The HCAHPS Reimbursement Myth: The Case for LEAN
HCAHPS and value based purchasing have an impact on Medicare reimbursement.
Value based purchasing reimbursement is based on the combination of the patient experience and core measures, calculated on a sliding scale. Hospitals that don’t meet national averages will not necessarily get their money back. Hospitals that exceed the national average will get a bonus.
Currently, one and one half percent of reimbursements are being held back, pending HCAHPS results.
This has caused a panic reaction. Hospitals are scrambling to initiate customer service programs to increase their scores so they can not only recoup the hold back but to get a bonus if they exceed national averages.
Is this the best use of time and resources?
Let’s analyze at this from a LEAN perspective.
Take a hospital with gross annual revenues of $65,000.000. Medicare reimbursements are $9,200,000 annual labor costs $ 23,100,000.
Based on these figures, the Medicare reimbursement at risk is $92,000.
Or is it?
The Myth of HCAHPS Scores and the Impact on a Hospital’s Bottom Line
Reimbursement is based on a ratio of:
30% patient experience and
70% core measures.
In reality, the amount at risk, based on patient experience, at this hospital is $ 27,600.
In reality, the maximum bonus, based on HCAHPS scores, is $27,600.
What is it costing you in terms of staff costs, training time and consultant fees to make $27,600? What is the return on your investment?
If you are focusing on HCAHPS reimbursements, you would be better off focusing on core measures. Your risk is $64,400 and your maximum bonus is $64,400.
What do these figures mean in the big picture?
Focusing all improvement activities on issues that generate Medicare generates reimbursements of $92,000.00 or 0.14% of gross revenue.
Is this the best use of your resources?