Value-Based Purchasing: Medicare Penalties Rise

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December 10th, 2013

Medicare Penalties Continue To Rise

Value Based PurchasingAs Medicare’s Value-Based Purchasing program pushes past the 2-year landmark, newly released data reflecting reimbursements and penalties indicate that many providers are still struggling to improve the quality of healthcare they are delivering.

Over 1,200 hospitals and doctors were awarded increased reimbursements as a result of performing well in over 2-dozen quality-metrics reported to CMS. However, more than 1,400 providers saw their reimbursements penalized for failing to perform. The numbers bring to surface many alarming facts regarding the quality of care delivered by facilities across the country.

Of all the providers receiving Medicare reimbursements, almost two-thirds of hospitals across 17 states saw their reimbursements reduced by penalties. For those receiving bonus reimbursements, hospitals in Maine, Massachusetts, Nebraska, New Hampshire, North Carolina, Utah and Wisconsin are fairing the best, with 60 percent or more of hospitals receiving increased payments.

Further breakdown of the penalties and bonuses to providers can be seen in the data table available to download here.

How Value Based Purchasing Works

Value-Based Purchasing was introduced by the CMS in order to boost the quality of care paid for by government reimbursement. Initially, all reimbursements were reduced by 1.25% percent and were transferred into a $1.1 billion pot to fund future incentives.

Hospitals, medical facilities, doctors and other Medicare providers are then scored on a criterion of multiple quality and performance metrics, including mortality rates. Scores are broken down into 3 categories:

  • 45% is based on how frequently each followed basic clinical standards of care.
  • 30% is based on how patients rate the way they were treated.
  • 25% is based on mortality rates within a month of discharge.

The program is supplemented by further incentives and quality controls based on hospital readmissions. With these quality controls factored in, it is estimated that 729 hospitals will end up with an increase in payments from the combined value-based programs.

The future is set to bring further control to the current healthcare landscape. Medicare is preparing to add multiple new measures to the program, including comparisons of patient costs in relation to different providers, and medical malpractice rates. These combined quality controls have the potential to strip away as much as 5.5% of Medicare payments from the worst performing hospitals starting October 2014.

What remains clear is that providers are still facing challenges in ensuring that their facilities and employees are maintaining the required levels of quality across the entire continuum of care.

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