National health reform considering shift of Medicare dollars to ‘high-value’ hospitals

In recent congressional health reform bills, provisions are included that Mediciare pay for “value”, which advocates say would encourage efficiency and quality, while lowering costs.  However, critics note these provisions will simply take funding from areas with more poverty and racial minorities and send it to more homogenous communities that tend to have fewer health problems.

According to the Washington Post, language in both the House and Senate bills would reward hospitals for efficiency in their Medicare spending, a dramatic change in the formula for parceling out the public dollars, which can account for as much as half of a hospital's budget. That could prove to be a windfall for some hospitals but a significant loss of funding for others, mostly those in big cities and the South. 

Backers of the value index acknowledge one concern: Medicare rates likely would be set at a regional level instead of on an individual hospital basis, potentially punishing efficient providers in high-spending areas and rewarding inefficient facilities in low-spending areas.

(SOURCES: Advisory Board Daily Briefing, http://advisory.com, January 6, 2010; The Washington Post, http://washingtonpost.com, accessed January 15, 2010)