Maybe the Medicare penalties won’t work

October 11, 2012

Regina Hampton prepares to insert a balloon catheter into a patient's breast for radiation treatment in Lanham. (Marvin Joseph / The Washington Post)

The Obama administration recently rolled out two programs that will penalize hospitals that provide low-quality care. The whole idea is to give health care providers a financial incentive to deliver excellent care.

While there are some signs that hospitals are changing their behaviors under the new incentives, new research on a similar Medicare program launched four years ago suggests caution about expecting big results.

In 2008, Medicare stopped paying hospitals for infections that patients contracted under due to medical care, such as catheter-related urinary tract or blood stream infections. Hospitals shouldn't get more money, the thinking went, for health-care problems they themselves were creating. They should eat the costs.

The goal was for hospitals to see that preventable infections were hurting their bottom lines and take steps to reduce those numbers.

That, according to research published in the New England Journal of Medicine, did not happen. "We did not find any effect on rates of targeted health care–associated infections as measured with the use of clinical data," the researchers concluded. The number of health care-associated infections were already dropping when the new policy started, and the study showed "no measurable additional benefit of the policy."

Here's one of their charts, which shows the rates of bloodstream infections that were associated with the insertion of a central catheter. The rate did indeed decrease over time, but it didn't drop any faster after the new incentives took effect (the point represented below by the black line).

The researchers hypothesized about why the program did not have an impact:: One reason could be that there were already a number of state and federal initiatives in progress looking to reduce the exact same kind of infections. Another could be that providers may have started noting in charts that an infection was present at admission, no longer categorizing it as one that was acquired in the hospital.

The most compelling explanation might have to do with the size of the penalties, which was as little as 0.6 percent of a hospital's Medicare revenue. "Because the financial effect may have been perceived as limited...hospitals may not have made additional investments in prevention of infection," the researchers said. "Greater financial penalties might induce a greater change in hospital responsiveness to the CMS policy."

It's hard to know what this means for the new programs that Medicare rolled out earlier this month. The penalties are bigger this time around -- but would still take a relatively minor fraction of a hospital's budget. A hospital could lose, for example, 1 percent of its Medicare revenue if it has too many patients readmitted to the hospital within a month of a first visit. It could lose another 1 percent if it does not get high ranks from patients on quality measures.

Taken together, those penalties are more than three times as large as the ones issued in this previous experiment. But they still only make up only 2 percent of a hospital budget, which may not prove enough to catalyze big improvements.

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Ezra Klein · October 11, 2012