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New Report: St. Louis Area Hospitals Improved With Financial Incentives

Barnes-Jewish Hospital in St. Louis
provided by Barnes Jewish Hospital

A health industry reportpublished Thursday suggests federal programs that tie hospital quality scores to Medicare reimbursements are giving St. Louis hospitals a reason to improve.

Seventeen St. Louis area hospitals received bonus payments this year from Medicare thanks to programs in the Affordable Care Act that reward hospitals for providing a high quality of care. At the same  time, 25 were penalized for low scores, high readmission rates or failing to improve between 2011 and 2012.

In the past, Medicare paid hospitals similar rates for all procedures, regardless of outcome or the quality of care. That meant hospitals who readmitted patients for the same condition weeks later would be paid two times for the same problem.

The Affordable Care Act created a financial incentive for hospitals to increase the quality of their care through programs run through Medicare reimbursements. This fall, hospitals will be evaluated for their performance for the third year.   

One of the programs, Medicare’s Hospital Value-Based Purchasing Program, scores hospitals on how well they follow clinical procedures, how patents evaluate their experiences and what the mortality rates are for three conditions. Medicare’s Readmission Reduction Program rates hospitals for how often patients with common ailments are readmitted to the hospital within 30 days. Each hospital’s overall performance score determines if it will receive a financial bonus or a penalty when reimbursed by Medicare.

Nationally, more hospitals were penalized by Medicare than rewarded. But in St. Louis, the trend was the opposite. Most hospitals received bonuses, and 56 percent of St. Louis' hospitals recorded improvements in quality scores last year.

“Those two things are encouraging to us, and it indicates that the programs are working,” said Karen Roth, Director of Research for the St. Louis Business Health Coalition, which publishes the report annually.

Credit St. Louis Area Business Health Coalition
Readmission rates at St. Louis area hospitals. One of the measures of a hospital's success is whether patients return within 30 days to be treated for the same condition.

  “On the Readmission Reductions program, over half of the hospitals improved, reduced or eliminated their penalties. That tells us they’re really working hard,” she said.

Roth warned that the bar will be set higher this fall. That's when hospitals will start to be graded on readmission rates after joint replacement surgeries, and a higher percentage of hospitals’ Medicare funding will be at risk—up to 5.5% in total.

For hospitals that mainly treat privately insured patients, the spectre of losing that funding may not pose much of a risk. Roth says policymakers have debated whether the scores should be adjusted for hospitals with large numbers of uninsured or low-income patients. But she says there’s a wide variation of quality measures between hospitals, regardless of the socioeconomic status of their patients.  

“Hospitals are tasked with taking care of all of their patients, no matter if they’re insured or uninsured, and everyone should really get the same care,” Roth said. 

To see how your hospital stacks up, read the full report here.