The Benefits of Bundled Payments
September 26, 2012Updates on Government Affairs
October 4, 2012
The federal fiscal year changes over on October 1. This year brings new challenges, and specific implications for hospitals, and those organizations that aim to supply them.
As of today, providers inpatient Medicare reimbursements will decline by 1%. After adjustments for market basket increases, many facilities will see a small reduction in their overall reimbursement. On average, hospitals face around $800,000 in annual reimbursement, where larger facilities will see bigger cuts, and smaller facilities will see less of an effect.
The cuts are a result of the value-based purchasing program, which aims to incentivize providers to improve quality and cost of care. Providers will be able to earn back some of the 1% they lost beginning today, if they meet performance and improvement thresholds.
Compounding the impact of this cut is an additional cut for facilities that have a higher than normal amount of avoidable readmissions. This penalty is incremental to the 1% and ranges from a small fraction of a percent to an additional 1%. A listing compiled by Kaiser Health News can be found by clicking here.
Implications for the supplier community
Whenever a change in reimbursement occurs, it is followed by a period of eerie silence. Provider organizations will see the effect of these cuts beginning in two weeks. From there they will need to determine the net effects and begin to implement plans and initiatives designed to mitigate losses.
Overall, suppliers can expect to have price and terms scrutinized more severely. Projects will be subject to continued delay and deferral. Scarce financial, and personnel resources will continue to be appropriated by ongoing IT projects.
Providers will begin to detect the ways private payer insurance companies will use these cuts to improve their performance. Reimbursements will be adjusted down and cost pressures will require additional offsets in fee rates.
2013 is going to be an eventful, and challenging year in the new normal of healthcare.