Healthcare News & Insights

Does your hospital cost Medicare more? Feds are probing

A new Medicare investigation finds costs vary greatly among hospitals — even facilities in close proximity to each other. Is your hospital one of the facilities the government has identified as charging patients big bucks?

If it is, you could experience some bumps in the road when Medicare’s proposal to link reimbursement to more efficient care goes into effect in October 2014.

Sure, that’s well over a year away, but facilities whose Medicare patients are incurring high bills will have some major adjustments to make. Especially since Medicare plans to hold hospitals accountable not only for the services provided and follow-up care, but everything that happens 30 days after discharge. That’s every test, treatment or additional stay, no matter what the reason.

Keiser Health News (KHN) analyzed the new Medicare data and found Medicare paid 5% or more above the national median to care for patients from 657 hospitals. That’s even after severity of illness and overall health condition of patients were taken into account. Basically, that comes out to one in every five hospitals.

On the other side, 1,150 hospitals were at least 5% below the national median when caring for Medicare patients — one out of three hospitals, according to the KHN analysis.

How Medicare will judge hospitals

Here’s how Medicare will be evaluating hospitals when the new plan goes into effect:

  • Hospitals will get more or less money depending on how their patients’ spending levels compare with other hospitals, and
  • How hospitals’ spending compares with previous years.

The good news is, even those hospitals whose patients are more expensive for Medicare to treat, may not be penalized if they’re making significant progress reducing their patients’ spending rates.

Reasons for gaps

So why are some hospitals better at cost savings when treating Medicare patients?

It could be a number of reasons:

  • some hospitals have more specialists working on a case together
  • if the hospital didn’t do a good job treating patients initially, they could require additional tests and procedures, or re-admittance, or
  • the hospital may have a tendency to discharge patients to long-term care facilities for recuperation.

Overall, it’s difficult to distinguish if a single hospital is actually better and more cost-effective than another at treating Medicare patients. For example, Nancy Foster, a vice president at the American Hospital Association in the KHN report brought up some interesting questions, such as: Could the patients that cost Medicare less actually have benefited from more care? Or did the patients that got more service fare better than the others?

It’s a complex matter that will take further examination.

What do you think? Share your thoughts in the comments box below.


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