Topic Paper #3

Topic Paper #3

Adam Ingram

MSAH 6500

Prof. Paul Longenecker

February 23, 2016

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Topic Paper #3

Understanding Value Based Incentive Models and Using Performance as a

Strategic Advantage

The federal hospital rating system before the Affordable Care Act (ACA) was somewhat

non-existent and therefore underutilized in the overall performance ranking system of hospital

systems- making things like recurrent patient readmissions and hospital acquired conditions go

unpenalized. The new ACA hospital incentive and penalty programs are the starting points for

transitioning the hospital Medicare and Medicaid services to value-based payments (VBP)

(Bosko et al., 2016).

To effectively operate under these new incentive and penalty programs, all levels of the

internal organization and all levels of the general healthcare system have to participate in order

for the hospital system to not be penalized- i.e. there has to be a unified goal that everyone can

understand and get behind. Organizations should view and use these new incentive and

penalty programs as a means to begin a transition to more population health-based models;

whereas, currently many hospital systems use either community based models or fee-for-

service based models (Bosko et al., 2016).

In the 2016 fiscal year (FY) 799 out of 3,414 eligible hospitals avoided excessive

avoidable readmissions, these numbers have continued to fall from FY 2013 when the penalties

were enacted; in net total, only 25% of eligible hospitals avoided a penalty when all programs

(incentive and penalty) were combined (Bosko et al., 2016).

These numbers are significant because it shows an important trend, one where hospitals

are striving for a more health-based model; however, at the slow rate they are moving,

penalties may have to be increased in order for them to truly understand the importance of not

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Topic Paper #3

overcharging or under diagnosing their conditions- hoping for readmission. I believe that if the

amount of hospitals that are not complying with the CSM’s new programs does not reach 50%

by 2018, then stricter, more robust penalties need to be enacted. For example, hospitals are

penalized more if they fail to meet criteria in subsequent years- former years are included.

Executives within hospital systems should not conclude that it is cheaper to just pay penalties

than to deliver value-based care with lower readmissions and lower rates of hospital acquired

conditions.

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Topic Paper #3

References

Understanding Value-Based Incentive Models and Using Performance as a Strategic Advantage.

(2016). Journal of Healthcare Management, 61(1), 11-14 4p.

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