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A Hospital Prevents Readmissions, but Threatens Revenue

Cheryl Clark, for HealthLeaders Media, February 10, 2011

Greenberg and hospitals colleagues have gone to officials with MassHealth, the state's Medicaid program, to demand "they bear some responsibility," and pay for the savings they're getting, he says. Discussions have been initiated with some private health providers as well.

In response, Massachusetts lawmakers recently passed legislation that calls for the state to develop "a global or bundled payment system for high-risk pediatric asthma patients enrolled in the MassHealth program."

That payment "shall reimburse expenses necessary to manage pediatric asthma, including, but not limited to patient education, environmental assessments, mitigation of asthma triggers and purchase of necessary durable medical equipment."

In two years, the project shall "ensure a financial return on investment through the reduction of costs related to hospital and emergency room visits and admissions."

Asked for the status of the effort, MassHealth spokeswoman Jennifer Kritz says the pilot is in the development process, but that "a new payment methodology in a manner that is prudent, both clinically and financially, is a complex undertaking."

The pilot is expected to include multiple providers, and "will be based on the bundle of services that are required to provide high quality care to MassHealth-covered children with asthma," she says.

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1 comments on "A Hospital Prevents Readmissions, but Threatens Revenue"


Neal Colburn (2/10/2011 at 3:31 PM)
The opportunity to align quality outcomes with financial incentives was provided under global capitation. Having once been president of a community health center controlled HMO, I thought that it would obtain buy-in from hospitals in a collaborative program investing in quality practices and patient management, as noted in the article, improving quality; raising the health status of our patients; and thereby, reducing cost; then reivesting part of the savings in more cost-saving programs. I thought that hospital administrators would understand that improving the health of the community; reducing hospitalization while retaining the same capitated revenue would be attractive. Unfortunately, hospital CEOs and CFO would only consider fee for service payments for procedures, services and bed days, albeit with some small discounts for volume - the opposite of the hoped-for incentive direction. As a result, the opportunity to work collaboratively and align financial and quality incentives, and possibly programs was lost in most cases. This was repeated in market after market. The HMO was able to obtain buy-in from many of the primary care providers with quality process incentives and capitation. Many were able to significantly bend their cost curve, but with their small portion of the resources they were not able to substantially impact the total system cost. Now the federal government and other payers are betting on the ACO and Patient-Centered Medical Home models with less control over global resources but also less downside risk. Hopefully, the incentives will be well directed and appropriately valued to drive significant change. However, it will take more enlightened vision, collaboration and decision-making than appears to have been the experience in the past. Let's work together this time and make it work.