Health & Human Services

Why Feds Withhold Money From the Most Vulnerable Hospitals

The places that treat the poorest and sickest often fail to meet safety standards. Some say the penalties need to be adjusted.
by | March 2017
(AP)

No one who works in health care would dispute the need to keep hospital patients safe. But there’s plenty of debate over how best to achieve that and over whether the federal approach is the right one, particularly for hospitals that treat the most vulnerable Americans.

In December, the Centers for Medicare and Medicaid Services (CMS) handed down its list of hospitals that would be penalized in the current fiscal year for patient safety violations. In all, 769 hospitals were dinged for preventable conditions such as blood clots, falls and the presence of antibiotic-resistant germs. The hospitals will have 1 percent of their payments from CMS cut, which for a large hospital can exceed a million dollars.

CMS has another program with even stiffer punishments, penalizing hospitals that have what’s considered an excessive number of readmissions within 30 days of hospitalization. In August, CMS announced that nearly 2,600 hospitals would have up to 3 percent of their reimbursements withheld this fiscal year.

The penalities handed down by CMS are part of the Affordable Care Act. They’re meant to motivate hospitals to correct procedures so as to avoid patient safety violations. But the problem with these penalities, some health policy experts say, is that they don’t take into account the particular challenges that individual hospitals face. “Most of the penalized hospitals take care of the poorest and sickest,” says Ashish Jha, a professor at Harvard University who focuses on patient safety. Jha and others argue that CMS should add a risk adjustment factor. Until then, safety-net and academic-centered hospitals will continue to get slapped with the most penalties.

“We all want patients to be healthy once they leave, but we need to understand that patients in certain areas have a harder time achieving proper health,” adds Michael Consuelos, vice president for clinical integration at the Hospital and Healthsystem Association of Pennsylvania. For a struggling rural hospital, reduced payments from CMS “can equal a death spiral,” he says.

Providers say that the more thorough reporting required under the CMS patient safety programs also has been a major administrative burden. “We’ve spent hundreds of thousands of dollars and an enormous amount of time managing the process,” says Saul Weingart, chief medical officer at Tufts Medical Center and a National Patient Safety Foundation board member. “It’s a lot of combing over doctors’ notes, clarifying things written down, trying to determine if it’s clinically significant.”

Adding to the hospitals’ exasperation is the fact that there is little information about whether the penalties have actually improved health outcomes. “We have no real idea if patient safety has gotten better because none of that data has been subject to peer review,” says Jha. “We do know that readmissions have fallen, but the problem with that metric is a good chunk of readmissions are often necessary.”

Still, hospitals say they do put a lot of effort into addressing issues they’re penalized for. The Pennsylvania association, like many state hospital groups, works to facilitate data sharing among hospitals, Consuelos says. “Organizations know what they scored low on, and they do try to really focus in on those areas.” And, Tufts’ Weingart notes, because the hospital star ratings that CMS releases every year are partially tied to the penalty programs, hospital executives “feel it can be a reputational issue.”

All of this is playing out, of course, at a time when the future of the Affordable Care Act and the mandates it imposes are very much up in the air in Washington. These patient safety programs, says Jha, “require a lot of subtlety.” That’s a quality that few would associate with the debate over the federal health law.

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