Healthcare Financial News

Although healthcare policymakers and private insurers champion pay for performance (P4P) as a tool for improving the quality of health care, a large P4P initiative failed to produce either a major improvement in quality or notable disruption in care, according to “Can You Get What You Pay For? Pay-for-Performance and the Quality of Healthcare Providers,” by Kathleen J. Mullen, Richard G. Frank, and Meredith B. Rosenthal, published in the Spring 2010 issue of the RAND Journal of Economics. Researchers recently analyzed performance reports from medical groups that worked with a large network HMO before and after implementation of two P4P programs in California. Although the researchers found that some incentivized measures of quality may have improved in response to P4P, they did not find evidence of positive spillovers to other related aspects of care.

The P4P program rewards healthcare providers with bonuses for high marks in areas of preventive medicine, such as blood sugar testing for diabetics. The Institute of Medicine recently recommended that Medicare join private insurers in offering better quality, incentive-based care. However, the research shows that P4P might persuade providers to focus on incentivized areas rather than shift resources toward general quality improvement.

Medicare paid for 45 percent of all stays in rural hospitals in 2007, while private health insurance paid for 25 percent of such stays, according to a statistical brief from the Agency for Healthcare Research and Quality. In urban hospitals, on the other hand, Medicare paid for 35 percent and private health insurance paid for 36 percent of all stays. Medicare accounted for 55.7 percent of aggregate costs in rural hospitals, compared with 44.3 percent in urban hospitals in 2007. Medicaid was the primary payer for about 20 percent of rural hospital stays, and patients living in the lowest income communities accounted for about 54.7 percent of all rural hospital stays.

Rural hospitalizations accounted for 12.8 percent of all hospitalizations and 9.6 percent of aggregate hospital costs in 2007. On average, costs per stay in rural hospitals were $6,500, compared with $9,000 in urban hospitals. The length of stay was shorter in rural hospitals (3.9 days) than in urban hospitals (4.7 days). In general, the most common principal diagnoses and principal procedures among rural hospital stays and urban hospital stays were similar. The top five principal procedures performed in rural hospitals were circumcision, cesarean section, blood transfusion, upper GI endoscopy, and arthroscopy of knee.

Patients involved in car crashes are more likely to have private insurance than other types of emergency department (ED) patients, according to recent research from the Agency for Healthcare Research and Quality (AHRQ). Fifty-five percent of ED visits related to motor vehicle crashes were covered by private payers in 2006. In comparison, only 34 percent of other types of ED visits were covered by private payers.

A January AHRQ statistical brief also provides hospital leaders with insight on how car crashes affect patient flow. For example, about 85 percent of motor vehicle victims were released from EDs after treatment for minor injuries, such as sprains. ED visits related to car crashes resulted in hospital admission about half as often as ED visits related to other causes (8 percent versus 15.6 percent).

A new publication from the Centers for Medicare & Medicaid Services may help patients understand how hospital status—or whether a patient is an inpatient or outpatient—affects Medicare payment to hospitals and skilled nursing facilities. The free, online publication clarifies that patients on observation status are considered outpatients. It also explains that a patient can spend the night at the hospital and still be considered an outpatient—if a physician did not write an order to admit that patient.