Medicare is revamping its payment system for hospitals as part of an effort to make them accountable on quality. The latest change will give bonuses and penalties to hospitals based on how well they performed on quality measures. That program is called Value Based Purchasing. Last fall, seeking to improve care and save money, Medicare announced penalties to hospitals to which too many patients returned within a month. Both payment changes are applied to payments for every hospital stay of a Medicare patient. This chart shows the effect of each of those programs on hospitals’ Medicare reimbursements per hospital stay, and the combined effect for the federal spending year that runs from last October through September 2013. Hospitals could gain up to 1 percent in payments or lose as much as 2 percent from the two programs combined.

The adjustments do not apply to money Medicare pays hospitals for capital expenses, to teach residents or to treat large numbers of low-income patients. Hospitals with too few cases and certain specialty hospitals, such as psychiatric, long-term care, rehabilitation and cancer hospitals, are exempted from the programs. Maryland hospitals are also excluded from the program, as that state has a unique reimbursement arrangement with Medicare, and thus no Maryland hospitals are listed below.

Sources: Centers for Medicare & Medicaid Services, Kaiser Health News

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