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First Look At Medicare Quality Incentive Program Finds Little Benefit

By Jordan Rau

August 6th, 2014, 2:11 PM

One of Medicare’s attempts to improve medical quality –by rewarding or penalizing hospitals — did not lead to improvements in the first nine months of the program, a study has found.

The quality program, known as Hospital Value-Based Purchasing, is a pillar of the federal health law’s campaign to use the government’s financial muscle to improve patient care. Since late 2012, Medicare has been giving small increases or decreases in payments to nearly 3,000 hospitals based on how patients rated their experiences and how faithfully hospitals followed a dozen basic standards of care, such as taking blood cultures of pneumonia patients before administering antibiotics. As much as 1 percent of their Medicare payments were at stake in the first year and 1.25 percent this year, though most hospitals gained or lost a fraction of that. Hospitals were judged both on how they compare to others and how much they are improving.

The program is one of several payment initiatives instituted by the health law. Others include penalties for hospitals that have high rates of Medicare patients readmitted within 30 days and penalties that will go into effect this fall for hospitals with high rates of patient injuries or infections.

The study, published last month on the Health Services Research journal online site, is the first to look at how hospitals performed under the value-based purchasing program. The researchers, led by Andrew Ryan, a professor at Weill Cornell Medical College in New York City, analyzed hospitals’ performances in the five years before the program began and the period from July 2011 through March 2012, the nine months of data that Medicare used to determine the first year of bonuses and penalties. The researchers compared how the hospitals in the program did with the performance of several hundred hospitals that were exempted from the program, such as Maryland hospitals and critical access hospitals that have special payment arrangements with Medicare. The researchers found no significant difference in performance, with both groups of hospitals improving at equal rates.

The study’s evaluation did not include hospital performance since the spring of 2012 because of the government’s lag in reporting that data, as well as the time between the start of the study and its publication. Researchers noted “it may take hospitals longer” than nine months “to respond to the financial incentives of the program.” They also noted that the bonuses and penalties may have a greater influence as the potential money at stake rises each year, and as Medicare analyzes more aspects of hospital performance. Starting this October, Medicare will distribute $1.4 billion in incentives, and hospitals could gain or lose up to 1.5 percent of payments. That will rise to 2 percent by the fall of 2016.

This article was produced by Kaiser Health News with support from The SCAN Foundation.

2 Responses to “First Look At Medicare Quality Incentive Program Finds Little Benefit”

  1. Karen McCamant says:

    While providing an important preliminary peek at the impact of VBP on quality, limiting the data analysis to just the first 9 months raises my skepticism of the results. In addition, with so many other pressures driving healthcare quality, a larger post-launch data set is needed to be able to even try to attribute the effect (or lack thereof) to VBP.

  2. Alan Lieber says:

    It is great that we are trying to understand the impact of the VBP program. As a Hospital President, it is not surprising that there was no impact in the first nine months for the following reasons: a) It is a very short period of time to have an impact, b) In my opinion the VBP program and other programs like the HAC program which has composite scores and changing priorities are going to have less impact than programs with clear incentives like the Readmission program and c) these are really first attempts at trying to come up with ways to balance the existing fee for service payment system with some quality based reimbursement and d) from my perspective the quality measurement industry is still somewhat immature in identifying the bottom lines of quality.

    I would urge you to keep evaluating the various VBP programs and to segment them. I think it will be important for the government to stay committed to the program, but to change it to be more effective at improving the care for Medicare and other patients.