Despite the looming threat of reduced reimbursements under performance measures, hospitals may be overly optimistic that they will perform well, according to experts at the American College of Health Executives' (ACHE) annual congress in Chicago. In fact, they should probably be shaking in their boots, considering that Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) scores and other core measures in value-based purchasing will affect their payments.
"Medicare is very clear about this. Average performers won't break even," Edward Murphy, past president and CEO of Carilion Clinic in Blacksburg, Va., and chair of the board at hospitalist group Sound Physicians, said Tuesday.
Value-based purchasing is funded by a reduction in Medicare operating base diagnosis-related group (DRG) payments for all participating hospitals. In fiscal year 2013, there will be a 1 percent MS-DRG operating payment cut for the care rendered last July to the end of March, that is, nine days from today.
"The scores already happened. Before the sun sets in calendar year 2012, the payments are fixed," Murphy said.
Hospitals will not only get paid for high performance compared to national benchmarks with other hospitals across the country but also for dramatic improvement against themselves. The problem is that the "threshold is perfection," Murphy said. Once you reach critical mass of improvement, the potential for earnings eventually plateaus. "You just can't keep getting better that's beyond human capability," Murphy added.
The target to curb Medicare isn't all that surprising with an expected 40 percent of healthcare spending attributed to hospital care in 2020. The Centers for Medicare & Medicaid Services is hoping to curb expenditures now, former CMS Acting Administrator Leslie Norwalk said. While Medicare and Medicaid make up 24 percent of the 2011 federal budget, the Congressional Budget Offices estimates they will soak up 30 percent of the 2021 budget, which is "why people in Washington are panicking," Norwalk said.
She added, "If you're a hospital now, hold onto your wallets," commenting on the revenue coming from both the government and private payers. Couple the reduced reimbursements with increased Medicaid enrollees of an additional 20.4 million over the next decade, and match that with fewer disproportionate hospital share (DSH) payments and productivity adjustments, 15 percent more institutional providers will go bankrupt by 2019, according to Norwalk.
"There's nothing better at incenting than money," Norwalk said. Value-based purchasing will target the explosive cost growth in the healthcare sector, but more specifically Medicare.
Although daunting, the solution to value-based purchasing is increased use and adherence to protocols, real-time monitoring and feedback, focused scorecards, and better training for doctors and nurses on patient communication techniques. In addition, "aligned physician compensation is absolutely necessary," Murphy said.
According to Robert Bessler, CEO and founder of Sound Physicians, some techniques to improve patient satisfaction scores include the following:
- Use checklists to make sure clinical process of care measures are met and documented.
- Manage quality measures in real-time to reduce fall-outs and drive interventions while the patient is still in the hospital. For example, a hospitalist nurse can round on patients in the afternoon rather than having patients mail in surveys after the fact.
- Provide patients a brochure, explaining at admission who their care team is, with pictures of each of the caregivers.
- Use call center follow-up to improve care coordination, intervention and data management.
"If you're not better than the crowd, you'll be worst off next year," Bessler said. He added, "We cannot depend on individual doctors to ensure performance. We need the whole system aligned to produce results."
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