Reassessing readmissions

October is here. Let the pain begin. That is, the 30-day readmission penalties.

The Centers for Medicare & Medicaid Services (CMS) instituted the 30-day readmission penalty initiative as a way to reduce preventable readmissions for heart failure, acute MI and pneumonia. The program withholds reimbursement to hospitals that perform worse than expected for readmissions for these conditions.

The first wave of penalties kicked in October 2012 at 1 percent and affected payments for 2013. The next year they increased to 2 percent and then to 3 percent. Elective hip and knee replacements and chronic obstructive pulmonary disease have been added to the list, and Medicare is eyeing CABG as well.

At the beginning, some hospitals may have seen the government’s stick more as a twig. The revenue achieved through a readmission may have offset or exceeded the lost reimbursement, making the penalty a weak disincentive. But as the bite into Medicare payments climbed, the urgency to address readmissions may have increased.

The federal government has credited the readmissions penalty program in part for a drop in readmissions and consequent savings to the healthcare system. Hospital readmissions are complex, though, and some readmissions actually are the best course for a patient.      

Critics of the program also voice concern over what may be unfair withholding of payments, especially to safety net hospitals. They question whether the risk adjustment formula captures the socioeconomic nuances of some hospitals that serve low-income and urban patient populations. Those hospitals, already strained financially, may fall into a downward spiral; with less money, they may not be able to provide quality care and then get dinged further.

On the other side of the argument, some health policy makers argue that treating hospitals that serve disadvantaged populations differently could lower standards and actually increase disparities in care.

Fundamentally, the Hospital Readmissions Reduction Program is a punishment. As with all public policy, there is a risk of unintended consequences. Could it be designed as a reward instead? That might not create the magnitude of savings that CMS projected but it might raise the quality of care. Just a thought.

Candace Stuart

Editor, Cardiovascular Business