In general, Medicare pays a certain amount of money for a patient with a specific diagnosis. So if 70-year old woman X is admitted with condition Y, the hospital will receive $Z for treating her -- no matter what it costs. Hospitals don't love that since having patients in beds is expensive, so they would often times discharge patients before it was medically appropriate. They would take $Z and then when the patient came back in a few days, they could bill for follow-up services.
With the ACA we started tracking hospital readmissions to see how big of a problem that really was, and if hospitals underperformed their peers (aka they saw a lot of readmissions indicating that patients were discharged too early), they would either not pay for the followup visits or just lower the overall reimbursement for future patients.
Another good example was the Hospital-Acquired Condition reduction program. There is an enormous amount of cost associated with hosptial-acquired infections and the US was particularly bad in terms of modern systems. If patients in your hospital are consistently catching bugs, Medicare will dramatically reduce your reimbursement rate.
Since the 1990s though, Docs have been working with P4P -- whether it's increased reimbursement from insurance companies for prescribing an appropriate ratio of generics vs. brand name medicines, to the lump-sum payment per patient, to bonuses for hospitals adhering to best-practices (what % of patients with chest pain get an aspirin with 30 minutes or what % are cath'ed within 90 minutes of presenting).
Medicare is obviously a big part of healthcare, but is this same pay for performance happening with private insurance? How has the consolidation of hospitals impacted this? Has it become harder to negotiate these deals with massive hosptital networks?
Private insurance actually started a lot of these initiatives. If you're a physician with a busy practice, at the end of the month, you'll get a check from all of the big insurance companies detailing how much they're paying you.
It doesn't read, "You saw 100 patients at $100/patient, here's $10,000."
It's more like, "You saw 100 patients, here's your per-patient fee of $50. You prescribed 87% generic medicines, which for a doctor with your patient population in your area underperforms by 2 percentage points, this equates to a $1,400 bonus -- if you prescribed 91% generics, this bonus would be $2,500. Only one of your patients required an off-formulary medcine, your bonus here is $500."
There are a lot of competing interests right now, the formerly independent doctor groups are all merging together, insurance companies are merging, hospitals are merging. There's also a big push for risk-based reimbursement:
I can second the testimony about lots of upheaval and consolidation in the industry. A family member recently worked at a Big Law firm on antitrust cases, and a large portion of them had to do when recent M&A activity among hospitals, specialty clinics, and small practices. The days of the doctor as small-business proprietor are waning.
One interesting aspect with the consolidation of hospitals is that they are generally buying smaller hospitals, it isn't some massive merger which gives them immunity from anti-trust cases.
https://www.medicare.gov/hospitalcompare/readmission-reducti...
In general, Medicare pays a certain amount of money for a patient with a specific diagnosis. So if 70-year old woman X is admitted with condition Y, the hospital will receive $Z for treating her -- no matter what it costs. Hospitals don't love that since having patients in beds is expensive, so they would often times discharge patients before it was medically appropriate. They would take $Z and then when the patient came back in a few days, they could bill for follow-up services.
With the ACA we started tracking hospital readmissions to see how big of a problem that really was, and if hospitals underperformed their peers (aka they saw a lot of readmissions indicating that patients were discharged too early), they would either not pay for the followup visits or just lower the overall reimbursement for future patients.
Another good example was the Hospital-Acquired Condition reduction program. There is an enormous amount of cost associated with hosptial-acquired infections and the US was particularly bad in terms of modern systems. If patients in your hospital are consistently catching bugs, Medicare will dramatically reduce your reimbursement rate.
http://www.beckershospitalreview.com/quality/769-hospitals-s...
Since the 1990s though, Docs have been working with P4P -- whether it's increased reimbursement from insurance companies for prescribing an appropriate ratio of generics vs. brand name medicines, to the lump-sum payment per patient, to bonuses for hospitals adhering to best-practices (what % of patients with chest pain get an aspirin with 30 minutes or what % are cath'ed within 90 minutes of presenting).