Thousands of Hospitals Penalized Under Medicare’s Readmissions Reduction Program

Medicare’s latest initiative, the Readmissions Reduction Program, has been assigned the task of reducing costly hospital readmissions. The program is part of the Patient Protection and Affordable Care Act, and will target providers with high readmission rates and test programs to help reduce these numbers. Currently, about one in five Medicare patients (approximately 2 million Medicare beneficiaries) return to the hospital within a month of discharge, creating about $17.5 billion in additional Medicare payments. According to Kaiser Health News, more than 2,000 hospitals are facing financial penalties from Medicare beginning in October for having excessive readmission rates.

Hospitals to lose $280 million in Medicare reimbursements

Penalties range up to one percent of the Medicare base payment, with about 278 hospitals facing the maximum penalty beginning in October. The total amount of the penalty across all 2,000+ hospitals is about $280 million. The Centers for Medicare and Medicaid Services (CMS) is targeting hospitals, which currently stand to benefit financially if a patient is readmitted. There was never really a financial incentive for providers to ensure patients receive the necessary care post-discharge to prevent unnecessary readmissions, which the Readmissions Reduction Program is hoping to change.

Hospitals penalized for high readmission rates.

Image via Home Instead Senior Care

Kaiser Health News also says that soon, hospitals will also stand to be penalized or rewarded based on “how well they adhere to basic standards of care and how patients rated their experiences.” In October 2013, penalties for excessive readmissions will rise to 2 percent of the base Medicare reimbursement, and in 2014, the penalty goes up again to 4 percent.

Are hospitals serving low-income populations being treated unfairly?

One concern that arose as a result of these penalties is the inclusion of hospitals who primarily treat a low-income population. Some say that external factors, such as lack of access to follow-up care, can artificially inflate readmission rates in cases where the hospitals could do little to prevent these outcomes.

A statistical analysis reveals that 76 percent of hospitals treating a low-income population are being penalized, while just 55 percent of hospitals which treat few poor patients will receive penalties. The concern is that these hospitals may not be able to afford the penalties assessed, and that providers treating poor populations are the ones who need funding the most to adequately care for a difficult population in which patients often fail to take prescribed medications, miss follow-up appointments and generally don’t receive appropriate follow-up care.

Medicare contends that there are many hospitals falling into the same low-income constituents group which do just as well or better on the measurement criteria compared to providers who serve very low numbers of disadvantaged patients. Medicare accounted for how sick patients were upon first admission when conducting its analysis, but didn’t account for income levels or socio-economic status. The analysis focused on Medicare recipients admitted for heart attack, heart failure and pneumonia between July 2008 and June 2011.

Goal to improve patient care

The goal of assessing penalties isn’t solely to save Medicare money, but to give providers a push to implement programs that improve follow-up care and reduce costly readmissions, which are often avoidable. The program is also implementing test programs that, if successful, will be rolled out nationally to enable providers to better reduce these numbers.

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