Hospitals push back on Medicare measures

Kaiser Health News published an article about 774 hospitals penalized because of patient complications. Medicare has adopted a carrot-and-stick approach to get hospitals to perform better (e.g. fewer complications and re-admissions). Naturally, hospitals criticize Medicare's program.

In particular, some hospitals suggest that they have been penalized simply because they are more thorough in reporting infections and other complications to Medicare. If true, this means that evaluation of the hospitals relies in part on self-assessment and is vulnerable to abuse. While most hospitals may be honest, it seems likely that some will overlook what they consider minor issues. Even putting aside fraud, there is the very real possibility that different hospitals simply have different standards for what is considered a complication.

Some hospitals also complain that they have sicker patients who are more likely to be re-admitted. Assuming that Medicare already risk-adjusts for patient population, hospitals appear to be taking issue with Medicare's risk-adjustment model. It seems unlikely, however, that the entire medical industry would be satisfied with any one risk-adjustment model at this point.

Some other hospitals appear to complain about being pitted against one another ("tournament" model), where being "good" is not enough... hospitals need to be in a certain tier relative to other hospitals. Understandably, Medicare does not want hospitals to stop improving, but some hospitals seem to think that the improvements are so small now that differences in ranking are essentially meaningless and they would rather Medicare adopt fixed thresholds. Needless to say, if Medicare proposed fixed thresholds that were too stringent, hospitals would also complain.

Overall, it seems clear that there may be a variety of issues with the way that Medicare encourages hospitals to perform better. Nevertheless, Medicare does seem to be pushing the industry forward, not letting perfection be the enemy of progress.