general support for our 

proposals to display hospital’s Hospital 

VBP performance measure score, 

condition-specific score, domainspecific score, and Total Performance 

Score available on the hospital’s 

QualityNet account on November 1, 

2012 for the FY 2013 Hospital VBP 

program, specifically noting time 

limitations in the statutory timeline. 

Response: We thank commenters for 

their support. 

Comment: Some commenters called 

on CMS to translate hospitals’ Total 

Performance Scores into publicly 

reported data that is meaningful to 

consumers and those employers 

sponsoring health care coverage for their 

employees, specifically by listing data 

not only for Medicare patients but for all 

patients. One commenter additionally 

requested that hospitals’ performance be 

evaluated and reported on an individual 

basis, even if hospitals are commonly 

owned and operating upon one license, 

and, therefore, reporting as one entity. 

One commenter asked if CMS will 

publish hospital-specific incentive 

payment percentages or amounts. 

Response: As discussed in the 

Hospital Inpatient VBP Program 

proposed rule (76 FR 2484), section 

1886(o)(10)(A)(i) of the Act requires the 

Secretary to make information available 

to the public regarding individual 

hospital performance in the Hospital 

VBP program. We proposed to publish 

hospital scores with respect to each 

measure, each hospital’s conditionspecific score, each hospital’s domainspecific score, and each hospital’s Total 

Performance Score on the Hospital 

Compare Web site. We will make every 

effort to make the information presented 

as usable and clear for public use as 

possible. However, we do not plan at 

this point to make public hospitalspecific incentive payment percentages 

or amounts because we believe that the 

information required to be publicly 

reported adequately describes each 

hospital’s individual performance under 

the program. With respect to the request 

that we report performance information 

for individual hospitals that are 

commonly owned, CMS currently 

receives and displays data under the 

Hospital IQR program by CCN number. 

One CCN number can apply to multiple 

campuses of one hospital. Although 

hospital owners have chosen to enroll 

these campuses in the Medicare 

program as one integrated hospital 

rather than as separate hospitals, we are 

aware that members of the public tend 

to view them as separate hospitals. CMS 

is currently exploring best methods to 

make data publicly available for each 

campus of multi-campus hospitals 

operating under one CCN number and 

will take this comment into 

consideration as it seeks to improve 

transparency of hospital performance 

for consumers. 

Comment: One commenter suggested 

that we develop a composite quality 

measurement system for the Hospital 

Compare Web site similar to the Society 

of Thoracic Surgeons’ Adult Cardiac 

Surgery Database. 

Response: We thank the commenter 

for the suggestion. We are continuing to 

look for ways to decrease the reporting 

burden to hospitals and make the 

information that we include on Hospital 

Compare meaningful for consumers. We 

will take the suggestion under 

advisement. 

Comment: Commenters questioned 

how the Hospital VBP program would 

ease reporting burdens and aid 

consumers if, although hospitals are 

required to report measure data, some of 

the data reported would not be made 

publicly available on Hospital Compare. 

Response: We note that all data used 

to evaluate hospital performance in 

Hospital VBP will also be submitted by 

hospitals under the Hospital IQR 

program. Accordingly, the Hospital VBP 

program does not impose reporting 

requirements on hospitals in addition to 

or different from those imposed by the 

Hospital IQR program. We believe that 

the data as reported on Hospital 

Compare adequately reflects each 

hospital’s performance without miring 

the consumer in too much detail. As 

discussed above, consumers will be able 

to see each hospital’s score with respect 

to each measure, each hospital’s 

condition-specific score, each hospital’s 

domain-specific score, and each 

hospital’s Total Performance Score on 

the Hospital Compare Web site. We are 

aware that the score for a measure for 

purposes of the Hospital VBP program 

might differ from the rate we display for 

that measure for purposes of the 

Hospital IQR program based on differing 

date ranges used for each program and 

the fact that the Hospital VBP data will 

reflect a hospital’s performance score on 

the measure. We will make every effort 

to ensure that these differences are 

clearly explained to the public. 

Comment: Many commenters asked 

that frequently updated calculations be 

provided for each hospital. Some 

commenters specifically asked for 

quarterly hospital preview reports with 

a percentile ranking for each hospital. 

Other commenters suggested CMS make 

available a report through QualityNet 

that would provide constant updates 

and status about value-based purchasing 

scoring calculations and each hospital’s 

individual and up-to-date scores. 

Response: We believe that yearly 

updates of Hospital VBP performance 

information will provide the most 

simplicity and clarity for hospitals, 

although we will certainly consider 

commenters’ suggestions as the program 

moves forward. We note that Total 

Performance Scores are based on 

measure data from the entirety of the 

performance period, not any subset. We 

are concerned that providing hospitals 

with a calculation of their scores based 

on only a portion of the performance 

period would be misleading because the 

scores would be based on insufficient 

data and could be significantly different 

from the hospitals’ Total Performance 

Scores, which will be based on data 

from entire performance periods. For 

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these reasons, we believe calculating 

Hospital VBP scores based on the data 

from the entire performance period will 

provide hospitals with the best and 

most reliable information for their use. 

Comment: Some commenters asked 

CMS to provide the final, adjusted DRG 

payments 30 days before October 1, 

2012 to avoid claims reprocessing for 

the value-based incentive payments. 

Response: Section 1886(o)(8) requires 

the Secretary to inform each hospital of 

the adjustments to payments to the 

hospital for discharges occurring in a 

fiscal year as a result of the calculation 

of the value-based incentive payment 

amount (section 1886(o)(6)) and the 

reduction of the base operating 

diagnosis-related group (DRG) payment 

amount (section 1886(o)(7)(B)(i)), not 

later than 60 days prior to the fiscal year 

involved. We proposed to notify 

hospitals of the 1.0 percent reduction to 

their FY 2013 base operating DRG 

payments for each discharge in the FY 

2013 IPPS rule, which will be finalized 

at least 60 days prior to the beginning 

of the 2013 fiscal year. We expect to 

propose to incorporate this reduction 

into our claims processing system in 

January 2013, which will allow the 1.0 

percent reduction to be applied to the 

FY 2013 discharges, including those 

that have occurred beginning on 

October 1, 2012. We will address the 

operational aspects of the reduction as 

part of the FY 2013 IPPS rule. 

Because the finalized nine-month 

performance period will end only six 

months prior to the beginning of FY 

2013, we will not have enough time to 

calculate each hospital’s exact total 

performance score or final value-based 

incentive payment adjustment 60 days 

prior to the start of the 2013 fiscal year 

on October 1, 2012. Therefore, we 

proposed to inform each hospital 

through its QualityNet account at least 

60 days prior to October 1, 2012 of the 

estimated amount of its value-based 

incentive payment for FY 2013 

discharges based on estimated 

performance scoring and value-based 

incentive payment amounts, which will 

be derived from the most recently 

available data. We also proposed that 

each hospital participating in the 

Hospital VBP program establish a 

QualityNet account if it does not already 

have one for purposes of the Hospital 

IQR program. 

We further proposed to notify each 

hospital of the exact amount of its 

value-based incentive payment 

adjustment for FY 2013 discharges on 

November 1, 2012. The value-based 

incentive payment adjustment would be 

incorporated into our claims processing 

system in January 2013, which will 

allow the value-based incentive 

payment adjustment to be applied to the 

FY 2013 discharges, including those 

that have occurred beginning on 

October 1, 2012. 

We made these notification proposals 

because we concluded that using a full 

year as the FY 2013 performance period 

would not give us sufficient time to 

calculate the total performance scores 

and value-based incentive payments, 

notify hospitals regarding their payment 

adjustments, and implement the 

payment adjustments. 

While we generally agree with 

commenters’ suggestion, we believe our 

finalized performance period and 

notification policies outlined above 

appropriately balance the need for a 

robust FY 2013 performance period 

with hospitals’ desire to receive valuebased incentive payments as quickly as 

possible. 

Comment: One commenter asked how 

often the rankings for each hospital, 

based on individual Total Performance 

Scores, will be updated. The commenter 

also asked if there will be a data backlog 

for such rankings, and, if so, how great. 

Response: We have not proposed to 

provide ‘‘rankings’’ of hospitals based on 

their Total Performance Scores. Rather, 

the hospitals’ Total Performance Scores 

will be calculated annually at least 60 

days prior to the beginning of the fiscal 

year. As stated above, because the Total 

Performance Scores depend on the 

entirety of hospitals’ data submitted 

during the performance period, we do 

not believe that providing more frequent 

updates to the Total Performance Scores 

than on an annual basis would be 

helpful to providers or the public. 

While there is a delay between the 

conclusion of the performance period 

and the beginning of the fiscal year in 

which the corresponding value-based 

incentive payments will be made, this 

time period is necessary for hospitals to 

submit the required data, for that data 

to be validated, for hospitals to review 

and submit corrections to information 

that will be made public, and for us to 

calculate Total Performance Scores. We 

do not view this delay as a ‘‘backlog,’’ 

which we would interpret in this 

context as an extraordinary delay in 

data submission, validation, processing 

and notifications to hospitals. 

As noted above, we will provide 

further details on information to be 

made public with respect to hospitals’ 

performance scores in the future. We 

will consider the commenter’s implicit 

suggestion that we should provide 

rankings in the future. 

After considering the public 

comments, we are finalizing the 

notification and review provisions of 

the Hospital Inpatient VBP Program 

proposed rule as proposed. 

J. Reconsideration and Appeal 

Procedures 

Section 1886(o)(11)(A) of the Act 

requires the Secretary to establish a 

process by which hospitals may appeal 

the calculation of a hospital’s 

performance assessment with respect to 

the performance standards (section 

1886(o)(3)(A)) and the hospital 

performance score (section 1886(o)(5)). 

Under section 1886(o)(11)(B) of the Act, 

there is no administrative or judicial 

review under section 1869, section 

1878, or otherwise of the following: (1) 

The methodology used to determine the 

amount of the value-based incentive 

payment under section 1886(o)(6) and 

the determination of such amount; (2) 

the determination of the amount of 

funding available for the value-based 

incentive payments under section 

1886(o)(7)(A) and payment reduction 

under section 1886(o)(7)(B)(i); (3) the 

establishment of the performance 

standards under section 1886(o)(3) and 

the performance period under section 

1886(o)(4); (4) the measures specified 

under section 1886(b)(3)(B)(viii) and the 

measures selected under section 

1886(o)(2); (5) the methodology 

developed under section 1886(o)(5) that 

is used to calculate hospital 

performance scores and the calculation 

of such scores; or (6) the validation 

methodology specified in section 

1886(b)(3)(B)(viii)(XI). 

We solicited public comment, in 

general, on the structure and procedure 

of an appropriate appeals process. 

Specifically, we solicited comment on 

the appropriateness of a process that 

would establish an agency-level appeals 

process under which CMS personnel 

having appropriate expertise in the 

Hospital VBP program would decide the 

appeal. We sought insight on what 

qualifications such personnel should 

hold. We solicited comment on how the 

appeals process should be structured. 

Finally, we solicited public input on the 

timeframe in which these appeals 

should be resolved. 

The comments we received on this 

proposal and our response are set forth 

below. 

Comment: Many commenters called 

on us to establish an appeals process as 

soon as possible or prior to FY 2012. 

Others provided suggestions on the 

proper form of an appeals process, 

including a peer-reviewed process 

similar to QIOs or an informal dispute 

resolution process such as that outlined 

in the CMS State Operations Manual, 

7212. 

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Response: We thank commenters for 

their input. These comments will 

inform future rulemaking on this issue. 

K. FY 2013 Validation Requirements for 

Hospital Value-Based Purchasing 

In the FY 2011 Inpatient Prospective 

Payment System (IPPS) final rule (75 FR 

50225 through 50230), we adopted a 

validation process for the FY 2013 

Hospital IQR program. We proposed 

that this validation process will also 

apply to the FY 2013 Hospital VBP 

program. We believe that using this 

process for both the Hospital IQR 

program and the Hospital VBP program 

is beneficial for both hospitals and CMS 

because no additional burden will be 

placed on hospitals to separately return 

requested medical records for the 

Hospital VBP program. Because the 

measure data we are using for the 

Hospital VBP program is the same as, or 

a subset of, the data we collect for the 

Hospital IQR program, we believe that 

we can ensure that the Hospital VBP 

program measure data are accurate 

through the Hospital IQR program 

validation process. 

We note that we recently proposed to 

shorten the timeframe for submitting 

medical records for purposes of 

validation under the Hospital IQR 

program from 45 days to 30 days. 

Details regarding that proposal can be 

found in the FY 2012 IPPS/LTCH PPS 

proposed rule scheduled for publication 

on May 5, 2011. 

The comments we received on this 

proposal and our responses are set forth 

below. 

Comment: A number of commenters 

expressed support for our proposal on 

data validation. 

Response: We thank the commenters 

for their input. 

Comment: Some commenters 

requested information on how the data 

validation processes for Hospital VBP 

would be run and, if issues regarding 

validation arose, how such problems 

would be addressed. 

Response: We interpret the comments 

to request more information on 

validation scoring, sample selection, 

medical record request deadlines, and 

measures included in the validation 

process. Details regarding the validation 

process that we have adopted for the FY 

2013 Hospital IQR program, as well as 

the change that we recently proposed to 

adopt for that process, can be found in 

the FY 2011 IPPS/LTCH PPS final rule 

(75 FR 50225 through 50230) and in the 

FY 2012 IPPS/LTCH PPS proposed rule 

scheduled for publication on May 5, 

2011. The public section of the 

QualityNet Web site (http:// 

www.qualitynet.org) also contains 

additional technical information about 

the validation process. As we stated in 

the Hospital Inpatient VBP Program 

proposed rule, we believe that using this 

process for both the Hospital IQR 

program and the Hospital VBP program 

will be beneficial for both hospitals and 

CMS because no additional burden will 

be placed on hospitals to separately 

return requested medical records for the 

Hospital VBP program. Because the 

measure data we are using for the 

Hospital VBP program is the same or a 

subset of the data we collect for the 

Hospital IQR program, we believe that 

we can ensure that the Hospital VBP 

program measure data are accurate 

through the Hospital IQR program 

validation process. The data validation 

for the proposed baseline period was 

completed at the end of January 2011. 

Comment: Some commenters 

suggested that CMS should conduct 

targeted validation, studying the overall 

accuracy of hospitals’ calculation of 

measure performance rather than 

assessing accuracy of every data 

element. 

Response: As we explain in the FY 

2011 IPPS/LTCH PPS Final Rule (75 FR 

50225 through 50230), the validation 

process we have adopted for the 

Hospital IQR Program uses every data 

element used to calculate chart 

abstracted quality measures to assess 

overall measure accuracy. We interpret 

the comment to request that we target 

hospitals for validation that have 

attained high measure rates, high 

performance scores, and/or a very high 

number of improvement points as part 

of their Hospital VBP total performance 

score calculation. We believe that 

targeting validation on the subset of 

hospitals achieving high performance 

scores and the highest performance 

score changes from previous 

performance periods would improve the 

data accuracy under the Hospital VBP 

program. We will consider this 

suggestion for future rulemaking. 

Comment: A commenter asked how 

we will validate data submitted from 

hospitals during the initial baseline 

period. 

Response: We interpret this comment 

to question our validation process for 

the FY 2013 proposed baseline period 

for chart abstracted clinical process of 

care measure data from July 1, 2009 to 

March 31, 2010. We validated the 

Hospital IQR data for the 3rd calendar 

quarter 2009 discharges using the 

validation process that we adopted in 

the FY 2010 IPPS final rule (73 FR 

43882 through 43889) for the FY 2011 

payment determination and for 1st 

calendar quarter 2010 discharges using 

the validation process that we adopted 

in the FY 2011 IPPS final rule (75 FR 

50225 through 50229) for the FY 2012 

payment determination. The 4th 

calendar quarter of 2009 was not among 

the quarters of data that were used for 

validation of the FY 2011 or FY 2012 

payment determinations. Accordingly, 

we used the process that we adopted for 

the FY 2012 payment determination to 

validate data from this calendar quarter. 

We completed validation of these data 

in January 2011. 

Comment: A number of commenters 

suggested that we consider the impact of 

the ICD–10–CM/PCS reporting 

implementation on the Hospital VBP 

program, measure rates, and quality 

improvement efforts. 

Response: We interpret the comment 

to request additional information on the 

impact of ICD–10/CM/PCS 

implementation on Hospital VBP 

measure populations changing from 

ICD–9 codes to using ICD–10 codes. 

While the change in codes used for 

measure calculation may have some 

impact on measure rates, this will not 

happen until the transition to ICD–10 on 

October 1, 2013. We have not modeled 

this impact on Hospital VBP measures 

using statistical analysis at the present 

time. We will closely monitor the 

impact of ICD–10 implementation on 

the Hospital VBP program measure 

achievement and improvement trends 

and consider this information in future 

rulemaking. We agree that this 

fundamental change in categorizing 

diagnoses and procedures could 

potentially impact Hospital VBP 

performance scores through changes in 

measure rates due to measure 

population definition changes and 

coding definition changes. Additional 

information regarding ICD–10 

implementation can be found at: 

http://www.cms.gov/ICD10. 

Comment: Some commenters argued 

that the proliferation of different 

electronic reporting requirements and 

programs and differing chart-abstraction 

practices may result in inconsistent data 

collection by hospitals. 

Response: We appreciate the 

comment and understand that 

differences in abstraction practices and 

increased use of electronic health 

records may result in inconsistent 

interpretations of measure instructions 

among hospitals in terms of data 

collection. A principal goal of our 

validation requirement is to ensure 

consistency and accuracy in hospital 

reported measures. We currently 

validate the accuracy of chart-abstracted 

measure data reported for the Hospital 

IQR program and, as explained above, 

will use this validation process to 

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ensure the accuracy of the Hospital VBP 

chart-abstracted measure data. 

After considering the public 

comments, we are finalizing our 

proposal to use the validation process 

we use for the FY 2013 Hospital IQR 

program to ensure that data for the FY 

2013 Hospital VBP program are 

accurate. 

L. Additional Information 

1. Monitoring and Evaluation. As part 

of our ongoing effort to ensure that 

Medicare beneficiaries receive highquality inpatient care, CMS plans to 

monitor and evaluate the new Hospital 

VBP program. Monitoring will focus on 

whether, following implementation of 

the Hospital VBP program, we observe 

changes in access to and the quality of 

care furnished to beneficiaries, 

especially within vulnerable 

populations. We will also evaluate the 

effects of the new Hospital VBP program 

in areas such as: 

• Access to care for beneficiaries, 

including categories or subgroups of 

beneficiaries. 

• Changes in care practices that might 

adversely impact the quality of care 

furnished to beneficiaries. 

• Patterns of care suggesting 

particular effects of the Hospital VBP 

program (such as whether there are 

changes in the percentage of patients 

receiving appropriate care for 

conditions covered by the measures); or 

a change in the rate of hospital acquired 

conditions. 

• Best practices of high-performing 

hospitals that might be adopted by other 

hospitals. We currently collect data on 

readmission rates for beneficiaries 

diagnosed with myocardial infarction, 

heart failure, and pneumonia. We also 

collect chart abstracted data on a variety 

of quality of care indicators related to 

myocardial infarction, heart failure, 

pneumonia, and surgical care 

improvement. These sources and other 

available data will provide the basis for 

early examination of trends in care 

delivery, access, and quality. 

Assessment of the early experience with 

the Hospital VBP program will allow us 

to create an active learning system, 

building the evidence base essential for 

guiding the design of future Hospital 

VBP programs and enabling us to 

address any disruptions in access or 

quality that may arise. These ongoing 

monitoring and evaluation efforts will 

be part of our larger efforts to promote 

improvements in quality and efficiency, 

both within CMS and between CMS and 

hospitals in the Hospital VBP program. 

2. Electronic Health Records (EHRs) 

a. Background 

Starting with the FY 2006 IPPS final 

rule, we have encouraged hospitals to 

take steps toward the adoption of 

electronic health records (EHRs, also 

referred to in previous rulemaking 

documents as electronic medical 

records) that will allow for reporting of 

clinical quality data from the EHRs 

directly to a CMS data repository (70 FR 

47420 through 47421). We encouraged 

hospitals that are implementing, 

upgrading, or developing EHR systems 

to ensure that the technology obtained, 

upgraded, or developed conforms to 

standards adopted by HHS. We 

suggested that hospitals also take due 

care and diligence to ensure that the 

EHR systems accurately capture quality 

data and that, ideally, such systems 

provide point of care decision support 

that promotes optimal levels of clinical 

performance. 

We also continue to work with 

standard-setting organizations and other 

entities to explore processes through 

which EHRs could speed the collection 

of data and minimize the resources 

necessary for quality reporting as we 

have done in the past. 

We note that we have initiated work 

directed toward enabling EHR 

submission of quality measures through 

EHR standards development and 

adoption. We have sponsored the 

creation of electronic specifications for 

quality measures for the hospital 

inpatient setting, and will also work 

toward electronically specifying 

measures selected for the Hospital IQR 

program and the Hospital VBP program. 

b. HITECH Act EHR Provisions 

The HITECH Act (Title IV of Division 

B of the ARRA, together with Title XIII 

of Division A of the ARRA) authorizes 

payment incentives under Medicare for 

the adoption and use of certified EHR 

technology beginning in FY 2011. 

Hospitals are eligible for these payment 

incentives if they meet requirements for 

meaningful use of certified EHR 

technology, which include reporting on 

quality measures using certified EHR 

technology. With respect to the 

selection of quality measures for this 

purpose, under section 1886(n)(3)(A)(iii) 

of the Act, as added by section 4102 of 

the HITECH Act, the Secretary shall 

select measures, including clinical 

quality measures, that hospitals must 

provide to CMS in order to be eligible 

for the EHR incentive payments. With 

respect to the clinical quality measures, 

section 1886(n)(3)(B)(i) of the Act 

requires the Secretary to give preference 

to those clinical quality measures that 

have been selected for the Hospital IQR 

program under section 

1886(b)(3)(B)(viii) of the Act or that 

have been endorsed by the entity with 

a contract with the Secretary under 

section 1890(a) of the Act. All clinical 

quality measures selected for the EHR 

Incentive Program for eligible hospitals 

must be proposed for public comment 

prior to their selection, except in the 

case of measures previously selected for 

the Hospital IQR program under section 

1886(b)(3)(B)(viii) of the Act. The final 

rule for the Medicare and Medicaid EHR 

Incentive Programs includes 15 clinical 

quality measures for eligible hospitals 

and critical access hospitals (75 FR 

44418), two of which have been selected 

for the Hospital IQR program under 

section 1886(b)(3)(B)(viii) of the Act for 

the FY 2014 payment determination (75 

FR 50210 through 75 FR 50211). 

Thus, the Hospital IQR and Hospital 

VBP programs have important areas of 

overlap and synergy with respect to the 

EHR-based reporting of quality 

measures under the HITECH Act. We 

believe the financial incentives under 

the HITECH Act for the adoption and 

meaningful use of certified EHR 

technology by hospitals will encourage 

greater EHR-based reporting of clinical 

quality measures under the Hospital 

IQR program which are subsequently 

used for the Hospital VBP Program. 

We note that the provisions in this 

final rule do not implicate or implement 

any HITECH statutory provisions. Those 

provisions are the subject of separate 

rulemaking and public comment. 

The comments we received on this 

proposal and our responses are set forth 

below. 

Comment: Many commenters 

expressed support or encouragement of 

EHR use for quality improvement 

efforts. 

Response: We thank commenters for 

their support. 

Comment: Some commenters argued 

that EHR use in hospitals does not mean 

that quality of care is improving. 

Response: We thank commenters for 

their input. We agree with commenters’ 

point that possessing electronic health 

records alone does not constitute quality 

improvement. However, the criteria for 

‘‘meaningful use’’ certified EHR 

technology are intended to encourage 

actual improvements in medical care 

quality associated with health 

information technology rather than 

simple possession of new systems. As 

stated in the Hospital Inpatient VBP 

proposed rule (76 FR 2485), we believe 

that electronic reporting of measure 

information is a necessary step towards 

a more integrated health care system 

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and one we intend to encourage in 

future Hospital VBP rulemaking. 

Comment: Some commenters 

requested clarification on the 

interaction of the Hospital VBP program 

initiatives with the EHR incentive 

programs. 

Response: We appreciate the 

commenters’ request. We are actively 

planning to synchronize the various 

reporting programs in order to ensure 

harmony amongst measures across 

various settings. We hope to have all 

measure data submitted via EHRs in the 

future. 

Comment: One commenter suggested 

that CMS ensure that value-based 

purchasing initiatives foster innovative, 

quality care with an adequate level of 

reimbursement for innovative medical 

technologies. 

Response: We thank the commenter 

for this observation and believe that the 

Hospital VBP program will drive high 

quality care for Medicare beneficiaries, 

including through the provision of 

innovative technologies and EHRs. As 

stated above, we will closely monitor 

the Hospital VBP program for effects on 

the provision of medical care and on 

changes to medical practices, including 

the appropriate use of medical 

technologies. 

Comment: Many commenters 

suggested that CMS coordinate with the 

Office of the National Coordinator for 

Health IT (ONC) so that quality 

reporting and value-based purchasing 

data can be collected from certified EHR 

technology and related health 

information systems rather than 

manually extracted from medical 

records and submitted through a CMS 

Web site. Many commenters suggested 

that the first steps in coordination 

between CMS and ONC should be to 

clarify the goals and harmonize the 

measure specifications between CMS 

quality reporting and value-based 

purchasing efforts and ‘‘meaningful 

use.’’ 

Response: We believe that using the 

same specifications for similarlyconstructed measures for ‘‘meaningful 

use’’ and value-based purchasing 

initiatives would reduce confusion from 

multiple overlapping measures, reduce 

the costs of developing measures and 

could potentially address the limitations 

of CMS data collection methods that 

impact the ability to risk-adjust 

measures and distinguish outcomes that 

are present on admission. 

We agree that data required for quality 

reporting and value-based purchasing 

should be collected primarily from 

certified EHR technology rather than 

manually extracted from medical 

records when at all possible. We believe 

that collecting and transmitting data in 

this fashion will, in the long term, 

reduce provider reporting burden, as 

well as improve the reliability of the 

data used for public reporting and 

value-based purchasing. In achieving 

this objective, we will continue to 

engage the ONC on a myriad of 

operational issues and challenges that 

will need to be addressed when aligning 

value-based purchasing and 

‘‘meaningful use,’’ including 

harmonizing the specifications of 

overlapping measures between 

‘‘meaningful use’’ and value-based 

purchasing programs and considering 

developing new policies to protect 

patient privacy when accessing EHR 

data. 

M. QIO Quality Data Access 

In the proposed rule (76 FR 2485), we 

explained the various changes that have 

occurred since the QIO program 

regulations were first issued in 1985 

(see 50 FR 15347, April 17, 1985). These 

include the significant technological 

changes that have occurred in the last 

25 years; the addition of new 

responsibilities performed by QIOs; 

changes in the way QIOs— and CMS— 

conduct business; the establishment of 

new laws to protect data and 

information, including the Health 

Insurance Portability and 

Accountability Act of 1996 (HIPAA) and 

the Federal Information Security and 

Management Act (FISMA); the need for 

improved transparency and focus on 

quality health care and patient safety; 

and the realization that CMS needs 

improved access to better manage and 

oversee the QIOs. We also noted that 

these same regulations govern data and 

information held by End Stage Renal 

Disease Networks in accordance with 

section 1881(c)(8) of the Act. 

In light of the above, we proposed 

several changes to the QIO regulations. 

Specifically, we proposed amending the 

definition of the QIO review system in 

§ 480.101(b) to include CMS; modifying 

§ 480.130 to clarify the Department’s 

general right to access non-QRS 

confidential and non-confidential 

information; removing the onsite 

limitation placed on CMS’ access to QIO 

internal deliberations in § 480.139(a); 

and similarly modifying § 480.140 to 

eliminate the onsite restriction to CMS’ 

access to Quality Review study (QRS) 

data. We also proposed making 

corresponding changes in § 422.153 to 

ensure consistency with § 480.140. In 

addition, we asked for comments 

regarding whether the ‘‘onsite’’ 

restriction should be eliminated entirely 

from subparagraph (a) of section 

480.140 so that other entities who 

already have access to this information 

can obtain it without going to the QIO’s 

site. We also asked for comments on 

whether researchers should be allowed 

access to QIO information and the 

process, including criteria, which 

should be used to approve or deny these 

requests. 

The comments we received on these 

changes and our responses are set forth 

below. 

Comment: We received comments 

expressing concern that the changes to 

the QIO confidentiality regulations strip 

many of the confidentiality safeguards 

and go against Congress’ original intent 

in establishing the confidentiality 

requirements contained in section 1160 

of the Social Security Act. These 

comments included concerns that 

making CMS part of the review system 

and providing CMS with access to 

confidential QIO deliberations and QRS 

information would make the 

information subject to the Freedom of 

Information Act (FOIA); would not 

provide ‘‘adequate protection’’ as 

required by section 1160; would violate 

other laws, such as the Health Insurance 

Portability and Accountability Act 

(HIPAA); and may result in patient, 

physician, and provider information 

being released much more broadly than 

Congress intended, including potential 

releases of information during discovery 

in civil proceedings. Other commenters 

believed that there could be serious 

unintended consequences for patients, 

physicians, and providers, including 

damage to professional reputations. 

Response: We thank the commenters 

for their concerns. While section 1160 

does provide a general framework for 

maintaining the confidentiality of data 

or information acquired by QIOs, the 

section gives the Secretary broad 

discretion on when disclosures are 

necessary and appropriate. Paragraph 

(a)(1) provides that disclosures can be 

made ‘‘to the extent that may be 

necessary to carry out the purposes of 

[the QIO statute], * * *’’ Paragraph 

(a)(2) gives the Secretary authority to 

allow disclosures in such cases and 

under such circumstances as the 

Secretary provides for in regulations to 

assure the adequate protection of the 

rights and interests of patients, 

physicians and providers. As we 

discussed in the proposed rule, the 

initial regulatory framework was 

developed at a time when computers 

were in their infancy and the work of 

the QIOs was performed onsite at 

provider and physician facilities. 

However, as technology has advanced 

and the QIOs’ workload has expanded, 

what was deemed ‘‘adequate’’ 25 years 

ago is no longer the case. CMS has 

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weighed the concerns of the 

commenters against the needs of the 

QIO program, as well as other benefits 

CMS will gain from these changes. We 

have determined that the benefits 

resulting from these changes are 

extremely important at this time. We 

believe that these changes are necessary 

to modernize the regulations to equate 

with the manner in which QIOs carry 

out their work. In addition, these 

changes take into account the increased 

focus on medical errors and patient 

safety, which continue to be a major 

focus of the QIO program and of CMS. 

These changes, particularly the 

expanded definition of ‘‘QIO review 

system,’’ acknowledge the key role CMS 

plays in quality improvement, including 

CMS’ role in the Hospital Value Based 

Purchasing Program, the Hospital 

Inpatient Quality Reporting Program, 

and the Hospital Outpatient Quality 

Data Reporting Program. We also 

recognize that conveying additional 

kinds of QIO confidential information to 

CMS will result in the information being 

subject to the Freedom of Information 

Act (FOIA); however, protections 

remain within FOIA for protecting 

certain kinds of confidential 

information from further disclosure. In 

obtaining any information, CMS strives 

to adhere to all legal requirements, 

including those specified in HIPAA and 

in the Federal Information Security and 

Management Act (FISMA). Our goals 

are, among others, to achieve improved 

management and oversight of the QIO 

program and greater transparency of 

physician and provider care. We 

recognize that these goals must be 

accomplished while continuing to 

ensure that QIOs are able to effectively 

develop reliable methods for identifying 

medical errors and attain overall 

improvement in the quality of health 

care provided to patients. 

Comment: Several commenters 

expressed concerns regarding the 

negative impact the changes to the 

confidentiality regulations, and in 

particular CMS’ expanded access to QIO 

information, could have on the QIO 

program. Some commenters suggested 

that the changes could place the entire 

QIO review process—and the QIO 

program—in jeopardy. Some believed 

that the changes are not in line with the 

original intent of the confidentiality 

provisions, which was to ensure ‘‘frank 

and open communication’’ and that the 

ability of the QIOs to attain quality 

improvement would be undermined. 

Others believed that the changes could 

create an environment where every 

discussion between the QIO and a 

provider or physician would take place 

in the presence of the provider’s or 

practitioner’s legal counsel in an 

attempt to ensure that the provider or 

practitioner does not reveal potentially 

damaging information. Still others 

believed the changes could result in 

attorneys using the QIO process as a 

‘‘screening’’ tool, gaining access to QIO 

information to decide whether a lawsuit 

against an individual or entity identified 

in the information might be appropriate, 

or whether the information might 

bolster an existing suit. The commenters 

also mentioned that access to QIO 

information might subject QIO staff to a 

lawsuit when a jury’s decision 

ultimately differs from that of the QIO. 

In addition, QIOs attempting to mediate 

and/or resolve concerns or complaints 

could see less willingness by 

beneficiaries, physicians, and providers 

to engage in these discussions in light 

of concerns that information and 

outcomes may become discoverable and 

that this could ultimately impact patient 

safety. In fact, at least one commenter 

suggested that providers and physicians 

could be less likely to participate in 

programs associated with other Federal 

agencies, such as the Center for Disease 

Control, and Prevention’s work 

associated with Healthcare Acquired 

Infections. Concerns were also raised 

regarding the ability of QIOs to hire 

physician reviewers should the names 

of physician reviewers and their 

conclusions about the quality of care 

provided by other physicians and 

providers become discoverable and that 

this could drive up costs associated 

with hiring these physician reviewers. 

Response: QIOs perform numerous 

reviews through their contracts with 

CMS, including quality of care reviews, 

medical necessity reviews, readmission 

reviews, higher-weighted diagnosis 

related group reviews, appropriateness 

of settings reviews, admission reviews, 

as well as appeals of beneficiary 

discharges from a variety of provider 

settings. In carrying out these reviews, 

the QIOs rely on medical and other 

relevant information supplied by 

providers, physicians and beneficiaries, 

and these providers and physicians are 

required by law to provide QIOs with 

relevant information upon request. In 

fact, the QIO regulations at § 480.130 

already provide, without any 

amendments, that the Department of 

Health and Human Services (including 

CMS) has full access to all QIO 

confidential information—except 

information that qualifies as QRS data 

and internal deliberations. As such, we 

do not anticipate that QIO core review 

operations will be impacted in any 

significant way through the changes to 

the confidentiality regulations. 

Moreover, while reference was made to 

a potential negative impact on 

participation in other Federal programs, 

the exact nature of this impact was not 

clear and again, in light of the 

Department’s existing access, we do not 

believe that the commenters’ concern is 

likely. Quality Review Studies is the 

one area in which the changes could 

potentially have an impact on provider 

and physician participation; however, 

we do not believe that the changes will 

have the profound impact envisioned by 

these commenters. In light of CMS’ role 

in paying claims and the substantial 

amount of claims data already in CMS’ 

possession, requestors can already 

obtain certain information from CMS’s 

Privacy Act Systems of Records related 

to providers and physicians from which 

conclusions about their performance 

could be gleaned. This is in addition to 

the performance information that is 

already made available on providers and 

physicians through the various quality 

reporting programs. CMS’ goal is not to 

serve as the repository of all QIO data 

and information. We recognize that 

responsibility is best left to the QIOs, 

and we are cognizant of the concerns 

expressed by the commenters. To the 

extent that we are going to collect 

information that will be retrieved by an 

individual’s personal identifier 

including name, social security number, 

etc., we will publish a CMS Privacy Act 

System of Record notice in the Federal 

Register. However, at this time we have 

not identified such a need. 

Additionally, CMS does not disclose 

patient identifiable data to third party 

FOIA requesters and will protect this 

information to the extent allowed by 

Federal law. As we have noted, one of 

our major goals is to improve the 

management and oversight of the QIOs. 

We do not intend to interfere in the 

relationships between the QIOs and 

physicians, providers, etc. 

Although providers and physicians 

could conceivably engage legal counsel, 

this does not appear likely, particularly 

given the nature of the review process 

as detailed below. Providers and 

physicians have always had the right to 

consult with their counsel but have not 

routinely enlisted such assistance. We 

believe that this is because of the QIOs’ 

statutory right to medical information, 

which is normally maintained in the 

medical records. Moreover, while the 

impact of the changes will place more 

emphasis on information in CMS’ 

possession, section 1157(b) of the QIO 

statute protects the QIO and its 

employees from being held to have 

violated a criminal law or be civilly 

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liable for performing its statutory and 

contractual responsibilities, provided 

due care was exercised. Additionally, 

while the changes provide CMS with 

the right to obtain more data off-site, 

they do not mandate that CMS receive 

every piece of information in the QIOs’ 

possession, and we will make 

determinations regarding information 

needed in line with our stated goals, as 

articulated above. As such, we do not 

anticipate routinely obtaining the names 

of physician reviewers or other 

information associated with QIO 

deliberations unless that information is 

pertinent to a specific identifiable 

performance initiative. 

Comment: Some commenters 

expressed concern that there could be a 

lack of control over disclosures once 

confidential information is provided to 

other Federal and state agencies and 

that robust systems are needed to 

prevent inherent dangers associated 

with multiple ‘‘hand-offs’’ of information 

from agency to agency so that the 

necessary level of responsibility and 

oversight is maintained and information 

is not lost, misused or inappropriately 

disclosed. In addition, a concern was 

raised that QIO information represents 

only a subset of all data and information 

and that CMS and other agencies must 

consider that the information does not 

represent the ‘‘norm.’’ In particular, 

commenters raised concerns that the 

expanded access to quality 

improvement review activity would 

allow CMS to use QIO data to determine 

new methodologies to reduce or deny 

payments for other initiatives, such as 

the expansion of the Recovery Audit 

Program. 

Response: We appreciate the 

comments regarding the need for 

internal controls related to information 

provided to other Federal and state 

agencies. However, QIOs already have 

the authority to release confidential 

information to Federal and state 

agencies in certain instances as defined 

by the QIO confidentiality regulations in 

Part 480 (for example, the Office of 

Inspector General, Federal and State 

fraud and abuse agencies, and Federal 

and State agencies responsible for risks 

to the public health), and necessary 

controls are already in place to 

effectuate these provisions and ensure 

the data is appropriately protected. We 

believe that any additional controls 

associated with the potential increased 

access by Federal and state agencies can 

be handled through the development of 

additional program instructions and 

policy statements. Moreover, CMS 

already has a well-defined process in 

place to ensure protection of various 

types of information, including limited 

data sets, identifiable data, and claims 

data in general, and this includes 

adherence to specific information 

technology requirements, as well as 

HIPAA and FISMA. As we have noted, 

our goal in expanding the access is, in 

part, to ensure appropriate oversight 

and management of the QIO program. 

However, we recognize that access to 

this information could have additional 

benefits and improve our understanding 

of payment related problems. This 

includes the ability to use QIO data to 

determine new methodologies to reduce 

or deny payments for other initiatives, 

such as recovery audits. In utilizing the 

data, we also recognize that careful 

analysis will need to be conducted to 

ensure that the scope of the data is 

clearly recognized so that inaccurate 

conclusions are not drawn based on the 

particular ‘‘subset’’ of data being used. 

Comment: We received comments 

advising that making confidential QIO 

information available to researchers 

would undermine the QIO program and 

could drive Hospitals to cease 

participating in QIO activities. Some 

commenters recognized that while 

sharing this data may be beneficial and 

increase opportunities for improvement 

within our health care systems, the data 

and process for obtaining the data could 

be easily mismanaged if well-defined 

parameters are not put into place for 

approving these requests, including the 

establishment of detailed criteria that 

ensures the research has value to CMS’ 

and is in line with CMS’ goals, and that 

the research be conducted by credible 

research entities. Still others 

commented that QIOs should share only 

aggregate level data or de-identified data 

and that rigorous assurances and 

safeguards be put in place to ensure 

patient privacy and confidentiality. 

Response: We appreciate the 

comments and suggestions regarding the 

release of information to researchers. As 

discussed previously, QIOs perform 

numerous reviews through their 

contracts with CMS, including quality 

of care reviews, medical necessity 

reviews, readmission reviews, higherweighted diagnosis related group 

reviews, appropriateness of settings 

reviews, admission reviews, as well as 

appeals of beneficiary discharges from a 

variety of provider settings. In carrying 

out these reviews, the QIOs rely on 

medical and other relevant information 

supplied by Medicare providers, 

physicians and beneficiaries, and these 

providers and physicians are required 

by law to provide QIOs with medical 

and other relevant information upon 

request. As such, we do not anticipate 

that most QIO core review operations 

will be negatively impacted through the 

changes to the confidentiality 

regulations. As previously mentioned, 

although there could be some potential 

impact on participation in Quality 

Review Studies, our hope is that the 

focus will remain on the patients and 

the quality improvements that can be 

achieved through these studies. 

Additionally, the potential benefits 

attained through the efforts of 

researchers are significant, particularly 

as we aim to improve patient safety by 

reducing medical errors. We recognize 

that these requests should be thoroughly 

evaluated, with the release of 

information based on well-defined 

criteria. CMS already employs the CMS 

Privacy Board to review researchers’ 

requests for CMS claims data. The Board 

reviews the request, and ensures that 

the request would comply with 

applicable privacy and security laws 

and CMS policies governing data 

disclosure. Only after an affirmative 

finding is the data released to the 

researcher. We believe that we should 

use the CMS Privacy Board to process 

research requests for QIO data as well. 

After consideration of the public 

comments, we have added § 480.144 to 

allow CMS to approve requests from 

researchers for access to QIO 

confidential information. 

Furthermore, even after the Board 

determines that the disclosure would 

comply with applicable laws and CMS’ 

policies, data is only released upon 

execution of a data use agreement 

(DUA). These agreements spell out the 

expectations on data transmission, 

storage, access, use, re-use and 

disclosure to downstream entities. CMS 

conditions research data disclosures on 

the researchers’ acceptance of these 

terms. DUAs therefore provide ongoing 

protection of the data after it is released. 

Moreover, in order to fully leverage 

the capabilities of these researchers, it is 

imperative that full access be given in 

those situations in which the CMS 

Privacy Board deems warranted. Our 

goal will be to develop sub-regulatory 

requirements, including any additional 

criteria and requirements necessary to 

properly evaluate these requests to 

coincide with the effectuation of this 

Final Rule. 

Comment: We received comments in 

support of CMS’s proposed changes to 

the regulations governing QIOs, 

including those providing CMS with 

broader access to QIO data and the 

deletion of the ‘‘onsite’’ requirement for 

CMS and other Federal and state 

agencies having the right to access the 

data. These commenters believed that 

any entity that is entitled to have access 

to QIO information should be able to get 

the information without going onsite to 

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26542 Federal Register / Vol. 76, No. 88 / Friday, May 6, 2011 / Rules and Regulations 

the QIO. The commenters considered 

the technological advances since 1985 

considerable and that new Federal 

legislation, including HIPAA and 

FISMA, have made the ‘‘on-site’’ 

requirement obsolete. Others supported 

making CMS an identified part of the 

definition of a ‘‘QIO review system’’ 

because this would assist CMS in 

becoming more efficient in exchanging 

data and enable CMS to better manage 

and respond to new information. These 

comments also supported CMS’ 

modification of § 480.139 and § 480.140 

to facilitate CMS’ communication with, 

and awareness of, QIO activities needed 

to improve the proper oversight and 

management of QIOs and the timely 

access to information. 

Response: We thank these 

commenters for the support. The 

changes are designed to improve our 

oversight and management of the QIOs 

while also better utilizing available data 

to oversee patient care, and where 

feasible the Medicare program. We see 

the recognition of CMS’ role in the QIO 

review system as an important step 

towards achieving this goal. Moreover, 

as we conveyed in the Hospital 

Inpatient VBP Program proposed rule, 

the current state of technology, the use 

of electronic exchanges of data and 

information, and the speed at which 

data must be exchanged to ensure 

accomplishment of our work warrants 

the elimination of the restriction that 

data can only be accessed onsite at the 

QIO by CMS in sections 480.139 and 

480.140. For the same reasons, we 

believe that the onsite restriction should 

be eliminated for all Federal and state 

agencies having access to QIO data as 

specified in section 480.140. In 

implementing these changes and 

allowing improved access to this 

information, CMS will ensure adherence 

to all legal requirements, including 

HIPAA and FISMA, and we will 

establish policies and procedures to 

ensure appropriate protections are in 

place in response to the deletion of the 

onsite requirement from sections 

480.139 and 480.140. 

Comment: We received several 

comments in support of giving 

researchers access to QIO confidential 

information. Many believed this access 

would enable researchers to study 

quality issues and obtain needed 

insights into ways health care quality 

could be improved. Commenters also 

supported leveraging the current CMS 

Privacy Board structure to evaluate 

these requests. Others suggested that the 

process for accessing QIO data be given 

free of lengthy delays or cumbersome 

process requirements for approval of 

these requests. It was also suggested that 

an expedited process be created that 

would grant individual QIOs with the 

authority to independently assess and 

release information, would incorporate 

tightly managed data use agreements 

and would also allow requestors to 

appeal declinations to the CMS Privacy 

Board. Alternatively, comments were 

received suggesting that CMS utilize a 

review process similar to 

‘‘investigational review boards’’ or the 

‘‘Limited Data Set Date process.’’ 

Response: We appreciate these 

comments and agree with the positive 

insights that could be attained by 

allowing researcher access to QIO data 

as well as the benefits of using the 

already established CMS Privacy Board. 

Although we have considered other 

options for evaluating these requests, we 

believe that using the existing CMS 

Privacy Board gives us the best 

opportunity to ensure that all requests 

are appropriately evaluated in a timely 

fashion. As necessary, we will consider 

potential modifications to the specific 

criteria and processes employed by the 

CMS Privacy Board should 

circumstances warrant such changes. 

Moreover, with regard to the suggestion 

that QIOs be used to evaluate these 

requests, we believe that this would 

create a substantial workload burden for 

QIOs and could potentially result in 

different decisions on similar requests, 

along with the potential for ‘‘forumshopping’’ for those who have had their 

requests denied by individual QIOs. 

While we recognize that other models 

may exist to evaluate these data 

requests, we believe the use of the CMS 

Privacy Board represents the best 

opportunity to ensure requests are 

properly and uniformly adjudicated, 

without placing an undue burden on 

individual QIOs. 

Comment: One commenter requested 

a change to the QIO confidentiality 

regulations related to the right of an 

attending physician to unilaterally 

decide not to release individual case 

review results to beneficiaries if the 

attending physician determines the 

results could ‘‘harm’’ the beneficiary. 

The commenter suggested that the 

regulatory requirement be changed to 

allow providers to comment on these 

determinations and that the QIO 

‘‘finding’’ be available to the beneficiary 

in all circumstances and that these 

changes are important for improvements 

to the patient, physician and provider 

relationships. 

Response: While we appreciate this 

suggestion, we believe that it is outside 

the scope of this Final Rule. As such, we 

are not taking any action at this time. 

However, we reserve the right to 

consider this issue in future rulemaking. 

After consideration of the public 

comments, we are finalizing the 

proposed changes to the QIO program 

regulations. In addition, we are 

eliminating the ‘‘onsite’’ restriction on 

Quality Review Study information in 

§ 480.140(a) so that all of the entities 

and individuals listed in that provision 

are no longer subject to it. We are also 

establishing regulations governing the 

ability of researchers to request access to 

QIO confidential information. 

III. Collection of Information 

Requirements 

We will submit a revised information 

collection and recordkeeping 

requirements to incorporate CMS access 

of information from QIOs. CMS intends 

to modify existing information 

collection requirements approved on 

behalf of the Hospital IQR program data 

collection (OMB 0938–1022) and 

supporting the Hospital Value Based 

Purchasing Program, and the QIO 

quality of care complaint form (OMB 

0938–1102) to QIO program 

confidentiality regulation modification. 

We estimate that the 53 QIOs will each 

require approximately 120 hours per 

QIO per year to modify information 

technology systems necessary to grant 

CMS access to the requested 

information, or a total of 6,360 burden 

hours per year. We believe that no 

additional information will be collected 

from providers and Beneficiaries as a 

result of this information collection. 

IV. Economic Analyses 

A. Regulatory Impact Analysis 

1. Introduction 

We have examined the impact of this 

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993), Executive 

Order 13563 on Improving Regulation 

and Regulatory Review (January 18, 

2011), the Regulatory Flexibility Act 

(RFA) (September 19, 1980, Pub. L. 96– 

354), section 1102(b) of the Social 

Security Act, section 202 of the 

Unfunded Mandates Reform Act of 1995 

(March 22, 1995; Pub. L. 104–4), 

Executive Order 13132 on Federalism 

(August 4, 1999) and the Congressional 

Review Act (5 U.S.C. 804(2)). 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

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quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. This rule 

has been designated an ‘‘economically’’ 

significant rule, under section 3(f)(1) of 

Executive Order 12866, and a major rule 

under the Congressional Review Act. 

Accordingly, the rule has been reviewed 

by the Office of Management and 

Budget. 

2. Statement of Need 

The objectives of the Hospital VBP 

program include to transform how 

Medicare pays for care and to encourage 

hospitals to continually improve the 

quality of care they provide. In 

accordance with section 1886(o) of the 

Act, we will accomplish these goals by 

providing incentive payments based on 

hospital performance on measures. This 

final rule was developed based on 

extensive research we conducted on 

hospital value-based purchasing, some 

of which formed the basis of the 2007 

Report to Congress, as well as extensive 

stakeholder and public input. The 

approach reflects the statutory 

requirements and the intent of Congress 

to promote increased quality of hospital 

care for Medicare beneficiaries by 

aligning a portion of hospital payments 

with performance. 

3. Summary of Impacts 

To provide funding for value-based 

incentive payments, beginning in fiscal 

year 2013 and in each succeeding fiscal 

year, section 1886(o)(7) of the Act 

governs the funding for the value-based 

incentive payments and requires the 

Secretary to reduce the base operating 

DRG payment amount for a hospital for 

each discharge in a fiscal year by an 

amount equal to the applicable percent 

of the base operating DRG payment 

amount for the discharge for the 

hospital for such fiscal year. We 

anticipate defining the term ‘‘base 

operating DRG payment amount’’ in 

future rulemaking. For purposes of this 

final rule, we have limited our analysis 

of the economic impacts to the valuebased incentive payments. As required 

by section 1886(o)(7)(A), total 

reductions for hospitals under section 

1886(o)(7)(B) must be equal to the 

amount available for value-based 

incentive payments under section 

1886(o)(6), as estimated by the 

Secretary, resulting in a net budgetneutral impact. Overall, the distributive 

impact of this final rule is estimated at 

$850 million for FY 2013. 

The objectives of the Hospital VBP 

program include to transform how 

Medicare pays for care and to encourage 

hospitals to continually improve the 

quality of care they provide. In 

accordance with section 1886(o) of the 

Act, we will accomplish these goals by 

providing incentive payments based on 

hospital performance on measures. This 

final rule was developed based on 

extensive research we conducted on 

hospital value-based purchasing, some 

of which formed the basis of the 2007 

Report to Congress, as well as extensive 

stakeholder and public input. The 

approach reflects the statutory 

requirements and the intent of Congress 

to promote increased quality of hospital 

care for Medicare beneficiaries by 

aligning a portion of hospital payments 

with performance. 

4. Detailed Economic Analysis 

Table 10 displays our analysis of the 

distribution of possible total 

performance scores based on 2009 data, 

providing information on the estimated 

impact of this final rule. Value-based 

incentive payments for the estimated 

3,092 hospitals that would participate in 

Hospital VBP are stratified by hospital 

characteristic, including geographic 

region, urban/rural designation, 

capacity (number of beds), and 

percentage of Medicare utilization. For 

example, row 8 of Table 10 shows the 

estimated value-based incentive 

payments for the East South Central 

region, which includes the states of 

Alabama, Kentucky, Mississippi, and 

Tennessee. Column 2 relates that, of the 

3,092 participating hospitals, 301 are 

located in the East South Central region. 

Column 3 provides the estimated mean 

value-based incentive payment to those 

hospitals, which is 1.021 percent. The 

next columns provide the distribution of 

scores by percentile; we see that the 

value-based incentive percentage 

payments for hospitals in the East South 

Central region range from 0.550 at the 

5th percentile to 1.482 at the 95th 

percentile, while the value-based 

incentive payment at the 50th percentile 

is 1.023 percent. 

TABLE 10—TWO-DOMAIN IMPACT (CLINICAL PROCESS AND HCAHPS): ESTIMATED INCENTIVE RATES BY HOSPITAL

CHARACTERISTIC † 

Hospital characteristic 

Percentile 

N = 3,092 Mean 5th 10th 25th 50th 75th 90th 95th 

Region 

New England ................................ 138 1.083 0.660 0.751 0.935 1.088 1.276 1.391 1.434 

Middle Atlantic .............................. 370 0.955 0.542 0.619 0.766 0.963 1.152 1.288 1.352 

South Atlantic ............................... 518 1.041 0.551 0.661 0.822 1.039 1.255 1.420 1.499 

East North Central ....................... 475 1.022 0.555 0.652 0.840 1.025 1.214 1.380 1.472 

East South Central ....................... 301 1.021 0.550 0.634 0.810 1.023 1.235 1.413 1.482 

West North Central ...................... 248 1.083 0.638 0.721 0.866 1.075 1.283 1.470 1.567 

West South Central ...................... 457 1.014 0.477 0.597 0.784 0.997 1.248 1.432 1.563 

Mountain ...................................... 201 0.980 0.584 0.650 0.822 0.986 1.159 1.336 1.396 

Pacific ........................................... 384 0.935 0.434 0.551 0.755 0.951 1.126 1.290 1.383 

Urban/Rural 

Large Urban ................................. 1,199 1.008 0.552 0.646 0.815 1.014 1.206 1.370 1.449 

Other Urban ................................. 1,010 1.016 0.551 0.646 0.817 1.015 1.209 1.379 1.484 

Rural ............................................. 883 1.007 0.487 0.607 0.788 1.009 1.239 1.398 1.499 

Capacity (by # beds) 

1 to 99 beds ................................. 1,045 1.044 0.491 0.617 0.814 1.047 1.284 1.456 1.575 

100 to 199 beds ........................... 939 1.002 0.500 0.598 0.815 1.015 1.201 1.360 1.452 

200 to 299 beds ........................... 481 0.989 0.586 0.662 0.803 0.996 1.175 1.323 1.392 

300 to 399 beds ........................... 279 0.995 0.577 0.668 0.821 1.022 1.167 1.293 1.379 

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26544 Federal Register / Vol. 76, No. 88 / Friday, May 6, 2011 / Rules and Regulations 

TABLE 10—TWO-DOMAIN IMPACT (CLINICAL PROCESS AND HCAHPS): ESTIMATED INCENTIVE RATES BY HOSPITAL

CHARACTERISTIC †—Continued 

Hospital characteristic 

Percentile 

N = 3,092 Mean 5th 10th 25th 50th 75th 90th 95th 

400 to 499 beds ........................... 151 0.985 0.575 0.700 0.837 0.982 1.135 1.307 1.414 

500+ beds .................................... 197 0.960 0.562 0.652 0.766 0.960 1.146 1.265 1.314 

Medicare Utilization 

0 to 25% ....................................... 237 0.990 0.542 0.639 0.798 1.012 1.164 1.352 1.451 

> 25% to 50% .............................. 1,508 1.016 0.528 0.642 0.818 1.020 1.224 1.381 1.459 

> 50% to 65% .............................. 1,148 1.005 0.524 0.637 0.804 1.008 1.206 1.381 1.482 

> 65% ........................................... 196 1.02 0.52 0.60 0.80 1.02 1.28 1.42 1.53 

† Note: Because sufficient 2009 data was not available at the time of publication of this final rule, the measures SCIP–Card–2 and SCIP–Inf–4 

were not included in the calculation of estimated incentive rates. However, we believe that no significant change in estimated incentive rates results from the omission of these measures. 

Table 11 below shows the estimated 

percent distribution by hospital 

characteristic of the 1 percent reduction 

($850 million) in the base operating 

DRG payment for fiscal year 2013. 

TABLE 11—AVERAGE ESTIMATED PERCENTAGE WITHHOLD AMOUNT (AS REQUIRED BY SECTION 1886(O)(7) OF THE

SOCIAL SECURITY ACT) BY HOSPITAL CHARACTERISTIC

Hospital characteristic N = 3,092 

Estimated percent withhold 

amount 

Region: 

New England ................................................................................................................................................ 138 5.9 

Middle Atlantic .............................................................................................................................................. 370 15.9 

South Atlantic ............................................................................................................................................... 518 19.5 

East North Central ....................................................................................................................................... 475 17.5 

East South Central ....................................................................................................................................... 301 7.8 

West North Central ...................................................................................................................................... 248 7.2 

West South Central ...................................................................................................................................... 457 10.3 

Mountain ....................................................................................................................................................... 201 4.8 

Pacific ........................................................................................................................................................... 384 11.2 

Urban/Rural: 

Large Urban ................................................................................................................................................. 1,199 49.8 

Other Urban ................................................................................................................................................. 1,010 38.2 

Rural ............................................................................................................................................................. 883 11.1 

Capacity (by # beds): 

1 to 99 beds ................................................................................................................................................. 1,045 8.1 

100 to 199 beds ........................................................................................................................................... 939 21.2 

200 to 299 beds ........................................................................................................................................... 481 20.5 

300 to 399 beds ........................................................................................................................................... 279 16.9 

400 to 499 beds ........................................................................................................................................... 151 11.0 

500+ beds .................................................................................................................................................... 197 23.4 

Medicare Utilization: 

0 to 25% ....................................................................................................................................................... 237 3.9 

> 25% to 50% .............................................................................................................................................. 1,508 60.0 

> 50% to 65% .............................................................................................................................................. 1,148 32.8 

> 65% ........................................................................................................................................................... 196 3.2 

We also analyzed the characteristics 

of hospitals not receiving a Hospital 

VBP score based on the program 

requirements, which is shown below in 

Table 12. We estimate that 353 hospitals 

will not receive a Hospital VBP score in 

fiscal year 2013. We note that these 

hospitals will not be impacted by the 

reductions in base DRG operating 

payments under section 1886(o)(7). 

Hospitals not included in this analysis 

were excluded due to the complete 

absence of cases applicable to the 

measures included, or due to the 

absence of a sufficient number of cases 

to reliably assess the measure. 

As might be expected, a significant 

portion of hospitals not receiving a 

Hospital VBP score are small providers 

because such entities are more likely to 

lack the minimum number of cases or 

measures required to participate in the 

Hospital VBP program. We anticipate 

conducting future research on methods 

to include small hospitals in the 

Hospital VBP program. 

TABLE 12—PROJECTED NUMBER OF

HOSPITALS NOT RECEIVING A HOSPITAL VBP SCORE IN FY 2013, BY

HOSPITAL CHARACTERISTIC

Hospital characteristic 

Number of 

hospitals not 

receiving hospital VBP score 

(N = 353) 

Region: 

New England ................... 6 

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TABLE 12—PROJECTED NUMBER OF

HOSPITALS NOT RECEIVING A HOSPITAL VBP SCORE IN FY 2013, BY

HOSPITAL CHARACTERISTIC—Continued 

Hospital characteristic 

Number of hospitals not receiving hospital 

VBP score (N = 

353) 

Middle Atlantic ................. 18 

South Atlantic .................. 14 

East North Central .......... 31 

East South Central .......... 26 

West North Central ......... 17 

West South Central ......... 85 

Mountain ......................... 25 

Pacific .............................. 26 

Puerto Rico ..................... 34 

Missing Region ............... 71 

Urban/Rural: 

Large Urban .................... 116 

Other Urban .................... 83 

Rural ................................ 83 

Missing Urban/Rural ....... 71 

Capacity (by # beds): 

1 to 99 beds .................... 213 

100 to 199 beds .............. 47 

200 to 299 beds .............. 11 

300 to 399 beds .............. 8 

400 to 499 beds .............. 2 

500+ beds ....................... 0 

Missing Capacity ............. 72 

Medicare Utilization: 

0 to 25% .......................... 78 

> 25% to 50% ................. 75 

> 50% to 65% ................. 43 

> 65% .............................. 28 

Missing Medicare Utilization ............................... 129 

We note that a number of hospitals 

were missing hospital characteristic 

data, including region, urban/rural 

classification, size, and Medicare 

utilization. All 353 hospitals included 

in Table 9, including those with missing 

hospital characteristic data, lacked 

sufficient clinical process of care data or 

HCAHPS data needed to calculate a 

total performance score. 

5. Alternatives Considered 

The major alternative performance 

scoring models considered for this final 

rule were the Six-Domain Performance 

Scoring Model and the Appropriate Care 

Model, and both of these models were 

discussed at length in the proposed rule 

(76 FR 2476 through 2478). 

The Appropriate Care Model (ACM) 

creates sub-domains by topic for the 

clinical process of care measures and is 

distinguished from the Three-Domain 

Performance Scoring Model in that it 

requires complete mastery for each topic 

area (‘‘all-or-none’’) in the clinical 

process of care domain at the patient 

level. Under the ACM, the patient 

encounter is the scored ‘‘event,’’ with a 

hospital receiving 1 point if it 

successfully provides to a patient the 

applicable processes under all of the 

measures within an applicable topic 

area, or 0 points if it fails to furnish one 

or more of the applicable processes. The 

hospital’s condition-specific ACM score 

is the proportion of patients with the 

condition who receive the appropriate 

care as captured by the process 

measures that fall within the topic area. 

The Six-Domain Performance Scoring 

Model, like the ACM, would create and 

separately score individual sub-domains 

at the topic level for the clinical process 

measures. In other words, the clinical 

process of care domain would be further 

broken down into sub-domains 

characterized by condition. We would 

assign intermediate scores to each 

hospital for each of the clinical process 

sub-domains. Like the Three-Domain 

Performance Scoring Model, hospitals 

would be scored on each measure in the 

sub-domain and individual measures 

would still be weighted equally within 

a sub-domain. Scores across the topic 

area sub-domains would then be equally 

weighted and combined to create an 

overall clinical process score. The total 

performance score would be computed 

as an average across domains, calculated 

by weighting the scores for each of the 

three domains. 

Examining these alternative 

performance scoring models, our 

analyses showed only modest 

differences in financial reimbursements 

across the separate models considered 

by the various characteristics listed 

above. We believe that these observed 

transfers are within the limits of 

expected variation and do not reflect 

significant differences in financial 

reimbursements between the 

performance scoring models considered. 

6. Accounting Statement 

As required by OMB Circular A–4 

(available at http://www.whitehouse.

gov/omb/circulars/a004/a-4.pdf), we 

have prepared an accounting statement 

showing the classification of the 

impacts associated with the provisions 

of this final rule. 

As required by section 1886(o)(7)(A), 

total reductions for hospitals under 

section 1886(o)(7)(B) must be equal to 

the amount available for value-based 

incentive payments under section 

1886(o)(6), resulting in a net budgetneutral impact. Overall, the distributive 

impacts of this final rule, resulting from 

the incentive payments and the 1 

percent reduction (withhold) in the base 

operating DRG payment for fiscal year 

2013, are estimated at $850 million for 

fiscal year 2013 (reflected in 2010 

dollars). 

TABLE 13—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES FOR FY 2013 

Category Transfers 

Annualized Monetized Transfers ........................ $0 (Distributive impacts resulting from the incentive payments and the 1 percent reduction 

(withhold) in the base operating DRG payment are estimated at $850 million.) 

From Whom To Whom? ..................................... Federal Government to Hospitals. 

B. Regulatory Flexibility Act Analysis 

The RFA requires agencies to analyze 

options for regulatory relief of small 

entities, if a rule has a significant impact 

on a substantial number of small 

entities. For purposes of the RFA, we 

estimate that the great majority of 

hospitals and most other health care 

providers and suppliers are small 

entities, either by being nonprofit 

organizations or by meeting the SBA 

definition of a small business having 

revenues of $7.0 million to $34.5 

million or less in any 1 year. For 

purposes of the RFA, among the 3,092 

hospitals that would be participating in 

the Hospital VBP program, we estimate 

that percent increases in payments 

resulting from this final rule will range 

from 0.0236 percent for the lowestscoring hospital to 1.817 percent for the 

highest-scoring hospital. When the 

reduction to base operating DRG 

payments required under section 

1886(o)(7) (one percent in FY 2013, 

gradually rising to 2 percent by FY 

2017) is taken into account, roughly half 

of participating hospitals will receive a 

net increase in payments and half will 

receive a net decrease in payments. 

However, we estimate that no 

participating hospital will receive more 

than a net 1 percent increase or decrease 

in total Medicare payments. This falls 

well below the threshold for economic 

significance established by HHS for 

requiring a more detailed impact 

assessment under the RFA. Thus, we are 

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26546 Federal Register / Vol. 76, No. 88 / Friday, May 6, 2011 / Rules and Regulations 

not preparing an analysis under the RFA 

because the Secretary has determined 

that this final rule would not have a 

significant economic impact on a 

substantial number of small entities. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 604 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

an urban area and has fewer than 100 

beds. We did not prepare an analysis 

under section 1102(b) of the Act because 

the Secretary has determined that this 

final rule would not have a significant 

impact on the operations of a substantial 

number of small rural hospitals. 

Comment: One commenter disagreed 

with our analysis, which concluded that 

the proposed rule will not have an 

impact on a substantial number of 

small, rural hospitals. The commenter 

argued that quality improvement efforts 

are more costly for small hospitals and 

was also concerned about the program’s 

reliability in low volume situations. 

Response: As discussed throughout 

the various sections of this Regulatory 

Impact Analysis, including the 

discussions of the RFA and section 

1102(b), and based on the concluding 

economic impact findings and tables 

presented, we believe there will not be 

a significant impact on the operations of 

a substantial number of small rural 

hospitals. Absent any new data, 

commenters may reference the 

upcoming demonstration projects such 

as those required under section 3001(b) 

of the Affordable Care Act as a tool for 

better understanding any new economic 

impacts, including those of small rural 

hospitals. As described in section II. G. 

of this Final Rule, we believe that the 

measure and case minimums allow us to 

include as many hospitals as possible 

while calculating reliable Total 

Performance Scores. 

Comment: Another commenter asked 

for more detail in Table 10, including 

data to offer a rationale for the incentive 

rates identified. This commenter stated 

that the ‘‘weights have not been defined 

or modeled within the rule to allow 

hospitals to make projections with 

budgeting and other operational issues.’’ 

This commenter recommended that 

CMS provide additional information so 

that hospitals can replicate the process 

and calculations for planning purposes. 

Response: We believe the data on the 

two-domain impact of the Hospital VBP 

program provided in Table 10 are as 

detailed as possible, along with the 

accompanying narrative and analysis 

provide a description of the number of 

affected entities and the size of the 

economic impacts of this final rule, as 

well as the justification for the 

Secretary’s certification that this final 

rule will not have a significant 

economic impact on a substantial 

number of small entities. We will take 

the commenter’s suggestions for 

providing additional data under 

advisement should additional or more 

detailed data become available and as 

we continue public outreach and 

education efforts for the Hospital VBP 

program. 

C. Unfunded Mandates Reform Act 

Analysis 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

also requires that agencies assess 

anticipated costs and benefits before 

issuing any rule whose mandates 

require spending in any 1 year of $100 

million in 1995 dollars, updated 

annually for inflation. In 2011, that 

threshold is approximately $136 

million. This rule would not mandate 

any requirements for State, local, or 

tribal governments, nor would it affect 

private sector costs. 

V. Federalism Analysis 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

As stated above, this final rule would 

not have a substantial effect on State 

and local governments. 

List of Subjects 

42 CFR Part 422 

Administrative practice and 

procedure, Health facilities, Health 

maintenance organizations (HMO), 

Medicare, Penalties, Privacy, Reporting 

and recordkeeping requirements. 

42 CFR Part 480 

Health care, Health professions, 

Health records, Peer Review 

Organizations (PRO), Penalties, Privacy, 

Reporting and recordkeeping 

requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR 

chapter IV as set forth below: 

PART 422—MEDICARE ADVANTAGE 

PROGRAM 

■ 1. The authority citation for part 422 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh). 

Subpart D—Quality Improvement 

■ 2. Section 422.153 is revised to read 

as follows: 

§ 422.153 Use of quality improvement 

organization review information. 

CMS will acquire from quality 

improvement organizations (QIOs) as 

defined in part 475 of this chapter data 

collected under section 

1886(b)(3)(B)(viii) of the Act and subject 

to the requirements in § 480.140(g). 

CMS will acquire this information, as 

needed, and may use it for the following 

functions: 

(a) Enable beneficiaries to compare 

health coverage options and select 

among them. 

(b) Evaluate plan performance. 

(c) Ensure compliance with plan 

requirements under this part. 

(d) Develop payment models. 

(e) Other purposes related to MA 

plans as specified by CMS. 

PART 480—ACQUISITION, 

PROTECTION, AND DISCLOSURE OF 

QUALITY IMPROVEMENT 

ORGANIZATION REVIEW 

INFORMATION 

■ 3. The authority citation for part 480 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh). 

Subpart B—Utilization and Quality 

Control Quality Improvement 

Organizations (QIOs) 

■ 4. Section 480.101(b) is amended by 

revising the definition of ‘‘QIO review 

system’’ to read as follows: 

§ 480.101 Scope and definitions. 

* * * * * 

(b) * * * 

QIO review system means the QIO and 

those organizations and individuals 

who either assist the QIO or are directly 

responsible for providing medical care 

or for making determinations with 

respect to the medical necessity, 

appropriate level and quality of health 

care services that may be reimbursed 

under the Act. The system includes— 

(1) The QIO and its officers, members 

and employees; 

(2) QIO subcontractors; 

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Federal Register / Vol. 76, No. 88 / Friday, May 6, 2011 / Rules and Regulations 26547 

(3) Health care institutions and 

practitioners whose services are 

reviewed; 

(4) QIO reviewers and supporting 

staff; 

(5) Data support organizations; and 

(6) CMS. 

* * * * * 

■ 5. Section 480.130 is revised to read 

as follows: 

§ 480.130 Disclosure to the Department. 

Except as limited by § 480.139(a) and 

§ 480.140 of this subpart, QIOs must 

disclose to the Department all 

information requested by the 

Department in the manner and form 

requested. The information can include 

confidential and non-confidential 

information and requests can include 

those made by any component of the 

Department, such as CMS. 

■ 6. Section 480.139 is amended by 

revising paragraph (a)(1) to read as 

follows: 

§ 480.139 Disclosure of QIO deliberations 

and decisions. 

(a) * * * 

(1) A QIO must not disclose its 

deliberations except to— 

(i) CMS; or 

(ii) The Office of the Inspector 

General, and the Government 

Accountability Office as necessary to 

carry out statutory responsibilities. 

* * * * * 

■ 7. Section 480.140 is amended by 

revising paragraphs (a) introductory 

text, (a)(1) and paragraph (g) to read as 

follows: 

§ 480.140 Disclosure of quality review 

study information. 

(a) A QIO must disclose quality 

review study information with 

identifiers of patients, practitioners or 

institutions to— 

(1) Representatives of authorized 

licensure, accreditation or certification 

agencies as is required by the agencies 

in carrying out functions which are 

within the jurisdiction of such agencies 

under state law; to Federal and State 

agencies responsible for identifying 

risks to the public health when there is 

substantial risk to the public health; or 

to Federal and State fraud and abuse 

enforcement agencies; 

* * * * * 

(g) A QIO must disclose quality 

review study information to CMS with 

identifiers of patients, practitioners or 

institutions— 

(1) For purposes of quality 

improvement. Activities include, but are 

not limited to, data validation, 

measurement, reporting, and evaluation. 

(2) As requested by CMS when CMS 

deems it necessary for purposes of 

overseeing and planning QIO program 

activities. 

■ 8. Section 480.144 is added to read as 

follows: 

§ 480.144 Access to QIO Data and 

Information. 

CMS may approve the requests of 

researchers for access to QIO 

confidential information not already 

authorized by other provisions in 42 

CFR part 480. 

Authority: Catalog of Federal Domestic 

Assistance Program No. 93.773, Medicare— 

Hospital Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program. 

Dated: April 14, 2011. 

Donald M. Berwick, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: April 26, 2011. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2011–10568 Filed 4–29–11; 8:45 am] 

BILLING CODE 4120–01–P 

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