Most Hospitals Will Fail to Collect on Medicare Quality Bonuses

This year, 55 percent of hospitals (1,700) that were graded on the federal government’s most comprehensive review of quality received bonuses, but fewer than 800 of those will actually receive the money, according to a Kaiser Health News analysis. Those who won’t receive the bonuses are being penalized through two other Medicare quality programs: one that punishes hospitals for having too many patients readmitted for follow-up care and another that lowers payments when too many patients develop infections or get injured during their hospital stays. In addition, payments are being lowered for hospitals that are not making enough progress in switching over to electronic medical records. Altogether, more than 6 percent of Medicare payments are contingent on performance.

The Hospital Value-Based Purchasing Initiative, now in its third year, is the only quality incentive that provides bonuses and penalties, as well as the only one that recognizes hospital improvement even if a hospital’s quality metrics are still subpar. The value-based bonuses and penalties are based on 26 different measures, including how consistently hospitals followed a dozen recommended medical guidelines and how patients rated their experiences while in the hospital, as well as a new measure that encourages hospitals to deliver care in the most efficient manner possible. This year, Medicare judged hospitals based on how they performed in comparison with others in the second half of 2012 and all of 2013, as well as how much they had improved from two years before. Medicare adds a hospital’s bonus or penalty to every Medicare reimbursement for a patient stay from October through the end of September.