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Report: Little Early Benefit in Medicare Quality Incentive Program

Exempt and participating hospitals show equal rates of improvement

One of Medicare’s attempts to improve medical quality — by rewarding or penalizing hospitals — did not lead to improvements in the first 9 months of the program, according to a study published in Health Services Research.

The quality program, known as Hospital Value-Based Purchasing, is a pillar of the campaign to use the government’s financial muscle to improve patient care under the Patient Protection and Affordable Care Act (PPACA). Since late 2012, Medicare has been giving small increases or decreases in payments to nearly 3,000 hospitals based on how patients rated their experiences and on how faithfully hospitals followed a dozen basic standards of care, such as taking blood cultures of pneumonia patients before administering antibiotics.

As much as 1% of hospitals’ Medicare payments were at stake in the first year and 1.25% this year, although most hospitals gained or lost a fraction of that. Hospitals were judged both on how they compare with other centers and on how much they are improving.

The program is one of several payment initiatives instituted by the PPACA. Others include penalties for hospitals that have high rates of Medicare patients readmitted within 30 days and penalties that will go into effect this fall for hospitals with high rates of patient injuries or infections.

The study was the first to look at how hospitals performed under the value-based purchasing program. The authors analyzed hospitals’ performance in the 5 years before the program began and in the period from July 2011 through March 2012 — the 9 months of data that Medicare used to determine the first year of bonuses and penalties. The researchers looked at how the hospitals in the program did compared with the performance of several hundred hospitals that were exempted from the program, such as Maryland hospitals and critical access hospitals that have special payment arrangements with Medicare. The researchers found no significant difference in performance, with both groups of hospitals improving at equal rates.

The study’s evaluation did not include hospital performance since the spring of 2012 because of the government’s lag in reporting those data, as well as the time between the start of the study and its publication. The authors noted that “it may take hospitals longer” than 9 months “to respond to the financial incentives of the program.” They also noted that the bonuses and penalties may have a greater influence as the potential money at stake rises each year, and as Medicare analyzes more aspects of hospital performance.

Starting this October, Medicare will distribute $1.4 billion in incentives, and hospitals could gain or lose up to 1.5% of payments. That will rise to 2% by the fall of 2016.

Sources: Kaiser Health News; August 6, 2014; and HSR; July 15, 2014.

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