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Hospital Pay to Reflect Care Efficiency Soon

Cheryl Clark, for HealthLeaders Media, September 17, 2013

Medicare spending per beneficiary is a measure of efficiency which underscores the importance of limiting readmissions. Some hospital groups reject the move, but at least one CMO describes it as "not completely unreasonable."

Like it or not, hospitals are bracing for a new, and some leaders say increasingly important, Medicare quality measure that is influencing how much they're reimbursed with discharges starting on Oct. 1, 2014.

The measure is efficiency, or Medicare spending per beneficiary. Against hospital groups' objections, officials for the Centers for Medicare & Medicaid Services added the score to the value-based purchasing incentive program algorithm, with a performance period ending Dec. 31, 2013, with an initial weight of 20%, increasing to 25% and possibly higher in later years.

The score each hospital receives, available publicly on Hospital Compare, purports to show how efficiently each organization delivers an episode of care, defined as the period starting three days before beneficiaries' hospital admissions and ending 30 days after discharge for all services paid under Medicare Part A and Part B.

Arguably, most of that time patients are not in the hospital, but under the care of providers outside of a hospital's direct control.

In one spreadsheet, Medicare now shows how much was spent on average to provide care in each of seven categories at each hospital: home health, hospice, inpatient, outpatient, skilled nursing, durable medical equipment, and carrier (physician, ambulatory surgical center), and how each category compares to state and national spending.

"I'll give Medicare some credit on this metric; it's not completely unreasonable," says Jeffrey DiLisi, MD, vice president and chief medical officer for 342-bed Virginia Hospital Center in Arlington, VA. "Actually, it's a pretty fair metric… because it's really letting you look at all the things that are set up at patient discharge, or the transition of care."

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