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 CFR § 412.162

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12 segments

42 CFR § 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.

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