Health Care Reform Measures Could Affect Hospital Finances

Jan. 09--Hospitals across the country have spent more than a year preparing for Oct. 1, 2012.

That is the expected launch date for two health care reform measures that will link Medicare reimbursements to the quality of a hospital's care. Readmission rates, patient satisfaction and a plethora of other measures will be used to calculate reimbursement rates, with lower-performing hospitals receiving less money than higher-performing ones.

The health care reform bill signed into law by President Barack Obama in March 2010 contains a number of measures scheduled to be rolled out this year. The coming year might also bring a decision on one of the portions of health care reform legislation requiring every American to buy health insurance by 2014 or risk financial penalties.

One of this year's measures is called value-based purchasing, which means Medicare reimbursements to hospitals will be based on the quality of care performed.

There are a number of measures that will be considered when assessing a hospital's quality of care, and more will be added as time goes on, according to Martin Ciccocioppo, vice president of research for the Hospital & Healthsystem Association of Pennsylvania.

How satisfied a patient is with the care he or she received is one of the quality measures being linked to Medicare reimbursements. Patients will be asked about how well doctors and nurses communicated with them, whether their pain was controlled and even if the hospital was quiet and the patients' rooms were clean.

The measure is troubling, Mr. Ciccocioppo said.

"There's no clear scientific link between (patient satisfaction) and the quality of care they received," he said. "But patient satisfaction is 30 percent of the (value-based purchasing) score."

Also beginning Oct. 1, Medicare reimbursements will be reduced if a hospital has more readmissions than expected for heart attack, heart failure and pneumonia patients. Hospitals with higher-than-expected readmission rates will see reduced reimbursements for the total payments received for treating those types of conditions.

But the measure does not take into account planned readmissions, Mr. Ciccocioppo said. It also penalizes hospitals for readmissions that are out of their control, including patients who do not take their medication or keep follow-up appointments after being released from the hospital.

"Hospitals are spending a lot of time and money ... making sure patients are receiving follow-up care," he said. "It's not something they are paid to do."

A new model

Hospitals across the region depend on Medicare reimbursements for a large chunk of their patient revenue, and the Hospital & Healthcare Association of Pennsylvania estimated that as many as 50 percent of the state's general acute care hospitals will lose Medicare revenue because of the two measures.

According to a report from the Pennsylvania Health Care Cost Containment Council, almost 35 percent of Moses Taylor's$144.2 million in net patient revenue in fiscal 2010 came from Medicare reimbursements.

About 52 percent of the Regional Hospital of Scranton's$145.5 million in net patient revenue in fiscal 2010 came from Medicare, and about 27.5 percent of Community Medical Center's$157.6 million in net patient revenue for fiscal 2010 came from Medicare.

Hospitals around the region have grappled with financial pressures for years, in part because Medicare reimbursements do not always cover the cost of the care provided. On average, Medicare pays about 93 cents for every $1 worth of care, according to the Hospital & Healthsystem Association of Pennsylvania. Private insurers base their reimbursements on what Medicare pays, experts said.

To stay afloat, hospitals have had to cut costs where they can. Many need millions of dollars in improvements to physical plants, information technology, equipment and funds for recruiting doctors and other key medical staff.

Health care reform, though, aims to shift the focus from a volume-based model of care -- where doctors, hospitals and other providers earn more by treating more people -- to paying for high-quality care.

"We can't continue to cut our way out of this dilemma," said Karen Murphy, R.N., Ph.D., president and CEO at Moses Taylor Hospital. "Health care reform forces us to take a step back and look at new ways of delivering care."

To prepare, hospital officials have been working to find ways to deliver better quality care. For example, every employee at Moses Taylor Hospital wears a button asking whether there is anything they can do for patients as a way to boost satisfaction rates. The hospital also has put staffers in place to check in with patients after they are released from the hospital, Dr. Murphy said.

Individual mandates

In addition to health care reform measures being rolled out this year, the Supreme Court will weigh in on what many believe is the most controversial portion of the bill.

By 2014, every American is required to have some type of health insurance coverage. Those who do not will face financial penalties.

Pennsylvania is one of 26 states that has challenged the measure as unconstitutional. The Supreme Court has set aside several days in late March to hear arguments in the case.

University of Scranton political science professor William Parente, Ph.D., expects the court to issue an opinion on the case by June. Just what that opinion will say, though, is anyone's guess.

"The court is split right down the middle," Dr. Parente said. "It is a little intrusive on individual liberties ... but to make (health care reform) work, everyone needs to be in the pool."

Dr. Parente added that the results of the November election also will have a huge impact on the future of health care reform.

"If Republicans take control, I think there will be a lot of changes that will probably be more important than the Supreme Court decision," he said.

Contact the writer: [email protected]

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