While the health law’s insurance markets are still struggling to get off the ground, the Obama administration is moving ahead with its second year of meting out bonuses and penalties to hospitals based on the quality of their care. This year, there are more losers than winners.
Medicare has raised payment rates to 1,231 hospitals based on two-dozen quality measurements, including surveys of patient satisfaction and — for the first time — death rates. Another 1,451 hospitals are being paid less for each Medicare patient they treat for the year that began Oct. 1.
For half the hospitals, the financial changes are negligible: they are gaining or losing less a fraction of a percent of what Medicare otherwise would have paid. Others are experiencing greater swings.
Gallup Indian Medical Center in New Mexico, a federal government hospital on the border of the Navajo Reservation, will be paid 1.14 percent less for each patient. Arkansas Heart Hospital in Little Rock, a physician-owned hospital that only handles cardiovascular cases, will get the largest bonus, 0.88 percent.
The bonuses and penalties are one piece of the health care law’s efforts to create financial incentives for doctors and hospitals to provide better care. “This program is driving what we want in health care,” said Dr. Patrick Conway, Medicare’s chief medical officer.
Hospitals in Maine, Massachusetts, Nebraska, New Hampshire, North Carolina, Utah and Wisconsin are faring the best, with 60 percent or more of hospitals getting higher payments, according to a Kaiser Health News analysis. Medicare is reducing reimbursement rates for at least two-thirds of hospitals in 17 states, including California, Connecticut, Nevada, New Mexico, New York, North Dakota, Washington and Wyoming, as well as the District of Columbia. (A full list of the hospitals can be viewed here.)
Under the program, called Hospital Value-Based Purchasing, Medicare reduced payment rates to all hospitals by 1.25 percent. It set the money aside in a $1.1 billion pot for incentives. While every hospital is getting something back, more than half are not recouping the 1.25 payment they initially forfeited, making them net losers. The payment adjustments are applied to
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