Because they did a relatively good job keeping patients happy and alive, among other measures, a slim majority of Texas hospitals have earned cash bonuses under a federal program that rewards high performance by hospitals that receive Medicare reimbursements.
But what Medicare giveth, it taketh away. Many of the hospitals earning performance bonuses won't see any cash as a result, because two different Medicare evaluation programs are penalizing them for shortcomings in the care provided to patients.
Under a change mandated by federal health reform, more than 6 percent of Medicare payments to hospitals are now contingent on performance. This year, some Texas hospitals are facing as much as a 3 percent cut in reimbursements for treating Medicare patients.
“There are some hospitals that do extremely well, but for many of them, that’s the difference between being in the black versus being in the red,” said Vivian Ho, a health economist at Rice University’s Baker Institute for Public Policy. “On Medicare patients they also tend to lose money, so that percentage can be very significant.”
The feds rewarded 141 Texas hospitals, or 52 percent of those evaluated, for having greater patient satisfaction and lower death rates than their peers in previous years, among other criteria under an evaluation known as value-based purchasing.
But fewer than 100 hospitals will actually reap a cash benefit in 2015. That’s because two other Medicare quality programs are cracking the whip on hospitals with poor health outcomes. One punishes hospitals if too many patients are re-admitted for follow-up care. The other cuts payments to hospitals where too many patients got sick during their visits.
The dollar value of the incentives depends on the number of Medicare patients a hospital sees. According to estimates by Eric Fontana, a health care analyst, the average bonus nationwide for hospitals with more than 400 beds will be nearly $213,000, as reported by Kaiser Health News. The average penalty will be about $1.2 million.
For hospitals with 200 or fewer beds, the average bonus will be about $32,000 and the average penalty will be about $131,000. Twenty-eight percent of hospitals will break even or get extra money.
Facing some of the steepest overall cuts for performance in Texas are the Northwest Texas Surgery Center, in Amarillo, and the Peterson Regional Medical Center, in Kerrville. They are set to lose 3.37 percent and 3.04 percent of their Medicare payments, respectively.
The Dallas Medical Center received the toughest penalty of any hospital for its value-based purchasing score, a 0.72 percent cut to Medicare payments. That was based in part on surveys from apparently disgruntled patients. The federal government gave the hospital a score of just 5 out of 100 on measures like cleanliness, quietness and how well the hospital staff managed a patient’s pain, as reported by patients. Representatives for the hospital did not return a request for comment.
On the other hand, the Physicians Centre in Bryan and the Moore County Hospital District in Dumas earned the biggest bonuses of any hospitals in the state, at 2 percent and 1.69 percent, respectively.
Some hospitals are exempt from the incentive program, including “critical access hospitals,” which operate in rural areas, and facilities that offer only specialized care, such as for children or veterans.
This story was produced in partnership with Kaiser Health News, an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.
Disclosure: Rice University is a corporate sponsor of The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here.
This article originally appeared in The Texas Tribune at http://www.texastribune.org/2015/01/22/few-texas-hospitals-reap-medicare-bonuses/.