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Safety Net Hospitals Weather VBP and Readmissions Penalties

By Christopher Cheney  
   April 24, 2017

Research examines the financial effect of readmissions penalties and value-based purchasing incentives on safety-net hospitals compared to other hospitals.

Safety-net hospitals have risen to a potentially existential challenge from a pair of Medicare's value-based payment reforms, a study published in the Journal of the American Medical Association indicates.

"Comparative Trends in Payment Adjustments Between Safety-Net and Other Hospitals Since the Introduction of the Hospital Readmission Reduction Program and Value-Based Purchasing," sheds light on how Medicare's Hospital Readmissions Reduction Program (HRRP)and its Hospital Value-Based Purchasing program (HVBP) have affected safety-net hospitals, says the study's lead author.

"The study confirms that safety-net hospitals have faced disproportionate penalties in both the HRRP and VBP, but also suggests that they have improved on the metrics used in these programs," says Nathan Favini, MD.

He says the research provides fodder for both supporters and opponents of HRRP and VBP, two major initiatives launched by the Centers for Medicare & Medicaid Services to prod and incentivize hospitals to deliver higher value for patients.

"This should ease concerns that safety-net hospitals can't effectively respond to penalties and incentives from CMS."

"For proponents of the programs," Favini says, "the improvements at safety-net hospitals, particularly in pneumonia and congestive heart failure readmissions, are a big success. Critics might note that the reductions in revenue at safety-net hospitals were big enough to impact margins and worry about the opportunity cost of focusing on these metrics in resource-limited settings."

HRRP imposes a Medicare payment penalty on hospitals that report relatively high 30-readmission rates for a bevy of medical conditions and procedures:

  • Acute myocardial infarction,
  • Chronic obstructive pulmonary disease,
  • Coronary artery bypass graft surgery,
  • Elective total hip and total knee arthroplasty,
  • Heart failure
  • Pneumonia

VBP tweaks the Medicare payment rate for hospitals based on a weighted set of quality metrics: clinical process of care, patient experience, clinical outcomes, and efficiency.

Christopher Cheney is the senior clinical care​ editor at HealthLeaders.

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