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Hospital Pay to Reflect Care Efficiency Soon

Cheryl Clark, for HealthLeaders Media, September 17, 2013

The new efficiency measure underscores the importance of limiting readmissions, he adds, because much of the cost shows up for inpatient care within 30 days of a patient's discharge, i.e., a readmission. That may be a form of double jeopardy, duplicating Medicare's penalty on hospitals with higher rates of readmissions up to 3% of their Medicare base DRG payments, he acknowledges.

But that's okay, DeLisi says, "because we all know that nationwide, everybody has too many readmissions, and that we probably don't do a good enough job with transitions of care. So that would be the first place I would go to reduce costs."

The efficiency measure may also incentivize hospitals paid flat rates under the DRG system not to push services into post-discharge settings where they are more expensive, and partially paid by the patient, under part B, DiLisi says.

"If you were ordering outpatient radiology studies that maybe you could have done in-house (during the patient's stay, and thus absorbed within the flat rate), now you're going to get hit for doing that, because that cost will show up" with a worse episode efficiency score.

With the efficiency measure, Medicare is "tracking reasonable things and giving granularity for comparisons with our competitors. We can now see what everybody else is spending on these services."

The quality improvement and group purchasing organization, Premier Inc., and the American Hospital Association don't agree that the efficiency measure is completely ready to be a pay-for-performance measure, however.

Premier argues the source of post-discharge spending, and sometimes the reason for readmissions, is often out of the hospital's control, because it relies on physician choices.

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