Wednesday, October 03, 2012

Health reforms impact on Hospitals

I posted in recent months some points on the impact Federal Health Reform is or will be having on medical insurance here in Connecticut.

In addition, to medical insurance Federal Health Reform is also having quite an impact on medical treatment providers. One thing, not often mentioned in the media, is a reduction, over the next few years, in the reimbursement rate providers such as hospitals, outpatient services, and MDs will receive when medical treatment is provided to individuals on Medicare. The result – the reimbursement Medicare providers receive will become lower than what providers receive from Medicaid (welfare). Think about that! If this does happen it will be very difficult for individuals to find a medical provider who will accept Medicare.

Wanted to share today some details on the affect Federal Health Reform is having on Hospitals. I received the following article this week from the National Association of Health Underwriters (NAHU) as part of their weekly Washington Update. NAHU is a professional association I am actively involved in here in Connecticut and on the national level. It reports on some changes on October 1, 2012, which affect Hospitals.

Pile on the Penalties

On October 1, two major programs from the 2010 health care law that affect hospitals went in to effect. The first, the Hospital Value-Based Purchasing Program, will pay hospitals according to how they perform based on a set of standard clinical quality measures and on surveys of patients’ experience. The payments are provided by Medicare which will withhold 1% of its regular hospital reimbursements, and over the course of the year funds will be returned to some hospitals based on their performance. By 2016 the percentage withheld will go up to 2%. Medicare estimates that about $850 million will be reallocated under the hospital pay for performance program this year. In effect, hospitals that do not meet the criteria will be penalized by not receiving a return of the withheld funds.

The criteria for receiving funds are divided into two categories. “Process” measures will account for 70% of the ratings, and the remaining 30% are based on patient surveys. The “process” measures include:

● Percent of heart attack patients given medication to avert blood clots within 30 minutes of arrival at the hospital
● Percent of heart attack patients given percutaneous coronary interventions within 90 minutes of arrival
● Percent of heart failure patients given instructions on discharge about how to take care of themselves
● Percent of pneumonia patients who had a blood culture taken before they were given antibiotics
● Percent of pneumonia patients that received the correct kind of antibiotics
● Percent of patients that received an antibiotic within an hour of surgery
● Percent of surgical patients that received the correct kind of antibiotic
● Percent of patients who had their antibiotics stopped within 24 hours after surgery ended
● Percent of heart surgery patients who had their blood sugar kept under control after an operation
● Percent of heart surgery patients already taking beta blockers who were given a beta blocker just before and after surgery
● Percent of surgery patients who received treatment to prevent blood clots within 24 hours before to 24 hours after the operation

Patient surveys will evaluate:

● How well nurses communicated with patients
● How well doctors communicated with patients
● How responsive hospital staff were to patients’ needs
● How well caregivers managed patients’ pain
● How well caregivers explained medication to patients before giving it to them
● How clean and quiet the hospital room and hall were
● How often caregivers explained to patients how to take care of themselves after discharge
● How the hospital stay rated overall

The other program that went into effect on October 1, the Readmissions Reduction Program, creates a Medicare penalty for hospitals with higher than expected readmission rates. Hospital readmissions are a costly problem – it is estimated that 1 in 5 Medicare patients return to the hospital within a month of discharge, the majority of which are readmissions costing $12 billion a year. These readmissions are considered preventable if better care been taken in transitioning the patient to the next phase in the patient’s recovery outside of the hospital.

The penalties were calculated between July 2008 and June 2011 and are based on the frequency that Medicare heart failure, heart attack, and pneumonia patients were readmitted to any hospital within 30 days of discharge - regardless of whether the patient was readmitted at the same hospital or for the same condition.

If a hospital is penalized for their readmission rate, the hospital will incur a 1% penalty. This penalty will be deducted from the Medicare reimbursement received from the hospital’s claim for a patient stay. This penalty may increase to a maximum of 2% in October 2012 and 3% in 2014. It is expected that about 2/3 of the hospitals serving Medicare patients, roughly 2,200 facilities, will be penalized. This averages to about $125,000 per facility in the next year. In total hospitals are expected to lose about $300 million out of $140 billion in Medicare inpatient payments over the next year.

The goal of the Hospital Value-Based Purchasing Program and the readmission penalties is to lower costs and improve care. To check on how your hospital is performing, Medicare will be posting details online using the agency’s “Hospital Compare” website.

John C Parker, RHU. LTCP
Niantic CT

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