Medicare penalties far exceed bonus payments to hospitals, analysis finds

 

Recently implemented Medicare penalties are having a greater impact on hospitals than newly available bonuses, according to a Kaiser Health News analysis. Penalties for readmissions and nosocomial infections are particularly costly, highlighting the increasingly important role that post-acute providers are playing in the healthcare ecosystem. 

The Affordable Care Act created a value-based purchasing incentive, which rewards Medicare hospitals that improve their performance and meet certain quality measures. About 1,700 hospitals earned bonuses this year, according to KHN. However, only about 28% will break even or see a bottomline boost, because many also are being penalized under ACA programs that ding hospitals for having too many patients readmitted or infected during their stay.

For hospitals with more than 400 beds, the average bonus is $213,000 and the average penalty is about $1.2 million, KHN's Jordan Rau reported Thursday. The estimates come from analyst Eric Fontana of The Advisory Board Company. 

Given the outsize impact of readmissions penalties, many hospitals have begun to work more closely and selectively with skilled nursing facilities and other post-acute providers. This trend toward greater coordination also is motivated by a new Medicare efficiency measure, Rau noted. The measure is an estimate of the cost of care for a hospital's average patient, and it takes into account services provided in the three days before and after hospital admission. 

Alaska, Minnesota, Oregon and Wisconsin were among states where many hospitals received Medicare bonuses, the analysis showed. Arizona, California, Florida and New York were among states where more than half of hospitals were penalized.