A change in Medicare program may award lower quality hospitals

Sunday, May 1, 2016 - 7:12pm

A team of University of Michigan researchers, led by Rackham student Anup Das, found that an amended Medicare program, designed to incentivize hospitals to operate at high quality and low cost, unintentionally rewards some low-performing hospitals.

The study focused on the Hospital Value-Based Purchasing Program, which is run by Centers for Medicare & Medicaid Services. HVBP, established in 2013, issues payments and penalties based on CMS’ scoring system to improve quality of care at hospitals.

Seventy-five percent of the score is based on quality, which is determined by three aspects: patient experience based on patient survey responses, clinical care guidelines and outcomes measured by mortality and infection rates. The other 25 percent is based on efficiency, which is determined by the hospital’s expenditure.

Das said that the team was interested in how the efficiency aspect of the scoring system — which was added  in 2015 — would affect the way incentives and penalties are issued. 

“We were interested in seeing how adding this measure of spending to this program that for two years only measured quality would or would not change which types of hospitals received bonuses and penalties in the program,” Das said.

According to Das, rehabilitation and post-acute care — services received after or instead of a short-term treatment at the hospital — was critical to determining hospitals’ performance scores. 

“We had a preliminary study that looked at what type of spending characteristics are associated with better performance on this new measure of spending,” Das said. “We found that it is primarily driven by spending outside the hospital in the post-acute care setting.”

The team found that adding the efficiency domain resulted in some poor-performing hospitals receiving bonuses. Das mentioned that the hospital quality remains a relative concept.

“According to the definition of quality that we use, some 231 lower-quality hospitals received bonuses because their spending levels were low enough,” Das said. “The caveat here is that there is no agreed-upon definition of lower quality versus higher quality.”

The team is now in the process of communicating its findings to CMS along with a proposal to set a threshold for both quality and spending that a hospital must meet to qualify for an incentive payment. The proposal would allow CMS to prevent lower-quality hospitals taking advantage of the system.

“Without thresholds in the program, there could be some adverse incentives that hospitals could take advantage of,” Das said.

Currently, the CMS has set thresholds for some of its other incentive payment programs such as the Physician Value-Based Payment Modifier. Das is optimistic that the same can be done for the HVBP.

“For the PVBPM, the cut-off point is one standard deviation below the mean, which means that physicians are not able to receive the bonuses or payments if they are below that point,” Das said.

Das said the aim of their research was to enhance, not discredit, CMS’ operations.

“We analyzed the data in different ways to see what it showed us,” Das said. “Once we saw this relationship with lower-quality hospitals getting bonuses, we figured that it was an important message to get out to CMS and the public. We are not trying to say that CMS is bad or anything; we are just trying to help them improve their program.”