231 hospitals inadvertently earned Medicare bonuses despite lower quality care

New research shows CMS rewarded hospitals with substandard quality scores in its Hospital Value-Based Purchasing program because they performed well in lowering cost, according to study published in the May issue of Health Affairs.

CMS added the spending metrics to the program in fiscal year 2015, which the study authors wrote marks "a major shift in CMS's approach to rewarding and penalizing hospitals." The measure was added to reward hospitals that provide high-quality care at lower costs.

However, after analyzing data from 2,679 hospitals that participated in the program in both 2014 and 2015, researchers found the added spending metrics inadvertently rewarded low-quality hospitals that also happened to be low-spending.

Specifically, they identified 231 hospitals that were low-quality received bonuses in fiscal year 2015 associated with their performance on spending. The average bonus was low — just 0.18 percent of the hospitals' Medicare payments. However, other low-quality hospitals that did not achieve cost savings, the average penalty was -0.33 percent.

The researchers did find that seven hospitals that delivered high-quality of care at a low cost in fiscal 2015 received larger bonuses, ranging from 1.40 percent to 1.77 percent. All hospitals with high quality were rewarded with bonuses, regardless of spending performance.

Because the whole aim of the program is to incentivize better care, the authors wrote, "CMS should consider adding a minimum quality threshold to avoid rewarding low-quality hospitals that are also low spending."


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