Medicare Reimbursement Based on Quality of Care Standards

Quality-of-care provisions in the Affordable Care Act (ACA) link Medicare reimbursement to hospital performance. These new rules are intended to cut unnecessary Medicare costs and reward medical providers that deliver high quality care.

The ACA authorizes the Centers for Medicare & Medicaid Services (CMS) to reduce payments to hospitals with excessive readmission rates. The Hospital Readmission Reduction Program addresses the problem of patients’ readmissions within 30 days of discharge, resulting from such issues as the following:

  • Complications caused by treatment a patient received at the hospital
  • Hospital-acquired conditions, including bedsores, infections and fall injuries
  • Inadequate treatment of a patient’s medical condition that prompted an initial hospital stay
  • Improper coordination among medical care providers treating the patient
  • Lack of follow-up medical care post hospital stay
  • Unanticipated worsening of a patient’s medical condition

The initial focus of the Hospital Readmission Reduction Program is on the high-volume, high-cost conditions — heart attacks, heart failure and pneumonia. CMS determines whether hospital admissions are excessive by dividing the number of predicted 30-day readmissions for the conditions by the number of expected readmissions based on similar hospitals. Excessive readmission is described as having a ratio of predicted to expected readmissions that is greater than one.

The Hospital Value-Based Purchasing (VBP) Program applies a pay-for-performance standard to reimbursement. The VBP adjusts payments based upon a hospital’s scores in the following areas:

  • Measure/dimension — Higher of either the achievement or the improvement score
  • Achievement — Points for achieving a certain level of performance when the hospital is compared to other similar hospitals
  • Improvement — Points for a hospital’s improvement over its own baseline performance
  • Condition/procedure — Score specific to a condition or procedure

Although these programs are supposed to improve quality and costs of patient care, quality-based assessments may unfairly penalize a hospital that helps generally unhealthy, seriously ill or noncompliant patient populations. These patients may have higher rates of readmissions even though the hospital delivered good care.

A poor quality assessment can result in incomplete Medicare reimbursement — a harsh ramification for a hospital that may be serving a traditionally underserved community. Fortunately, CMS provides an appeals process for hospitals that are designated as having excessive readmission rates. An attorney who focuses on health care provider reimbursement issues can help hospitals in New Jersey and New York argue effectively for reconsideration of an unfavorable quality-of-care determination.

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