More than 1,800 hospitals will see payments from the federal government rise in 2016 due to improvements in quality under the Centers for Medicare and Medicaid Services value-based purchasing program, CMS said Monday, with 600 more hospitals receiving increases than the prior year.
Half of participating hospitals will see a small change, between -0.4 and 0.4 percent, in their MS-DRG payments.
The highest-performing hospitals will see a 3 percent jump in payments, after a mandatory 1.75 percent reduction.
[Also: UPDATED: 1-star hospital number falls in latest CMS rankings, 5-stars slide; See the data]
The worst-performing hospital will see the maximum 1.75 percent reduction in payments.
That amount came as CMS said it would increasing the reduction it pays hospitals under the value-based purchasing program from 1.5 to 1.75 percent, CMS announced Monday.
CMS estimates the total amount available for incentives is $1.5 billion.
"We'll pay most hospitals more or less for each Medicare fee-for-service discharge in FY 2016 than they would've been paid in the absence of the program," CMS said in a statement.
The program adjusts what CMS pays hospitals for inpatient services based on the quality of care they give patients. This is the fourth year of the program, affecting payment for inpatient stays in over 3,000 hospitals across the country.
CMS has been increasing the program's number of quality domains used to evaluate performance.
The quality domains for 2016 are: 10 percent, clinical process of care; 25 percent, patient experience based on the Hospital Consumer Assessment of Healthcare Providers and Systems survey; 40 percent, outcome for hospital mortality measures for a number of conditions including acute myocardial infarction, heart failure, and pneumonia, and certain infections; 25 percent, efficiency based on Medicare spending per beneficiary measure.
Hospitals' payments will depend on how well they measure up to their peers on important healthcare quality measures during a performance period and how much they have improved over time, CMS said.
Hospitals excluded from the hospital value-based purchasing program do not incur the reduction of 1.75 percent and are not eligible to receive other incentives.
Like Healthcare Finance on Facebook
The program is funded each year from a reduction of participating hospitals' base operating DRG payments for the year. These payment reductions are redistributed to hospitals as incentive payments, based on their total performance scores.
Over 78 percent of the measures in the hospital value-based payment program assess health outcomes, patient experience and cost.
New program requirements for 2017 include the addition of two safety measures, the addition of one new clinical care process measure, and removal of six "topped-out" clinical process measures.
Twitter: @SusanJMorse