Hospitals Brace for Medicare Readmission Penalties

Earlier this week, Kaiser Health News (KHN) released an analysis of Medicare data which showed that approximately 2200 hospitals will face penalties this October for having too many patients readmitted for care within 30 days of discharge. The estimated total cost of these penalties over the next 2 years, according to the report, will result in $280 million in Medicare funds.

The newly established penalties are an effort to improve the quality of care. Currently, there are nearly 2 million Medicare beneficiaries each year that are readmitted within the standard 30-day window, and this breakdown in the system results in costs of approximately $17.5 billion each year. In the past, hospital systems have had very little incentive to ensure that patients are cared for once they leave the hospital; in fact, hospitals actually benefit financially when patients are readmitted. This no longer will be the case.

But not everybody is happy with the new system.

Healthcare Payer News compiled a list of reactions to the KHN report as reported by NPR radio stations around the United States. The mixed reactions included the following criticism from Curt Schroder, head of the Delaware Valley Healthcare Council. ““[Medicare] needs to remember that people are not cars. They seem to be treating hospitals like auto repair shops. In other words, ‘You should be able to change the tire, send them on their way and not see them for another 5,000 miles.’” Spokespeople from other hospitals around the country were also a bit wary as to how readmission metrics would be used. When asked about the new policy, Dr. Ashish Jha, health policy professor at Harvard, said that “not all readmissions are bad,” adding that hospitals with high readmission rates often have low mortality rates, and those mortality rates are a better assessment of quality than readmissions.

Another common criticism of the readmission penalties is the fact that safety-net hospitals stand to be hit the hardest. "It's not the classic cardiac cases that are the issue," says Paul Goldberg, CFO, LibertyHealth. “We have a booming emergency room [at LibertyHealth], and unfortunately we see patients frequently. Frankly, it's the safety-net providers that are taking it on the chin here.” Adding to that sentiment was Atul Grover, chief public policy officer of the Association of American Medical Colleges, "You’re probably going to end up penalizing those very places that need to put resources into patients when they leave the hospital," said Grover.

Although hospitals can estimate what penalties they will be assessed, there is no way to know with absolute certainty. This is because “the penalty percentage is applied to each bill the hospital submits to Medicare for a patient service during the upcoming fiscal year that begins Oct. 1.” However, there are 278 hospitals that will be getting the maximum penalty of 1%. The average penalty is 0.42%.

KHN has provided an extensive list of the nation’s hospitals with published penalties.

Around the Web

Medicare To Penalize 2,211 Hospitals For Excess Readmissions [Kaiser Health News]

Hospitals react to readmission penalties [Healthcare Payer News]

7 Areas That Will Influence the Finances of Safety-Net Hospitals [Becker’s Hospital Review]

Hospitals Treating The Poor Hardest Hit By Readmissions Penalties [Kaiser Health News]