Hospital Bonus or Penalty

Under Obamacare, the federal government wants to rein in costs for Medicare and Medicaid patients. Starting in 2013 they will do this with a carrot and stick approach that rewards hospitals with "good" outcomes and penalizes those with "poor" outcomes.

All this sounds wonderful in principle, but what does it really mean?

The program is one of several Medicare is launching to make hospitals and doctors accountable for quality and more careful stewards of public money. In October, Medicare also began reducing payments to 2,217 hospitals because too many of their patients ended up back in their care within a month. Medicare already gives bonuses to the private Medicare Advantage insurance plans that score well on quality metrics. In 2015, the health law calls for the government to begin a quality payment program for physician groups of 100 professionals or more, and that is to be expanded to all doctors by 2017.

The way the program works is that Medicare is reducing payments to all hospitals by 1 percent, estimated at $964 million. It then calculated a score on how much money each hospital deserved to get back based on the quality of its care. While every hospital is getting something back, almost half aren't recouping the 1 percent they forfeited and thus are net losers.

Kaiser Health News

Studies like this have been tried before but I question the relevancy.

Under such a system, hospitals with the sickest patients would receive the lowest scores while those who treat individuals that are just sick enough to be in the hospital but don't really require specialty or acute care will have more positive scores.

If you read the article

New York-Presbyterian in Manhattan and Massachusetts General Hospital in Boston, both dominant hospitals in their cities, will have their payments reduced.

These large facilities handle a lot of high risk patients which can naturally skew their results towards the negative.

Treasure Valley Hospital, a physician-owned, 10-bed hospital in Boise, Idaho, that is getting a 0.83 percent increase in payment for each Medicare patient

I am sure this is a very good hospital, but what kind of patients are treated in a hospital that has fewer beds than a Motel 6? I can't imagine they are folks who need a high level of specialized care.

All this begs the question. If you operate a hospital that is in danger of being penalized because you handle a number of high risk patients, do you suppose they might have a tendency to "cherry pick" the healthier patients and let someone else take the really sick folks?

Seems like a way to ration care while maximizing profits.