iProtean—Medicare Payment Cuts Plus ACA Payment Reforms

The American Hospital Association urged Congress last week to avoid cuts to Medicare and Medicaid payments to hospitals as they negotiate debt reductions.  Much is at stake here—the 2% fiscal cliff cuts (“sequestration”) to Medicare providers as well as additional cuts that may affect hospitals and physicians; for example, offsetting the “doc” fix by shifting this reduction in physician payment to hospitals and other providers, and the expiration of some Medicare provisions at the end of the year. (Health Lawyers Weekly, AHLA ,December 7, 2012)


AHA also noted its concern about “the use of hospitals provisions as part of a ‘down payment’ in a debt reduction plan.”  It asked Congress to protect payments to Graduate Medical Education, long-term care hospitals, inpatient rehabilitation facilities, and rural and critical access hospitals from “harmful cuts.”


These potential cuts, when combined with the payment reforms under the Affordable Care Act, would mean “longer wait times for care; fewer doctors, nurses and other caregivers; and less patient access to the latest treatments and technology,” AHA said.  (AHA Letter to Congress, December 4, 2012)


Nate Kaufman of Kaufman Strategic Advisors notes in the upcoming iProtean advanced course Value-Based Purchasing and Accountable Care Organizations that the value-based purchasing provision of the Affordable Care Act and other performance-based measures could put hospitals at risk for Medicare payments: “Up to eight percent of a hospital’s Medicare revenue will be contingent on performance on the value-based purchasing standards, the readmission standards and the hospital-acquired condition standards.  No hospital could survive losing eight percent of its Medicare revenue.”


In the course, Dan Grauman says that an obvious negative effect of value-based purchasing occurs when hospitals are not focused on improving performance. They “could do poorly and suffer financially just by getting . .  less on their Medicare payments.”


“The way I describe the Medicare reimbursement system for the next five years is we are in a fee-for-service system with value-based penalties.  So it’s critical that if you want to get your full payment from Medicare, even though that payment rate isn’t particularly great, you make sure you optimize your performance in value-based purchasing,” Mr. Kaufman said.


In Value-Based Purchasing and Accountable Care Organizations, Dan Grauman, Nate Kaufman and Monte Dube provide background information on value-based purchasing and accountable care organizations, and offer suggestions about how to perform successfully under these provisions of the Affordable Care Act.  iProtean subscribers, this new course will appear in your course library soon!  We will send you a notice of publication.


Notice:  iProtean Connect will be on holiday from December 24 through January 9, 2013.  We hope everyone has a wonderful holiday season!



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