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  • Medicare’s New Performance Measures Are Bad News for Hospitals

    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.

    Dr. James Merlino, the Cleveland Clinic’s chief experience officer, said, “Focusing on patient satisfaction is the right thing to do, but it’s also necessary we pick the right metrics and we hold hospitals accountable for things within their control.”

    A number of variables unrelated to hospital performance can influence survey responses. Rau writes, “Partly linking payments to patient satisfaction may hurt hospitals in regions where patients tend to render less-than-glowing judgments, including the District of Columbia, Maryland, New Jersey and Hawaii. The District and New York State rank at the bottom: 59 percent of patients in both places give their hospital experiences a top rating, lower than anywhere else except the Virgin Islands.”

    New York City has three of the nation’s best teaching hospitals—Beth Israel Medical Center, Mount Sinai Medical Center, and NYU Langone Medical Center—yet all three received scores well below average. Jaclyn Mucaria, a senior vice president at New York–Presbyterian, said the reason could be “[T]hat we New Yorkers are very hard to please, whether it’s in a hotel or a restaurant or a hospital. For somebody to really rave about something is an anomaly.”

    Empowering bureaucracy to define and reward value will allow hospitals that provide high-quality care to receive unjustifiably lower payments. Research shows that while performance measures improve compliance with what is measured, they generally do little to improve health outcomes. Indeed, schemes using financial incentives to reward value—as defined by a removed third party—can cause more harm than good. The fact is, value simply cannot be defined by an algorithm or a simple survey. Its definition will vary for every patient.

    This post was co-authored by Amanda Rae Kronquist, who is currently a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please visit: http://www.heritage.org/about/departments/ylp.cfm

    Posted in Obamacare [slideshow_deploy]

    9 Responses to Medicare’s New Performance Measures Are Bad News for Hospitals

    1. michael j mudrak car says:

      Awhile back I made an appointment with a top hand specialist. Who was part of a

      team at a teaching hospital. I was very unhappy with his work ethic. He brought into

      the exam room a group of medical students and was more concerned with impressing

      them than concentrating on the exam. That is why teaching hospitals get lower ratings.

    2. Michael McCarty, Tul says:

      Too bad we cannot pay lawyers based on results….another congressional bad idea..do they ever have any good ideas? Guess they have those on one of their many breaks!

    3. Mark Trudeau, Las Ve says:

      It is true that value is highly personal and will vary from individual to individual. What one has to wnder is how emotions and other factors could play into the results of such a survey? For example, how might one value their hospital experience if they just lost a spouse during open heart surgery when the hospital and staff did everything they could to provide the best environment and treatment possible? Would this person even complete a survey–even several months later? What might be asked? Was the surgery center comfortable and clean? Who would likely remember or care about such things when the outcome was do devasting and liikely beyond what the hospital or staff could provide? I really wonder where these folks in Washington come up with these silly ideas. I'm loathe to do a survey for the guy that changes my tires, let alone someone who takes my blood! By the way, the guy that changes my tires, and does a great job of it, regardless how dirty his shop is, get's a tip. I don't think I's ever tip someone for talking my blood. How about you?

    4. Rock Cramer, Parker says:

      Excellent piece, but why didn't you complete the last sentence?

      –which is why only patients can determine value, not third party bureaucracies.

    5. Jeanne Stotler,Woodb says:

      Defund Obama care and when new POTUS is elected get rid of it, This is just a another way to ration care to Seniors.

    6. Paul Trower, Memphis says:

      Just wanted to point out that this program will not affect hospitals in Maryland since they are not paid under the traditional Medicare DRG system.

    7. George Colgrove VA says:

      Just let the doctors compete in an open market without cost controls and with insurance programs that can cross state lines. Then impose tort reform. Then watch what a FED-FREE medical industry would be like. I do not think we will be spending nearly the amount we are today.

    8. Dennis Wilcox, MD, P says:

      The problem is very few doctors communicate the prognosis of what can reasonably be expected from their intervention. If we lower expectations and a better than expected outcome occurs then a false augmentation of quality is appreciated. The opposite occurs when we raise expectations. The Medicare reimbursement currently pays regardless of the outcome and leaves the matter of quality to the providers to police themselves. If doctors were able to compete with each other on the basis of their reputation instead of their willingness to accept a discount for their services from the Medicare intermediary then care would improve.

    9. Barbara Jo, Ph. D. says:

      Performace Objectives known as Behavioral Objectives in the 1970's are a failure from the past. This was in the era of the Czars. I worked on a project for the State of NJ at that time and they are simply not implementable. One essentially cannot write enough definitive objectives for reliable measurement.

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