Many South Florida hospitals will see slight reductions in how much Medicare pays them based on a new system of penalties and rewards that started Monday.
The shift is part of a little known, but long planned provision of the 2009 federal healthcare reform act that intends to shift providers toward a pay-for-performance system, with bonuses paid for good performances and penalties for bad ones.
The bonuses will play out over time, but the penalties are now being revealed for hospitals that have too many patients for specific diseases being readmitted within 30 days of being released. The penalties will be up to 1 percent of payments this year and increase to 3 percent in 2015.
According to an analysis by Kaiser Health News, the full penalty of 1 percent is being assessed this year against Memorial West in Pembroke Pines, Memorial Regional in Hollywood, Palm Springs General and Palmetto General in Hialeah and the University of Miami Hospital.
Kendall Regional was assessed a penalty of 0.99 percent, Jackson Memorial 0.83 percent, according to the Kaiser analysis.
Hospitals say there are complex reasons for their ratings. Stanley Marks, chief medical officer of Memorial Healthcare System, said Monday that Memorial hospitals get favorable marks in many surveys. “Nonetheless, we see this as an opportunity to improve the care we provide to our patients.”
Brian Dean, Jackson’s vice president of finance, said managers are working hard to improve all performance standards, but Medicare makes up only 17 percent of Jackson’s patient revenue and so federal penalties and rewards do not have much impact on finances.
The new Medicare bonuses will be based on performance standards, such as giving medications to prevent blot clots to heart attack patients within 30 minutes of arriving at the hospital, and on patient satisfaction surveys.
For the bonuses, Medicare will withhold 1 percent of payments to all hospitals. Hospitals that do poorly on the value measurements may back a small portion of the withheld funds. Top performing hospitals could get more than 1 percent as a bonus.
Though the rewards and penalties are comparatively small, they could grow over time. Sal Barbera, a former hospital executive who teaches at Florida International University, called it “a step in the right direction that will eventually result in a move away from fee-for-service reimbursement.”
“The government is hoping these pay-for-performance methods ... will result in higher quality and more efficient care being rendered,” Barbera said. “All providers should be accountable for the care they provide.”
The federal government has long been discussing paying for performance, going back to the George W. Bush administration. “Hospitals have been preparing for this,” said Linda Quick, president of the South Florida Hospital and Healthcare Association.
In anticipation of the changes, many facilities have been working strenuously to reduce preventable re-admissions and to increase patient satisfaction, data that “all hospitals have been keeping ... for years,” Quick said.
The larger challenge is hospitals getting doctors to adhere to national guidelines for what’s the best standard of care. That’s “the most challenging,” Quick said, because doctors, not hospital administrators, generally decide the specifics of care.
“Just last week at the Palm Beach County Medical Society’s ‘Future of Medicine’ event, some of the doctors were still balking at the notion of ‘guidelines,’ ” Quick said.