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Medicare bonuses, penalties for hospitals kick in


Hospitals soon will begin feeling the effect of Medicare’s new Value-Based Purchasing program, with more than 1,500 receiving bonus payments and more than 1,400 getting penalized based on quality of care.

The maximum amount by which payments can be adjusted is 1%. For nearly two-thirds of the affected hospitals, the changes, which take effect in January, are less than 0.25%, according to an analysis of the records by Kaiser Health News.

The biggest bonus, according to the Kaiser Health News report, will go to Treasure Valley Hospital, a physician-owned, 10-bed hospital in Boise, Idaho, that will receive a 0.83% increase in payment for each Medicare patient. Auburn Community Hospital, a nonprofit near Syracuse in upstate New York, faces the biggest cut: 0.9% of every payment.

The adjustments will be applied retroactively to payments hospital have received for the first three months of fiscal year 2013, which began in October.

The Affordable Care Act established the VBP program, part of an effort to transform healthcare in the United States by tying payments to quality of care rather than strictly to volume of services.

Hospitals’ VBP scores, which determine their bonus or penalty, are based on two broad categories of performance: 12 process-of-care measures and eight patient survey measures. Among the latter group is a measure of patients’ satisfaction with how well nurses communicated with them ( Along with overall performance, hospitals’ improvement is a factor in their score.

“These standards are consistent with clinical practice for the provision of high-quality care,” Patrick Conway, MD, MSc, the Centers for Medicare & Medicaid Services’ chief medical officer and director of the Center for Clinical Standards and Quality, wrote in a CMS blog post.

Hospital payments also may be affected by a Medicare program to reduce readmissions. This year, CMS penalized 2,217 hospitals for excessive readmissions. The maximum payment reduction, 1%, was applied to 307 hospitals.

When combined, the VBP program and the readmissions penalty will result in net losses for 2,245 hospitals this year, according to Kaiser Health News ( A total of 277 hospitals will lose 1% or more of their reimbursements, topped by the 1.8% hit to the Medical Center of Southeastern Oklahoma.

More information

For information on how specific hospitals have fared in the VBP program, visit and click on the “FY 2013 HVBP Payment Adjustment Factors” zip file under the “Downloads” section.

The listing of payment adjustment factors on the file is organized by CMS Certification Number. To find a hospital’s number, visit


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