Your health care reform (potential payment reduction) update

If your paycheck comes from a hospital, like mine does, this is a very important blog for you to read and understand.  If you get confused as you read through the post you should at least skip to the final three paragraphs.

As rules and regulations surrounding the Affordable Care Act or Health Care Reform become more clear I will do my best to keep you up to date on how those rules will affect hospitals.  Bear with me through the first couple paragraphs, I will try to make a confusing subject understandable.  This is an important topic for all of us to understand because it will have a huge impact on hospital revenue which obviously affects our ability to improve our facility, add and grow services, purchase new equipment and increase salaries and benefits for staff.

Value Based Purchasing or VBP is an aspect of the Affordable Care Act designed to modify how Medicare services are paid to hospitals and to reward value, outcomes and innovations instead of payment being based solely on volume.  To this point hospitals have qualified for a market basket or rate increase from Medicare simply by reporting quality measures. 

Over the past few years Medicare has provided payment increases to hospitals that publicly report clinical care measures (ORYX measures) related to Acute Myocardial Infarction, Heart Failure, Pneumonia, Surgical Care Improvement and HCAHPS which measures patient experience.  GVMH, like most hospitals, has been reporting this information for a few years and the data is available for anyone see on the CMS Hospital Compare Website .

Beginning July 1, 2011 simply reporting the information will not be enough for hospitals to qualify for a payment increase and to provide hospitals even more incentive to improve, Medicare payments to hospitals will be decreased.  This is an important point to remember and I’ll come back to it in a few paragraphs.

To qualify for payment increases after July 1, 2011 hospitals will need to exceed benchmarks and perform better than their peers in the clinical and patient experience measures I mentioned above.

The clinical measures will count for 70 percent of the potential payment increase and hospitals will get points for being at the median of all hospitals and then additional points for being in the top decile.  Hospitals below the median will not be eligible for any payment increase related to the clinical measures.

The patient experience score is measured by the HCAHPS (Hospital Consumer Assessment of Healthcare Providers and Systems) survey.  The HCAHPS survey asks patients about their hospital experience in communication with nurses and doctors, responsiveness of hospital staff, cleanliness and quietness, pain management, communication about medicine, discharge information and overall rating of the hospital.  The survey is randomly administered to all adult patients who have an overnight stay in the hospital and is not restricted to Medicare patients.  The same payment tabulation applies.  You must be at least at the 50th percentile to receive any increase and you get additional increase if you are at the 95th percentile compared to other hospitals.

The total score is determined by combining the clinical score and the patient experience score.  The total score is then compared to other hospitals to determine if an incentive payment will be given.  Hospitals with higher performance scores will receive higher incentive payments than those with lower scores.  It’s important to know that all hospitals will be compared to one another and there is no differentiation for size or setting such as rural, urban or sole community provider.

I mentioned earlier that I would come back to an important point about payment reductions.  To pay for this program all hospital payments for Medicare inpatient stays are being decreased by 1 percent beginning October 1, 2011 and that reduction will ramp up to 2 percent over the next couple of years.

So what’s it all mean.  If hospitals maintain the status quo and don’t work hard to improve outcomes and improve patient satisfaction they will see their Medicare revenue decrease significantly.  Every hospital in the country will be working hard to improve processes to demonstrate better clinical outcomes and every hospital in the country will be working hard to improve the patient experience.

If we don’t focus on quality and improvement in our clinical processes and strive to improve the patient experience other hospitals will pass us by.  Its more important than ever for us work hard to make our patient’s stay exceptional and to follow the protocols we have in place to consistently provide exceptional clinical care. 

Our patients deserve the best care they can receive.  We have the opportunity, and financial incentive, to prove that the best care delivered anywhere is right here at GVMH.

About Craig Thompson

I am a young professional with two great sons, and I work in the healthcare setting. I am employed in hospital administration and serve as Chief Executive Officer at Golden Valley Memorial Healthcare in Clinton, Missouri. At GVMH we care for our families, friends and neighbors. We're committed to providing the safest, friendliest and most compassionate care to all we serve.
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