Big Medicare Change = Big Rewards for Munson?

REGION – Since the long fought-for enactment of the Social Security Act, any change in Medicare has been held captive to decades of debate and much deliberation.

Nevertheless, a major change is coming this October: a new approach to the way hospitals are reimbursed for Medicare payments.

Part of federal health reform's Affordable Care Act, value-based purchasing is a strategy intended to transform the current payment system by rewarding providers for delivering high quality, efficient and affordable care – and penalizing those that don't.

Under the new program more than 3,500 hospitals nationwide will be reimbursed by Medicare for the quality of care they provide.

How will it affect local hospitals?

"I think for a hospital like Munson, which has patient satisfaction in the 90th percentile, which has top 100 hospital quality metrics – and we're in the top quartile of all those metrics – [this program] is an opportunity to get recognized and rewarded for the quality that we provide," says Ed Ness, CEO of Munson Healthcare.

"Theoretically, if you go back 10 years, hospitals were paid by Medicare, which is a federal program, based on taking care of patients. So, if someone came in with a heart attack, we took care of them, and we were paid," he says.

Now the incentives and penalties will be based on a hospital's delivery on quality and its patient satisfaction metrics, a better measure of performance. The Center for Medicare & MedicaidServices (CMS) views value-based purchasing as an important step toward rewarding better value, outcomes, and innovations instead of merely volume.

As such, performing 10,000 surgeries is fine and good, but what truly counts will be the outcomes: Were any patients re-admitted after surgery? Did any have infections? How happy were patients with their surgery's results?

According to information from Liz Surgener with the CMS' Chicago regional office, one in seven Medicare patients will experience some "adverse" event, such as a preventable illness or injury while in the hospital. One in three Medicare beneficiaries who leave the hospital today will be back in the hospital within a month. Those readmissions add up, costing Medicare $26 billion in 2009.

Hospital payments account for the largest share of Medicare spending, and Medicare is the largest single payer for hospital services. In 2009, more than 7 million Medicare beneficiaries experienced more than 12.4 million inpatient hospitalizations.

The government's position boils down to this: Since we're paying for the majority of health care, we have certain expectations with the quality of that health care, and we are going to start basing payments on those qualities.

Ness, for one, welcomes that position. "Historically, our frustration is that we think that our metrics show that we have really good outcomes here in northern Michigan for low cost, yet we are not rewarded for that," he says. "So for a high quality hospital like Munson, this is an opportunity to get recognized and potentially financially rewarded for our quality."

How to Measure a Hospital:

The value-based payment system will rely on a mix of standard metrics, including process, outcomes and patient experience measures. Hospitals will be scored on their performance for each measure relative to other hospitals and how their performance has improved over time.

"There are 65 measures that hospitals are reporting this year on various clinical conditions, including both process and outcomes," says Sam R. Watson, senior vice president of patient safety and quality at the Michigan Health and Hospital Association. "The most important consideration is that the measures that are used be valid, connected to evidence-based best practices and collected in as efficient a manner as possible."

Patients win, supporters say, because there will be more transparency of data. Since there will be standardized data for comparing hospitals – which to date has not been readily available to patients – it should be easier to compare the quality of care.

As a result, if a patient is going to pick between two hospitals for knee surgery, the patient can see which hospital has the lowest infection rate.

"Measures that are linked to evidence-based practices indicate if the care being delivered is meeting the best medical evidence," Watson says. "Providers can use the measures to make improvements; patients and payers can use the measures to best understand if they are getting the care that they should and for which they are paying."

Medicare reimbursement is more than 50 percent of the payment Munson receives for its services. Between Medicare and Medicaid, a state program, it is 62 percent of the payment they receive.

"When they implement something like this and it represents 50 percent of your patients, you really have to do it for everyone," Ness says. "As hospitals focus on cost and these quality metrics, it isn't that they are just going to do it for Medicare patients, they are going to do it for all patients, because they're going to develop systems and processes to try to improve all of the outcomes." BN