HERITAGE: “Hospitals’ Skepticism of New Obamacare Medicare Payment Scheme Grows”

HERITAGE: “Obamacare sets up “value-based purchasing” for hospital payments under Medicare. Starting in October 2012, hospitals and other providers will see payments redistributed based on performance scores calculated according to the methodology chosen by the Obama Administration. Payments will be reduced across the board to a new, lower “base” payment, and hospitals will then either receive “bonuses” for performing well on the quality measures or be further penalized.

This “pay-for-performance” scheme is arbitrary at best, and physicians and experts in the field have identified several ways in which it could create perverse incentives that harm patient care. In a recent article, New York Times reporter Robert Pear highlights one: Under the new program, hospitals will be graded on the cost-per-beneficiary of hospital care. Pear reports: “Hospitals could be held accountable not only for the cost of the care they provide, but also for the cost of services performed by doctors and other health care providers in the 90 days after a Medicare patient leaves the hospital.”

If patients receive care from other providers within 90 days of a hospital stay, a hospital could get a lower score—and subsequent lower payment—based on care they did not provide or even know about. Hospitals thus risk receiving punitive payments that do not accurately reflect the quality of care they provided based on factors beyond their control.

Teaching hospitals have even more reason for concern, since Medicare payments based on cost-per-beneficiary calculations will put providers that treat sicker, more costly patients at a severe disadvantage. This will create the incentive for providers to avoid taking high-risk patients in order to obtain higher scores and higher payments.”

[Read “Hospitals’ Skepticism of New Obamacare Medicare Payment Scheme Grows” at Heritage]

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