Understanding the Role Played by Medicare's Patient Experience Points System in Hospital Reimbursement

Published in: Health Affairs, v. 35, no. 9, Sep. 2016, p. 1673-1680

Posted on RAND.org on September 15, 2016

by Marc N. Elliott, Megan K. Beckett, William Lehrman, Paul Cleary, Christopher W. Cohea, Laura Giordano, Noah J. Goldstein, Cheryl L. Damberg

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Research Questions

  1. How do the scores on the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS)—and its component measures, improvement, consistency, and achievement—affect reimbursement at hospitals under the Medicare Hospital Value-Based Purchasing (VBP) program?
  2. Do hospitals with lower baseline performance tend to receive a higher proportion of improvement and consistency points?
  3. Do the improvement and consistency points adjust reimbursement appropriately for hospitals unlikely to have high achievement scores, such as those serving a high proportion of minority patients?

In 2015 the Medicare Hospital Value-Based Purchasing (VBP) program paid hospitals $1.4 billion in performance-based incentives; 30 percent of a hospital's VBP Total Performance Score was based on performance on Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) measures of the patient experience of care. Hospitals receive patient experience points based on three components: achievement, improvement, and consistency. For 2015 we examined how the three components affected reimbursement for 3,152 hospitals, including their impact on low-performing and high-minority hospitals. Achievement accounted for 96 percent of the differences among hospitals in total HCAHPS points. Although achievement had the biggest influence on payments, payments related to improvement and consistency were more beneficial for low-performing hospitals that disproportionately served minority patients. The findings highlight the important inducement that paying for improvement provides to initially low-performing hospitals to improve care and the role this incentive structure plays in minimizing resource redistributions away from hospitals serving minority populations. Additional emphasis on improvement points could benefit hospitals serving disadvantaged patients.

Key Findings

  • The achievement component accounted for most of the differences in hospitals' overall scores, and played the largest role in payment.
  • Hospitals with a high proportion of minority patients received lower overall HCAHPS VBP scores than hospitals with predominately White patients.
  • Although high-minority hospitals received fewer achievement points, improvement and consistency points helped raise overall HCAHPS VBP scores and corresponding payments.
  • Improvement points constituted a particularly large proportion of overall scores for many high-minority hospitals.
  • The payment structure under the Hospital VBP program appears to be working as intended and engaging low-performing hospitals in the pursuit of quality improvement.


Increasing the weight of improvement points in the scoring formula could help increase the financial incentives of low-performing hospitals to engage in quality improvement.

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