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How Will Medicare’s New Efficiency Measurement Impact Patient Safety?

As part of the federal Affordable Care Act, Medicare will begin measuring efficiency and per-patient costs to evaluate hospitals and adjust its payments to them accordingly. The change has provoked the ire of some hospital administrators and also has patient advocates wondering whether tracking spending as planned will improve or diminish patient safety and medical care.

Medicare Efficiency Measurement

Amid rising Medicare costs and persistent budget challenges, federal officials are focused on reducing Medicare expenditures. To do so, in July 2011, Medicare will begin tracking hospitals’ spending on individual patients as directed by the Affordable Care Act. Then, Medicare will adjust its payment percentage for each hospital depending on whether the hospital is a relatively expensive or low-cost performer.

Medicare Spending Per Beneficiary

According to The New York Times, Medicare will use efficiency as a hospital performance measure based on “Medicare spending per beneficiary,” similar to other factors like infection rates for surgery patients and mortality rates for heart-attack patients. The stated purpose of the measure is to improve the quality and efficiency of health care by correlating Medicare payments to the performance of health-care providers.

In addition to expenses generated during a patient’s hospitalization, the cost of any medical treatment occurring three days before hospitalization and for 90 days after discharge also will be included in the hospitals’ bills for Medicare measurement purposes. Medicare officials believe that using such a long duration will encourage hospitals to coordinate care in an efficient manner over an extended time period, reported The New York Times.

Federal officials provided an example of the Medicare spending per beneficiary measurement, demonstrated in simplified form by The New York Times. It stated that if Medicare spends an average of $9,125 per Medicare beneficiary at a single hospital, and comparable costs at all U.S. hospitals are $12,467, the single hospital would receive a high score for efficiency.

The efficiency score would then be combined with other measures to create an overall performance score for the hospital. Overall performance scores would then be used to determine a higher or lower percentage that Medicare pays for each claim a hospital files in a system known as value-based purchasing, which distributes more funds to and rewards higher-performing hospitals. Details of the measure are still in flux, but Medicare plans to begin computing performance scores in July 2011, and implement the value-based purchasing system in October 2012.

Quality Concerns

As may be expected, some hospital administrators dislike the prospect of being held accountable for expenses arising from care outside of their facilities. They say they have little influence over medical treatment occurring after a patient has left their hospitals and even less control over the treatment a patient receives before coming in their doors.

In addition, teaching hospitals may receive lower efficiency scores and be penalized by the value-based purchasing system because they treat sicker and often more expensive patients. According to The New York Times, Medicare officials assert that the data will be adjusted in consideration of patients’ ages and the severity of their illnesses. Yet, president of the Greater New York Hospital Association, Kenneth E. Raske, said the efficiency measure “tends to discriminate against inner-city hospitals with large numbers of immigrant, poor and uninsured patients.”

Many people agree that paying hospitals based on performance is desirable, but the right measures of performance are crucial. President of the Federation of American Hospitals, Charles N. Kahn III, said officials are “off track” in holding hospitals responsible for what Medicare spends on patients up to three months after discharge. Further, hospital administrators and patient-safety advocates are concerned about the effect of a measure that emphasizes low costs instead of quality outcomes.

Most worrying is the potential impact on patient care and safety as hospitals attempt to lower costs. The focus on efficiency could result, for example, in fewer diagnostic tests being ordered and performed, potentially resulting in missed or incorrect diagnoses. In cases where early detection and prompt treatment are key to recovery, such cost-cutting measures could have grave consequences.

If you or a loved has one experienced a negative outcome after medical treatment, such as misdiagnosis from improper testing, or suffered from a health-care provider’s negligence, contact a personal injury attorney with experience in medical-malpractice cases to discuss any legal claims you may have.