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ACA Pay for Performance Provisions Start Today

What about me! (photo: davidandbecky / flickr)

The Affordable Care Act contains numerous provisions besides just creating exchanges and expanding Medicaid. Two go into effect today with the goal of making our Medicare spending more efficient. From NPR:

As part of the government’s biggest effort yet at paying for performance, Medicare is withholding 1 percent of its regular hospital payments and putting that money into a fund to reward hospitals that score well on 20 different quality measures. […]

Also today, Medicare is applying a separate penalty to 2,211 hospitals with higher than expected readmission rates. Hospitals with the highest rates for heart attack, heart failure and pneumonia patients will lose 1 percent of their regular reimbursements. The Readmissions Reduction Program also was established by the health care law.

Medicare expects hospitals together will forfeit about $280 million this year. The maximum penalty grows to 2 percent next year and 3 percent in October 2015. Kaiser Health News has published the 2013 readmission penalties for all hospitals in a downloadable PDF file.

Hopefully the reforms work as intended. We should be rewarding quality and punishing hospitals that have an unusually high number of people readmitted due to complications.

If these programs succeed, they could marginally help decrease our health care spending by eliminating some unnecessary treatments, but pay for performance reforms will never bring our outrageous health care spending in line with international norms.

The simple fact is we have a price problem, not an overuse problem. The main source of our cost problem is that we allow hospitals, doctors, drug companies, and labs to charge radically higher prices than any other country. Programs to marginally reduce the amount of care people need could help, but it doesn’t even touch the 800 pound gorilla in the room.

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Jon Walker

Jon Walker

Jonathan Walker grew up in New Jersey. He graduated from Wesleyan University in 2006. He is an expert on politics, health care and drug policy. He is also the author of After Legalization and Cobalt Slave, and a Futurist writer at