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D-H Hospital Hit With 1% Medicare Penalty

Valley News Staff Writer
Published: 1/7/2017 11:55:20 PM
Modified: 1/7/2017 11:55:21 PM

Lebanon — Mary Hitchcock Memorial Hospital will be penalized by having its Medicare reimbursements cut by 1 percent during the current fiscal year under a program that aims to reduce injuries and illnesses acquired in hospitals.

Dartmouth-Hitchcock’s flagship hospital ranked in the lowest quartile, or 25 percent, of U.S. hospitals in Medicare’s computation of the rate at which patients suffered certain infections as well as blood clots, bed sores and falls, according to the U.S. Centers for Medicare and Medicaid Services.

The Hospital-Acquired Condition Reduction Program is one of several Medicare programs aimed at improving quality and reducing costs. In fact, Mary Hitchcock scored well over a five-year period under another of those programs that looked at a different aspect of quality of care.

The penalty related to infections and injuries could result in about a $1.4 million reduction in D-H’s annual revenue, according to health system spokesman Rick Adams. In the fiscal year that ended June 30, Mary Hitchcock and its clinic system posted total revenue of about $1.5 billion, according to its audited financial statement.

The agency computes the rate at which patients acquired various types of infections or suffered certain injuries in a given hospital over a multi-month period in the past. The poorest performers in that past period have their Medicare reimbursements for the current year reduced.

Nationwide, the hospital-acquired conditions program will impose $430 million in penalties on 769 hospitals, according to Kaiser Health News, a nonprofit news service that covers health care policy and politics.

Medicare accounted for 42 percent of D-H’s gross patient service revenue in the fiscal year that ended June 30, which made it the health system’s largest source of revenue, according to its audited financial statement.

George Blike, D-H’s chief quality and value officer, said D-H’s low ranking was largely driven by a flawed quality index based on billing data compiled by the U.S. Agency of Healthcare Research and Quality. The index, called the PSI 90, accounts for 15 percent of a hospital’s ranking, with the balance accounted for by infection rates.

The PSI 90 “is just junk,” Blike said. “It’s a big part of why we’re getting a (hospital-acquired conditions) penalty.”

Nancy Foster, vice president of quality and patient safety for the American Hospital Association, recently criticized the PSI 90 for inadequately accounting for risk. In addition, she wrote, “many of the individual components of the composite PSI 90 measure fail to reliably capture hospital performance.”

The hospital-acquired conditions program is one of several that Medicare has established in recent years to promote quality health care and rein in costs.

In fiscal 2017, D-H estimates it will lose $1.6 million of the $11.1 million it has at risk in penalties and rewards in the various CMS programs aimed at promoting better health care quality outcomes and reporting. Private insurers offer similar incentives, Blike said.

“I do think that (the size) of the incentives is large enough for hospitals to be paying attention,” said Melony Sorbero, a senior policy researcher at the Rand Corp., a nonprofit think tank primarily funded by federal agencies.

Some critics have argued that the measures used by CMS are more a reflection of the socioeconomic status and general health of a hospital’s patients than of its quality of care or outcomes. The severity of illnesses that a hospital might typically deal with also can skew scores, they maintain.

Mary Hitchcock, a teaching hospital affiliated with Dartmouth’s Geisel School of Medicine, draws patients from all over New Hampshire and Vermont.

Adams said the ratings don’t include “risk adjustments,” and said there is a time lag between the compilation and release of figures.

“Teaching hospitals tend to perform worse in these programs,” Sorbero said. Such hospitals “serve a population that is more medically complicated and more likely to develop infections,” she said.

Hospital-Acquired Conditions Penalties

Hospital-acquired conditions penalties for the current year were imposed on a number of prestigious hospitals.

In Massachusetts, penalties were imposed on Boston Medical Center, Brigham and Women’s Hospital and Tufts Medical Center in Boston as well as Lahey Hospital in Burlington and the University of Massachusetts Memorial Medical Center in Worcester.

In New Hampshire, penalties were imposed on four hospitals including Mary Hitchcock, the state’s largest hospital, and the second- and third-largest hospitals, Catholic Medical Center and Elliot Hospital, both in Manchester, as well as Exeter Hospital in Exeter.

In fiscal 2016, Mary Hitchcock and Catholic Medical Center were penalized. In fiscal 2015, the first year of the program, Mary Hitchcock, Catholic and Elliot were penalized.

Northwestern Medical Center in Saint Albans was the only Vermont hospital penalized under the program during the current year, according to a program analysis done by Kaiser Health News. In fiscal 2016, Northwestern and Brattleboro Memorial Hospital were penalized. In fiscal 2015, no Vermont hospital was penalized.

Hospitals with 25 or fewer beds that have been designated “critical access” facilities aren’t subject to the hospital-acquired condition penalties. The critical access program boosts Medicare reimbursement by 1 percent for facilities deemed to provide care in underserved rural areas.

Medicare’s use of financial rewards and penalties is intended, according to a 2014 report from the Rand Corp., to “link financial incentives to providers’ performance on a set of defined measures in an effort to achieve better value by driving improvements in quality and slowing the growth in health care spending.”

These programs that tie a portion of Medicare reimbursements to quality and cost measures got a boost from the Affordable Care Act, the health care reform initiative widely referred to as Obamacare that was passed in 2010.

While Medicare incentives aimed at improving quality and limiting costs predated the passage of the ACA, the early efforts were mainly limited to demonstration and pilot programs because broader changes required legislation rather than agency rule-making, Sorbero said. The 2010 reform law offered “an opportunity to put some the programs into place,” she added.

While President-elect Donald Trump has put repeal of the ACA high on his post-inauguration to-do list, how that would affect programs that tie Medicare reimbursements to quality isn’t clear, Sorbero said. In the past, she noted, such programs have “tended to get bipartisan support.”

Readmission Reduction Program

In fiscal 2017, Medicare withheld $528 million in reimbursements from 2,500 hospitals that too often readmitted patients who had been discharged after treatment for heart attacks, heart failure, chronic obstructive pulmonary disease or pneumonia or after hip knee replacements or coronary artery bypass graft surgery.

Over a three-year period, Mary Hitchcock posted satisfactory readmission rates in all categories, sparing it from the penalties associated with this program.

Of 13 New Hampshire hospitals large enough to be subject to penalties, Mary Hitchcock was the only one that was not penalized during any of the five years in which the program has been in effect, according to a tally by Kaiser Health News.

Value-Based Purchasing Program

However, Mary Hitchcock has fared more poorly under Medicare’s value-based purchasing program, which penalizes hospitals that perform poorly on various measures of clinical practices, patient surveys and death rates of patients with some common conditions.

Mary Hitchcock was one of four New Hampshire hospitals penalized under the program during the current fiscal year and one of three penalized in fiscal 2016, the first year of the value-based purchasing program. Cheshire Medical Center, a D-H affiliate in Keene, was not penalized either year.

The effectiveness of each of the Medicare incentive programs is difficult to measure, in part because of the “long signaling process” prior to the imposition of new measures that affect rewards or penalties, Sorbero said. That makes before-and-after comparisons difficult, she said.

There is some evidence of progress.

Last month, the Agency for Healthcare Research and Quality estimated that there was a nationwide 21 percent decline in inpatient infections and injuries between 2010 and 2015. That reduction, which saved 125,000 lives and $28 billion in health care costs, was “spurred in part by Medicare payment incentives,” the agency said.

So Medicare’s efforts to improve the quality and rein in costs of health care seem to be having a beneficial effect, Sorbero said: “The general trends over time (are) going in the direction we want them to go.”

Blike said the quality of care at D-H has not been compromised by cuts and changes implemented to address recent financial deficits. He said he is part of a leadership team that has assessed changes in staffing and purchasing plans for medical equipment to make sure they did not affect patient safety.

A new online safety dashboard used by the hospital’s clinical operations management team is updated weekly, and has shown no trend of problems arising in the wake of the cuts, he said.

Contact Rick Jurgens at 603-727-3229 or

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