Pages 75 and 76 of the Senate Health Care Finance bill lay out the future plans for hospital funding: A move from pay for reporting to pay for performing. This is the governments version of value-based purchasing. And here are the future plans for hospital funding:
The Chairman‘s Mark would establish a Hospital Value-Based Purchasing (VBP) program in Medicare that moves beyond pay-for-reporting on quality measures, to paying for hospitals‘ actual performance on these measures. This value-based purchasing program would provide value-based incentive payments to acute care IPPS hospitals that meet certain quality performance standards beginning in FY2012. The first year of the program would be a data collection/performance year. Beginning in FY2013, hospital payments would be adjusted based on performance under the VBP program.
The Chairman‘s Mark would establish a Hospital Value-Based Purchasing (VBP) program in Medicare that moves beyond pay-for-reporting on quality measures, to paying for hospitals‘ actual performance on these measures. This value-based purchasing program would provide value-based incentive payments to acute care IPPS hospitals that meet certain quality performance standards beginning in FY2012. The first year of the program would be a data collection/performance year. Beginning in FY2013, hospital payments would be adjusted based on performance under the VBP program.
Measures for the hospital VBP program would be selected from the measures used in the RHQDAPU program. The measures would focus on the same areas that are the focus of the RHQDAPU program: heart attack (AMI); heart failure; pneumonia; surgical care activities; and patient perception of care. Beginning in FY2014 and beyond, the Secretary would have the authority to expand these categories through the quality measure development and endorsement procedures laid out in the Quality Infrastructure section of this legislation. By FY2014, the Secretary would be required to expand categories to include efficiency measures. Such measures would include Medicare hospital spending per beneficiary for selected medical conditions and would be adjusted by factors including age, sex, race, severity of illness and other factors that the Secretary determines are appropriate. The Secretary would have the authority to replace a measure if it is found that all hospitals are effectively in compliance with the measure or if the measure no longer represents a best practice.
Funding for value-based incentive payments for qualifying acute care hospitals would be generated through reducing Medicare IPPS payments to the hospitals. The reductions would be used to fund an incentive pool and would be phased-in as follows: 1.0 percent in FY2013; 1.25 percent in FY2014; 1.5 percent in FY2015; 1.75 percent in FY2016; and 2.0 percent in FY 2017 and beyond. The reductions would apply to all MS-DRGs under which a hospital provides services. The Secretary would be required to ensure that all funds reduced from hospital payments to fund the VBP program in a given year be returned to hospitals in the form of value-based incentive payments in that same year (i.e. the program would be budget neutral to the Medicare program).
The Secretary would be provided the necessary funding to administer the program (amount to be determined).
What you see here is a move in hospital funding to move from pay for reporting to pay for performance. For a hospital with 50% Medicare collection on a billion dollars of revenue, 2% is ten million dollars. Hospitalists have the perfect opportunity to save a hospital's balance sheet, a balance sheet that could be the difference between going broke or surviving. It also helps explain why hospitalists, whose own financial implications are often aligned with hospital, are in a perfect position to thrive under the ever changing Medicare landscape. If you are a hospital that may lose 10 million dollars a year because the outpatient internists or family medicine or even the subspecialist docs refuse to play the Medicare games, are you as a hospital more or less likely to look to hospitalists to save the day. I think the answer is obvious.
