Health Care Reform Incentives, Penalties Can Sway Provider Reporting

Two separate studies published on Jan. 23 in the Journal of the American Medical Association looked at the implementation of public quality reporting and the effects of the federal hospital readmissions reduction program.

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The first study was analysis of early pay-for-performance (P4P) and public reporting, and found that hospitals tailor administrative data reporting to obtain the best possible statistical results, which therefore makes administrative data less reliable and can affect financial payments based on quality measures.

"Public reporting and P4P initiatives give hospitals incentives to change documentation to optimize performance on metrics," said lead author Steven Farmer, MD, PhD, FACC, Center for Cardiovascular Innovation, Feinberg School of Medicine, Northwestern University, Chicago. "Hospitals respond to these incentives, sometimes substantially. Physicians will face similar incentives to the extent they are or become subject to reporting or P4P mandates."

Required reporting can produce dramatic changes in the underlying data. In 2008, the Centers for Medicare and Medicaid Services (CMS) stopped reimbursing hospitals for costs associated with selected preventable events, including Patient Safety Indicator 7, central line-associated bloodstream infection (CLABSI). Data from the National Inpatient Sample show an increase and plateau of PSI-7 from 1998 through most of 2008. But when CMS halted reimbursement for PSI-7-related events in the fourth quarter of 2008, reported PSI-7 events fell by 50 percent in a single quarter.

Further, Farmer notes a study based on clinical laboratory data shows no evidence that non-payment affected the true CLABSI rate. The conclusion, Farmer adds, is that administrative data no longer present an accurate measure of these important and preventable adverse events.

The second study also published in JAMA found dramatic differences in readmission rates by hospital size and type. Beginning in 2013, CMS will reduce reimbursement by 1 percent for hospitals whose readmission rate exceeds expectations based on their case mix.

Karen Joynt, MD, MPH, affiliate of the ACC, Brigham and Women’s Hospital, and Ashish Jha, MD, MPH, Harvard School of Public Health, Boston, found that large and medium-sized hospitals are more likely than small hospitals to be penalized based on their readmission rates. Major teaching hospitals are 1.56 times more likely to be penalized than non-teaching institutions. Safety net hospitals are 2.38 times more likely to be penalized than non-safety net institutions. While a 1 percent penalty may be modest for some hospitals, the authors note, it may represent substantial financial shortfalls for hospitals operating on low profit margins. Financial pressures may move hospitals to reclassify patient admissions to minimize reported readmission rates, the authors note.

"P4P may primarily affect reporting, not outcomes," Farmer cautioned. "In response to reporting, hospitals and physicians will predictably modify their billing data to enhance apparent performance. There is need for a national, standardized system for outcome reporting. This system must be separate from billing data and structured so that it is minimally affected by the incentives to alter coding created by public reporting and P4P."

Keywords: Hospitals, Health Care Reform, Boston, Diagnosis-Related Groups, Medicaid, Centers for Medicare and Medicaid Services, U.S., Patient Safety, Inpatients, Universities, Hospitals, Teaching, Research Design, Patient Readmission, Chicago, Patient Admission, Medicare, United States

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