cmsThe Centers for Medicare & Medicaid Services (CMS) has announced its second round of penalties and bonuses to hospitals under its Value-Based Purchasing Program. Medicare reduced payment rates for 1,451 hospitals and increased rates for 1,231 based on 24 quality measures, including patient satisfaction surveys and for the first time, death ratesAccording to a Kaiser Health News articlethe largest bonus given for FY 2014 was a 0.88 percent increase awarded to Arkansas Heart Hospital, a physician-owned facility representative of the type of hospital some healthcare executives claim have an unfair advantage in this program.

Hospitals in Maine, Massachusetts, Nebraska, New Hampshire, North Carolina, Utah and Wisconsin received the highest scores with at least 60 percent of the hospitals in these states earning higher payments. On the other hand, at least two-thirds of hospitals in 17 states including California, Connecticut, Nevada, New Mexico, New York, North Dakota, Washington and Wyoming experienced reimbursement reductions.

Many of this year’s “winners” received bonuses last year as well, and most hospitals that received reductions last year continued that trend for FY 2014. However, 300 hospitals or healthcare systems did manage to improve their scores. According to KHN, organizations that were previously penalized but were awarded bonuses this year included: Massachusetts General, Vanderbilt University Medical Center and Ronald Reagan UCLA Medical Center. Conversely, a disappointing 416 hospitals, which earned bonuses last year, received penalties this year.

Patrick Conway, M.D., chief medical officer at CMS and director of the Centers for Clinical Standards and Quality commented in a blog post announcing the scores that these numbers actually signal “good news.”   “The fact that not every higher performing hospital last year made the grade this year, and not every lower performing hospital last year will see payment decline this year, means that hospitals are adjusting to the new world of value-based payment,” Conway said.

To access the FY 2014 Value-based Incentive Payment Adjustment Factors, click here.