---
kind: "range"
citation: "42 C.F.R. §§ 412.161–412.168"
title: "42"
from: "412.161"
to: "412.168"
count: 7
url: "https://uscodex.org/cfr/42/412.161..412.168"
---

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


The Hospital VBP Program applies to hospitals, as that term is defined in [§ 412.160](/cfr/42/412.160.md).


# §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.

- (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](/cfr/42/412.160.md).
    - (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](/cfr/42/412.160.md) from the value-based incentive payment percentage and then adding that difference to one.

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

- (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)](#b) of this section to review and submit corrections for the information.
- (d) CMS will post the information specified in [paragraph (b)](#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/.

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

- (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)](#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>.**

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

- (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)](#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)](#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.

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

- (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](/cfr/42/412.163.md) 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)](#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)](/cfr/42/1886.md?p=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)](/cfr/42/1886.md?p=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)](/cfr/42/1886.md?p=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.**

# §412.168. Special rules for FY 2022 and FY 2023.

- (a) This section sets forth the scoring and payment methodology for each of fiscal years 2022 and 2023Hospital VBP Program.
- (b) CMS calculates a measure rate for all measures selected under [§ 412.164(a)](/cfr/42/412.164.md?p=a) for fiscal year 2022 but only applies [§ 412.165(a)](/cfr/42/412.165.md?p=a) to the measures included in the Clinical Outcomes Domain for that fiscal year, which are the following:
  - (1) Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Acute Myocardial Infarction (AMI) Hospitalization (MORT-30-AMI).
  - (2) Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Heart Failure (HF) Hospitalization (MORT-30-HF).
  - (3) Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Pneumonia Hospitalization (MORT-30-PN (updated cohort)).
  - (4) Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Chronic Obstructive Pulmonary Disease (COPD) Hospitalization (MORT-30-COPD).
  - (5) Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Coronary Artery Bypass Graft (CABG) Surgery (MORT-30-CABG).
  - (6) Hospital-Level Risk-Standardized Complication Rate Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (COMP-HIP-KNEE).
- (c) CMS calculates a domain score for the measures described in [paragraph (b)(1)](#b-1) of this section for hospitals that report the minimum number of measures in the Clinical Outcomes Domain.
- (d) **CMS does not award a Total Performance Score to any hospital.**
- (e) The total amount available for value-based incentive payments for fiscal year 2022 is equal to the total amount of base-operating DRG payment reductions for that fiscal year, as estimated by the Secretary.
- (f) CMS awards value-based incentive payment percentages (as defined in [§ 412.160](/cfr/42/412.160.md)) for all hospitals to ensure that each hospital receives an incentive payment amount equal to the amount of the reduction made to its base-operating DRG payment amounts.
- (g) CMS calculates a measure rate for all measures selected under [§ 412.164(a)](/cfr/42/412.164.md?p=a) for fiscal year 2023 but only applies [§ 412.165(a)](/cfr/42/412.165.md?p=a) to the measures included in the Clinical Outcomes Domain and the Efficiency and Cost Reduction Domain for that fiscal year, which are the following:
  - (1) Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Acute Myocardial Infarction (AMI) Hospitalization (MORT-30-AMI).
  - (2) Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Heart Failure (HF) Hospitalization (MORT-30-HF).
  - (3) Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Pneumonia Hospitalization (MORT-30-PN (updated cohort)).
  - (4) Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Chronic Obstructive Pulmonary Disease (COPD) Hospitalization (MORT-30-COPD).
  - (5) Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Coronary Artery Bypass Graft (CABG) Surgery (MORT-30-CABG).
  - (6) Hospital-Level Risk-Standardized Complication Rate Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (COMP-HIP-KNEE).
  - (7) **Medicare Spending Per Beneficiary (MSPB)—** Hospital.
- (h) **CMS calculates—**
  - (1) A Clinical Outcomes Domain score for fiscal year 2023 for hospitals that report the minimum number of cases and measures with respect to the measures described in [paragraphs (g)(1) through (6)](#g-1..g-6) of this section; and
  - (2) An Efficiency and Cost Reduction Domain score for fiscal year 2023 for hospitals that report the minimum number of cases with respect to the measure described in [paragraph (g)(7)](#g-7) of this section.
- (i) **CMS does not award a Total Performance Score to any hospital for fiscal year 2023.**
- (j) The total amount available for value-based incentive payments for fiscal year 2023 is equal to the total amount of base-operating DRG payment reductions for that fiscal year, as estimated by the Secretary.
- (k) CMS awards a value-based incentive payment percentage (as defined in [§ 412.160](/cfr/42/412.160.md)) for fiscal year 2023 to all hospitals to ensure that each hospital receives a value-based incentive payment amount equal to the amount of the reduction made to its base-operating DRG payment amounts.