VBP. ACO. HAC. EHR. Suddenly, Medicare-derived acronyms are everywhere, and many of them are attached to a growing set of programs aimed at boosting efficiency and quality. Some are optional; others are mandatory. Some have carrots as incentives; others have sticks. Some seem well-designed; others seemingly work at cross-purposes.
Love or hate these initiatives, the combined time, money, and resources needed to address all of them could put hospitals and hospitalists under considerable duress.
“It can either prove or dismantle the whole hospitalist movement,” says Brian Hazen, MD, medical director of the hospitalist division at Inova Fairfax Hospital in Falls Church, Va. “Hospitals expect us to be agile and adapt to the pressures to keep them alive. If we cannot adapt and provide that, then why give us a job?”
Whether or not the focus is on lowering readmission rates, decreasing the incidence of hospital-acquired conditions, or improving efficiencies, Dr. Hazen tends to lump most of the sticks and carrots together. “I throw them all into one basket because for the most part, they’re all reflective of good care,” he says.
The basket is growing, however, and the bundle of sticks could deliver a financial beating to the unwary.
It’s possible that some low-margin hospitals that are facing big penalties could actually have their solvency threatened. If hospitals that are a vital part of the community are threatened with insolvency because of these programs, we may need to take a second look at how we structure the penalties.
—Win Whitcomb, MD, MHM, medical director of healthcare quality, Baystate Medical Center, Springfield, Mass.; SHM Performance and Measurement Reporting Committee member; co-founder and past president of SHM; author of The Hospitalist’s “On the Horizon” column
At What Cost?
For the lowest-performing hospitals, the top readmission penalties will grow to 2% of Medicare reimbursements in fiscal year 2014 and 3% in 2015. Meanwhile, CMS’ Hospital-Acquired Conditions (HAC) program will begin assessing a 1% penalty on the worst performing hospitals in 2015, and the amount withheld under the Hospital Value-Based Purchasing (VBP) program will reach 2% in 2017 (top-performing hospitals can recoup the withhold and more, depending on performance). By that year, the three programs alone could result in a 6% loss of reimbursements.
Win Whitcomb, MD, MHM, medical director of healthcare quality at Baystate Medical Center in Springfield, Mass., and a member of SHM’s Performance and Measurement Reporting Committee, estimates that by 2017, the total at-risk payments could reach about $10 million for a 650-bed academic medical center. The tally for a 90-bed community hospital, he estimates, might run a bit less than $1 million. Although the combined penalty is probably enough to get the attention of most hospitals, very few institutions are likely to be dinged for the entire amount.
Nevertheless, the cumulative loss of reimbursements could be a tipping point for hospitals already in dire straits. “It’s possible that some low-margin hospitals that are facing big penalties could actually have their solvency threatened,” Dr. Whitcomb says. “If hospitals that are a vital part of the community are threatened with insolvency because of these programs, we may need to take a second look at how we structure the penalties.”
The necessary investment in infrastructure, he says, could prove to be a far bigger concern—at least initially.
“What is more expensive is just putting out the effort to do the work to improve and perform well under these programs,” says Dr. Whitcomb, co-founder and past president of SHM and author of The Hospitalist’s “On the Horizon” column. “That’s a big unreported hidden expense of all of these programs.”