Portland facilities targeted for penalties in federal crackdown

by: TRIBUNE PHOTO: JAIME VALDEZ - Cleaning hands helps prevent infections at Portland-area hospitals trying to avoid penalties under new Medicare rules. A number of Portland-area hospitals are on track to have their Medicare payments reduced this fall as part of a federal program to penalize hospitals with high rates of infection and other hospital-acquired conditions.

The penalties, scheduled to take effect in October and based on three years of data, are part of the 2010 Affordable Care Act’s initiative to change hospital reimbursement. The idea is to promote better care with an emphasis on patient safety. The bottom performing 25 percent of all hospitals nationwide will receive penalties of up to 1 percent of their annual Medicare payments.

A study of preliminary federal data by nonprofit, Washington, D.C.-based Kaiser Health News reveals that Legacy Good Samaritan Medical Center in Northwest Portland ranks lowest among Portland-area hospitals for hospital-acquired conditions. Out of 3,226 hospitals analyzed by federal officials, Good Samaritan ranked 212th from the bottom, according to data released by Kaiser Health News.

The three basic measures in the scoring were:

• Frequency of bloodstream infections in patients in whom catheters have been inserted into major arteries.

• Rates of infection from catheters inserted into bladders to drain urine.

• Various safety problems including bedsores, falls and accidental lung punctures.

Legacy Mt. Hood Medical Center in Gresham received the next-lowest score among Portland-area hospitals. It ranked 242th out of 3,226. Legacy Emanuel Medical Center and Providence St. Vincent Medical Center also are due for federal penalties if the data remain in place.

Diane Waldo says the preliminary federal data may not hold up. Waldo, associate vice president of quality and clinical operations for the Oregon Association of Hospitals and Health Systems, says Oregon hospitals are well aware of the specter of federal penalties and have been making efforts to improve their national rankings.

Some gains made

Nearly all Portland-area hospitals during the past three years have joined in a Partnership for Patients effort to reduce medical errors, Waldo says. As a result, according to Waldo, Oregon hospitals have made major gains. Surgical site infections among the 33 Oregon hospitals in Partnership for Patients have dropped 55 percent. Central line infections have been lowered 40 percent. Ventilator-associated pneumonia has been reduced 80 percent, according to Waldo.

Ironically, even those improvements might not keep Oregon hospitals from incurring penalties. The Medicare program is structured so that hospitals that rank in the bottom 25 percent nationally will get penalized, regardless of their actual rates of infection and other problems. Experts say hospitals all over the country have been working to keep from ending up in the bottom 25 percent.

“That’s the complaint of the industry,” says Jordan Rau, a researcher/writer for Kaiser Health News. “It’s an arbitrary cutoff, and hospitals can be improving significantly yet still be penalized. Even if your rate is going down, if everyone else’s rate is going down at the same rate you’re not doing better.”

The federal rules also mean that two hospitals could have very similar rates, with one receiving a penalty and the other not, if they are on different sides of the 25 percent threshold.

Hospitals that work hard to reduce errors might be at a disadvantage in another way, Waldo says.

“A lot of times, when you really work hard to make an improvement, say reduce infections, you may find more because you didn’t have a system in place (before) to discover them all,” Waldo says. That, she says, puts hospitals making the most effort in an uncomfortable position. “They may be finding more, and they may still end up in the penalty box,” she says.

For some of the Portland-area hospitals the fines will likely be measured in the hundreds of thousands of dollars. Those fines are significant, says Paul Matsui, executive director of The Advisory Board, a health care analytics and research firm in Washington, D.C.

The upcoming penalties for hospital-acquired conditions are actually the third phase of penalties imposed on hospitals. In 2012, Medicare started penalizing and giving bonuses to hospitals based on a series of quality measurements. In 2013, 2,225 hospitals nationwide lost a portion of Medicare payments for having excessive rates of re-admitting patients for problems related to their initial treatments.

In 2013, penalties for high re-admission rates were issued to (in order of greatest penalty) Legacy Meridian Park Medical Center, Legacy Emanuel Medical Center, Providence Willamette Falls Medical Center in Oregon City, Oregon Health & Science University, Legacy Good Samaritan Medical Center, and Legacy Mt. Hood Medical Center.

A typical Portland-area hospital, according to Matsui, might have gross operating income of only $2 million to $3 million, so a loss of a few hundred thousand dollars would hurt. According to Matsui, some large hospitals already have suffered more than $1 million in Medicare penalties.

“Yes, it definitely matters,” Matsui says. “We’re talking about hospitals that operate on big revenues but pretty thin margins. In a world where you’ve got a lot of uncompensated care and charity care, every dollar counts.”

Fines improve care quality

And the penalties are working, Matsui says. Hospital re-admissions are dropping since those fines began. The penalty program reverses the incentives in traditional fee-for-service payments, in which hospitals were basically rewarded for creating more need for health services as Medicare paid more bills.

“The big change here is a pretty seismic shift in the way hospitals think about how to treat their patients,” Matsui says. “It’s moving away from performing more services to thinking about this quality component.”

But Erica Mobley, spokeswoman for The Leapfrog Group, a Washington, D.C.-based patient safety nonprofit, says not all hospitals are putting maximum effort into better patient care as a way to avoid Medicare penalties.

“A lot of hospital spending is more on trying to change the rules than they are trying to get better,” Mobley says. Hospital lobbyists, she says, have been working hard to alter the Medicare penalty programs.

Hospital penalties will increase in the years ahead, from 1 percent of Medicare payments this year to 2 percent of payments next year. And Mobley says that’s a good thing.

“There needs to be more in order to get hospitals to make some serious improvements,” she says.

The penalties will have real impact, Mobley says, when consumers, not hospitals, start to take them seriously.

“We would like to see consumers looking at this data and saying, ‘I don’t want to go to this hospital anymore,’” she says. “Only when hospitals are faced with that kind of financial risk are they really going to put effort into making improvements.”

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