As hospitals grapple with new CMS guidelines limiting reimbursement for care related to errors, they also are trying to get ready for increased use of pay-for-performance-based reimbursement by Medicare.
At a roundtable last week hosted by the Senate Finance Committee, major healthcare provider groups asked the CMS to proceed with caution on its proposal to reimburse hospitals based on quality of care, known as value-based purchasing.
Hospital industry leaders said the agency was heading in the right direction on value-based purchasing, but they argued it should not be used as a vehicle to reduce Medicare spending. Hospitals now report on 26 process measures and patient-survey data and allow their mortality data to become public, in order to receive full updates on Medicare payments. Value-based reimbursement, however, goes beyond requiring data reporting and rewards hospitals for providing higher quality care or for making improvements in quality.
Specifically, 2% to 5% of a hospitals base operating payment for each discharge or DRG payment would be contingent on its actual performance on a specific set of measures.
The roundtable represented major players in healthcare, including the American Hospital Association, Association of American Medical Colleges, Blue Cross and Blue Shield Association, Federation of American Hospitals and National Quality Forum. Absent from the roundtable was a representative from the Joint Commission.
Picking measures that please the industry is a sticking point. A number of questions need to be answered before moving forward with such an initiative, said Senate Finance Committee Chairman Max Baucus (D-Mont.), such as how the performance standards should be set, and how the payment structure could better align hospital incentives with health outcomes.
If the short-term focus is to try to reduce Medicare spending, as opposed to a longer-term focus on improving quality and achieving cost reductions, value-based purchasing will lose credibility among providers, said Richard Norling, president and chief executive officer of Premier, a large healthcare purchasing group.
Mark Miller, executive director of the Medicare Payment Advisory Commission, said that negative incentives are part of the process to maintain budget neutrality in a performance-measures system.