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Hospital Pay to Reflect Care Efficiency Soon

Cheryl Clark, for HealthLeaders Media, September 17, 2013

In its final rule on the value-based purchasing algorithm, CMS disagreed.

"We believe that the MSPB measure is appropriately risk-adjusted, that its reliability has been established, and that it incentivizes hospitals to exert their control of episode spending. We continue to believe that a measure of cost is integral in recognizing and incentivizing hospitals involved in providing high quality care to the beneficiaries they serve, at a lower cost to Medicare."

As for NQF endorsement, CMS says it expects that to come this October.

In the spreadsheets CMS has released clearly show huge variation in hospital efficiency and cost.

For example, East Valley Hospital Medical Center in Glendora, CA, is shown as having among the most expensive "Complete Episode" of care costs, $27,390, for any non-specialized general acute care hospital in the country, far more than the $19,093 average for hospitals in California and the $18,358 average total spending for hospitals nationally.

But Estella Renteria, East Valley's assistant administrator, and Mary Ann Bennett, chief nursing officer, explain that the hospital has a very low census, averaging about 30 patients, which drives up average costs, and many patients have psychiatric illness and are homeless, and require more expensive services.

A look at the CMS spreadsheet also shows that East Valley has extremely high 30-day post discharge costs going for skilled nursing care, $12,317, about four times higher than the California and national averages.

Nate Kaufman, a San Diego based hospital consultant, says that like it or not, getting paid based on episode of care efficiency is today's reality.

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