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Dr. Ashish Jha, an associate professor of health policy and management at the Harvard School of Public Health

Reform Update: CMS plans changes to performance pay, penalties

By Maureen McKinney
Posted: April 29, 2013 - 3:45 pm ET

In its newly released proposed inpatient hospital payment rule for 2014, the CMS plans a slew of performance-based payment changes, including a penalty program for hospital-acquired conditions and updates to the agency's readmissions reduction program that would expand the parameters for “planned” readmissions, thereby lowering the number of rehospitalizations that are used to calculate penalties.

The readmissions program, which launched in October, penalizes hospitals that have higher-than-expected rates of hospital readmissions for heart attack, heart failure and pneumonia. More than 2,200 hospitals saw their reimbursements docked anywhere from 0.01% to 1% for 2013 under the program.

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According to the proposed rule, released April 26, the maximum readmissions penalty for 2014 would jump to 2%, an increase specified in the healthcare reform law. The top penalty is scheduled to increase another percentage point to 3% in 2015.

But what is perhaps more interesting to hospital officials—many of whom have taken issue with the program and its effect on safety net facilities—is the revised methodology proposed by the CMS in the rule.

The agency proposed broadening the scope of procedures and conditions that fall under the category of planned readmissions, or readmissions that don't count against a hospital. For this year, that list includes just two procedures related to heart attack—coronary artery bypass graft surgery and percutaneous coronary intervention—and no exceptions for heart failure and pneumonia.

For 2014, however, the CMS developed an expanded “planned readmission algorithm” that, if finalized, would allow hospitals to “identify readmissions that are likely to be planned as part of ongoing medical or surgical treatment,” according to the rule.

If the proposed algorithm had been used to calculate readmission rates and penalties for 2013, the number of planned readmissions would have jumped by 4,942 for heart attack, by 17,512 for heart failure, and by 7,084 for pneumonia, the CMS said. The 30-day readmission rates for 2013 would have decreased by 1 percentage point for heart attack, 1.5 percentage points for heart failure and 0.7 of a percentage point for pneumonia, if the algorithm was in use, the agency said in the rule.

Dr. Ashish Jha, an associate professor of health policy and management at the Harvard School of Public Health, Boston, who has published numerous articles about readmissions as an indicator of clinical quality, said the revision indicates a willingness by the CMS to address provider concerns about the program, particularly in the face of emerging data that says most readmissions are not preventable.

“I see it as a good thing,” Jha said of the new methodology, “but it doesn't address some of the underlying issues, including the fact that research shows that what really drive readmissions are the social factors affecting patients and what is happening in their community.”

In addition to the algorithm, the CMS also proposed the inclusion of chronic obstructive pulmonary disease and hip/knee arthroplasty for 2015's readmissions penalty program.

The CMS also unveiled its proposed hospital-acquired condition program, mandated by the healthcare reform law, which would impose a 1% payment penalty in 2015 on hospitals that perform in the bottom quartile on prevention of late-stage pressure ulcers, foreign objects left after surgery, certain types of healthcare-associated infections and other patient safety-related complications.

  • The American Hospital Association released new data from its affiliated Health Research and Educational Trust, one of 26 Hospital Engagement Networks chosen by HHS to help hospitals meet the targets of its $1 billion Partnership for Patients. According to HRET, the hospitals participating in its HEN, numbering more than 1,600, have seen a 42% drop in early elective deliveries and $10 million in related healthcare savings. Additionally, HRET said its HEN hospitals have experienced a 14% drop in readmissions. Launched in April 2011, the Partnership for Patients aims to reduce the number of hospital-acquired conditions by 40% and lower the rate of hospital readmissions by 20% by the end of 2013.

  • Frontier Medicine Better Health Partnership, a St. Regis, Mt.-based organization focused on best practices and delivery system reform for rural regions, announced plans to collaborate with Vree Health, a Merck subsidiary that specializes in technology-enabled post-discharge services. FMBHP, which is backed by a $10.5 million grant from the Center for Medicare and Medicaid Innovation, said it will work with Vree Health to improve care transitions in at least 10 Montana communities.

  • The Patient-Centered Outcomes Research Institute announced plans to spend up to $68 million on a national data infrastructure to support comparative effectiveness research. The Washington-based not-for-profit also named Bryan Luce, former senior vice president for science and policy at United BioSource Corp., as its first chief science officer.

Follow Maureen McKinney on Twitter: @MHMMcKinney

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