Medicare’s New Performance Measures Are Bad News for Hospitals

Kathryn Nix / May 03, 2011

Congress has yet to enact health care reform that will successfully reduce costs without threatening the quality of care patients receive. Obamacare attempted to achieve this by moving Medicare from a system that pays for the volume of services to one that pays for value. But in fact, the new health law will simply enable bureaucrats to arbitrarily define and reward provider performance, resulting in negative unintended consequences for providers.

Beginning in 2012, Medicare’s new Value-Based Purchasing program will go into effect. In the program’s first year, hospital reimbursement will be reduced by 1 percent, and the $850 million this generates will be used to pay providers based on performance.  Hospitals will be scored both on their performance and improvement, and payment will vary based on the higher of these two scores. Thirty percent of performance payments will depend on patient satisfaction surveys, which will report how well hospital employees communicated, how well caregivers responded to patients’ needs and explained medications, and how clean and quiet the hospital was.

A recent article by Kaiser Health News writer Jordan Rau highlights some hospitals’ hesitations about the changes. Since surveys do not necessarily measure the quality of care that patients receive—and factors that are out of providers’ hands can affect patients’ perceptions—many hospitals argue this measure should not weigh so heavily on payment. (more…)