It's Oct. 1, the day some acute care hospitals have been eagerly awaiting...and which others have been dreading.
Because today the Patient Protection and Affordable Care Act begins its two-pronged impact on the way hospitals receive payment for care provided to Medicare patients, arguably the most significant pay-for-performance program impacting acute care facilities in federal history.
There are winners and losers. And if hospitals don't have a pretty good idea by now how they're performing, they should.
The two provisions of the law (Section 3001, for value-based purchasing incentives for quality; and Section 3025, penalties for excess 30-day readmissions) work somewhat differently.
But these two new rules each can impact up to 1% of a hospital's base Medicare diagnostic-related group (DRG) payments between now and Aug. 31, 2013, when new formulas will kick in.
In theory, a hospital that performs poorly in both categories could endure a penalty of 2%. For some struggling hospitals, that represents a significant chunk of payment, although at first glance no hospital will be penalized that severely.
It doesn't seem like a lot of money, but when you're a hospital with a 1 to 2% margin, a 1% to 2% penalty on Medicare payments can add up fast.