So Far, Obamacare’s Hospital Reform Isn’t Working
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The Fiscal Times
August 15, 2014

The Affordable Care Act includes a handful of measures aimed at improving the hospitals’ overall performance and the quality of care. The problem is some of those measures don’t seem to be working, while others are having unintended consequences.

One provision in particular, called Hospital Value Based Purchasing, which rewards or penalizes hospitals depending on their performance—is not leading to any substantial improvements in care, a new study found.

Related: If You Don’t Take Your Meds Should Your MD Be Punished?

This year, under the program, Medicare gives either a 1.25 percent increase or decrease in payments to hospitals, depending on their performance measured by at least 20 metrics.

But researchers led by Andrew Ryan at Weill Cornell Medical College in New York City, determined there was no difference in performance between hospitals performing in the program and those that were exempt from the program.

This was the first study of its kind to look at how hospitals were doing under the new program, as Kaiser Health News first noted.

Researchers cautioned that it might be too early to conclude much about the program’s overall effectiveness. They say it may take hospitals longer than 9 months to respond to the financial incentives of the program.

Related: A Bipartisan Baby Step to Fix an Obamacare Glitch

They also said the penalties and bonuses this year might have been too small to have any real impact. Still, the researchers expect the program will likely have more influence as the years go on and the penalties or bonuses increase. In 2015, the penalties or bonuses rise to 1.5 percent of payments, then 2 percent in 2016. 

This program is just one of a spate of payment provisions aimed at improving the quality of care. Another measure penalizes or rewards hospitals for their re-admittance rates.

That program was flagged earlier this year by a panel of 26 experts commissioned by the Obama administration who say it could unintentionally hurt hospitals that serve a disproportionately large share of low-income people.

The panel, created by the National Quality Forum, issued a draft report saying the current performance-based pay structure is problematic because low-income patients are less likely to have successful outcomes.

Related: Up to 300,000 Could Lose Obamacare on Federal Exchange

The hospitals serving them could then be labeled as “poor performers” and be slapped with penalties. The panel suggested the pay structure be adjusted to take into account socioeconomic factors.

The panel’s suggestions did not go unheard. Before lawmakers left Washington for August recess, a bipartisan group of senators introduced legislation that would take socio-economic status into account in the law’s pay for performance initiative.

Of course, it still faces an uphill battle when the gridlocked Congress returns.

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Washington Correspondent Brianna Ehley, based in D.C., covers Congress, government agencies and spending issues, health care, and tax and economic policy for The Fiscal Times.