While policymakers continue to pursue mandatory Medicare value-based programs at least in part to help reduce taxpayers’ costs for Medicare, they may be robbing Peter to pay Paul.
According to a new study, hospitals that participate in federally mandated Medicare value-based purchasing programs face increased administrative costs for doing so even while federal agencies maintain that the programs are saving taxpayer money.
Brown University researchers examined 15 years of hospital cost reports and found that participation in Medicare’s Hospital Value-Based Purchasing Program, Hospital Readmissions Reduction Program, and Hospital-Acquired Condition Reduction Program cost hospitals about $650,000 a year in added administrative expenses. Participation in Medicare’s Comprehensive Care for Joint Replacement model cost them even more: about $1.23 million a year.
The increased administrative costs were typically greater among hospitals with higher proportions of Medicare Advantage patients and those in states that expanded their Medicaid programs under the Affordable Care Act.
Learn more about the Brown University analysis and its public policy and financial implications for policymakers and providers from the JAMA Health Forum report “Mandatory Value-Based Payment Programs and Hospital Administrative Costs” and the Becker’s Hospital Review article “Value-based payment programs tied to higher admin costs: Study.”