Change coming to Medicare reimbursement formula

By staff Writer

May 01, 2011 at 08:00 PM

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As part of the new health care law, the Centers for Medicare & Medicaid Services is revamping its reimbursement system for Medicare participants.

The new rules include "value based purchasing," which will pay doctors and hospitals based on the quality of care they provide rather than the quantity. Furthermore, what patients report about hospital stays will also be taken into account in hospitals' reimbursement rates.

Adherence to quality care measures will account for 70 percent of the payment formula, while patient satisfaction surveys will make up the remaining 30 percent. Also considered in the formula will be such things as emergency room wait time and the rate at which inpatients contract infections.

Hospitals that do not meet the new standards will lose 1 percent of their Medicare payments beginning in 2012. Those funds will then be used to reward hospitals scoring above average in certain areas. The CMS estimates that the plan will generate $850 million dollars in the first year alone.

For their part, the American Hospital Association is unhappy with the new payment system, particularly the inclusion of medical errors and in-hospital infections in the payment formula. They also do not like the fact that patient satisfaction surveys will have such a significant influence on reimbursement rates.

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