Affordable Care Act Begins New Era Steering US Healthcare Toward Pay-for-Performance

Some healthcare providers will have as much as 2 percent of Medicare reimbursements withheld thanks to the latest reforms of the U.S. healthcare system, which are set to take effect as the federal government begins a new fiscal year as of Oct. 1.

On Monday the latest round of reforms baked into the Patient Protection and Accountable Care Act that lawmakers hope will reform healthcare to become more results-based versus revenue-based enter into play. While Medicare reimbursements nationwide for acute healthcare providers will increase $2 billion or 2.3 percent, that increase will not be distributed across the board, but instead for providers that provide measurable benefit and value to patients.

The focus for Fiscal 2013 is on hospital readmissions. Acute-care hospitals that have readmission rates lower than the national average will get a 2.8 percent bump in Medicare reimbursements; those that have readmission rates higher than the national average will only receive a .8 percent increase.

These new regulations represent the first significant steps of healthcare reform to put greater import on quality than quantity by withholding a percentage of payments to hospitals that rate below the national average for certain quality metrics.

According to the Centers for Medicare & Medicaid Services (CMS), the criteria for the redistribution of the Medicare increase will be based upon:

• The use of three 30-day readmission measures—Acute Myocardial Infarction (AMI), Heart Failure (HF) and Pneumonia (PN), endorsed by the National Quality Forum for FY 2013 and FY 2014;
• The definition of “readmission” as generally referring to an admission to an acute-care hospital paid under the IPPS within 30 days of a discharge from the same or another acute-care hospital (subject to technical issues addressed in the rule);
• The calculation of a hospital’s excess readmission ratio for AMI, HF and PN, which is a measure of a hospital’s readmission performance compared to the national average for the hospital’s set of patients with that applicable condition; and
• A policy to use three years of discharge data and a minimum of 25 cases to calculate a hospital’s excess readmission ratio for each applicable condition. In FY 2013, the excess readmission ratio will be based on discharges occurring during the 3-year period of July 1, 2008 to June 30, 2011.