Medicare has disclosed bonuses and penalties for nearly 3,000 hospitals as it ties almost $1 billion in payments to the quality of care provided to patients.
Maine hospitals, as a whole, outperformed those in every other state.
The revised payments, which will begin in January, mark the federal government’s most extensive effort yet to hold hospitals financially accountable for what happens to patients. In what amounts to a nationwide competition, Medicare compared hospitals on how faithfully they followed rudimentary standards of care and how patients rated their experiences.
In many regions, the hospitals that did the best are not the ones with the most outsized reputations, but regional and community hospitals, according to government records that were released Thursday. New York-Presbyterian in Manhattan and Massachusetts General Hospital in Boston, both dominant hospitals in their cities, will have their payments reduced.
It is far from clear that the new payment program will significantly improve hospitals. When Medicare tested a similar approach with 266 hospitals that volunteered through the Premier hospital alliance, performance scores shot up significantly. But a subsequent study found that other hospitals not receiving financial incentives ultimately did just as well.
In all, Medicare is rewarding 1,557 hospitals with more money and reducing payments to 1,427 others, according to a Kaiser Health News analysis of records released by the Centers for Medicare & Medicaid Services. The maximum amount any hospital could gain or lose was 1 percent of its regular Medicare payments. For nearly two-thirds of the hospitals, the changes are less than one-quarter of a percent. In many cases, it’s little more than a rounding error on their bottom lines.
In Maine, 79 percent of the state’s 19 hospitals will receive a bonus, a higher percentage than in any other state. Inland Hospital in Waterville and Miles Memorial Hospital in Damariscotta topped the list, with payments that will rise 0.65 percent and 0.56 percent, respectively.
On average, Maine hospitals will see their payments increase by 0.23 percent.
Jeff Austin, a spokesman for the Maine Hospital Association, called Maine’s performance “good news” but unsurprising.
“Our hospitals consistently rank near or at the top nationally for quality and patient safety,” he said. “Our only frustration is that value is such a small factor in reimbursement. We continue to urge that Medicare increase the role of quality in setting reimbursement.”
The biggest bonus this year is going to Treasure Valley Hospital, a physician-owned, 10-bed hospital in Boise, Idaho, that is getting a 0.83 percent increase in payment for each Medicare patient, the records show. Auburn Community Hospital, a nonprofit near Syracuse in upstate New York, is facing the biggest cut, losing 0.9 percent of every payment.
On average, hospitals in Maine, Nebraska, South Dakota, Utah and South Carolina will fare the best, while hospitals in the District of Columbia, Connecticut, New York, Wyoming and Delaware come out among the worst, the data shows.
The payment change was created by the federal health law and is known as the Hospital Value-Based Purchasing Program. It is part of the government’s effort to shift away from paying hospitals and doctors based on the quantity of care they provide with no regard for how good a job they did.
“To me, it’s the tip of the iceberg for where we are going,” said Dr. Michael Henderson, chief of quality at the Cleveland Clinic.
The program is one of several Medicare is launching to make hospitals and doctors accountable for quality and more careful stewards of public money. In October, Medicare also began reducing payments to 2,217 hospitals because too many of their patients ended up back in their care within a month.
In Maine, 10 hospitals were penalized. Pen Bay Healthcare has said it’s working to address the readmission rate at its Pen Bay Medical Center in Rockport, which faced the highest penalty in the state in terms of the percentage of payments withheld.
The way the value-based purchasing program works, Medicare reduces payments to all hospitals by 1 percent, a total estimated at $964 million. That money is returned to hospitals based on their quality scores. While every hospital is getting something back, almost half aren’t recouping the 1 percent they forfeited and thus are net losers.
Seventy percent of the scores are based on how frequently hospitals followed 12 basic clinical standards of care, such as controlling heart surgery patients’ blood sugar levels and giving them beta blockers to lower their blood pressure. The other 30 percent is determined by how well hospitals were rated by former patients in surveys asking about the communication and responsiveness of doctors and nurses and the cleanliness and quietness of their environment.
Nicholas Genna, CEO of Treasure Valley Hospital in Idaho, recipient of the biggest bonus, credited close attention to patients, including a low nurse-to-patient ratio and handwritten thank-you notes to patients, along with the fact that the doctors own the hospital. “People answer the phone with a smile on their face,” he said.
Thomas Filiak, the chief operating officer at Auburn Community Hospital in New York, which received the largest penalty, said executives have begun a number of initiatives to ramp up clinical performance, improve food and lower noise near patient hallways by putting new wheels on squeaky food carts. “They sounded like Mack trucks going through the hallway,” he said.
“We are going to work our way to much more acceptable scores,” Filiak said.
The penalties are impacting some types of hospitals more than others, according to an analysis Thursday by Dr. Ashish Jha’s research team at the Harvard School of Public Health. Bigger hospitals, teaching hospitals and hospitals with the most poor patients tended to do worse than smaller hospitals, hospitals that don’t train residents and hospitals with a more affluent patient mix, the researchers found.
Medicare will begin adjusting payments next month through the end of the federal fiscal year in September and will retroactively apply the changes to payments made in the last three months of this year.
The bonuses and penalties do not apply to money Medicare pays hospitals for capital expenses, to teach residents or to treat large numbers of low-income patients. Hospitals with too few cases and ones that only offer specific specialties, such as psychiatry, long-term care, rehabilitation and cancer treatment, are exempted. Maryland hospitals are also excluded because the state has a unique reimbursement arrangement with the federal government.
During the next four years, the program will expand to encompass 2 percent of all Medicare payments. Next year Medicare is adding death rates of heart and pneumonia patients, and for future years it is considering other measures, including the cost-efficiency of hospitals; the frequency of infections; and wait times in emergency rooms.
The Bangor Daily News contributed to this report.