Assessing Medicare's hospital pay-for-performance programs and whether they are achieving their goals.

Three separate pay-for-performance programs affect the amount of Medicare payment for inpatient services to about 3,400 US hospitals. These payments are based on hospital performance on specified measures of quality of care. A growing share of Medicare hospital payments (6 percent by 2017) are dependent upon how hospitals perform under the Hospital Readmissions Reduction Program, the Value-Based Purchasing Program, and the Hospital-Acquired Condition Reduction Program. In 2015 four of five hospitals subject to these programs will be penalized under one or more of them, and more than one in three major teaching hospitals will be penalized under all three. Interactions among these programs should be considered going forward, including overlap among measures and differences in scoring performance.

Cost of hospitalization for preterm and low birth weight infants in the United States.

OBJECTIVE: The objective of this study was to estimate national hospital costs for infant admissions that are associated with preterm birth/low birth weight. METHODS: Infant (<1 year) hospital discharge data, including delivery, transfers, and readmissions, were analyzed by using the 2001 Nationwide Inpatient Sample from the Healthcare Cost and Utilization Project. The Nationwide Inpatient Sample is a 20% sample of US hospitals weighted to approximately >35 million hospital discharges nationwide. Hospital costs, based on weighted cost-to-charge ratios, and lengths of stay were calculated for preterm/low birth weight infants, uncomplicated newborns, and all other infant hospitalizations and assessed by degree of prematurity, major complications, and expected payer. RESULTS: In 2001, 8% (384,200) of all 4.6 million infant stays nationwide included a diagnosis of preterm birth/low birth weight. Costs for these preterm/low birth weight admissions totaled $5.8 billion, representing 47% of the costs for all infant hospitalizations and 27% for all pediatric stays. Preterm/low birth weight infant stays averaged $15,100, with a mean length of stay of 12.9 days versus $600 and 1.9 days for uncomplicated newborns. Costs were highest for extremely preterm infants (<28 weeks' gestation/birth weight <1000 g), averaging $65,600, and for specific respiratory-related complications. However, two thirds of total hospitalization costs for preterm birth/low birth weight were for the substantial number of infants who were not extremely preterm. Of all preterm/low birth weight infant stays, 50% identified private/commercial insurance as the expected payer, and 42% designated Medicaid. CONCLUSIONS: Costs per infant hospitalization were highest for extremely preterm infants, although the larger number of moderately preterm/low birth weight infants contributed more to the overall costs. Preterm/low birth weight infants in the United States account for half of infant hospitalization costs and one quarter of pediatric costs, suggesting that major infant and pediatric cost savings could be realized by preventing preterm birth.

Snapshot of hospital quality reporting and pay-for-performance under Medicare.

This paper examines the impact that Medicare pay-for-performance (P4P) might have upon hospital payment. It uses the initial two quarters of a national quality database to model financial gains or losses using the Premier Hospital Quality Incentive Demonstration rules, as well as the P4P approach recommended by the Medicare Payment Advisory Commission (MedPAC). Findings reveal variation among all types of hospitals and across all measures within each of the three conditions studied: heart attack, heart failure, and pneumonia. Initially, hospitals' financial gains and losses likely will be marginal using the Premier demonstration payment rules and somewhat larger under the MedPAC recommendations as modeled.