Throughout the debate and the recent initial implementation steps of health care reform, medical experts and politicians alike have touted the shift away from the fee-for-service model to more coordinated care, leading to better outcomes and lowered spending.
Beginning this year, however, the financial health of hospitals will likely depend on just how well care is coordinated, as a relatively little-known yet critically important piece of the Affordable Care Act is enacted: the "Hospital Value-based Purchasing Program," overseen by the Centers for Medicare and Medicaid.What Medicare changes could mean to local hospitals
Value-Based Purchasing is a Medicare program started in January that seeks to hold hospitals accountable for the care they provide.
Last year, Medicare rolled out penalties for hospitals that have too many returning patients within a month. [chart of the effects of the two programs combined on hospitals in Sonoma, Marin and Napa counties]
The program ties hospital performance on a number of key metrics, both clinical and on patient satisfaction, directly to reimbursement rates on Medicare patients, which could have significant impact in either direction, hospital experts in the North Bay said.
It's of particular importance given the sway that Medicare has as a health care payer. And, as Medicare goes, often so goes private insurance, meaning other third-party payers, if they haven't already, will likely adopt similar metrics for payment to providers.
[caption id="attachment_69066" align="alignleft" width="180"] Cathy Camenga[/caption]
"It's getting more attention because CMS is doing it," said Cathy Camenga, vice president of performance improvement for St. Joseph Health, Sonoma County. "This is not a surprise to hospitals. It shouldn't be."
Under the new program, which began in January this year, Medicare reduced its payments to all hospitals by 1 percent to achieve an estimated savings of $964 million. Hospitals are then given a score indicating how much money they are entitled to recoup, based on certain criteria set by CMS.
Payment to hospitals will be based on 12 clinical measures, including the effectiveness of treatment on heart disease, hospital-borne infections, pneumonia, diabetes and others. Seventy percent of the scores will be based on the clinical standards, while 30 percent will be determined by patient satisfaction surveys, which will include emergency room wait times and physician responsiveness, among others.
Hospitals will be scored on how well they match up with others in the industry as well as how much they improve over time.
By 2017, value-based purchasing will increase its penalty or bonuses to 2 percent -- a potentially significant number to any hospital's bottom line, said Mark Knight, a Santa Rosa-based health care consultant. And, come 2015, the concept will be applied to physicians groups of 100 professionals or more, and to all doctors by 2017.
"The significance is only going to grow," Mr. Knight said. "Big systems are taking it very seriously."
Ms. Camenga and other local hospital professionals said that while the idea of making treatment decisions based on quality and outcome isn't new, the value-based purchasing program is perhaps the biggest example of financially rewarding or penalizing hospitals that either do or don't meet certain measures.
"More and more of our money is at stake as the measures ramp up," Ms. Camenga said. "Hospitals know how to deliver this care. It shouldn't be a surprise but the ante has been upped."