CMS Plan Would Tie Efficiency Scores to Hospital Payments

The proposed rule indicates an eight-month "performance period" that would begin a year from now, from May 1 to Dec. 31, 2013.

While CMS officials said the purpose of the new score is to push healthcare cost transparency to reduce Medicare spending, it's unclear how these cost variances equate with patient outcomes, such as infection rates and mortality.

It's conceivable that higher cost hospitals, rather than providing more expensive high-tech care than its less expensive competitors,  may be giving unnecessary, invasive care that can introduce infections, exacerbate conditions, or cause other kinds of harm.

Likewise, a low-cost hospital may have poor outcomes because it is not providing necessary care.

Three-fold variation
The scores are based on the variance from 1, which is the value assigned to represent an average cost per beneficiary. For example, for hospitals with 10 or more cases (the number needed for statistical validity), Indian Health Services Hospital in San Carlos, AZ, is the least expensive with a score of .54. Allegiance Hospital of Midland-Permian Basin, Midland, TX is the most expensive, with a score of 1.72.

That score calculates all Medicare Part and B services incurred in the physician's office, for outpatient care, durable medical equipment, imaging, home health services, hospitalization, and surgery.