Today’s column is more about hospitals than a clinical practice, but the concepts are worth studying because this type of activity will be in the ambulatory setting before long.

First, a little history. A few years ago, Medicare started a program called Hospital Value-Based Purchasing. Basically, the way it works is Medicare reduced payment rates to all hospitals by 1.25 percent and placed this money in a pot for incentives. Since Medicare is so huge and its payments measured in the billions of dollars, the 1.25 percent generated something like $1.1 billion. While every hospital is getting something back, more than half are not recouping the 1.25 percent payment they initially forfeited. The payment adjustments are applied to each Medicare patient stay over the federal fiscal year that started October 1, 2013, and runs through September 2014.

Hospitals are now in the third phase of the program and it deals with Hospital-Acquired Condition (HAC) Reduction Program. The HAC program addresses hospital infections and other patient injuries—basically, it is the “bad stuff” that hospitals do not want to see happening to their patients.

If the HAC component is third, what are the first two?

Well, the first levies penalties against hospitals with high readmission rates and the second awards bonuses or penalties based on two-dozen quality measures. Both are in their second year.

When all three programs are in place this fall, hospitals will be at risk of losing up to 5.4 percent of their Medicare payments. This represents significant dollars to hospitals.
Furthermore, according to the Kaiser newsletter, more than 750 hospitals are likely to have Medicare payments docked later this year under the HAC Reduction Program.

I think the message for us on the clinic side is to be ready—Texas Tech Physicians will see a program like this before too long. It will probably be based on missed diagnosis or unplanned returns, possibly total expenditures per episode of illness. I have not seen any of this—just conjecture on my part.

We do know that the Affordable Care Act directs CMS to provide information to physicians and group practices about the resources used and quality of care provided to their Medicare Fee-For-Service patients, including quantification and comparisons of patterns of resource use/cost among physicians and medical practice groups. So, the message is to be ready. I think with our focus on Key Performance Indicators that we have used for several years, and our emphasis on meeting or exceeding standards of The Joint Commission, we should have a bit of a head start on what CMS is expecting.