Obamacare Program Awarded Hospitals Thousands in Bonuses Even If They Had Low-Quality Scores

Hospitals received a median bonus of $67,511 in fiscal year 2017

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July 5, 2017

An Obamacare program awarded hospitals thousands of dollars in bonuses even if they had low-quality scores, according to a report from the Government Accountability Office.

The Hospital Value-Based Purchasing program, which was created by Obamacare, was designed to incentivize participating hospitals to increase efficiency and quality.

Even though the program's purpose is to reward hospitals that offer high-quality care at a lower cost, the auditors found that hospitals with low quality scores but high efficiency scores still received bonuses.

In fiscal year 2017, there were 345 hospitals that received a bonus with quality scores below the median. Roughly 20 percent of hospitals that received a bonus had a quality score below the median from 2015 through 2017.

"While a majority of all hospitals received a bonus or a penalty of less than 0.5 percent each year, the percentage of hospitals receiving a bonus greater than 0.5 percent increased from 4 percent to 29 percent from fiscal year 2013 to 2017," the report states.

According to the report, the median bonus awarded to all hospitals in fiscal year 2017 was $67,511.90. This has more than doubled since 2013 when the median bonus was $30,352.61.

In addition, if a hospital had missing quality scores, this would give their efficiency score a higher effect, which means they were more likely to receive a bonus, due to the way the agency calculated the score.

"In fiscal year 2017, 68 percent of hospitals with missing domain scores received a bonus, compared to 50 percent of hospitals with all domain scores," the report explains. "For example, in fiscal year 2017, 182 of the 345 lower quality hospitals that received a bonus (53 percent) were missing at least one quality domain score."

"CMS signaled the importance of hospitals' providing care at a lower cost to Medicare, and, in its weighting formula, the agency tried to find balanced consideration for quality and cost," the report states. "Rather than achieving this balance—which would have allowed the agency to identify and reward higher quality and lower cost hospitals—CMS's weighting formula has resulted in bonuses for some lower quality hospitals, solely due to their cost efficiency."

In response to the report, the agency said that it would consider revising the formula.

"HHS is committed to improving the quality of care across settings while also improving the efficiency of care and patient experience," said Barbara Clark, acting assistant secretary for legislation at the agency. "HHS will examine alternatives and consider revising the formula for the calculation of hospitals' [total performance score] consistent with relevant statutory guidance, and in a way to reduce the effect of the efficiency domain on the [total performance score]."

Published under: Health Care , Obamacare