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Medicare imposes small cut in payments on Lutheran, Parkview

Smaller hospitals in these groups receive bonuses for patient care

Thursday, January 3, 2013 - 11:47 am

Lutheran Hospital and Parkview Regional Medical Center have received small cuts in Medicare payments based on federal measures of the quality of care, according to a report from Kaiser Health News.

Medicare payments have been cut by much less than 1 percent at each hospital – 0.12 percent at Lutheran and 0.07 percent at Parkview.

According to the Kaiser report, smaller hospitals in Fort Wayne and the region affiliated with Lutheran and Parkview receive small bonuses based on their records on patient readmissions and a more complex measure of patient satisfaction and health-care practices called the “value-based purchasing program.” Those increases range from 0.15 percent to 0.61 percent.

One measure of the quality of care is how many patients have to be readmitted within 30 days of being released from the hospital. These financial incentives are intended to encourage hospitals to improve care and reduce the number of patients who wind up back in the hospital within a month.

“I think the government is asking the right questions,” Joe Dorko, CEO of Lutheran Health Network, said Wednesday. Dorko said hospitals in the Lutheran group have been surveying patients since long before the Affordable Care Act was passed.

“I'm trying to reduce the number of people admitted to the hospital in general,” Dorko said. He said that he sees hospital admissions in many cases as evidence of missed opportunities for better patient education or effective care delivered earlier.

“I don't think it's a hospitals-only” effort to improve patient care, he said. Dorko said he's hearing from nursing homes and home-healthcare agencies that want to work more effectively with Lutheran hospitals to improve patient care.

Dorko did not comment on how much the reduced Medicare reimbursement might cost Lutheran Hospital or how that would balance with increased payments in the regional hospitals. Parkview Health Systems officials did not comment on the report.

Lutheran Hospital had a bonus of 0.14 percent in the value-based purchasing program but a cut of 0.26 percent for excessive readmissions, for a net cut of -0.12 percent. Parkview Regional Medical Center suffered no penalty for excessive readmissions, but lost 0.07 percent under the value-based purchasing.

These penalties and bonuses were created as part the Affordable Care Act, widely known as Obamacare. One of the many goals of that legislation was reducing the growth of Medicare costs.

Two measures are involved in these incentives. The first is a penalty that can be applied to hospitals in which too many patients treated for pneumonia, heart attack or heart failure are readmitted within a month. The health care law requires the agency that administers Medicare to cut its payments to hospitals with excessive readmissions, beginning for discharges after Oct. 1. That penalty is limited to 1 percent.

The second is a broader assessment of patient care based 30 percent on satisfaction surveys of patients and the 70 percent on consistency with which hospitals follow “best practices” in treating certain conditions, such as pneumonia and heart failure, or preparing patients for surgery.

In explaining this “Value-Based Purchasing Program,” the Centers for Medicare and Medicaid Services said it is “is changing the way it pays hospitals, rewarding hospitals for the quality of care they provide to Medicare patients, not just the quantity of procedures they perform. Hospitals are rewarded based on how closely they follow best clinical practices and how well hospitals enhance patients' experiences of care.” Penalties or bonuses based on the value-based program are limited to 1 percent this fiscal year, which ends Sept. 30, 2013. By 2017, the percentage of payment that can be withheld or added will rise to 2 percent, according to the Centers for Medicare and Medicaid Services.

Medicare penalties, bonuses

The federal Medicare program will pay bonuses or impose penalties to hospitals based on its measures of the quality of care. One measure – the “Value-Based Purchasing Program” – combines patient satisfaction, certain health care outcomes and several accepted medical practices. The other measure is the frequency of patient readmissions for certain conditions within 30 days. The Medicare penalties and bonuses were not available for every hospital in the region. The figures in this table are the percentages that Medicare payments will be raised or cut, based on these quality measurements.

Lutheran Network

HospitalCityValue-based percentageReadmissions percentageTotal percentage change for Medicare payment
Lutheran HospitalFortWayne0.14-0.26-0.12
Bluffton RegionalBluffton0.55-0.150.40
Dupont HospitalFort Wayne0.4600.46
St. Joseph HospitalFort Wayne0.1500.15
Orthopedic HospitalFort Wayne0.6100.61

Parkview System

HospitalCityValue-based percentageReadmissions percentageTotal percentage change for Medicare payment
Parkview RegionalFortWayne-0.070-0.07
Parkview HuntingtonHuntington0.2600.26
Parkview NobleKendallville0.1700.17
Parkview WhitleyColumbia City0.2500.25
Parkview Orthopedic HospitalFort Wayne0.3500.35

Sources: Kaiser Health News, Centers for Medicare and Medicaid Services

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