Tying Medicare Payment to Quality

By Patrick Conway, MD, MSc  

CMS Chief Medical Officer and Director of the Center for Clinical Standards and Quality

In mid-December, the Centers for Medicare & Medicaid Services (CMS) posted one of the most important steps we’ve taken yet for Medicare reform. 

Go to http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/hospital-value-based-purchasing/index.html and you’ll find a chart labeled FY 2013 HVBP Payment Adjustment Factors with provider numbers and percentages.  This chart is the latest sign of how serious Medicare is when it comes to making sure its beneficiaries get the best quality care. 

The Hospital Value-Based Purchasing Program is one of a host of Affordable Care Act programs that put patients at the center of the Medicare system.  We’ve known for a long time that when Medicare paid providers based on how much work they did and not on how well they did for patients, too often patients got services and tests that didn’t improve their health.  Providers already must publicly report the steps they take to provide quality care to Medicare beneficiaries; Hospital Value-Based Purchasing gives these efforts additional teeth. 

Beginning in 2013, Medicare will start paying hospitals a little more or a little less in each payment depending on how well they meet Medicare’s quality standards.  The value-based payment adjustment factors tell them how much their base Medicare payments will change.

Hospitals are graded on improvement as well as performance on a variety of quality measures.  These standards are consistent with clinical practice for the provision of high quality care.  Did emergency room staff follow the right protocols with a heart-attack patient?  Did a patient get antibiotics before surgery?  Did your nurses and doctors listen to you?

Hospital Value-Based Purchasing is a carefully crafted program.  It’s built on the same recommendations that private purchasers of health care and the Institute of Medicine have recommended and tested for a decade or more.  It does not add to the deficit.  One percent of the base Medicare payment for each Medicare patient discharged from an eligible hospital funds the FY 2013 program.  CMS consulted with a wide range of stakeholders—from hospitals to patient advocates—every step of the way. 

CMS reviewed nine months of data from July 1, 2011, to March 30, 2012 measure both performance and improvement in the first year of the program.  We published our initial calculations in April, gave hospitals updated calculations in October, and posted these final adjustment factors only after the hospitals had a chance to review them.  And, only 15 hospitals out of almost 3,000 asked us to review our calculations. 

If you go to the chart, you’ll see the base payment adjustments that Medicare will be making for every single discharge from an eligible hospital, depending on the quality of care the hospital provided.  This demonstrates Medicare’s commitment to ensuring that its beneficiaries get the best quality care. 

In the next few years, as payment incentives gradually increase and more quality measures are added to the program, we will continue working with hospitals to make sure Medicare beneficiaries’ quality of care improves.  The Hospital Value-Based Purchasing program is off to a strong start.  Posting the value-based payment adjustment factors may seem like a routine step, but it actually heralds a new era in which Medicare actively promotes the best care for beneficiaries and makes their health priority #1.

Fighting Health Care Fraud

The Obama Administration has made fighting health care fraud one of our top priorities.  In Medicare and Medicaid, these efforts are already paying off.  This year, we announced a record recovery of $4.1 billion in taxpayer dollars. Four years ago, that number was only a little more than $1 billion.

These efforts reflect a broad range of steps we have taken to improve our ability to detect and go after fraud.  For instance:

•             Under the Affordable Care Act, we have new authorities to fight fraud.  This includes additional scrutiny for higher risk categories of providers and suppliers before they’re able to bill Medicare, Medicaid and the Children’s Health Insurance Program (CHIP); and new authority to suspend payments during the investigation of fraud.

For example, this week we suspended payments to home health providers in Texas related to a recent fraud bust.

•             We’ve instituted tougher new rules and sentences for criminals.  From 2008 to 2011, there has been a 75 percent increase in individuals charged with criminal health care fraud.

•             We are implementing a ground-breaking Healthcare Fraud Prevention Partnership, where the federal government and private and state organizations, including insurers, work together to prevent health care fraud.

•             And we have implemented a new Fraud Prevention System that uses predictive modeling technology, similar to the technology that credit card companies use to flag suspicious activity, to review medical claims before they are paid.

Today, we released a report on the first year results of the Fraud Prevention System (http://www.stopmedicarefraud.gov/fraud-rtc12142012.pdf). Since the technology was first rolled out in 2011, all Part A and B Medicare claims – over one billion – have run through the system.   In the first year in operation, the system initiated 536 new investigations and helped stop, prevent, or identify an estimated $115 million in fraudulent payments.

We are working to continue improving our system and refine the way we track our results.  Our law enforcement partners have made important suggestions on how to improve our metrics for reporting these savings, and we are working to implement their recommendations.  They agree – this is an important system that will strengthen our efforts to fight fraud, waste and abuse.

Fighting fraud continues to be a top priority for the Administration, and we will continue implementing innovative new approaches that will protect taxpayer dollars.  For more information on our efforts to fight fraud, please visit: http://www.healthcare.gov/news/factsheets/2011/03/fraud03152011a.html.

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