Hospitals Express Concerns About Post-Acute Care Bill

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By Nathaniel Weixel

Oct. 7 — Hospitals are objecting to legislation introduced in the House Ways and Means Committee that would create a Medicare value-based purchasing program (VBP) for post-acute care.

In an Oct. 6 letter to House Ways and Means health subcommittee leaders, the American Hospital Association said the post-acute care (PAC) VBP program called for in H.R. 3298 “is too narrowly focused on cutting provider payment rather than promoting value.” The letter was sent to Reps. Kevin Brady (R-Texas) and Ron Kind (D-Wis.), the authors of the bill.

The bill, introduced in July, would establish a shared incentive pool in four Medicare settings—home health agencies, skilled-nursing facilities, inpatient-rehabilitation facilities and long-term-care hospitals.

Starting in the 2020 fiscal year, it would withhold 3 percent of post-acute care Medicare payments, rising to 8 percent in FY 2025 and beyond. Individual providers could earn back some or all of the withheld funds—and potentially earn a bonus—based on their performance on only one measure: Medicare spending per beneficiary (MSPB). However, the AHA said the program is not budget neutral: Only 50 to 70 percent of the withheld funds could be paid back to providers, with the rest being retained by Medicare as savings.

“The AHA strongly opposes utilizing VBP to achieve reductions in the Medicare program; the program should be budget neutral,” the group said.

Cost, Not Value

By using only the spending measure, the hospital group said the PAC VBP program “appears focused on only the cost side of the value equation. The AHA believes pay-for-performance programs should include both cost and quality measures to ensure that the reward system encourages both high quality and lower costs. Without a more balanced, budget neutral approach that includes an assessment of quality, the PAC VBP program appears to function as a mechanism to cut provider payments in perpetuity, rather than primarily as a way to promote value.”

The AHA also told the lawmakers the amount of money being withheld is too much, especially compared with other value-based purchasing programs. The Medicare inpatient hospital VBP program, end-stage renal disease quality improvement program and skilled nursing facility VBP all have a maximum “withhold” of only 2 percent.

The AHA also argued that post-acute care providers have “faced numerous regulatory and statutory payment reductions and restrictions in recent years.” The money at risk for the proposed VBP program, on top of all the other cuts, would put a strain on providers' ability to serve patients and the community, the hospital trade group wrote.

To contact the reporter on this story: Nathaniel Weixel in Washington at

To contact the editor responsible for this story: Brent Bierman at

Text of the AHA's letter is at

An overview of H.R. 3298 is at