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Vol. 76 Friday,No. 88 May 6, 2011

Part V

Department of Health and Human Services

Centers for Medicare & Medicaid Services

42 CFR Parts 422 and 480Medicare Program; Hospital Inpatient Value-Based Purchasing Program;Final Rule

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

DEPARTMENT OF HEALTH ANDHUMAN SERVICES

Centers for Medicare & MedicaidServices

42 CFR Parts 422 and 480

[CMS–3239–F]

RIN 0938–AQ55

Medicare Program; Hospital InpatientValue-Based Purchasing Program

AGENCY: Centers for Medicare &Medicaid Services (CMS), HHS.

ACTION: Final rule.

SUMMARY: This final rule implements aHospital Inpatient Value-BasedPurchasing program (Hospital VBPprogram or the program) under section1886(o) of the Social Security Act (theAct), under which value-based incentivepayments will be made in a fiscal year

to hospitals that meet performancestandards with respect to a performanceperiod for the fiscal year involved. Theprogram will apply to payments fordischarges occurring on or after October1, 2012, in accordance with section1886(o) (as added by section 3001(a) ofthe Patient Protection and AffordableCare Act, as amended by the HealthCare and Education Reconciliation Actof 2010 (collectively known as theAffordable Care Act)). Scoring in theHospital VBP program will be based onwhether a hospital meets or exceeds theperformance standards established with

respect to the measures. By adoptingthis program, we will reward hospitals based on actual quality performance onmeasures, rather than simply reportingdata for those measures.

DATES: Effective Date: These regulationsare effective on July 1, 2011.

FOR FURTHER INFORMATION CONTACT:Allison Lee, (410) 786–8691.

Table of Contents

I. BackgroundA. OverviewB. Hospital Inpatient Quality Data

Reporting Under Section 501(b) of PublicLaw 108–173

C. Hospital Inpatient Quality ReportingUnder Section 5001(a) of Public Law109–171

D. 2007 Report to Congress: Plan ToImplement a Medicare Hospital Value-Based Purchasing Program

E. Provisions of the Affordable Care ActII. Provisions of the Final Rule and Response

to CommentsA. Overview of the Proposed RuleB. Overview of the Hospital Value-Based

Purchasing ProgramC. Performance PeriodD. MeasuresE. Performance Standards

F. Methodology for Calculating the TotalPerformance Score

G. Applicability of the Value-BasedPurchasing Program to Hospitals

H. The Exchange FunctionI. Hospital Notification and Review

Procedures J. Reconsideration and Appeal ProceduresK. FY 2013 Validation Requirements for

Hospital Value-Based Purchasing

L. Additional InformationM. QIO Quality Data Access

III. Collection of Information RequirementsIV. Economic Analyses

A. Regulatory Impact AnalysisB. Regulatory Flexibility Act AnalysisC. Unfunded Mandates Reform Act

AnalysisV. Federalism Analysis

Acronyms

Because of the many terms to whichwe refer by acronym in this final rule,we are listing the acronyms used andtheir corresponding meanings inalphabetical order below:

ACM Appropriate Care ModelAHRQ Agency for Healthcare Research and

QualityAMI Acute Myocardial InfarctionCCN CMS Certification numberCLABSI Central line-associated

bloodstream infectionsCMMI Center for Medicare and Medicaid

InnovationCMS Centers for Medicare & Medicaid

ServicesCV Coefficient of variationDRA Deficit Reduction Act of 2005DRG Diagnosis-Related GroupEHR Electronic Health RecordEKG ElectrocardiogramFISMA Federal Information Security and

Management ActHAC Hospital acquired conditionsHAI Healthcare-associated infectionsHCAHPS Hospital Consumer Assessment of

Healthcare Providers and SystemsHF Heart FailureHIPAA Health Insurance Portability and

Accountability ActHOP QDRP Hospital Outpatient Quality

Data Reporting ProgramIPPS Inpatient prospective payment

systemsIQI Inpatient Quality IndicatorIQR Inpatient Quality ReportingMMA Medicare Prescription Drug,

Improvement and Modernization Act of2003

NQF National Quality ForumPMA Patient-mix adjustmentPN PneumoniaPOA Present on AdmissionPQRI Physician Quality Reporting InitiativePRRB Provider Reimbursement Review

BoardPSI Patient Safety IndicatorQIO Quality Improvement OrganizationQRS Quality Review StudyRFA Regulatory Flexibility ActRHQDAPU Reporting Hospital Quality Data

for the Annual Payment Update ProgramRIA Regulatory Impact AnalysisSCIP Surgical Care Improvement

SDPS Standard Data Processing SystemSES Socioeconomic statusSSI Surgical site infectionsVBP Value-Based Purchasing

I. Background

A. Overview

The Centers for Medicare & MedicaidServices (CMS) promotes higher quality

and more efficient health care forMedicare beneficiaries. In recent years,we have undertaken a number ofinitiatives to lay the foundation forrewarding health care providers andsuppliers for the quality of care theyprovide by tying a portion of theirMedicare payments to their performanceon quality measures. These initiatives,which include demonstration projectsand quality reporting programs, have

been applied to various health caresettings, including physicians’ offices,ambulatory care facilities, hospitals,nursing homes, home health agencies,

and dialysis facilities. The overarchinggoal of these initiatives is to transformMedicare from a passive payer of claimsto an active purchaser of quality healthcare for its beneficiaries.

This effort is supported by ouradoption of an increasing number ofwidely-agreed upon quality measuresfor purposes of our existing qualityreporting programs. We have workedwith stakeholders to define measures ofquality in almost every setting. Thesemeasures assess structural aspects ofcare, clinical processes, patientexperiences with care, and,increasingly, outcomes.

We have implemented qualitymeasure reporting programs that applyto various settings of care. With regardto hospital inpatient services, weimplemented the Hospital IQR program.In addition, we have implementedquality reporting programs for hospitaloutpatient services through the HospitalOutpatient Quality Reporting program(HOQR), formerly known as theHospital Outpatient Quality DataReporting Program (HOP QDRP), and forphysicians and other eligibleprofessionals through the PhysicianQuality Reporting System (formerly

referred to as the Physician QualityReporting Initiative or PQRI). We havealso implemented quality reportingprograms for home health agencies andskilled nursing facilities based onconditions of participation, and an end-stage renal disease quality incentiveprogram that links payment toperformance.

This new program will necessarily bea fluid model, subject to change asknowledge, measures and tools evolve.We view the Hospital VBP programunder section 1886(o) as the next step



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in promoting higher quality care forMedicare beneficiaries and transformingMedicare into an active purchaser ofquality health care for its beneficiaries.

In developing this rule as well asother value-based quality initiatives,CMS applied the following principlesfor the development and use ofmeasures and scoring methodologies.

Purpose

CMS views value-based purchasing asan important step toward revampinghow care and services are paid for,moving increasingly toward rewarding

better value, outcomes, and innovationsinstead of merely volume.

Use of Measures

• Public reporting and value-basedpayment systems should rely on a mixof standards, process, outcomes, andpatient experience measures, includingmeasures of care transitions and

changes in patient functional status.Across all programs, CMS seeks to moveas quickly as possible to using primarilyoutcome and patient experiencemeasures.

• To the extent possible andrecognizing differences in paymentsystem maturity and statutoryauthorities, measures should be alignedacross Medicare’s and Medicaid’s publicreporting and payment systems. CMSalso seeks to develop a focused core-setof measures appropriate to each specificprovider category that reflects the levelof care and the most important areas of

service furnished by that provider.• The collection of informationshould minimize the burden onproviders to the extent possible. As partof that effort, CMS will continuouslyseek to align its measures with theadoption of meaningful use standardsfor health information technology (HIT).

• To the extent practicable, measuresused by CMS should be nationallyendorsed by a multi-stakeholderorganization. Measures should also bealigned with best practices among otherpayers and the needs of the end usersof the measures.

Scoring Methodology• Providers should be scored on their

overall achievement relative to nationalor other appropriate benchmarks. Inaddition, scoring methodologies shouldconsider improvement as anindependent goal.

• Measures or measurement domainsneed not be given equal weight, but overtime, scoring methodologies should beweighted more heavily towardsoutcome, patient experience, andfunctional status measures.

• Scoring methodologies should bereliable, as straightforward as possible,and stable over time and enableconsumers, providers, and payers tomake meaningful distinctions amongproviders’ performance.

Comment: A number of commentersexpressed their general support for theseprinciples. One commenter provided

additional remarks on the principlesand made a number of comments on theinteractions between the principles,including risk adjustment, measurereliability, patient experience of caremeasures, and measure endorsement.For example, this commenter expressedagreement with our stated principle thatpublic reporting and value-basedpayment systems should rely on a mixof standards, processes, outcome andpayment experience measures. Insupporting this principle, thecommenter related that health andhealth care are complex, which requires

a multifaceted accountabilityframework. This commenter alsosupported our statement that scoringmethodologies should be reliable, asstraightforward as possible, and stableover time. The commenter furtherremarked that VBP relies on the supportof consumers in the marketplace todrive improvement, and that consumersmust understand the measures and howthey are used in order to make informeddecisions.

Response: We appreciate thecomments and input on theseprinciples, and will keep them in mindas we continue to enhance, develop and

implement the Hospital VBP program,other quality reporting programs, andother value-based incentive programs.

Comment: A number of commentersstated that CMS must ensure that value-

based purchasing programs foster thedevelopment of innovative, quality careand provide an adequate level ofreimbursement for innovative medicaltechnologies. One commenter reiteratedthat value-based purchasing programsshould not place the provision of lowercost services and products in conflictwith what is best for the patient.

Response: We agree that value-based

purchasing programs should not hinderinnovation and should result inimproved patient care. We believe thatthe Hospital VBP program will driveimprovements in the quality of care forMedicare beneficiaries, including theprovision of innovative technologies,

because of its financial incentives forproviders to provide high-quality,patient-centered care coupled with highlevels of patient satisfaction. We notethat our measure development andselection activities take into accountnational priorities, including those

established by the National PrioritiesPartnership and the Department ofHealth and Human Services, as well asother widely accepted criteriaestablished in the medical literature. Wewill continue to seek to align all of ourquality initiatives to promote high-quality 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 commentperiod.

Response: We decline to extend thecomment period. Based on the volumeand depth of comments we received inresponse to the Hospital Inpatient VBPproposed rule, we believe thatcommenters had ample opportunity tosubmit meaningful comments on ourproposals and did so. Specifically, wereceived comments discussing a widerange of issues on nearly every aspect ofthat proposed rule, including itspotential impact on the health caresystem, the provision of high-qualitymedical care and effects on patientsatisfaction. We received commentsfrom a wide range of stakeholders,including hospitals, health careproviders, professional associations,trade groups, advocacy organizations,Medicare beneficiaries, private citizens,and others. We have had a sufficientopportunity to consider the issuesraised by the commenters and havetaken their comments into account indeveloping this final rule.

Comment: One commenter stated that‘‘the specific process for how the agency

proposes to achieve ‘transparency’ is notdescribed or attained,’’ and that theproposed rule did not offer sufficientinformation and disclosure of the‘‘methods and data the agency proposesto use’’ in developing the Hospital VBPprogram.

Response: We disagree. We believethat we have been transparent in makingpublic our goals for the Hospital VBPprogram and numerous documents thatinformed our rulemaking on thisprogram, including the 2007 Report toCongress, Congressional testimony andpublic listening session transcripts. We

also believe that the proposed rulecontains detailed information regardingthe data and analyses we considered indeveloping our proposals.

However, because we seek to ensurethat the continued development of theHospital VBP program take place in astransparent a manner as possible, wewill make available additionalinformation regarding our analyses,study results, and methods and willinform the public accordingly.

We have addressed specific issuesrelating to the use of measures, scoring



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methodology, and other aspects of theHospital VBP program below.

B. Hospital Inpatient Quality DataReporting Under Section 501(b) ofPublic Law 108–173

Section 501(b) of the MedicarePrescription Drug, Improvement, andModernization Act of 2003 (MMA),

Public Law 108–173, added section1886(b)(3)(B)(vii) to the Act. Thissection established the originalauthority for the Hospital IQR programand revised the mechanism used toupdate the standardized amount forinpatient hospital operating costs.Specifically, section 1886(b)(3)(B)(vii)(I)of the Act provided for a reduction of0.4 percentage points to the applicablepercentage increase (sometimes referredto at that time as the market basketupdate) for FY 2005 through FY 2007for a subsection (d) hospital if thehospital did not submit data on a set of

10 quality indicators established by theSecretary as of November 1, 2003. It alsoprovided that any reduction appliedonly to the fiscal year involved, andwould not be taken into account incomputing the applicable percentageincrease for a subsequent fiscal year.The statute thereby established anincentive for many subsection (d)hospitals to submit data on the qualitymeasures established by the Secretary.

We implemented section1886(b)(3)(B)(vii) of the Act in the FY2005 IPPS final rule (69 FR 49078) andcodified the applicable percentageincrease change in §412.64(d) of ourregulations. We adopted additionalrequirements for the Hospital IQRprogram in the FY 2006 IPPS final rule(70 FR 47420).

C. Hospital Inpatient Quality ReportingUnder Section 5001(a) of Public Law109–171

1. Change in the Reduction to theApplicable Percentage Increase

Section 5001(a) of the DeficitReduction Act of 2005 (DRA), PublicLaw 109–171, further amended section1886(b)(3)(B) of the Act to, among other

things, revise the mechanism used toupdate the standardized amount forhospital inpatient operating costs byadding a new section 1886(b)(3)(B)(viii)to the Act. Specifically, sections1886(b)(3)(B)(viii)(I) and (II) of the Act,as added by the DRA, provided in partthat the applicable percentage increasefor FY 2007 and each subsequent fiscalyear shall be reduced by 2.0 percentagepoints for a subsection (d) hospital thatdoes not submit quality data in a formand manner and at a time specified bythe Secretary. Section

1886(b)(3)(B)(viii)(I) of the Act alsoprovided that any reduction in ahospital’s applicable percentageincrease will apply only with respect tothe fiscal year involved, and will not betaken into account for computing theapplicable percentage increase for asubsequent fiscal year.

In the FY 2007 IPPS final rule (71 FR

48045), we amended our regulations at§ 412.64(d)(2) to reflect the 2.0percentage point reduction requiredunder the DRA.

2. Selection of Quality Measures

Section 1886(b)(3)(B)(viii)(V) of theAct, before it was amended by section3001(a)(2)(B) of the Affordable Care Act,required that, effective for payments

beginning FY 2008, the Secretary addother measures that reflect consensusamong affected parties, and to the extentfeasible and practicable, have been setforth by one or more national consensus

building entities. The National QualityForum (NQF) is a voluntary consensusstandard-setting organization with adiverse representation of consumer,purchaser, provider, academic, clinical,and other health care stakeholderorganizations. The NQF was establishedto standardize health care qualitymeasurement and reporting through itsconsensus development process. Wehave generally adopted NQF-endorsedmeasures for purposes of the HospitalIQR program. However, we believe thatconsensus among affected parties alsocan be reflected by other means,including consensus achieved during

the measure development process,consensus shown through broadacceptance and use of measures, andconsensus achieved through publiccomment.

Section 1886(b)(3)(B)(viii)(VI) of theAct authorizes the Secretary to replaceany quality measures or indicators inappropriate cases, such as when allhospitals are effectively in compliancewith a measure, or the measures orindicators have been subsequentlyshown to not represent the best clinicalpractice. We interpreted this provisionto give us broad discretion to replace

measures that are no longer appropriatefor the Hospital IQR program.We adopted 45 measures under the

Hospital IQR program for the FY 2011payment determination. Of thesemeasures, 27 are chart-abstractedprocess of care measures, which assessthe quality of care furnished byhospitals 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 measuresare claims-based measures, which assess

the quality of care furnished byhospitals on the following topics: 30-day mortality and 30-day readmissionrates for Medicare patients diagnosedwith AMI, HF, or PN; Patient SafetyIndicators/Inpatient Quality Indicators/Composite Measures; and Patient SafetyIndicators/Nursing Sensitive Care.Three of the measures are structural

measures that assess hospitalparticipation in cardiac surgery, strokecare, and nursing sensitive caresystemic databases. Finally, the HospitalConsumer Assessment of HealthcareProviders and Systems (HCAHPS)patient experience of care survey isincluded as a measure for the FY 2011payment determination.

The technical specifications for theHospital IQR program measures, or linksto Web sites hosting technicalspecifications, are contained in theCMS/The Joint CommissionSpecifications Manual for National

Hospital Inpatient Quality Measures(Specifications Manual). ThisSpecifications Manual is posted on theCMS QualityNet Web site at https:// www.QualityNet.org/. We maintain thetechnical specifications by updating thisSpecifications Manual semiannually, ormore frequently in unusual cases, andinclude detailed instructions andcalculation algorithms for hospitals touse when collecting and submitting dataon required measures. Thesesemiannual updates are accompanied bynotifications to users, providingsufficient time before the effective dateof the change in order to allow users to

incorporate changes and updates to thespecifications into data collectionsystems.

3. Public Display of Quality Measures

Section 1886(b)(3)(B)(viii)(VII) of theAct, as amended by section3001(a)(2)(C) of the Affordable Care Act,requires that the Secretary establishprocedures for making informationregarding measures submitted under theHospital IQR program available to thepublic after ensuring a hospital has theopportunity to review its data. To meetthis requirement, we display most

Hospital IQR program data on theHospital Compare Web site, http:// www.hospitalcompare.hhs.gov, after a30-day preview period. An interactiveWeb tool, this Web site assists

beneficiaries by providing informationon hospital quality of care to those whoneed to select a hospital. It furtherserves to encourage beneficiaries towork with their doctors and hospitals todiscuss the quality of care hospitalsprovide to patients, thereby providingan additional incentive to hospitals toimprove the quality of care that they


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furnish. The Hospital Compare Web sitecurrently makes public information on awide range of measures, includingclinical process of care measures, riskadjusted outcome measures, theHCAHPS patient experience of caresurvey, and structural measures.However, data that we believe is notsuitable for inclusion on Hospital

Compare because it is not salient or willnot be fully understood by beneficiaries,as well as data for which there areunresolved display or design issues,may be made available on other CMSWeb sites that are not intended to beused as an interactive Web tool, such ashttp://www.cms.hhs.gov/ HospitalQualityInits/. In suchcircumstances, affected parties arenotified via CMS listservs, CMS e-mail

blasts, national provider calls, andQualityNet announcements regardingthe release of preview reports followed

by the posting of data on a Web site

other than Hospital Compare.D. 2007 Report to Congress: Plan ToImplement a Medicare Hospital Value-Based Purchasing Program

Section 5001(b) of the DRA requiredthe Secretary to develop a plan toimplement a value-based purchasingprogram for subsection (d) hospitals. Indeveloping the plan, we were requiredto consider the on-going development,selection, and modification process formeasures of quality and efficiency inhospital inpatient settings; thereporting, collection, and validation ofquality data; the structure, size, and

sources of funding of value-basedpayment adjustments; and thedisclosure of information on hospitalperformance.

On November 21, 2007, we submittedthe Report to Congress: Plan toImplement a Medicare Hospital Value-Based Purchasing Program, which isavailable on the CMS Web site. Thereport discusses options for a plan toimplement a Medicare hospital value-

based purchasing program that buildson the Hospital IQR program. Werecommended replacing the HospitalIQR program with a new program that

would include both a public reportingrequirement and financial incentives for better performance. We alsorecommended that a hospital value-

based purchasing program beimplemented in a manner that wouldnot increase Medicare spending.

To calculate a hospital’s totalperformance score under the plan, weanalyzed a potential performancescoring model that incorporatedmeasures from different quality‘‘domains,’’ including clinical process ofcare and patient experience of care. We

examined ways to translate that scoreinto an incentive payment by making aportion of the base DRG paymentcontingent on performance. Weanalyzed criteria for selectingperformance measures and considered apotential phased approach to transitionfrom Hospital IQR to value-basedpurchasing. In addition, we examinedredesigning the current datatransmission process and validationinfrastructure, including makingenhancements to the Hospital CompareWeb site, as well as an approach tomonitor the impact of value-basedpurchasing.

E. Provisions of the Affordable Care Act

Section 3001(a) of the Affordable CareAct added a new section 1886(o) to theAct, which requires the Secretary toestablish a hospital value-basedpurchasing program under which value-

based incentive payments are made in afiscal year to hospitals meetingperformance standards established for aperformance period for such fiscal year.Both the performance standards and theperformance period for a fiscal year areto be established by the Secretary.Section 1886(o)(1)(B) of the Act directsthe Secretary to begin making value-

based incentive payments under theHospital VBP program to hospitals fordischarges occurring on or after October1, 2012. These incentive payments will

be funded for FY 2013 through areduction to FY 2013 base operating

DRG payments for each discharge of 1.0percent, as required by section1886(o)(7). Section 1886(o)(1)(C)provides that the Hospital VBP programapplies to subsection (d) hospitals (asdefined in section 1886(d)(1)(B)), butexcludes from the definition of the term‘‘hospital,’’ with respect to a fiscal year:(1) A hospital that is subject to thepayment reduction under section1886(b)(3)(B)(viii)(I) for such fiscal year;(2) a hospital for which, during theperformance period for the fiscal year,the Secretary cited deficiencies that

pose immediate jeopardy to the healthand safety of patients; and (3) a hospitalfor which there is not a minimumnumber (as determined by the Secretary)of applicable measures for theperformance period for the fiscal yearinvolved, or for which there is not aminimum number (as determined by theSecretary) of cases for the applicablemeasures for the performance period forsuch fiscal year.

II. Provisions of the Final Rule andResponse to Comments

A. Overview of the January 7, 2011Hospital Inpatient VBP ProgramProposed Rule

On January 7, 2011, we issued aproposed rule that proposes toimplement a Hospital VBP program

under section 1886(o) of the Act (76 FR2454, January 13, 2011). Specifically, weproposed to initially adopt for the FY2013 Hospital VBP program 18measures that we have already adoptedfor the Hospital IQR program,categorized into two domains, asfollows: 17 of the measures would beclinical process of care measures, whichwe would group into a clinical processof care domain, and 1 measure would bethe HCAHPS survey, which would fallunder a patient experience of caredomain. With respect to the clinicalprocess of care and HCAHPS measures,we proposed to use a three-quarterperformance period from July 1, 2011through March 31, 2012 for the FY 2013Hospital VBP payment determination.We proposed to determine whetherhospitals meet the performancestandards for the selected measures bycomparing their performance during theperformance period to theirperformance during a three-quarter

baseline period of July 1, 2009 throughMarch 31, 2010. We also proposed toinitially adopt for the FY 2014 HospitalVBP program three outcome measures.With respect to the outcome measures,we proposed to use an 18-month

performance period from July 1, 2011 toDecember 31, 2012. Furthermore, forthese outcome measures, we proposedto establish performance standards andto determine whether hospitals meetthose standards by comparing theirperformance during the performanceperiod to their performance during a

baseline period of July 1, 2008 toDecember 31, 2009.

We also proposed to adopt 8 HospitalAcquired Condition measures and 9AHRQ Patient Safety Indicator andInpatient Quality Indicator outcomemeasures. We further proposed to begin

the performance period for each of theseproposed measures 1 year after weincluded the measure on the HospitalCompare Web site.

In general, we proposed to implementa methodology for assessing the totalperformance of each hospital based onperformance standards, under which wewould score each hospital based onachievement and improvement rangesfor each applicable measure.Additionally, we proposed to calculatea total performance score for eachhospital by combining the greater of the


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hospital’s achievement or improvementpoints for each measure to determine ascore for each domain, multiplying eachdomain score by a proposed weight(clinical process of care: 70 percent,patient experience of care: 30 percent),and adding together the weighteddomain scores. We proposed to converteach hospital’s Total Performance Score

into a value-based incentive paymentutilizing a linear exchange function.

We provided a 60-day publiccomment period in which we receivedapproximately 319 timely commentsfrom hospitals, health care facilities,advocacy organizations, researchers,patients, and other individuals andorganizations. Summaries of the publiccomments, as well as our responses tothose comments, are set forth below.

Comment: A number of commentersrequested clarification on theinteraction between the Hospital IQRprogram and the Hospital VBP program.Commenters specifically requested thatwe explain more fully how the penaltiesunder the two programs will interact, aswell as clarify if we intend to continuethe Hospital IQR program in the future.

Response: The Affordable Care Actdid not repeal section1886(b)(3)(B)(viii), the statutoryauthority for the Hospital IQR program,and that program will continue to existside-by-side with the Hospital VBPprogram. However, we note that

beginning in FY 2015, the reduction tothe applicable percentage increaseunder the Hospital IQR programchanges from a straight 2.0 percentage

point reduction to a reduction equal to‘‘one quarter of such applicablepercentage increase’’ (determinedwithout regard to several otherapplicable statutory reductions).

We also note that under section1886(o)(1)(C)(I), hospitals that aresubject to the Hospital IQR programpayment reduction for a fiscal year areexcluded from the definition of‘‘hospital’’ for purposes of the HospitalVBP program for that fiscal year. Weinterpret this provision to mean that ahospital that does not meet therequirements of the Hospital IQR

program with respect to a fiscal yearand, as a result, will receive a reductionto the applicable percentage increase forthat fiscal year, will not be subject to thereduction to its base operating DRGpayment amount under the HospitalVBP program for that fiscal year or beeligible to receive a value-basedincentive payment for that fiscal year.

Comment: Some commentersrequested that CMS delayimplementation of the Hospital VBPprogram. A number of commentersurged CMS to adopt the implementation

calendar discussed in 2007 Report toCongress, in which the first performanceperiod would begin April 1, 2013.

Response: We are statutorily requiredto begin making value-based incentivepayments under the Hospital VBPprogram to hospitals for dischargesoccurring on or after October 1, 2012under section 1886(o)(1)(B) of the Act.

Thus, the first performance period must begin before April 1, 2013, which is thetime suggested by the commenters. Aswe stated in the proposed rule, indetermining what performance period topropose to adopt, we were cognizantthat hospitals submit data on the chartabstracted measures adopted for theHospital IQR Program on a quarterly

basis, and for that reason, we believedthat the performance period shouldcommence at the beginning of a quarter.We also recognized that we needed to

balance the length of the performanceperiod for collecting measure data with

the need to undertake the rulemakingprocess in order to establish theperformance period and provide thepublic with an opportunity tomeaningfully comment on thatproposal. With these considerations inmind, we proposed July 1, 2011 as thestart of the performance period.

Comment: Some commentersrequested additional information onhow we will educate consumers aboutthe Hospital VBP program.

Response: We understand how crucialit is to communicate clearly andconsistently with all stakeholders inorder to provide accurate and timely

information about the Hospital VBPprogram. We believe thatcommunicating in a way that promotestransparency and understanding of theHospital VBP program will help reduceconfusion and misunderstanding whileenhancing the program’s success.

To this end, we will be undertakingan extensive outreach and educationcampaign to ensure that all stakeholdersunderstand how the Hospital VBPprogram works. In addition to providinginformation on www.cms.gov andwww.medicare.gov, as well as throughother existing mechanisms that we use

to communicate with the public such asnewsletters, e-mail blasts, listservcommunications, special forums, andwebinars, an important element of thiscampaign will be a new Hospital VBPpage on http://www.cms.gov. Inaddition, as required under sections1886(o)(10)(A) and (B), hospital specificand aggregate information for theHospital VBP program will be madeavailable on the Hospital Compare Website.

Comment: One commenter stated thatthe Hospital VBP program statutory

authority overlaps with other provisionsof the Affordable Care Act and askedCMS to address the various incentivescreated by the Affordable Care Act, howit intends to differentiate amongseparate policies, and how it will ensurethat incentives will not overlap or beduplicative. The commenter specificallycited efforts to increase productivity and

efficiency through Accountable CareOrganizations, market basket reductionsfor productivity, penalties related tohospital-acquired conditions, andpayment reductions for readmissions.

Response: While there may be specificareas of overlap addressed by thevarious statutory provisions andpolicies, the legislative requirements,programs, and policies cited by thecommenter represent interrelated butdistinct areas of efforts to improvequality in the Medicare program. Wewill continue to monitor theinteractions between the policies cited

by the commenter and will continuediscussions with stakeholders on thistopic.

Comment: One commenter stated thatall purchaser/payer value-basedstrategies and programs should besupported and encouraged through theCenter for Medicare and MedicaidInnovation (CMMI).

Response: Created by the AffordableCare Act and launched on November 16,2010, the CMMI will examine new waysof delivering health care and payinghealth care providers that can savemoney for Medicare and Medicaidwhile improving the quality of care.

CMMI will consult a diverse group ofstakeholders including hospitals,doctors, consumers, payers, States,employers, advocates, relevant federalagencies and others to obtain directinput and build partnerships for itsupcoming work. We agree that CMMI isan important contributor in developinginnovative strategies for value-basedpurchasing programs, and look forwardto continuing to leverage the Center’sresources and expertise in future yearsof the Hospital VBP program.

Comment: One commenter suggestedthat we establish a ‘‘Pay to Share’’ pool

under which funding would beprovided to enable higher-ratedhospitals to instruct lower-ratedhospitals on best practices.

Response: While we appreciate thecomment, we do not believe we havethe statutory authority under the Act toimplement such a program at this time.

C. Performance Period

Section 1886(o)(4) of the Act requiresthe Secretary to establish a performanceperiod for a fiscal year that begins andends prior to the beginning of such


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fiscal year. In considering variousperformance periods that could applyfor purposes of the fiscal year 2013payment adjustments, we recognizedthat hospitals submit data on the chart-abstracted measures adopted for theHospital IQR program on a quarterly

basis, and for that reason, we proposedthat the performance period commence

at the beginning of a quarter. We alsorecognized that we must balance thelength of the period for collectingmeasure data with the need toundertake the rulemaking process inorder to propose a performance periodand provide the public with anopportunity to meaningfully commenton that proposal. With theseconsiderations in mind, we concludedthat July 1, 2011 is the earliest date thatthe performance period could begin.

Therefore, we proposed to use thefourth quarter of FY 2011 (July 1, 2011through September 30, 2011) and the

first and second quarters of FY 2012(October 1, 2011 through March 31,2012) as the performance period for theclinical process of care and HCAHPSmeasures we proposed to initially adoptfor the FY 2013 Hospital VBP program.Under the proposed approach, hospitalswould be scored based on how wellthey perform on the clinical process ofcare and patient experience measuresduring this performance period. For thethree mortality outcome measurescurrently specified for the Hospital IQRprogram for the FY 2011 paymentdetermination (MORT–30–AMI, MORT–30–HF, MORT–30–PN) that we

proposed to adopt for the FY 2014Hospital VBP program paymentdetermination, we proposed to establisha performance period of July 1, 2011 toDecember 31, 2012. We also proposed to

begin the performance period for the 8proposed HAC measures and 9proposed AHRQ Patient Safety Indicator(PSI) and Inpatient Quality Indicator(IQI) outcome measures 1 year afterthose measures were included on theHospital Compare Web site. Theproposed HAC and AHRQ measureswere included on Hospital Compare onMarch 3, 2011.

Comment: A number of commentersrequested that we adopt a 12-monthperformance period for the proposedmortality measures rather than theproposed 18-month performance period.Some were concerned that seasonalfluctuations in mortality rates wouldimpact the measure rates if an 18-monthperformance period were used insteadof a 12-month period.

Response: We proposed to use an 18-month performance period (July 1, 2011through December 31, 2012) for thethree proposed mortality measures in

order to be able to increase thereliability of the measure rates byincluding more cases. However, inresponse to the commenters’ concernabout how the use of a period that is notequal to a year (or multiple years) couldintroduce seasonal fluctuations into themeasure rates, we conducted additionalreliability analyses on the hospital-level

risk standardized mortality rates for theproposed 30-day mortality measuresusing 12 months, 18 months, and 24months, and have concluded that 12months of data provides moderate tohigh reliability for the Heart Failure andPneumonia 30-day mortality measures,and is sufficiently reliable for the AMI30-day mortality measure. Therefore, weare finalizing a 12-month performanceperiod of July 1, 2011 to June 30, 2012for the three proposed 30-day mortalitymeasures for the FY 2014 Hospital VBPpayment determination.

Comment: Some commenters

expressed concern about the proposed baseline period for the FY 2014mortality outcome measures.Commenters noted that the proposed18-month baseline period would lead todata overlap during each program year.

Response: For the reasons notedabove, we are finalizing a 12-monthperformance period of July 1, 2011 to

June 30, 2012 for the three proposed 30-day mortality measures for the FY 2014Hospital VBP payment determination.In accordance with our proposal thathospital performance should beevaluated based on how well hospitalsperformed during the same quarters in

a baseline period, we are finalizing a 12-month baseline period for the mortalityoutcomes measures’ performancestandards calculations from July 1, 2009to June 30, 2010. We believe that thischange will address commenters’concerns about seasonal fluctuations inthe data or overlap between programyears.

Comment: Some comments requestedthat we require 2–3 years’ worth of datafor outcome measures to ensure that themeasures do not result in anyunintended consequences.

Response: As noted above, our

reliability analyses for the proposed 30-day mortality measures indicate thatusing 12-months of data yieldssufficient reliability (moderate to high)for the HF, PN and AMI 30-daymortality measures. We believe thistime frame will enable us to calculatethe measures using reliable data. CMSwill monitor this policy to ensure thatnegative consequences do not occur asa result of the shortened performanceperiod and, if indicated, would considerproposing to lengthen the performanceperiod for future program years.

Comment: Many commentersgenerally supported our performanceperiod proposals given the statutorydeadlines.

Response: We thank commenters fortheir support.

Comment: Some commenterssuggested that we use 12-monthperformance periods for all measures as

soon as possible.Response: We anticipate proposing touse a full year as the performanceperiod for all measures in the future.

After considering the publiccomments, we are finalizing aperformance period of July 1, 2011through March 31, 2012 that will applyto the clinical process of care andpatient experience measures for the FY2013 Hospital VBP program. Withrespect to the FY 2014 Hospital VBPprogram, we are finalizing a 12-monthperformance period of July 1, 2011through June 30, 2012 that will apply tothe three 30-day mortality measures(AMI, HF, PN) that we are finalizing

below. We are also finalizing ourproposal to adopt a performance periodthat begins 1 year after any HAC and/or AHRQ measures that are specified forthe Hospital IQR program are includedon Hospital Compare, and in accordancewith that finalized policy, theperformance period for the 8 finalizedHAC measures and 2 finalized AHRQmeasures (discussed below) will beginon March 3, 2012. We intend to proposethe end performance period date for the8 finalized HAC measures and 2finalized AHRQ measures in the CY

2012 Outpatient Prospective PaymentSystem proposed rule.

D. Measures

Section 1886(o)(2)(A) of the Actrequires the Secretary to select for theHospital VBP program measures, otherthan readmission measures, from themeasures specified for the Hospital IQRprogram. Section 1886(o)(2)(B)(i) of theAct requires the Secretary to ensure thatthe selected measures for FY 2013include measures on the followingspecified 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 Actprovides that the Secretary may notselect a measure with respect to aperformance period for a fiscal yearunless the measure has been specifiedunder section 1886(b)(3)(B)(viii) of theAct and included on the HospitalCompare Web site for at least 1 yearprior to the beginning of theperformance period. Section1886(o)(2)(C)(ii) of the Act provides thata measure selected under section



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1886(o)(2)(A) of the Act shall not applyto a hospital if the hospital does notfurnish services appropriate to themeasure.

In the FY 2011 IPPS/RY 2011LTCHPPS Final Rule (75 FR 50188), westated that in future expansions andupdates to the Hospital IQR programmeasure set, we will be taking into

consideration several important goals.These goals include: (1) Expanding thetypes of measures beyond process ofcare measures to include an increasednumber of outcome measures, efficiencymeasures, and patients’ experience ofcare measures; (2) expanding the scopeof hospital services to which themeasures apply; (3) considering the

burden on hospitals in collecting chart-abstracted data; (4) harmonizing themeasures used in the Hospital IQRprogram with other CMS qualityprograms to align incentives andpromote coordinated efforts to improve

quality; (5) seeking to use measures based on alternative sources of data thatdo not require chart abstraction or thatutilize data already being reported bymany hospitals, such as data thathospitals report to clinical dataregistries, or all payer claims databases;and (6) weighing the relevance andutility of the measures compared to the

burden on hospitals in submitting dataunder the Hospital IQR program.

In addition, we stated in the proposedrule our belief that we must act with allspeed and deliberateness to expand thepool of measures used in the HospitalVBP program. This goal is supported by

at least two Federal reportsdocumenting that tens of thousands ofpatients do not receive safe care in thenation’s hospitals. For this reason, weproposed to adopt measures for theHospital VBP program relevant toimproving care, particularly as thesemeasures are directed toward improvingpatient safety, as quickly as possible.We believe that speed ofimplementation is a critical factor in thesuccess and effectiveness of thisprogram.

The Hospital VBP program that weproposed to implement has been

developed with the focused intention tomotivate all subsection (d) hospitals towhich the program applies to takeimmediate action to improve the qualityof care they furnish to their patients.Because we view as urgent the necessityto improve the quality of care furnished

by these hospitals, and because we believe that hospitalized patients in theUnited States currently face patientsafety risks on a daily basis, weproposed to adopt an initial measure setfor the Hospital VBP program. However,we also proposed to add additional

measures to the Hospital VBP programin the future in such a way that theirperformance period would beginimmediately after they are displayed onHospital Compare for a period of timeof at least one year, but without thenecessity of notice and commentrulemaking. We proposed this becauseof the urgency to improve the quality of

hospital care, and in order to minimizeany delay to take substantive action infavor of patient safety.

We stated that for the Hospital IQRProgram, we give priority to qualitymeasures that assess performance on: (a)Conditions that result in the greatestmortality and morbidity in the Medicarepopulation; (b) conditions that are highvolume and high cost for the Medicareprogram; and (c) conditions for whichwide cost and treatment variations have

been reported, despite establishedclinical guidelines. In addition, westated that we seek to select measures

that address the six quality aims ofeffective, safe, timely, efficient, patientcentered, and equitable healthcare.Current and long term priority topicsinclude: Prevention and populationhealth; safety; chronic conditions; highcost and high volume conditions;elimination of health disparities;healthcare-associated infections andother adverse healthcare outcomes;improved care coordination; improvedefficiency; improved patient and familyexperience of care; effectivemanagement of acute and chronicepisodes of care; reduced unwarrantedgeographic variation in quality and

efficiency; and adoption and use ofinteroperable health informationtechnology.

We also stated that these criteria,priorities, and goals are consistent withsection 1886(b)(3)(B)(viii)(X) of the Act,as added by section 3001(a)(2)(D) of theAffordable Care Act, which requires theSecretary, to the extent practicable andwith input from consensusorganizations and other stakeholders, totake steps to ensure that the HospitalIQR program measures are coordinatedand aligned with quality measuresapplicable to physicians and other

providers of services and suppliersunder Medicare.As discussed in the Hospital Inpatient

VBP Program proposed rule (76 FR2459), to determine which measures topropose to initially adopt for the FY2013 Hospital VBP program, weexamined whether any of the eligibleHospital IQR measures should beexcluded from the Hospital VBPprogram measure set because hospitalperformance on them is ‘‘topped out,’’meaning that all but a few hospitalshave achieved a similarly high level of

performance on them. We stated our belief that measuring hospitalperformance on topped-out measureswould have no meaningful effect on ahospital’s total performance score.

We also stated that scoring a topped-out measure for purposes of the HospitalVBP program would present a numberof challenges. First, as discussed below,

we proposed that the benchmarkperformance standard for all measureswould be performance at the mean ofthe top decile of hospital performanceduring the baseline period. We noted inthe Hospital Inpatient VBP Programproposed rule that, when applied to atopped-out measure, this proposed

benchmark would be statisticallyindistinguishable from the highestattainable score for the measure and, inour view, could lead to unintendedconsequences as hospitals strive to meetthe benchmark. Examples of unintendedconsequences could include, but would

not be limited to, inappropriate deliveryof a service to some patients (such asdelivery of antibiotics to patientswithout a confirmed diagnosis ofpneumonia), unduly conservativedecisions on whether to exclude somepatients from the measure denominator,and a focus on meeting the benchmarkat the expense of actual improvementsin quality or patient outcomes. Second,we stated that we have found that fortopped-out measures, it is significantlymore difficult to differentiate amonghospitals performing above the median.Third, because a measure cannot beapplied to a hospital unless the hospital

furnishes services appropriate to themeasure, we stated our belief that datareporting under the Hospital VBPprogram would not be the same for allhospitals. To the extent that a hospitalcould report a higher proportion oftopped-out measures, for which itsscores would likely be high, we statedthat we believed such a hospital would

be unfairly advantaged in thedetermination of its Total PerformanceScore.

To determine whether an eligibleHospital IQR measure is topped out, weinitially focused on the top distribution

of hospital performance on eachmeasure and noted if their 75th and90th percentiles were statisticallyindistinguishable. Based on ouranalysis, we identified 7 topped-outmeasures: AMI–1 Aspirin at Arrival;AMI–5 Beta Blocker at Discharge; AMI–3 ACEI or ARB at Discharge; AMI–4Smoking Cessation; HF–4 SmokingCessation; PN–4 Smoking Cessation;and SCIP–Inf–6 Surgery Patients withAppropriate Hair Removal. We thenobserved that two of these measuresidentified as topped out (AMI–3 ACEI or



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ARB at Discharge and HF–4 SmokingCessation) had significantly lower meanscores than the others, which led us toquestion whether our analysis was toofocused on the top ends of distributionsand whether additional criteria thatcould account for the entire distributionmight be more appropriate. To addressthis, we analyzed the truncated

coefficient of variation (CV) for each ofthe measures. The CV is a commonstatistic that expresses the standarddeviation as a percentage of the samplemean in a way that is independent ofthe units of observation. Applied to thisanalysis, a large CV would indicate a

broad distribution of individual hospitalscores, with large and presumablymeaningful differences betweenhospitals in relative performance. Asmall CV would indicate that thedistribution of individual hospitalscores is clustered tightly around themean value, suggesting that it is not

useful to draw distinctions betweenindividual hospital performance scores.We used a modified version of the CV,namely a truncated CV, for eachmeasure, in which the 5 percent ofhospitals with the lowest scores, and the5 percent of hospitals with highestscores were first truncated (set aside)

before calculating the CV. This wasdone to avoid undue effects of thehighest and lowest outlier hospitals,which if included, would tend to greatlywiden the dispersion of the distributionand make the measure appear to bemore reliable or discerning. For

example, a measure for which mosthospital scores are tightly clusteredaround the mean value (a small CV)might actually reflect a more robustdispersion if there were also a numberof hospitals with extreme outlier values,which would greatly increase theperceived variance in the measure.Accordingly, the truncated CV wasadded as an additional criterionrequiring that a topped-out measure alsoexhibit a truncated CV < 0.10. Using

both the truncated CV and data showingwhether hospital performance at the75th and 90th percentiles wasstatistically indistinguishable, wereexamined the available measures anddetermined that the same sevenmeasures continue to meet our proposeddefinition for being topped-out.

Our analysis of the impact ofincluding the topped-out measuresdiscussed above indicated that their usewould mask true performancedifferences among hospitals and, as aresult, would fail to advance ourpriorities for the Hospital VBP program.We therefore proposed to not includethese 7 topped-out measures (AMI–1

Aspirin at Arrival; AMI–5 Beta Blockerat Discharge; AMI–3 ACEI or ARB atDischarge; AMI–4 Smoking Cessation;HF–4 Smoking Cessation; PN–4Smoking Cessation; and SCIP–Inf–6Surgery Patients with Appropriate HairRemoval) in the list of measures weproposed to initially adopt for the FY2013 Hospital VBP program. We sought

comment on that proposal.We also examined and sought

comment on whether the followingoutcome measures adopted for theHospital IQR program were appropriatefor inclusion in the FY 2013 HospitalVBP program. These measures are asfollows: (1) AHRQ PSIs, IQIs andcomposite measures; (2) AHRQ PSI andnursing sensitive care measure; and (3)AMI, HF, and PN mortality measures(Medicare patients). We stated our beliefthat these outcome measures provideimportant information relating totreatment outcomes and patient safety.

We also stated in the proposed rule thatwe believe that adding these outcomemeasures would significantly improvethe correlation between patientoutcomes and Hospital VBPperformance. However, because undersection 1886(o)(2)(C)(i) of the Act, wemay only select measures if they have

been included on Hospital Compare fora least 1 year prior to the beginning ofthe performance period, we stated thatthe AHRQ PSIs, IQIs and compositemeasures, and the AHRQ NursingSensitive Care measure were not yeteligible for inclusion in the FY 2013Hospital VBP program. Although these

measures are currently specified for theHospital IQR program, weacknowledged that as of the time weissued the proposed rule, they did notmeet the one year Hospital Compareinclusion requirement.

We also considered whether thecurrent publicly-reported 30-daymortality claims-based measures (Mort–30–AMI, Mort–30–HF, Mort–30–PN)should be included in the FY 2013Hospital VBP program. The mortalitymeasures assess hospital-specific, risk-standardized, all-cause 30-day mortalityrates for patients hospitalized with a

principal diagnosis of heart attack, heartfailure, and pneumonia. All-causemortality is defined for purposes ofthese measures as death from any causewithin 30 days after the indexadmission date, regardless of whetherthe patient died while still in thehospital or after discharge. The eligibleclinical process of care measures weconsidered covered AMI, HF, PN, andsurgeries as measured by the SCIP.Therefore, we believe that they meet therequirements of section1886(o)(2)(B)(i)(I)(aa)–(dd) of the Act,

which requires us to include measurescovering these conditions or procedures.Section 1886(o)(2)(B)(i)(ee) of the Actalso requires the Secretary to select forpurposes of the FY 2013 Hospital VBPprogram measures that cover HAIs ‘‘asmeasured by the prevention metrics andtargets established in the HHS ActionPlan to Prevent Healthcare-Associated

Infections (or any successor plan) of theDepartment of Health and HumanServices.’’ The SCIP measures discussedabove were developed to supportpractices that have demonstrated anability to significantly reduce surgicalcomplications such as HAIs.Compliance with the selected SCIPinfection measures is also included as atargeted metric in the HHS Action Planto Prevent Healthcare-AssociatedInfections issued in 2009, available onthe 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 IQRprogram meet the requirement insection 1886(o)(2)(B)(i)(I)(ee); weproposed to adopt them for the FY 2013Hospital VBP program and to categorizethem under the HAI condition topicinstead of under the SCIP conditiontopic.

Under section 1886(o)(2)(B)(i)(II), theSecretary must select measures for theFY 2013 Hospital VBP program relatedto the HCAHPS survey. CMS partneredwith AHRQ to develop HCAHPS. TheHCAHPS survey is the first national,standardized, publicly reported surveyof patients’ experience of hospital care,

and we proposed to adopt it for the FY2013 Hospital VBP program. HCAHPS,also known as the CAHPS® HospitalSurvey, is a survey instrument and datacollection methodology for measuringpatients’ perceptions of their hospitalexperience.

The HCAHPS survey asks dischargedpatients 27 questions about their recenthospital stay that are used to measurethe experience of patients across 10dimensions in the Hospital IQRprogram. The survey contains 18 corequestions about critical aspects ofpatients’ hospital experiences

(communication with nurses anddoctors, the responsiveness of hospitalstaff, the cleanliness and quietness ofthe hospital environment, painmanagement, communication aboutmedicines, discharge information,overall rating of the hospital, andwhether they would recommend thehospital). The survey also includes fouritems to direct patients to relevantquestions if a patient did not have aparticular experience covered by thesurvey, such as taking new medicationsor needing medicine for pain. Three



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items in the survey are used to adjust forthe mix of patients across hospitals, andtwo items related to race and ethnicitysupport congressionally-mandatedreports on disparities in health care.

The HCAHPS survey is administeredto a random sample of adult patientsacross medical conditions between 48hours and 6 weeks after discharge; the

survey is not restricted to Medicare beneficiaries. Hospitals must surveypatients throughout each month of theyear. The survey is available in officialEnglish, Spanish, Chinese, Russian andVietnamese versions. The survey and itsprotocols for sampling, data collectionand coding, and file submission can befound in the HCAHPS QualityAssurance Guidelines, Version 5.0,which is available on the officialHCAHPS Web site, http:// www.hcahpsonline.org.

AHRQ carried out a rigorous,scientific process to develop and test the

HCAHPS instrument. This processentailed multiple steps, including: Apublic call for measures; literaturereview; cognitive interviews; consumerfocus groups; stakeholder input; a three-state pilot test; small-scale field tests;and soliciting public comments viaseveral Federal Register notices. In May

2005, the HCAHPS survey was endorsed by the NQF, and in December 2005, theFederal Office of Management andBudget gave its final approval for thenational implementation of HCAHPS forpublic reporting purposes. CMS adoptedthe entire HCAHPS survey as a measurein the Hospital IQR program in October2006, and the first public reporting of

HCAHPS results occurred in March2008. The survey, its methodology, andthe results it produces are in the publicdomain.

As previously discussed, indetermining what clinical process ofcare measures to propose, we analyzedthe impact of including topped-outmeasures and determined that their usewould mask true performancedifferences among hospitals, thus failingto advance our quality priorities. As aresult, we proposed to exclude 7topped-out measures (AMI–1 Aspirin atArrival; AMI–5 Beta Blocker at

Discharge; AMI–3 ACEI or ARB atDischarge; AMI–4 Smoking Cessation;HF–4 Smoking Cessation; PN–4Smoking Cessation; and SCIP–Inf–6Surgery Patients with Appropriate HairRemoval) from the list of measures weproposed to initially adopt for the FY2013 Hospital VBP program.

We did not propose to adopt thecurrent Hospital IQR structuralmeasures because we believe that thesemeasures require further development ifthey are to be used for the Hospital VBPprogram. Therefore, we solicited publiccomment on the possible utility ofadopting structural measures for theHospital VBP program measure set and

how these measures might contribute tothe improvement of patient safety andquality of care.

Finally, we proposed to exclude thePN–5c measure from the Hospital VBPprogram. We do not believe that thismeasure is appropriate for inclusion

because it could lead to inappropriateantibiotic use. We proposed retiring thismeasure, as well as several othermeasures that we will not adopt for theHospital VBP program, from theHospital IQR program in the FY 2012IPPS/LTCH PPS proposed rulescheduled for publication on May 5,

2011.We proposed to initially select 17

clinical process of care measures andthe HCAHPS measure for inclusion inthe FY 2013 Hospital VBP program. Theproposed list of initial measures isprovided 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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1Proposed dimensions of the HCAHPS survey foruse in the FY 2013 Hospital VBP program are:Communication with Nurses, Communication withDoctors, Responsiveness of Hospital Staff, PainManagement, Communication about Medicines,Cleanliness and Quietness of Hospital Environment,Discharge Information and Overall Rating ofHospital.

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 Programproposed rule, we solicited publiccomments on our intention to addmeasures to the Hospital VBP Programas rapidly as possible for theiravailability in future performanceperiods. To that end, we proposed toimplement a subregulatory process toexpedite the timeline for addingmeasures to the Hospital VBP program

beginning with the FY 2013 program.Under this proposed process, we couldadd any measure to the Hospital VBPprogram if that measure is adoptedunder the Hospital IQR program and has

been included on Hospital Compare forat least 1 year. We proposed that theperformance period for all of thesemeasures would start exactly 1 yearafter the date these measures werepublicly posted on Hospital Compare,consistent with section 1886(o)(2)(C)(i).Under this proposed subregulatoryprocess for adopting new Hospital VBPprogram measures, we would solicitcomments from the public on theappropriateness of adopting 1 or moreHospital IQR measures for the HospitalVBP program. We would also assess thereported Hospital IQR measure ratesusing the criteria we used to select themeasures for the initial FY 2013Hospital VBP measure set and wouldnotify the public regarding our findings.We stated that we would propose to setperformance period end dates for anymeasure we selected for future HospitalVBP program years in rulemaking.

We also proposed to implement asubregulatory process to retire HospitalVBP measures. Under the proposedprocess, we would post our intention toretire measures on the CMS Web site atleast 60 days prior to the date that wewould retire the measure. Also, as wedo with respect to Hospital IQR

measures that we believe poseimmediate patient safety concerns ifreporting on them is continued, weproposed that we would notify hospitalsand the public of the retirement of themeasure and the reasons for its

retirement through the usual hospitaland QIO communication channels usedfor the Hospital IQR program, whichinclude e-mail blasts to hospitals andthe dissemination of Standard DataProcessing System (SDPS) memorandato QIOs, as well as post the informationon the QualityNet Web site. We wouldthen confirm the retirement of themeasure from the Hospital VBP programmeasure set in a rulemaking vehicle. Wemade this proposal because it wouldallow us to ensure that the Hospital VBPprogram measure set focuses on themost current quality improvement and

patient safety priorities. We solicitedpublic comment on our proposals andother methods that allow for theaddition of measures to the HospitalVBP program as rapidly as possible inorder to improve quality and safety forpatients.

In addition, we sought publiccomment on efficiency measuresrequired for inclusion in the HospitalVBP program for value-based incentivepayments made with respect todischarges occurring during FY 2014 ora subsequent fiscal year. Specifically,we requested comment on what servicesshould be included and what should be

excluded in a ‘‘Medicare spending per beneficiary’’ calculation, and what, ifany, type(s) of hospital segmentation oradjustment should be considered insuch a measure. We also solicitedcomment on approaches for measuringinternal hospital efficiency. We tookthese comments into account in thedevelopment of the Medicare spendingper beneficiary measure that weproposed to adopt in the FY 2012 IPPS/LTCH PPS proposed rule scheduled forpublication on May 5, 2011, available athttp://www.ofr.gov/inspection.aspx? AspxAutoDetectCookieSupport=1).

The public comments we received areset forth below.Comment: Some commenters agreed

with our proposed measure set and ourproposal to exclude PN–5c andstructural measures.

Response: We thank the commentersfor their support. We believe that thestructural measures we have adopted forthe Hospital IQR program requirefurther development before we canconsider adopting them for the HospitalVBP program, including thedevelopment of an appropriate scoring

methodology. We also believe that theinclusion of PN–5c measure could leadto inappropriate antibiotic use. We alsonote that we have proposed to retire thePN–5c measure from the Hospital IQRprogram in the FY 2012 IPPS/LTCH PPSproposed rule scheduled for publicationon May 5, 2011 for the same reason thatwe proposed to not include it in theHospital VBP program measure set.

Comments: Some commenters notedthat CMS is retiring PN–2(Pneumococcal Vaccination) and PN–7(Influenza Vaccination) from theHospital IQR Program and asked whythese measures were included in theproposed rule. These commenterswanted to know how the retirement ofthese measures from the Hospital IQRProgram would affect how thesemeasures were collected and scoredunder the Hospital VBP program. Othercommenters were concerned aboutincluding pneumonia vaccinationmeasures in the Hospital VBP programmeasure set because they stated thatthere may be clinical reasons why aphysician does not want a patient toreceive the vaccination. Thecommenters suggested adding an‘‘allowable value’’ or allowable code to

the measure specifications to avoidpenalizing the hospital for thatsituation.

Response: Commenters are correct inthat we finalized our retirement of PN–2 (Pneumococcal Vaccination) and PN–7 (Influenza Vaccination) beginningwith the FY 2014 Hospital IQR programpayment determination (75 FR 50211),and hospitals will no longer be requiredto submit data on these measures

beginning with January 1, 2012discharges (75 FR 50221). Because thesemeasures will cease to continue beingHospital IQR program measures midway

through the performance period we arefinalizing for the FY 2013 Hospital VBPprogram, we do not believe that we caninclude them in the FY 2013 HospitalVBP measure set.

Comment: One commenter requestedclarification on whether we proposed toinclude SCIP–Inf–6 in the FY 2013Hospital VBP measure set.

Response: Table 2 of the HospitalInpatient VBP proposed rule (76 FR2462) listed our proposed measures forFY 2013, and Table 2 of this Final Rulelists the finalized measures. As we


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explained in the Hospital Inpatient VBPproposed rule (76 FR 2461), weproposed not to adopt SCIP–Inf–6 forthe Hospital VBP program because weconcluded that the measure hadachieved a ‘‘topped out’’ status.

Comment: A commenter suggestedthat the proposed clinical process ofcare measures are flawed, suggesting

that hospitals might choose not tosubmit records that could adverselyimpact their total performance scorewhen submitting quality data.

Response: All Hospital VBP programmeasures must be selected from themeasures specified under the HospitalIQR program, and the data that we willuse to calculate a hospital’s totalperformance score for the clinicalprocess of care measures will be thesame data that the hospital submitted onthose measures under the Hospital IQRprogram.

We allow hospitals to submit HospitalIQR clinical process of care measuredata either by abstracting the necessarydata elements from all qualifying casesor by submitting data elements takenfrom a sample of those cases. If thehospital chooses to submit a sample, thesample must meet the population andsample requirements outlined in theSpecifications Manual. ThisSpecifications Manual is posted on theCMS QualityNet Web site at https:// www.QualityNet.org/. The purpose ofthese requirements is to ensure that thesample is statistically valid. We alsonote that we have adopted a process forvalidating clinical process of care

measure data submitted under theHospital IQR program, and we stated inthe Hospital Inpatient VBP programproposed rule our belief that thisprocess will also assure us that the samedata is accurate for purposes ofassessing hospital performance underthe Hospital VBP program.

Comment: Several commenters askedif CMS will monitor ‘‘topped-out’’measures to ensure that they remain‘‘topped-out’’.

Response: At this time, we do nothave a mechanism in place to monitorwhether measures we do not adopt for

the Hospital VBP program on the basisthat they are topped-out remain topped-out. We will consider such monitoringin the future.

Comment: Some commenterssuggested that CMS include in theHospital VBP program measures thatmeet the definition of ‘‘topped out’’

because some hospitals will still be ableto demonstrate improvement on them.

Response: As detailed in the HospitalInpatient VBP proposed rule (76 FR2460), we proposed to define a ‘‘toppedout’’ measure as a measure for which

hospital performance at the 75th and90th percentiles are statisticallyindistinguishable, and the truncated CVwas set at


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Response: The intervention timing for both AMI–7a and AMI–8a runs from thetime of arrival, not the time of diagnosis

by EKG. Specifically, the specificationsfor the AMI–7a measure state that AMIpatients with ST-segment elevation orLeft bundle branch block (LBBB) on theEKG closest to arrival time receivingfibrinolytic therapy during the hospital

stay have a time from hospital arrival tofibrinolysis of 30 minutes or less.Similarly, the specifications for theAMI–8a measure state that AMI patientswith ST-segment elevation or LBBB onthe ECG closest to arrival time receivingprimary PCI during the hospital stayhave a time from hospital arrival to PCIof 90 minutes or less. Thesespecifications can be found on theQualityNet Web site (http:// www.qualitynet.org ). We note that thesespecifications are based on clinicalguidelines adopted by the AmericanCollege of Cardiology (ACC) clinical

guidelines for ST elevation MI.Comment: Some commentersexpressed support for our exclusion ofstructural measures. Others suggestedthat we consider using specificstructural measures in the future such asparticipation in a systematic database orregistry.

Response: We believe these measuresrequire further analysis of how theycould be scored, and how they wouldimpact a hospital’s total performancescore before they can be adopted for theHospital VBP program. We intend toconsider these issues as the HospitalVBP program evolves.

Comment: One commenter suggestedincluding the three smoking cessationmeasures adopted for the Hospital IQRprogram (AMI–4, HF–4, PN–4), despitetheir ‘‘topped out’’ status, because of therisk that hospitals will not focus onthese measures and overall performancecould begin to decline.

Response: These measures meet ourproposed definition of topped-outstatus. As we have stated, we do not

believe that measuring performance ona topped-out measure produces ameaningful differentiation of hospitalperformance. We also note that we have

proposed to retire these measures fromthe Hospital IQR measure set in the FY2012 IPPS/LTCH PPS proposed rulescheduled for publication on May 5,2011. Therefore, we are excluding thesemeasures from the Hospital VBPmeasure set. We will consider thefeasibility of proposing to adopt a globalsmoking cessation measure for theHospital VBP program.

Comment: A number of commenterssupported our proposal to include PN–6 and PN–3b in the Hospital VBPmeasure set, stating that these measures

encourage use of new technologies afterpatient diagnosis.

Response: We appreciate the support,and we believe that the inclusion ofthese measures will help promote theprovision of quality care by promotingappropriate laboratory testing (taking of

blood cultures to facilitate selection ofthe most effective antibiotic for the

patient) and actual selection ofappropriate antibiotics based on patientdata.

Comment: Some commenterssupported our proposal to use SCIPmeasures to capture HAIs.

Response: We thank commenters fortheir support. As discussed in theHospital Inpatient VBP Programproposed rule (76 FR 2461), the SCIPmeasures were developed to supportpractices that have demonstrated anability to significantly reduce surgicalcomplications such as HAIs.Compliance with the proposed SCIPinfection measures is also included as atargeted metric in the HHS Action Planto Prevent Healthcare-AssociatedInfections issued in 2009, a copy ofwhich is available on the HHS Web site.

Comment: One commenter suggestedthat measures should assess servicesregularly provided by rural hospitalsand hospitals that do not performsurgeries.

Response: The measures selected forthe Hospital VBP program addressservices provided by subsection (d)hospitals, including rural hospitals andhospitals that do not perform surgeries.For example, the HCAHPS dimensions

measure patients’ experiences of care athospitals; none of the dimensions aresurgery-specific. Additionally,pneumonia and other conditions suchas heart failure and acute myocardialinfarction are treated by rural hospitals.

Comment: A number of commenterscalled on CMS to use the JointCommission’s accountability criteria formeasure selection, which include strongscientific evidence of improvedoutcomes, proximity to impactedoutcomes, accurate assessment ofevidence-based processes and minimaladverse effects.

Response:In August 2010, The JointCommission published an article in the

New England Journal of Medicinediscussing the criteria that should beused to define a measure that is used foraccountability and public reportingpurposes versus criteria that is used todefine measures used strictly forperformance improvement. The JointCommission identified four criteria ameasure must have in order to have thegreatest positive impact on patientoutcomes. These criteria include:Research, Proximity, Accuracy, and

Adverse Effects. Further information onthe Joint Commission’s accountabilitycriteria may be found at http:// www.jointcommission.org/about/JointCommissionFaqs.aspx?CategoryId=31. We generally agree with the JointCommission’s list of criteria that wouldapply to measures used foraccountability purposes and considered

this criteria in determining whethercertain measures may warrantretirement from the Hospital IQRprogram. However, we do not agree withtheir exclusion of HF–1 from the list ofaccountability measures as we believeHF–1 assesses a hospital’s compliancewith providing critical information topatients at the time of their discharge,including instructions regarding activitylevel, diet, discharge medications,follow-up appointment, weightmonitoring, and what to do if symptomsworsen. As stated above, we believe thatthis information is critical for hospitals

to provide in order to facilitateappropriate self-care and providerfollow up care after a patient isdischarged from the hospital.

Comment: A number of commentersrecommended that we analyze measuresagainst pre-established, agreed-uponcriteria to ensure that they are relevantto value-based purchasing and willimprove health outcomes for patients.Some commenters suggested that ourgoal should be to find the mostappropriate ways to tie measures topatient benefits. Some commentersargued that current measures which wehave proposed to adopt for the Hospital

VBP program do not sufficiently impacthealth outcomes. Other commenterswondered if any measures are ‘‘paper-only’’ and do not reflect the actualprovision of quality medical care.

Response: To ensure that measuresassess the quality of care provided toMedicare beneficiaries, we agree thatmeasures should be scrutinized byexperts and evaluated against objectivecriteria. We believe that these elementshave been incorporated into ourmeasure selection process in a variety ofways, including through endorsement

by consensus-developing entities and

through notice and public commentrulemaking. For example, most of themeasures that we have selected for theHospital IQR program, (which makethem candidates for the Hospital VBPprogram) are endorsed by the NQF, theentity with a contract with the Secretaryunder Section 1890(a) of the Act. To theextent that we have determined thatmeasurement is needed in a specifiedarea for which there are no NQFendorsed measures, we give dueconsideration to measures endorsed oradopted by different consensus


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3See ‘‘Adjusting Performance Measures To EnsureEquitable 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 arecurrently patient-mix adjusted. Weadjust HCAHPS data for patientcharacteristics that are not under thecontrol of the hospital that may affectpatient reports of hospital experiences.The goal of adjusting for patient-mix isto estimate how different hospitalswould be rated if they all provided care

to comparable groups of patients. Aspart of the endorsement process forHCAHPS, the NQF endorsed theHCAHPS patient-mix adjustmentcurrently in use.

The HCAHPS patient-mix adjustment(PMA) model incorporates importantand statistically significant predictors ofpatients’ HCAHPS ratings that also varymeaningfully across hospitals (O’Malleyet al., 2005). The PMA model includesseven variables, as follows: Self-reported health status, education,service line (medical, surgical, ormaternity care), age, response percentile

order (also known as‘‘

relative lag time,’’

which is based on the time betweendischarge and survey completion),service line by linear age interactions,and primary language other thanEnglish. Initially the model alsoincluded admission through anemergency room, but because admissionthrough an emergency room is no longeravailable on the UB–92 Form, thisadjuster is no longer available for thepatient-mix model. We are exploringother options to obtain that informationin the future. We have found thatevaluations of care increase with self-rated health and age (at least through

age 74), and decrease with educationalattainment. Maternity service hasgenerally more positive evaluations thanmedical and surgical services. Percentileresponse order (relative lag time)findings show that late responders tendto provide less positive evaluations thanearlier responders. From researchconducted during the development ofHCAHPS, we found little evidence thatDRG matters beyond the service line,which is included in the patient mixmodel.

To further address specific concernsabout the adjustment model, it is

important to note that self-reportedhealth status is a widely acceptedmeasure of a person’s overall healthstatus. In general, ‘‘how would you rateyour health’’ is the most widely usedsingle self-reported health item and isused in a plethora of national healthsurveys. Education also capturesimportant aspects of socio-economicstatus. Income is generally not availableto adjust survey data.

Patient-mix adjustment is based onvariation by patient-level factors withinhospitals so that true differences

between hospitals are not included inthe adjustment.3 Controlling forgeographic region (a hospital-levelfactor) as part of a patient-mixadjustment model could mask importantdifferences in quality across thecountry.

Comment: Several commenterssuggested changing the HCAHPS

requirements to reduce the number ofrequired mailings and telephoneattempts, allow survey administrationwhile patients are still in the hospital,and allow electronic administration ofthe survey to reduce the cost of surveyadministration.

Response: We know from ourHCAHPS research that, on average, lateresponders report less positiveexperiences. For this reason, we believethat allowing hospitals to reduce theireffort to obtain completed surveys byreducing the required number ofmailings and telephone attempts would

bias the HCAHPS results. Under thecurrent HCAHPS requirements, whichcan be found in the HCAHPS QualityAssurance Guidelines available atwww.hcahpsonline.org, theadministration of the HCAHPS survey

begins 48 hours following discharge toensure that the patient has had anopportunity to return home or go to analternative location. We also believe thatallowing a hospital to administer thesurvey while the patient is still in thehospital has the potential to create

biased results because the patient mightnot feel that he or she can freely answer

the questions with ho

fr value based

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