By Bernard J. Wolfson and Ronald Campbell, The Orange County Register
Medicare will dock payments this year for hospitals in hopes of spurring them to reduce the number of patients who are re-hospitalized too quickly.
Government and commercial insurers view lower readmissions as a sign of higher-quality care and greater cost consciousness by hospitals.
The pay cuts, coming under the Affordable Care Act, are among the many factors motivating hospitals to spend more time educating patients about their illnesses and partnering with outside caregivers to ensure that treatment doesn’t stop after discharge.
The move coincides with broader changes afoot in the industry, as payments from government and commercial insurers are based increasingly on medical outcomes rather than the volume of services provided. Under increasing pressure from more empty beds and lower revenues, hospitals are pondering new models that rely less on traditional inpatient business.
For patients, especially people with serious diseases, the new thrust means closer monitoring while they are in the hospital and a more seamless transition to follow-up care after they leave. In many cases, it also affords them a host of support services to ensure they are following their post-discharge marching orders and getting the medical attention they need.
The penalties, levied on hospitals that readmit too many patients within a month of their discharge, come in the form of reductions in Medicare payments for inpatient care.
Many hospital executives, however, say Medicare’s formula for setting the penalties is not entirely fair. And some doctors warn that discouraging readmissions is not always the best thing for patients.
“There are things we don’t control, and we certainly don’t control patient behavior either,” said Nancy Pratt, chief quality and patient safety officer for Irvine, Calif.-based St. Joseph Health System.
“You could do everything right and still end up having a patient readmitted.”
The Medicare payment cuts seem small — just $227 million nationwide — but hospital operators and industry analysts say they are yet one more squeeze on revenues in a new world of declining reimbursements. And money aside, hospitals must pay attention to their reputations.
“The bottom line is no hospitals want to have on their records that they have a number of violations or penalties,” said Jim Lott, a former senior executive with the Hospital Association of Southern California who now consults with hospitals on improving post-discharge care and reducing readmissions. “You can charge them $100,000; you can charge them $5,000. It’s more important that you not have any negative hits on your record, because that’s what messes with you in the marketplace.”
Hospitals getting payment cuts can lose anywhere from hundreds of thousands of dollars to only a few thousand. Medicare inpatient payments nationwide totaled nearly $140 billion in 2012, the most recent year for which data are available.
This year, the maximum readmissions fine on any hospital is 2 percent, up from 1 percent in 2013, the first year of the penalty program. It maxes out at 3 percent next year. Eighteen hospitals in the U.S. got the maximum penalty this year.
About 12 percent of Medicare patients readmitted to the hospital may not need to be, according to a study by the Medicare Payment Advisory Commission, a congressional agency. Reducing these preventable readmissions by 10 percent could save Medicare $1 billion annually, the report found.
Although Medicare tracks readmissions for all causes, it is penalizing hospitals this year for only three types of cases: pneumonia, heart attack and heart failure. It has recently added two more — chronic obstructive pulmonary disorder and hip and joint replacements — for which excess readmissions will be factored into penalties next year.