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Immediate Jeopardy at Parkland Puts VBP Incentive Pay in Peril

Cheryl Clark, for HealthLeaders Media, September 8, 2011

In other words, hospitals will be competing with each other for a bigger share. The game is on, as the performance competition began July 1 and will end March 31, 2012.

Don McLeod, a spokesman for the Centers for Medicare & Medicaid Services, told me that hospitals that do better than others will receive payments between .0236% for the lowest scoring hospitals to 1.817% for those scoring the highest.

But here's the rub: According to language in the ACA and in the VBP rules, hospitals that have received a federal declaration of immediate jeopardy don't get to play ball. 

Medicare will still withhold that 1% of their federal diagnostic related group (DRG) payments. But it looks like Parkland would be locked out of any opportunity to earn any portion of that pool back.

And lest Parkland be all by itself with this distinction, Methodist Dallas Medical Center, another important healthcare institution five miles away, is in the same boat, having received its own federal sanction from CMS for causing immediate jeopardy just a few weeks after Parkland did.

CMS spokeswoman Ellen Griffith Cohen cautioned in an e-mail that the agency "has not announced the names of any hospitals that will or will not be eligible for hospital VBP incentive payments," adding that CMS is "evaluating the application of the definition of immediate jeopardy in the hospital VBP context."

Here's the precise language of the rule:

"These incentive payments will be funded for FY 2013 through a reduction to FY 2013 base operating DRG payments for each discharge of 1.0 percent, as required by section 1886(o)(7). Section 1886(o)(1)(C) provides that the Hospital VBP program applies to subsection (d) hospitals (as defined in section 1886(d)(1)(B)), but excludes from the definition of the term “hospital,” with respect to a fiscal year: (1) a hospital that is subject to the payment reduction under section 1886(b)(3)(B)(viii)(I) for such fiscal year; (2) a hospital for which, during the CMS-3239-F 16 performance period for the fiscal year, the Secretary cited deficiencies that pose immediate jeopardy to the health and safety of patients..."
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