As a hospital administrator, you should now be aware of two major programs in the new healthcare law scheduled to kick in this month (October 2012). Its goal is to ensure better medical care and to provide added insurance by using Medicare's considerable financial influence in a “carrot and stick” approach.
The carrot will reward hospitals for more efficient and higher quality care; the stick will financially punish those who fail to measure up.
As reported in a recent issue of Politico, the Hospital Value-Based Purchasing Program will pay hospitals based on a performance yardstick of standard clinical quality measures as well as patient surveys of patients. The program will withhold 1 percent of Medicare payments to about 3,000 acute-care hospitals over the next year—roughly $850 million. The money will then be redistributed to the best-performing hospitals. The amount withheld jumps to 2 percent by 2016.
The other major program scheduled to take effect this month targets hospital re-admissions. Here, again up to 1 percent of Medicare payments will be withheld to hospitals with high re-admission rates. The goal of both programs is to replace quantity of care with quality.
“I think we all see these programs as the first steps towards the way the system will be structured in the future and the way incentives will be structured in the future,” said Mindy Steinberg, director of government relations for the Association of Academic Health Centers. “But everyone needs to recognize that this is the first step in a long, complicated process.”
Some question if the “carrots and sticks” are big enough to nudge underperforming hospitals to change. There are obviously mitigating circumstances, such as socioeconomic factors and re-admissions of certain cases that raise red flags. Here, the re-admissions program may unfairly penalize hospitals who need the funds to maintain quality healthcare.
The Miami Herald recently reported that 10 Tarrant County hospitals in Forth Worth—including the Medical Center of Arlington and the Texas Health Harris Methodist Fort Worth—were penalized by Medicare for re-admitting patients too soon after being discharged.
Medicare reimbursements for as many as 2,200 hospitals nationwide are being cut by up to 1 percent for excessive re-admissions. While it may seem like a slap on the wrist—a $30,000 claim will be reduced to $29,700 for errant hospitals—the goal is to spur hospitals to gradually improve. The re-admission problem is significant. Nearly 1 in 5 patients returns to the hospital within a month of being discharged. This costs Medicare a whopping $17.5 billion in additional hospital bills.
Re-admissions most often occur after heart failure, heart attack and pneumonia. While these constitute a small part of Medicare’s annual discharges, they make up a sizable number of re-admissions.
The Center for Medicare and Medicaid Services has already begun withholding reimbursements. The penalty rises to 2 percent in October 2013 and 3 percent in October 2014. Are you ready?
Image courtesy of MorgueFile