In the United States we have the most expensive health care system in the world. Unfortunately, the highest cost does not translate into the highest quality care. Much of the health related spending we do does not result in improved outcomes for patients.
There is bipartisan agreement that we need to improve the quality of the health care we get for the dollars we spend. The political disagreement is over whether we should seek this improvement through marketplace competition or through the imposition of government standards.
Pay for Performance
One of the health reform law’s strategies for improving the value we receive for our health expenditures is referred to as “pay for performance.” The idea is to pay providers based on quality standards rather than on the volume of services provided.
In October 2012 Medicare initiated a Quality Payment Incentives model for hospitals. The Medicare hospital reimbursement system now includes pay for performance incentives to encourage hospitals to provide better quality care at lower cost.
A recent Kaiser Health News article describes two current Medicare payment incentive programs for hospitals which are “part of an effort to make them accountable on quality. One gives bonuses and penalties to hospitals based on how well they performed on 24 quality measures. That program is called Value Based Purchasing. The second penalizes hospitals which have too many patients readmitted within a month. Both programs are in their second year.” See, Interactive Chart: Bonuses And Penalties For U.S. Hospitals Kaiser Health News, November 14, 2013.
The bonuses or penalties are based on the hospital’s prior year’s performance. They are applied to hospital reimbursements for the following year.
Recently Medicare announced the payment incentives for hospitals for the upcoming year (October 2013 through September 2014). See, Nearly 1,500 Hospitals Penalized Under Medicare Program Rating Quality, Kaiser Health News, November 14, 2013, which gives the following overview:
To assess quality, Medicare looked not only at how hospitals scored in comparison with each other, but also how much each improved from two years ago compared to other hospitals. A hospital is judged on whichever score is higher, so some hospitals with subpar quality rankings are still getting more money because they showed vast improvement. It won’t be clear how much any hospital’s bonuses and penalties amount to in dollar figures until next October because it depends on how much a hospital ultimately bills Medicare.
Individual Hospital Performance Results
The Kaiser Health News articles include access to a chart which shows the data for individual hospitals. I have put together the following listing showing how a number of hospitals in Northcentral and Northeastern Pennsylvania fared for the upcoming year.
Here are the positive or negative percentage changes in performance bonuses/penalties our area hospitals will be receiving from Medicare for the period October 2013 through September 2014:
Facilities with Positive Change
| Institution | Location | Total Bonus/Penalty Change |
| Memorial Hospital | Towanda | 0.39% |
| Dubois Regional Medical | Dubois | 0.27% |
| Soldiers And Sailors | Wellsboro | 0.21% |
| Lock Haven Hospital | Lock Haven | 0.10% |
| Williamsport Regional | Williamsport | 0.08% |
| Hershey Medical Center | Hershey | 0.06% |
| Evangelical Community | Lewisburg | 0.03% |
| Moses Taylor Hospital | Scranton | 0.01% |
Facilities with Negative Change
| Institution | Location | Total Bonus/Penalty Change |
| Geisinger Medical Center | Danville | -0.08% |
| Geisinger – Community | Scranton | -0.11% |
| Geisinger Wyoming Valley | Wilkes Barre | -0.11% |
| Tyler Memorial Hospital | Tunkhannock | -0.13% |
| Mount Nittany | State College | -0.16% |
| Pocono Medical Center | East Stroudsburg | -0.27% |
| Wilkes-Barre General | Wilkes Barre | -0.29% |
| Gnaden Huetten | Lehighton | -0.53% |
| Regional Hospital of Scranton | Scranton | -0.53% |
| Geisinger – Bloomsburg | Bloomsburg | -0.64% |
| Berwick Hospital Center | Berwick | -0.69% |
| Clearfield Hospital | Clearfield | -1.17% |
| Hazleton General Hospital | Hazleton | -1.19% |
| Sunbury Community Hospital | Sunbury | -1.23% |
The full data for individual hospitals is available on the Kaiser Health News website along with details on the methodology used by Medicare to determine the payments. Nationally, 1,231 hospitals will receive increased payments from Medicare while 1,451 hospitals will be paid less.
Further Reading:
Nearly 1,500 Hospitals Penalized Under Medicare Program Rating Quality
Medicare Penalizes Nearly 1,500 Hospitals For Poor Quality Scores (NPR)
Interactive Chart: Bonuses And Penalties For U.S. Hospitals
