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Medicare tweaks hospital incentives to improve care, save money

On Monday, Medicare launched a double-barreled effort to get more for its money from hospitals. Millions of dollars are on the line for hospitals around the state.

It's a carrots-and-stick approach, with bonuses for hospitals that get high scores on certain measures of quality and penalties for those that have high rates of readmission within 30 days of discharge.

Both programs -- Value-Based Purchasing and Readmissions Reduction -- are part of the Affordable Care Act, or "ObamaCare," signed into law in 2010.

Hospitals in line for bonuses haven't been named yet. But those that will see penalties have been named(see list).

Nine hospitals in Florida, from Lake City to Hialeah, will have a 1-percent cut in funds, and scores of others will lose somewhat less. The penalty cap will rise to 2 percent for 2014 and 3 percent for 2015.

It doesn't sound like much money, until you consider the size of the denominator.

Florida Hospital in Orlando, which admits more Medicare patients than any other hospital in the nation and thus takes in almost $3 billion a year from Medicare, will see the biggest hit: about $3 million in the coming year.

Health News Florida published an explanation of the readmissions policy in August. Today, Kaiser Health News published a succinct explanation of Value-Based Purchasing.

Rich Morrison, senior vice president of government affairs at Florida Hospital, said today that the group doesn't anticipate problems, since "we budgeted for it." He added, "It will be part of our continued move toward efficiency."

Morrison said the hospital has already implemented a number of steps, such as making sure patients have a doctor's appointment set up for the 10-day period immediately following discharge. A failure in follow-up was one source of rapid readmissions.

"We're beginning to see a difference in 'potentially preventable' readmissions," Morrison said. "We'll work on those things we can change."

But part of the problem, he said, is that nursing homes continue to send Medicare patients back to the hospital rather than provide treatment, even when they could. Medicare pays them to hold the bed, so they have nothing to lose, he said, even though the hospital is taking a hit.

Morrison said he hopes Congress will ensure that hospitals aren't penalized for readmissions that are outside their control.

---Health News Florida, journalism for a healthy state, is part of WUSF Public Media. Question? Comment? Contact Carol Gentry, Editor, at  813-974-8629  or  727-410-3266  or

Carol Gentry, founder and special correspondent of Health News Florida, has four decades of experience covering health finance and policy, with an emphasis on consumer education and protection.