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Study Finds Medicare Payment Reform Saves Money, Helps Patients

Reform reduces incidence of preventable, hospital-acquired health problems

Medicare reforms aimed at reducing preventable, hospital-acquired conditions have worked as desired for at least two conditions, according to a study by researchers at the Stanford University School of Medicine.

“We have a win-win. We have patients who are avoiding adverse events while Medicare saves money,” said lead author Risha Gidwani, DrPH.

The findings were published online December 12 in the Journal of General Internal Medicine.

In the past, the Centers for Medicare & Medicaid Services (CMS) paid hospitals based on the treatment patients received, even if the treatment was needed for an easily preventable condition that the patient acquired in the hospital. But in 2008, the CMS stopped paying for the cost of treating several preventable, hospital-acquired conditions.

Gidwani selected two of these conditions: pulmonary embolism and deep-vein thrombosis. Patients who undergo hip or knee replacements are likely to develop these conditions without proper care, which usually consists of ambulation, mechanically assisted movement, or medication.

She examined records from 2007 to 2009 in a national database of American hospital discharges, comparing Medicare patients aged 65 to 69 years who received a hip or knee replacement with non-Medicare patients aged 60 to 64 years who received the same procedures.

When CMS stopped paying for treating deep-vein thromboses and pulmonary embolisms, the incidence of those conditions after hip or knee replacement surgery dropped 35% in the Medicare population, Gidwani said. In the younger, non-Medicare population, the incidence of these two conditions increased, although they also decreased in patients over 65 years of age who had private insurers. More than 1 million hip or knee replacements are performed in the U.S. each year, and more than 60% of them are paid for by Medicare.

Gidwani conducted statistical analyses to ensure that the results were not due to differences in the lengths of hospital stays or potential differences in billing practices among the hospitals.

“This study provides evidence that the reimbursement reform had the desired effect,” Gidwani said. “This is important information if Medicare or private payers are thinking about expanding value-based purchasing programs.”

Co-author Jay Bhattacharya, MD, PhD, added: “It may seem obvious that Medicare should use payment incentives for providers to encourage better and more appropriate care for patients, but there is always a risk of unintended consequences when Medicare cuts payments for services. In this case, we have found evidence that Medicare’s refusal to pay for complications arising from hip and knee surgeries really did reduce the incidence of those complications. I believe that there may be many more opportunities to improve patient outcomes by reforming provider payment practices, though lots of careful research will be needed to identify them.”

Source: Stanford University School of Medicine; December 12, 2014.

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