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Insights InHealth


Safety and Cost in the ValueSCORE™ Ratings System

Updated: Sep 26, 2023

In a prior edition of Insights InHealth, we introduced the ValueSCORE™ ratings system and the innovations it incorporates to deliver unique intelligence into hospital performance. As discussed in the prior article, the ValueSCORE™ integrates measures pertaining to five domains of value (reproduced in the figure below). This installment of Insights InHealth provides a deeper dive into the first two of the five domains, Safety and Cost. For each value domain, we will discuss: (i) why it was selected for inclusion, (ii) which metrics comprised the domain and why, (iii) the data sources referenced, and (iv) technical notes regarding the application of the metrics to the ValueSCORE™.

Since the passage of the Affordable Care Act in 2010, the term “Triple Aim” has become ubiquitous when discussing the value of healthcare. The Triple Aim describes the three primary objectives for value-based care: providing better care and experiences for patients, improving the health of populations and reducing the cost of healthcare. Over time, the industry recognized an essential element was missing from these aims: ensuring the sustainable engagement of healthcare providers. This understanding has led to the increasing reference to the “Quadruple Aim” (adapted from this article [1]), which expands the lens of the Triple Aim to include provider engagement as a necessary objective in value-based care.

The COVID-19 pandemic has aptly demonstrated the need to adopt the Quadruple Aim paradigm, given the extensive reports [2] of provider burnout. Using the Quadruple Aim as the foundation of the ValueSCORE™, we identified the five domains based on their documented contribution to furthering these objectives.

The First Domain: Safety

As sites of service with extensive acute care facilities, hospitals often serve as the location of last resort for individuals suffering from disease or injury. Accordingly, hospitals are expected to treat or at the very least stabilize all patients that come through their doors. With a high concentration of ill patients needing emergent or urgent care, hospitals face higher risks of medical errors or infection, which can lead to patient harm or death, in the most extreme cases. Research has highlighted [3] the unfortunate prevalence of patient harm through medical error or poor infection control in hospitals. Central to the premise of high-value care is the need for hospitals to operate in a manner that reduces or eliminates avoidable medical error and infection.

In response to this challenge, payors have adopted measures to penalize facilities for avoidable medical error and infection. For example, the Centers for Medicare and Medicaid Services (CMS) operates the mandatory Hospital-Acquired Condition (HAC) Reduction Program as part of Medicare reimbursement for inpatient services. The HAC Reduction Program requires hospitals to report patient safety and adverse events along with healthcare-associated infection measures. These metrics are then used to adjustment reimbursement from Medicare’s Inpatient Prospective Payment System (IPPS) to hospitals. Facilities with HAC rates in excess of the 75th percentile receive a 1 percent penalty to reimbursement. The HAC measures are also used in the Value-Based Purchasing Program (VBP) as part of Medicare’s IPPS.

Given Medicare’s requirements to report HAC data and their widespread availability, InHealth Advisors uses the active HAC metrics to comprise the patient safety domain in the ValueSCORE™. We supplement this data with measures reported as part of the VBP Program pertaining to timely and effective care at hospitals. The active metrics for the 2022 rankings are summarized in the table below; all data utilized in the 2022 ValueSCORE™ rankings was drawn from calendar years 2020 and 2021.

ValueSCORE™ Safety Metrics

Complications and Deaths – Hospital

PSI 90 - Serious complications (composite measure)

Timely and Effective Care - Hospital

OP 22 - Percentage of patients who left the emergency department before being seen

OP 23 - Percentage of patients who came to the emergency department with stroke symptoms who received brain scan results within 45 minutes of arrival

PC 01 - Percent of mothers whose deliveries were scheduled too early (1-2 weeks early), when a scheduled delivery was not medically necessary

SEP 1 - Percentage of patients who received appropriate care for severe sepsis and septic shock (composite measure)

HAC Reduction Program - Hospital

CLABSI - Central line-associated bloodstream infections in ICUs and select wards

CAUTI - Catheter-associated urinary tract infections in ICUs and select wards

SSI - Surgical site infection from colon surgery and abdominal hysterectomy

MRSA - Methicillin-resistant Staphylococcus aureus blood laboratory-identified events

CDI - Clostridium difficile laboratory identified events (intestinal infections)

The ValueSCORE™ ratings system uses a relative rankings system that places each of the over 3,300 hospitals within a percentile from 0 to 100. In order to reward facilities for reporting metrics, we apply an adjustment to the final domain score to account for the number of metrics reported. That said, we also implement a cutoff whereby a hospital is excluded from the rankings if it reported less than 25 percent of the included metrics. Additionally, we adjust the final domain score based on the change in performance from the prior period (i.e., the change in ranking from 2020 to 2021); the final domain score could be adjusted upwards or downwards by 10 percentiles depending on the change from the prior period.

To derive the ranking for the Safety domain, we employ the following process:

  1. Determine the percentile rank for each of the 10 metrics above. We note that some hospitals may not report all metrics.

  2. Determine the average percentile rank for the reported metrics.

  3. Adjust the average ranking based on the number of metrics reported. For every metric that was not reported, the final score was adjusted downwards by one percent.

  4. Apply an adjustment to the average ranking based on the change in performance from the prior period. Depending on the increase or decrease in percentile ranking (e.g., from 2020 to 2021 in the 2022 ValueSCORE™ rankings), the final score can be adjusted by up to 10 percentiles. The reward from performance improvement is higher if a facility increased from a lower percentile ranking starting point in the prior year; conversely, the penalty is higher if the facility exhibited a decrease in performance from a higher percentile ranking starting point.

  5. Derive a final percentile ranking of the scores that incorporated the prior two adjustments.

We utilize the average percentile score as the starting point in recognition that some facilities may not have a sufficient volume of patients to report all 10 metrics. Nevertheless, to avoid penalizing facilities for reporting data, we apply the score reduction related to the number of reported measures. Both the reporting adjustment and adjustment for change in performance are capped to prevent biasing the scores too heavily away from the average across all reported metrics.

The Second Domain: Cost

Healthcare costs in the United States far exceed those in other nations, whether on a percentage of gross domestic product or per capita basis. For this level of spending, the life expectancy in the United States (78.5 years) is five years less than the country that spends the second-most on healthcare on a per capita basis: Switzerland (83.5 years, from an analysis of World Health Organization data for 2019 [4]). As is clear from this data, the country has ample room for improvement in ensuring that healthcare dollars are spent more effectively to improve health outcomes.

This observation rises to the level of a mandate given the fiscal situation pertaining to public health programs: the latest Medicare Trustees report [5] projects that the program will run out of trust fund assets to fund Part A operations by 2028. The proposed rules for Medicare’s 2023 IPPS and Physician Fee Schedule reflect modest increases and decreases, respectively, in reimbursement despite spikes in levels of inflation in 2022. Private insurance premiums have been increasing [6] at a rate well in excess of inflation (47% cost growth vs. 19% inflation from 2012 to 2021). Increasingly, healthcare providers must confront the reality that the pool funds available to pay for healthcare services will be constrained. Providers that demonstrate the ability to contain or reduce costs while improving the quality of healthcare will grow to command the market.

Medicare’s VBP program, referenced above, includes limited use of cost metrics to adjust reimbursement pursuant to the IPPS. Currently, the VBP program only uses Medicare spending per beneficiary as a metric in its cost and efficiency segment (representing 25 percent of the total domains evaluated). Given the population covered by Medicare, this selection is logical given the difficulties of parsing cost data for subsegments of a hospital’s treated population. To supplement the insights from this metric, we referenced data summarized by the RAND Hospital Data (RHD) Web Tool [7] produced by the RAND Corporation. The RHD compiles information from CMS’s Healthcare Cost Report Information System, as well as supplemental data from research performed by the RAND Corporation. The table below summarizes the data points we include in the ValueSCORE™:

ValueSCORE™ Cost Metrics

Total cost per discharge equivalent

Maintained bed occupancy rate

Non-Medicare inpatient hospital revenues per non-Medicare discharge divided by case mix index

Medicare inpatient operating costs per Medicare inpatient hospital discharge, adjusted for Medicare case mix index

Administrative cost per discharge equivalent

Medicare spending per beneficiary

As noted in the table above, we supplement the Medicare spending per beneficiary data point with five other metrics pertaining to the cost-effectiveness of care. We incorporate three additional cost metrics related to the overall, operating, and administrative costs of care, respectively. Furthermore, we include a metric related to bed occupancy rates to track the efficient utilization of existing resources. Finally, as a proxy for efficient revenue cycle management, we evaluate a measure of non-Medicare revenue per severity-adjusted discharge.

As with the technical discussion of the Safety metrics, the Cost domain relies on percentile ranking system. Below, we highlight the technical differences between the methodology applied to the Cost domain relative to the Safety domain:

  1. Given the variable reporting period for hospital cost reports, the cost data that the 2022 ValueSCORE™ rankings draw from RHD is from calendar year 2019 and 2018, with 2019 being the most recent year for which all cost reports were reported.

  2. As with the Safety domain, we require more than 2 (33 percent) of metrics to be reported in order to rank a hospital.

  3. Given the more limited number of metrics and the reduced degree of specificity associated with Cost metrics relative to the Safety metrics, the adjustment based on the number of metrics reported is increased to 2.8 percent per metric excluded.

  4. The “discharge equivalents” used to determine cost per discharge benchmarks adjust the number of discharges based on the ratio of total costs to inpatient costs in order to correct for the impact of expenses associated with non-inpatient (e.g., outpatient) services.

Future editions of Insights InHealth will detail the formulation of the Outcomes, Risk, and Engagement domain scores of the ValueSCORE™.

Safety and Cost in ValueSCORE
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Works Cited

[1] Bodenheimer, Thomas, MD and Sinsky, Christine, MD. "From Triple to Quadruple Aim: Care of the Patient Requires Care of the Provider." Annals of Family Medicine, Volume 12 Issue 5, November 2014.

[2] America's Health Insurance Plans, Inc (AHIP). "Health Care Provider Burnout Reaches New Levels." News article published July 20, 2021.

[3] Saks, Michael J. and Landsman, Stephan. "Use systems redesign and the law to prevent medical errors and accidents." STAT, August 4, 2021.

[4] World Health Organization. Global Health Observatory Indicators from 2019.

[5] The Boards of Trustees, Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. 2022 Annual Report, June 2, 2022.

[6] Kaiser Family Foundation, 2021 Employer Health Benefits Survey, November 10, 2021.

[7] RAND Hospital Data: Web-Based Tool. Santa Monica, CA: RAND Corporation, 2018


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