September 13,2009

Grassley, Baucus Seek Status of Hospital Value-Based Purchasing Plan

Washington, DC – U.S. Senators Chuck Grassley (R-Iowa) and Max Baucus (D-Mont.)have asked the Department of Health and Human Services to explain the status of ahospital value-based purchasing plan, which the department was required to deliver inlegislation enacted in 2005. Grassley, the ranking member of the Finance Committee,and Baucus, the chairman, are interested in making sure the federal government makestimely progress in linking Medicare payments to quality. The plan due from HHS is animportant step toward that goal, especially if legislation is required for implementation.

The text of the senators’ September 11 letter to HHS follows here.

September 11, 2007

The Honorable Michael O. Leavitt
US Department of Health & Human Services
200 Independence Avenue, SW
Washington, DC 20201

Dear Secretary Leavitt:

The Committee on Finance has exclusive jurisdiction over the Medicare program in theSenate. Accordingly, we have the responsibility that the more than 40 million Americanswho receive health care under the program receive the best care available.

We write today to inquire about the status of the hospital value based purchasing planthat we requested in section 5001(b) of the Deficit Reduction Act of 2005 (DRA) and torequest that the report be issued as soon as possible. The DRA specifically mandated “aplan to implement a value based purchasing program for payments under the Medicareprogram for subsection (d) hospitals beginning with fiscal year 2009.” Time is of theessence, as we will need an adequate period to reflect on the plan and potentially considerlegislation during this session to authorize a Medicare hospital value based purchasingprogram beginning with fiscal year 2009.

We also seek to capture in a timely manner the momentum created by the Centers forMedicare and Medicaid Services’ (CMS) recent promulgation of regulationsimplementing the hospital acquired conditions provision that we laid down in section5001(c) of the DRA. CMS’ announcement that it has selected eight complicatingconditions for which it will no longer pay an additional amount when those conditions arenot present on hospital admission beginning with fiscal year 2009 has generated apositive response and enthusiasm in expanding value based purchasing for the Medicareprogram. A New York Times editorial on August 21 stated that Congress and CMS are“clearly on the right track in seeking to prevent errors that harm patients and drive up thecost of health care.” We believe that a well-designed hospital value based purchasingprogram would capture and expand the power behind the hospital acquired conditionsvalue based payment policy that has captured national attention.

In section 5001(b) of the DRA, Congress requested detailed consideration of thefollowing issues that are essential elements for a hospital value based purchasingprogram: (1) measures development, selection, and modification processes; (2) qualitydata reporting, collection, and validation processes; (3) value based payment adjustment,, and sources of funding; and (4) disclosure of information on hospital performance.We are anticipating that the plan will contain a detailed approach to implementation thataddresses these elements, as well as the funding requirements to build and maintain ahospital value based purchasing program for the first three years.

Again, it is important that this report is released as soon as possible. Because this is atime sensitive matter, we request from you an update on the status of the report as well asdates and times for Committee staff briefings on the report by Monday, September 17.We thank you in advance for your quick response to our inquiry.


Max Baucus, Chairman

Charles E. Grassley, Ranking Member

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