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The changing healthcare landscape

The changing healthcare landscape

Today’s changing U.S. healthcare landscape places an urgent emphasis on improving the quality of patient care and reducing overall costs, particularly within hospitals. A combination of regulatory and marketplace forces, such as hospital profitability, consolidation trends, shifting ownership patterns and changing federal reimbursement policies, create a significant need to identify additional ways to drive quality and alleviate costs. The Center for Medicare and Medicaid Services PDF(79 KB) under the Deficit Reduction Act of 2005 will:

  • No longer pay the extra cost of treating particular conditions that occur while the patient is in the hospital, including pressure ulcers and surgical site infections for obesity, among others.1

  • Lower Medicare payment rates for patients with certain types of conditions if they are readmitted to the hospital within 30 days of discharge with the same diagnosis.2 Today, nearly 1 in 5 Medicare patients who are released from the hospital return within 30 days, costing $26 billion every year.3

Read the research studies below to learn more about how the healthcare landscape is changing and the positive impact nutrition has on patient care.

Background / Summary
Substantial change concerning healthcare reimbursements is underway. The creation of Accountable Care Organizations (ACOs) was among the many reforms born with passage of the Patient Protection and Affordable Care Act in March 2010. And with those ACOs, officials clearly see a system trending toward bundled payment models for reimbursement, away from the traditional fee for-service approach. “Bundled payment” refers to a single payment for all care related to a treatment or condition in which that payment is then apportioned to multiple providers across many settings. Bundled payment has also been referred to as “episode-based payment” or “case rate payment” as a way to improve both cost and quality.  Healthcare professionals who can demonstrate improvements in patient outcomes will be invaluable members of the healthcare team at all levels. Healthcare will be shifting away from rewarding utilization and is heading toward supporting positive outcomes, which will help reduce variability in care and reduce cost.

Boyce B. Paradigm Shift in Health Care Reimbursement:  A look at ACOs and bundled service payments.  JAND. 2012;112:974-979.

This analysis aimed to determine whether the occurrence of “never events” after major surgical procedures is affected by patient and disease characteristics and by the type of operation performed. Furthermore, this study explored the effect of recognizable external factors on the occurrence after major surgery of 8 infection-related complications, each of which has been designated as a “never event” by Centers for Medicare & Medicaid Services (CMS).

Postoperative infectious events and decubitus ulcers were assessed using predictive equations for the Healthcare Cost and Utilization Project Nationwide Inpatient Sample administrative claims data for patients hospitalized between 2002 and 2005.

A total of 887,189 cases from 1,368 hospitals met the criteria for inclusion in the analysis. Complication rates ranged from 0.03% for catheter-associated urinary tract infections to 2.35% for postoperative pneumonias. Predictive equations for six of eight complications had C statistics greater than 0.65 without hospital variables, while two had C statistics of less than 0.55. All equations had C statistics greater than 0.75 when hospital dummy variables were included.

Patient characteristics and type of operative procedure are important predictors of complications of surgical care evaluated in this study, undermining the rationale for their current classification as “never events.” Variations in risk-adjusted complication rates among hospitals support the influence of quality of care on their occurrence. Development and use of warranties to cover costs associated with caring for the unavoidable components of potentially avoidable complications is proposed as a means of rewarding high-quality providers without creating unrealistic expectations or perverse financial incentives.

The Deficit Reduction Act of 2005 required the Secretary of Health and Human Services to eliminate Medicare payments for complications of patient care deemed to be “never events.” Accordingly, on October 1, 2008, CMS began denying payment for costs associated with treatment of select complications of hospital care. Many commercial insurers also have stated their intention to deny payment for these complications.

Use of the term “never event” and denial of payment for all such events imply that these complications result entirely from avoidable clinical errors. This clearly is true for rare complications such as wrong-site surgery or retained surgical sponges. However, CMS's list of current and proposed “never events” includes medical and surgical complications that may occur even when the highest current standards of care are met. Occurrence of these complications is related, in part, to external factors beyond a provider's control, such as the complexity and severity of a patient's current medical conditions and the nature of required interventions.

If recognizable external factors influence the occurrence of “never events,” denial of payment for treatment of these complications will create an incentive to avoid treating high-risk patients.

Fry DE et al. Patient characteristics and the occurrence of never events. Arch Surg 2010; 145: 148-151


1Department of Health and Human Services, Center for Medicaid State Operations Letter, July 31, 2008
2American Hospital Association, “Trendwatch”, September 2011
3U.S. Department of Health and Human Services Fact Sheet: Administration Implements New Health Reform Provision to Improve Care Quality, Lower Costs. Available at