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Medicare To Add Hospital Efficiency, Patient Safety To Payment Formula

Medicare is proposing a significant change in how it decides on hospital reimbursements, adding two measures of patient safety and a financial assessment of whether hospitals are careful stewards of Medicare’s money.

The changes represent a broadening of the way Medicare plans to pay hospitals through its value-based purchasing program, which is set to begin in October. Medicare has already decided that in the initial year of the program, it will pay more to hospitals that follow clinical guidelines for recommended care and do better than average in patient surveys of their experiences.

Hospitals that fall short will get less money, initially losing up to 1 percent of their regular Medicare reimbursements, with even more at stake in 2013 and beyond.

In the second year of the program, Medicare has already decided to adjust payments based on mortality rates of patients as well. The proposed rule Medicare released Tuesday expands the role of outcome measures starting in October 2014. The proposed new measures that Medicare will take into account are:

  • Rates of blood infections patients get from catheters inserted into their arteries. More than 18,000 patients developed a central-line associated blood stream infection in 2009, according to government estimates.
  • Rates of serious complications that could have been avoided. This “patient safety indicator” combines a hospital’s frequency of punctured lungs, blood clots after surgery, wounds that split open after an operation, bedsores, catheter and bloodstream infections and broken hips from falling after surgery. The accuracy of the measure has come under criticism from teaching hospitals and some independent quality experts.
  • The amount Medicare spends on an average hospital beneficiary, not only during the person’s stay but in the three days preceding it and the 30 days afterward. This “efficiency” measure is intended to reward hospitals that make sure its patients don’t cost Medicare excessive amounts, especially after they are discharged.

Medicare also proposed adding, in the future, new measures on its Hospital Compare website. These include hospital readmissions of patients who received total hip or total knee arthroplasty. In addition, it will analyze readmission rates for all of a hospital’s Medicare patients. Medicare already analyzes readmission rates for three common conditions: pneumonia, heart failure and heart attack.

The new rule lays out the way Medicare intends to penalize hospitals with high readmission rates under a separate program. That penalty, like value-based purchasing, was created by the 2010 federal health law.

In addition, Medicare proposed to begin analyzing and publishing quality measures for hospitals that specialize in cancer patients.

The Centers for Medicare & Medicaid Services will accept comments on the rule until June 25 and  issue its final rule by Aug. 1.

This article was produced by Kaiser Health News with support from
The SCAN Foundation