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Immediate Jeopardy at Parkland Puts VBP Incentive Pay in Peril

Cheryl Clark, for HealthLeaders Media, September 8, 2011

The possibility that Parkland Memorial Hospital could lose $417 million in federal pay stemming from last month's "immediate jeopardy" declaration for shameful quality problems uncovered by state and federal surveyors sounds draconian.

But frankly, such harsh punishment is unlikely, given the fact that Parkland is a 140-year-old safety net facility with national historic significance. Such a decision would surely shut the hospital down, and Dallas couldn't withstand that. The Centers for Medicare & Medicaid Services will work very hard with Parkland to get these problems fixed, I'm sure.

Additionally, CMS officials tell me their 344-page federal report documenting Parkland's problems is, in part, the result of a concerted effort to be more assertive as they investigate complaints. I'll explain more about that shortly.

But there's another consequence lurking with a much more realistic impact on Parkland's revenue, one that as yet has not been the topic of much open discussion.

The hospital to which the assassinated President John F. Kennedy was rushed in 1963 could well be the first major acute care facility in the nation prohibited from receiving millions in incentive payments under a key provision of the Affordable Care Act.

Under that rule, called the Hospital Inpatient Value-Based Purchasing program, roughly 3,000 hospitals in the nation will see their Medicare payments reduced by 1% in fiscal 2013, and more in later years.

Those funds, an estimated $850 million in the first year, are to be set aside for redistribution to hospitals that provide better care, as measured by such indicators as patient experience scores and timely administration of medications.

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