42 C.F.R. §§ 412.160–412.167

7 sections in range

§412.160. Definitions for the Hospital Value-Based Purchasing (VBP) Program.

42 C.F.R. § 412.160

As used in this section and in §§ 412.161 through 412.168:

Achievement threshold (or achievement performance standard) means the median (50th percentile) of hospital performance on a measure during a baseline period with respect to a fiscal year, for Hospital VBP Program measures other than the measures in the Efficiency and Cost Reduction domain, and the median (50th percentile) of hospital performance on a measure during the performance period with respect to a fiscal year, for the measures in the Efficiency and Cost Reduction domain.

Applicable percent means the following:

(1)

For FY 2013, 1.0 percent;

(2)

For FY 2014, 1.25 percent;

(3)

For FY 2015, 1.50 percent;

(4)

For FY 2016, 1.75 percent; and

(5)

For FY 2017 and subsequent fiscal years, 2.0 percent.

Base operating DRG payment amount means the following:

(1)

With respect to a subsection (d) hospital (as defined in section 1886(d)(1)(B) of the Act), the wage-adjusted DRG operating payment plus any applicable new technology add-on payments under subpart F of this part. This amount is determined without regard to any payment adjustments under the Hospital Readmissions Reduction Program, as specified under § 412.154. This amount does not include any additional payments for indirect medical education under § 412.105, the treatment of a disproportionate share of low-income patients under § 412.106, outliers under subpart F of this part, or a low volume of discharges under § 412.101.

(2)

With respect to a Medicare-dependent, small rural hospital that receives payments under § 412.108(c) or a sole community hospital that receives payments under § 412.92(d), the wage-adjusted DRG operating payment plus any applicable new technology add-on payments under subpart F of this part. This amount does not include any additional payments for indirect medical education under § 412.105, the treatment of a disproportionate share of low-income patients under § 412.106, outliers under subpart F of this part, or a low volume of discharges under § 412.101. With respect to a Medicare-dependent, small rural hospital that receives payments under § 412.108(c) (for discharges occurring in FY 2013) or a sole community hospital that receives payments under § 412.92(d), this amount also does not include the difference between the hospital-specific payment rate and the Federal payment rate determined under subpart D of this part.

Benchmark means the arithmetic mean of the top decile of hospital performance on a measure during the baseline period with respect to a fiscal year, for Hospital VBP Program measures other than the measures in the Efficiency and Cost Reduction domain, and the arithmetic mean of the top decile of hospital performance on a measure during the performance period with respect to a fiscal year, for the measures in the Efficiency and Cost Reduction domain.

Cited for deficiencies that pose immediate jeopardy means that, during the applicable performance period, the Secretary cited the hospital for immediate jeopardy on at least three surveys using the Form CMS-2567, Statement of Deficiencies and Plan of Correction. CMS assigns an immediate jeopardy citation to a performance period as follows:

(1)

If the Form CMS-2567 only contains one or more EMTALA-related immediate jeopardy citations, CMS uses the date that the Form CMS-2567 is issued to the hospital;

(2)

If the Form CMS-2567 only contains one or more Medicare conditions of participation immediate jeopardy citations, CMS uses the survey end date generated in ASPEN; and

(3)

If the Form CMS-2567 contains both one or more EMTALA-related immediate jeopardy citations and one or more Medicare conditions of participation immediate jeopardy citations, CMS uses the survey end date generated in ASPEN.

Domain means a grouping of measures used for purposes of calculating the Total Performance Score for each hospital with respect to a fiscal year.

Domain score means the total number of points awarded to a hospital for a domain.

Hospital means a hospital described in section 1886(d)(1)(B) of the Act, but does not include a hospital, with respect to a fiscal year, for which one or more of the following applies:

(1)

The hospital is subject to the payment reduction under section 1886(b)(3)(B)(viii)(I) of the Act for the fiscal year;

(2)

The Secretary cited the hospital for deficiencies that pose immediate jeopardy to the health or safety of patients during the performance period that applies with respect to the fiscal year;

(3)

There are not a minimum number of measures that apply to the hospital for the performance period for the fiscal year; or

(4)

There are not a minimum number of cases for the measures that apply to the hospital for the performance period for the fiscal year.

Immediate jeopardy has the same meaning as that term is defined in § 489.3 of this chapter.

Improvement threshold (or improvement performance standard) means an individual hospital's performance level on a measure during the baseline period with respect to a fiscal year.

Linear Exchange Function is the means to translate a hospital's total performance score into a value-based incentive payment percentage such that:

(1)

Each eligible hospital's value-based incentive payment percentage is based on its total performance score; and

(2)

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 in such fiscal year.

Measure performance scaler means the sum of the points awarded to a hospital for each domain for the fiscal year based on the hospital's performance on the measures in those domains.

Performance period means the time period during which data are collected for the purpose of calculating hospital performance on measures with respect to a fiscal year.

Performance standards are the levels of performance that hospitals must meet or exceed in order to earn points under the Hospital VBP Program, and are calculated with respect to a measure for a fiscal year no later than 60 days prior to the start of the performance period for that measure for that fiscal year. The performance standards for a measure may be updated as follows:

(1)

To make a single correction to correct a calculation error, data issue, or other problem that would significantly change the performance standards; or

(2)

To incorporate nonsubstantive technical updates made to the measure between the time that CMS first displays the performance standards for that measure for a fiscal year and the time that CMS calculates hospital performance on that measure at the conclusion of the performance period for that measure for a fiscal year.

Total Performance Score means the numeric score awarded to each hospital based on its performance under the Hospital VBP Program with respect to a fiscal year.

Underserved multiplier means the mathematical result of applying a logistic function to the number of hospital inpatient stays for patients in the underserved population out of the hospital's total Medicare inpatient population during the calendar year that is 2 years prior to the applicable fiscal year.

Underserved population, as used in this section, means hospital inpatients who are Medicare beneficiaries and also dually eligible for full Medicaid benefits during the month of discharge or, if a patient died during that month, during the previous month.

Value-based incentive payment adjustment factor is the number that will be multiplied by the base operating DRG payment amount for each discharge from a hospital, during a fiscal year, in order to adjust the hospital's payment as a result of its performance under the Hospital VBP Program.

Value-based incentive payment percentage means the percentage of the base operating DRG payment amount for each discharge that a hospital has earned with respect to a fiscal year, based on its Total Performance Score for that fiscal year.

Wage-adjusted DRG operating payment is the applicable average standardized amount adjusted for—

(1)

Resource utilization by the applicable MS-DRG relative weight;

(2)

Differences in geographic costs by the applicable area wage index (and by the applicable cost-of-living adjustment for hospitals located in Alaska and Hawaii); and

(3)

Any applicable payment adjustment for transfers under § 412.4(f).

Notes, amendments, and revision history

Amendments

[77 FR 53674, Aug. 31, 2012, as amended at 78 FR 50967, Aug. 19, 2013; 79 FR 50354, Aug. 22, 2014; 81 FR 57268, Aug. 22, 2016; 86 FR 45520, Aug. 13, 2021; 88 FR 59333, Aug. 28, 2023; 90 FR 37202, Aug. 4, 2025]

Source

Source: 77 FR 53674, Aug. 31, 2012, unless otherwise noted.

Authority

Authority: 42 U.S.C. 1302 and 1395hh.

Source

Source: 50 FR 12741, Mar. 29, 1985, unless otherwise noted.

Amendments

§412.161. Applicability of the Hospital Value-Based Purchasing (VBP) Program.

42 C.F.R. § 412.161

The Hospital VBP Program applies to hospitals, as that term is defined in § 412.160.

Notes, amendments, and revision history

Amendments

[79 FR 50355, Aug. 22, 2014]

Source

Source: 77 FR 53674, Aug. 31, 2012, unless otherwise noted.

Authority

Authority: 42 U.S.C. 1302 and 1395hh.

Source

Source: 50 FR 12741, Mar. 29, 1985, unless otherwise noted.

Amendments

[79 FR 50355, Aug. 22, 2014]

§412.162. Process for reducing the base operating DRG payment amount and applying the value-based incentive payment amount adjustment under the Hospital Value-Based Purchasing (VBP) Program.

42 C.F.R. § 412.162

(a)

General. If a hospital meets or exceeds the performance standards that apply to the Hospital VBP Program for a fiscal year, CMS will make value-based incentive payments to the hospital under the requirements and conditions specified in this section.

(b)

Value-based incentive payment amount.

(1)

Available amount. The value-based incentive payment amount for a discharge is the portion of the payment amount that is attributable to the Hospital VBP Program. The total amount available for value based incentive payments to all hospitals for a fiscal year is equal to the total amount of base-operating DRG payment reductions for that fiscal year, as estimated by the Secretary.

(2)

Calculation of the value-based incentive payment amount. The value-based incentive payment amount is calculated by multiplying the base operating DRG payment amount by the value-based incentive payment percentage.

(3)

Calculation of the value-based incentive payment percentage. The value-based incentive payment percentage is calculated as the product of all of the following:

(i)

The applicable percent as defined in § 412.160.

(ii)

(A)

For fiscal years before FY 2026, the hospital's Total Performance Score divided by 100; or

(B)

Beginning with FY 2026, the hospital's Total Performance Score divided by 110; and

(iii)

The linear exchange function slope.

(c)

Methodology to calculate the value-based incentive payment adjustment factor. The value-based incentive payment adjustment factor for each discharge is determined by subtracting the applicable percent as specified in § 412.160 from the value-based incentive payment percentage and then adding that difference to one.

Notes, amendments, and revision history

Amendments

[77 FR 53674, Aug. 31, 2012, as amended at 88 FR 59333, Aug. 28, 2023]

Source

Source: 77 FR 53674, Aug. 31, 2012, unless otherwise noted.

Authority

Authority: 42 U.S.C. 1302 and 1395hh.

Source

Source: 50 FR 12741, Mar. 29, 1985, unless otherwise noted.

Amendments

[77 FR 53674, Aug. 31, 2012, as amended at 88 FR 59333, Aug. 28, 2023]

§412.163. Process for making hospital-specific performance information under the Hospital Value-Based Purchasing (VBP) Program available to the public.

42 C.F.R. § 412.163

(a)

CMS will make information available to the public regarding the performance of each hospital under the Hospital VBP Program.

(b)

To ensure that a hospital has the opportunity to review and submit corrections for the information to be made public under this section, CMS will provide each hospital with confidential hospital-specific reports and discharge level information used in the calculation of its performance with respect to each measure, condition, and domain, and the calculation of its Total Performance Score.

(c)

Hospitals will have a period of 30 days after CMS provides the information specified in paragraph (b) of this section to review and submit corrections for the information.

(d)

CMS will post the information specified in paragraph (b) for each hospital on the the Hospital Compare website, which can be accessed via the Care Compare website at https://www.medicare.gov/care-compare/.

Notes, amendments, and revision history

Amendments

[50 FR 12741, Mar. 29, 1985, as amended at 86 FR 45520, Aug. 13, 2021]

Source

Source: 77 FR 53674, Aug. 31, 2012, unless otherwise noted.

Authority

Authority: 42 U.S.C. 1302 and 1395hh.

Source

Source: 50 FR 12741, Mar. 29, 1985, unless otherwise noted.

Amendments

[50 FR 12741, Mar. 29, 1985, as amended at 86 FR 45520, Aug. 13, 2021]

§412.164. Measure selection under the Hospital Value-Based Purchasing (VBP) Program.

42 C.F.R. § 412.164

(a)

CMS will select measures, other than measures of readmissions, for purposes of the Hospital VBP Program. The measures will be selected from the measures specified under section 1886(b)(3)(B)(viii) of the Act (the Hospital Inpatient Quality Reporting Program).

(b)

CMS will post data on each measure on the Hospital Compare website, which can be accessed via the Care Compare website at https://www.medicare.gov/care-compare/, for at least 1 year prior to the beginning of a performance period for the measure under the Hospital VBP Program.

(c)

(1)

Updating of measure specifications. CMS uses rulemaking to make substantive updates to the specifications of measures used in the Hospital VBP Program. CMS announces technical measure specification updates through the QualityNet website (https://qualitynet.cms.gov) and listserv announcements.

(2)

Measure retention. All measures selected under paragraph (a) of this section remain in the measure set unless CMS, through rulemaking, removes or replaces them.

(3)

Measure removal factors—

(i)

General rule. CMS may remove or replace a measure based on one of the following factors:

(A)

Factor 1. Measure performance among hospitals is so high and unvarying that meaningful distinctions and improvements in performance can no longer be made (“topped out” measures), defined as: statistically indistinguishable performance at the 75th and 90th percentiles; and truncated coefficient of variation ≤0.10.

(B)

Factor 2. A measure does not align with current clinical guidelines or practice.

(C)

Factor 3. The availability of a more broadly applicable measure (across settings or populations) or the availability of a measure that is more proximal in time to desired patient outcomes for the particular topic.

(D)

Factor 4. Performance or improvement on a measure does not result in better patient outcomes.

(E)

Factor 5. The availability of a measure that is more strongly associated with desired patient outcomes for the particular topic.

(F)

Factor 6. Collection or public reporting of a measure leads to negative unintended consequences other than patient harm.

(G)

Factor 7. It is not feasible to implement the measure specifications.

(H)

Factor 8. The costs associated with a measure outweigh the benefit of its continued use in the program.

(ii)

Application of measure removal factors. CMS assesses the benefits of removing a measure from the Hospital VBP Program on a case-by-case basis.

(iii)

Patient safety exception. Upon a determination by CMS that the continued requirement for hospitals to submit data on a measure raises specific patient safety concerns, CMS may elect to immediately remove the measure from the Hospital VBP measure set. CMS will, upon removal of the measure—

(A)

Provide notice to hospitals and the public at the time CMS removes the measure, along with a statement of the specific patient safety concerns that would be raised if hospitals continued to submit data on the measure; and

(B)

Provide notice of the removal in the <I>Federal Register</I>.

Notes, amendments, and revision history

Amendments

[77 FR 53674, Aug. 31, 2012, as amended at 83 FR 41704, Aug. 17, 2018; 86 FR 45520, Aug. 13, 2021; 88 FR 59333, Aug. 28, 2023]

Source

Source: 77 FR 53674, Aug. 31, 2012, unless otherwise noted.

Authority

Authority: 42 U.S.C. 1302 and 1395hh.

Source

Source: 50 FR 12741, Mar. 29, 1985, unless otherwise noted.

Amendments

[77 FR 53674, Aug. 31, 2012, as amended at 83 FR 41704, Aug. 17, 2018; 86 FR 45520, Aug. 13, 2021; 88 FR 59333, Aug. 28, 2023]

§412.165. Performance scoring under the Hospital Value-Based Purchasing (VBP) Program.

42 C.F.R. § 412.165

(a)

Points awarded based on hospital performance.

(1)

CMS will award points to hospitals for performance on each measure for which the hospital reports the applicable minimum number of cases during the applicable performance period. The applicable minimum number of cases are set forth as follows:

(2)

CMS will award from 1 to 9 points for achievement to each hospital whose performance on a measure during the applicable performance period meets or exceeds the achievement threshold but is less than the benchmark for that measure.

(3)

CMS will award from 0 to 9 points for improvement to each hospital whose performance on a measure during the applicable performance period exceeds the improvement threshold but is less than the benchmark for that measure.

(4)

CMS will award 10 points to a hospital whose performance on a measure during the applicable performance period meets or exceeds the benchmark for that measure.

(b)

Calculation of the Total Performance Score. The hospital's Total Performance Score for a program year is calculated as follows:

(1)

CMS will calculate a domain score for a hospital when it reports the minimum number of measures in the domain.

(2)

CMS will sum all points awarded for each measure in a domain to calculate an unweighted domain score.

(3)

CMS will normalize each domain score to ensure that it is expressed as a percentage of points earned out of 100.

(4)

CMS will weight the domain scores with the finalized domain weights for each fiscal year.

(5)

The hospital's Total Performance Score for the fiscal year is the sum of the weighted domain scores up to a maximum score of 100.

(c)

Extraordinary circumstance exception (ECE)—

(1)

General rule. CMS may grant an ECE with respect to the reporting requirements under this section in the event of extraordinary circumstances beyond the control of the hospital. For purposes of this paragraph (c), an extraordinary circumstance is an event beyond the control of a hospital (for example, a natural or man-made disaster such as a hurricane, tornado, earthquake, terrorist attack, or bombing) that affected the ability of the hospital to comply with one or more applicable reporting requirements with respect to a fiscal year.

(2)

Process for requesting an ECE.

(i)

A hospital may request an ECE within 60 calendar days of the date that the extraordinary circumstance occurred by submitting the information specified by CMS at QualityNet or a successor website.

(ii)

CMS notifies the hospital of its decision on the request, in writing, via email. In the event that CMS grants an ECE to the hospital, the written decision will specify whether the hospital is exempted from one or more reporting requirements or whether CMS has granted the hospital an extension of time to comply with one or more reporting requirements.

(3)

Authority to grant an ECE. CMS may grant an ECE to one or more hospitals that have not requested an ECE if CMS determines that a systemic problem with a CMS data collection system directly impacted the ability of the hospital to comply with a quality data reporting requirement or that an extraordinary circumstance has affected an entire region or locale. Any ECE granted under this paragraph (c)(3) specifies whether the affected hospitals are exempted from one or more reporting requirements or whether CMS has granted the hospitals an extension of time to comply with one or more reporting requirements.

Notes, amendments, and revision history

Amendments

[50 FR 12741, Mar. 29, 1985, as amended at 85 FR 27621, May, 8, 2020; 86 FR 45520, Aug. 13, 2021; 88 FR 59333, Aug. 28, 2023; 90 FR 37202, Aug. 4, 2025]

Source

Source: 77 FR 53674, Aug. 31, 2012, unless otherwise noted.

Authority

Authority: 42 U.S.C. 1302 and 1395hh.

Source

Source: 50 FR 12741, Mar. 29, 1985, unless otherwise noted.

Amendments

[50 FR 12741, Mar. 29, 1985, as amended at 85 FR 27621, May, 8, 2020; 86 FR 45520, Aug. 13, 2021; 88 FR 59333, Aug. 28, 2023; 90 FR 37202, Aug. 4, 2025]

§412.167. Appeal under the Hospital Value-Based Purchasing (VBP) Program.

42 C.F.R. § 412.167

(a)

A hospital may appeal the following issues:

(1)

CMS' decision to deny a hospital's correction request that the hospital submitted under the review and corrections process;

(2)

Whether the achievement/improvement points were calculated correctly;

(3)

Whether CMS properly used the higher of the achievement/improvement points in calculating the hospital's measure/dimension score;

(4)

Whether CMS correctly calculated the domain scores, including the normalization calculation;

(5)

Whether CMS used the proper lowest dimension score in calculating the hospital's HCAHPS consistency points;

(6)

Whether CMS calculated the HCAHPS consistency points correctly;

(7)

Whether the correct domain scores were used to calculate the Total Performance Score;

(8)

Whether each domain was weighted properly;

(9)

Whether the weighted domain scores were properly summed to arrive at the Total Performance Score; and,

(10)

Whether the hospital's open/closed status (including mergers and acquisitions) is properly specified in CMS' systems.

(b)

Appeals must be submitted within 30 days of CMS' decision to deny a corrections request under § 412.163 or within 30 days of the conclusion of the review and corrections period, as applicable, and must contain the following information:

(1)

Hospital's CMS Certification Number (CCN).

(2)

Hospital name.

(3)

Hospital's basis for requesting an appeal. This must identify the hospital's specific reason(s) for appealing the hospital's Total Performance Score or performance assessment with respect to the performance standards.

(4)

CEO contact information, including name, email address, telephone number, and mailing address (must include the physical address, not just the post office box).

(5)

QualityNet security official contact information, including name, email address, telephone number, and mailing address (must include the physical address, not just the post office box).

(c)

If a hospital is dissatisfied with CMS' decision on an appeal request submitted under paragraph (b) of this section, the hospital may request an independent CMS review of that decision.

(d)

Limitations on review. There is no administrative or judicial review of the following:

(1)

The methodology used to determine the amount of the value-based incentive payment under section 1886(o)(6) of the Act and the determination of such amount.

(2)

The determination of the amount of funding available for value-based incentive payments under section 1886(o)(7)(A) of the Act and the payment reduction under section 1886(o)(7)(B)(i) of the Act.

(3)

The establishment of the performance standards under section 1886(o)(3) of the Act and the performance period under section 1886(o)(4) of the Act.

(4)

The measures specified under section 1886(b)(3)(B)(viii) of the Act and the measures selected under section 1886(o)(2) of the Act.

(5)

The methodology developed under section 1886(o)(5) of the Act that is used to calculate hospital performance scores and the calculation of such scores.

(6)

The validation methodology that is specified under section 1886(b)(3)(B)(viii)(XI) of the Act.

Notes, amendments, and revision history

Amendments

[50 FR 12741, Mar. 29, 1985, as amended at 78 FR 75196, Dec. 10, 2013; 86 FR 45520, Aug. 13, 2021]

Source

Source: 77 FR 53674, Aug. 31, 2012, unless otherwise noted.

Authority

Authority: 42 U.S.C. 1302 and 1395hh.

Source

Source: 50 FR 12741, Mar. 29, 1985, unless otherwise noted.

Amendments

[50 FR 12741, Mar. 29, 1985, as amended at 78 FR 75196, Dec. 10, 2013; 86 FR 45520, Aug. 13, 2021]