Up to 2%, growing to 6% over the next 3 years, of hospital’s Medicare payments are based on value based purchasing measures. These measures help drive efficiency and quality in hospital based services and they measure performance in areas like treatment of congestive heart failure, pneumonia, heart attack, surgical outcomes and patient perception of care. These measures make sense because they occur in the four walls of the hospital and a hospital can help drive performance in each of the areas.
There’s a new measure which will account for up to 20% of the total Medicare incentive or penalty, depending upon your viewpoint, will be based on one additional measure as of October 1, 2014. The new measure is Medicare spending per beneficiary.
The measure is supposed to look at how efficiently a hospital provides care and controls cost. The measure sounds good in theory but the problem is it measures total spending from 3 days prior to a hospital admission through 30 days after discharge. The hospital has little control on spending prior to admission or after discharge. The spend per beneficiary will include payments to home health, hospice, inpatient, outpatient, skilled nursing, durable medical equipment, physician services and ambulatory surgical centers. Other than inpatient the rest of the list occurs outside of the hospital.
Obviously inpatient care has the greatest cost but hospitals are already penalized for readmissions even though readmissions are often outside of the control of hospitals. At some point “rationing” comes into play and I’m concerned that this new measure is a way to ration care not reduce cost.