The second year of Medicare’s Hospital Value-Based Purchasing Program (HVBP) will not be kind to nearly 1, 500 hospitals that will be hit with negative reimbursement adjustments. Not surprisingly, physician-owned hospitals again fared the best.
Hospitals are judged on a variety of criteria, including comparative scoring, patient surveys, and a series of quality measures judging the frequency of basic care protocols. Patient outcomes are also part of the equation, with inpatient and 30-day mortality rates making up a quarter of the hospital’s score. Some hospital representatives complain that the calculation is skewed towards hospitals with the resources to provide better patient accommodations or those who care for populations that are generally healthier or more compliant.
Patrick Conway, M.D., CMS’ chief medical officer and Director of the Centers for Clinical Standards and Quality wrote in his blog that Medicare is no longer a program that “just pays the bills. Acute-care hospitals across the country not only are paid more for higher quality care, they also have skin in the game.”
More Losers Than Winners
According to government records, more hospitals are receiving penalties than bonuses this year, and the average penalty is steeper than it was last year.
Kaiser Health News reports that Medicare raised payment rates to 1, 231 hospitals, while 1, 451 hospitals are being paid less for each Medicare patient they treat.
Top and Bottom
For half the hospitals, Kaiser reports the financial changes that started last month are negligible: they are gaining or losing less than a fifth of one percent what Medicare otherwise would have paid. Others are experiencing greater swings. Gallup Indian Medical Center in New Mexico, a federal government hospital on the border of the Navajo Reservation, will be paid 1.14% less for each patient. Arkansas Heart Hospital in Little Rock, a physician-owned hospital that only handles cardiovascular cases, will get the largest bonus, 0.88%.
Physician-owned hospitals that focus on just a few specialties have tended to do particularly well in the program, as evidenced by the Arkansas Heart Hospital’s record bonus.
Hospitals in Maine, Massachusetts, Nebraska, New Hampshire, North Carolina, Utah and Wisconsin are faring the best, with 60% or more of hospitals getting higher payments, according to a Kaiser analysis. Medicare is reducing reimbursement rates for at least two-thirds of hospitals in 17 states, including California, Connecticut, Nevada, New Mexico, New York, North Dakota, Washington and Wyoming, as well as the District of Columbia.
Penalty and Bonus Breakdown
The average penalty grew to 0.26 percent, up from 0.21 percent in the first year of the program. North Georgia Medical Center in Ellijay is the only hospital besides Gallup to lose more than 1 percent of its reimbursements: it will lose 1.04 percent. Denver Health Medical Center, a highly respected safety-net hospital, is losing 0.71 percent of its reimbursements. The hospital that was penalized the most last year, Auburn Community Hospital in upstate New York, reduced its 0.90 penalty, but will still lose 0.55 percent.
The average bonus was 0.24 percent, almost the same as last year’s 0.23 percent. Large bonuses are going to some major teaching hospitals, such as Thomas Jefferson University Hospital in Philadelphia and Duke University Hospital in Durham, N.C. Most are being distributed among smaller institutions, such as Pikeville Medical Center in Kentucky.
Most winners from last year, according to the Kaiser survey, stayed winners and losers stayed losers. But there were some switches. Oaklawn Hospital in Marshall, Michigan, improved its score the most from last year. In place of a 0.26% penalty, Oaklawn will receive a 0.65% bonus. A number of prominent academic medical centers also turned around their scores. Vanderbilt University Medical Center in Nashville, Massachusetts General Hospital in Boston, New York-Presbyterian Hospital in Manhattan, Cedars-Sinai Medical Center and Ronald Reagan UCLA Medical Center, both in Los Angeles, and Yale-New Haven Hospital were among the 300 places that went from a penalty to a bonus.
A total of 416 hospitals that won bonuses last year will be penalized this year. Centura Health-St. Thomas More Hospital in Canon City, Colorado, dropped from a 0.08% bonus to a 0.72% penalty, the largest decrease.
HVBP Program
Under the HVBP program, Medicare reduced payment rates to all hospitals by 1.25%. It set the money aside in a $1.1 billion pot for incentives. While every hospital is getting something back, more than half are not recouping the 1.25 payment they initially forfeited, making them net losers. The payment adjustments are applied to each Medicare patient stay over the federal fiscal year that started October 1 and runs through September 2014. The potential bonuses and penalties were higher than they were last year, when the maximum at stake was 1%.
