Hospital Pay to Reflect Care Efficiency Soon

Cheryl Clark, for HealthLeaders Media , September 17, 2013

"Just like when we had five core [process of care] quality measures, that was a signal that we'd soon have 100, so you better get your act together on quality and processes," Kaufman says.

"And this too, is like a signal. CMS is saying sooner or later, there's going to be some significant penalties based on how the delivery system performs for Medicare patients, pre, and post hospital admission. And you need to get your act together."

Kaufman adds that the pressure is on hospitals to get their physicians in line. Hospitals that are integrated, or have accountable care-style management over their post-discharge services should do well on the efficiency measure.

"The accountable care organizations and the fully integrated healthcare systems shouldn't have a problem, (with efficiency scores) but those markets where physicians consider themselves autonomous, and [where] their hospitals are interfering with the practice of medicine, and [where they] have their 'own way of doing things' are going to get penalized," he says. "The government's position seems to be not to penalize the physicians directly, but to force the hospitals to penalize them."

DiLisi adds that a weight of 20% in the VBP algorithm affecting 1.5% to 2% of a hospital's Medicare payment may not seem like much. "And Medicare could get everybody's attention by making this measure worth even more."

But even 20% of 2% is important, DiLisi says. "You're talking about an industry that is not dealing with 20% margins. In general we're dealing with single digits.

"And by 2017, you'll have 6% of your revenue at risk for Medicare reductions, and that's real cash in the grand scheme. Most hospitals are going to pay attention to that."

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