Hospitals readmit nearly 1 in 5 Medicare patients within one month of discharge, with the return trips costing the federal government more than $17 billion a year as of 2004, according to a study published in the New England Journal of Medicine.
But, beginning this month, hospitals with too many Medicare readmissions stand to lose some of their Medicare income under a new health care reform initiative called the Hospital Readmissions Reduction Program, or HRRP.
The program is part of an effort under the Obama health care overhaul that's aimed at reducing all hospital readmissions next year by 20% compared to 2010 levels.
Millions in penalties handed out
To identify problem hospitals, the federal Centers for Medicare & Medicaid Services compared readmission rates against national averages for Medicare patients treated for three acute health conditions: heart attack, heart failure and pneumonia.
By 2015, the review will expand to include readmissions for chronic obstructive pulmonary disease, or COPD, coronary bypass surgery, coronary angioplasties and other vascular conditions.
Medicare readmissions have already been deemed excessive at more than 2,200 hospitals -- roughly two-thirds of those evaluated -- and they were slapped with $280 million in penalties on Oct. 1. A list put together by the Kaiser Family Foundation using Medicare's data shows that the penalized hospitals include such prestigious institutions as New York's Mount Sinai Hospital, Boston's Beth Israel Deaconess Medical Center and Yale-New Haven Hospital in Connecticut.
Nearly 300 hospitals that most exceeded the national averages for readmissions will lose the maximum 1% of their base Medicare reimbursements for the coming year.
A stubborn problem
Past attempts to combat excessive Medicare readmissions have met with limited success due to the complexity of the problem and the difficulty in determining who's to blame.
"It's very hard to know what a rehospitalization is and if it's really the hospital's fault," says Toby Edelman, senior policy attorney for the nonprofit, nonpartisan Center for Medicare Advocacy Inc. in Washington, D.C. "Did the hospital discharge the patient too soon, or was the post-hospital care inadequate to meet the patient's need?"
Nancy Foster, vice president for quality and patient safety policy at the American Hospital Association, says that while the trade group supports the use of both positive and negative incentives to improve the quality of care, the punishment in this case hits high and wide of the mark.
"The penalty program penalizes hospitals much, much more than they were paid for the readmissions," she says. "And there are differences in the prevalence of primary care physicians, especially in urban inner-city poor areas and rural areas. ... We don't think the hospitals should be penalized because there aren't enough primary care physicians to meet patient needs once we discharge them."
Billing abuse part of the equation?
"So instead of getting sanctioned for readmissions, hospitals can get extra money," says Edelman. "I'm really concerned that if hospitals are going to be sanctioned for rehospitalizing people (under the Hospital Readmissions Reduction Program), they'll just say, 'OK, now the person is in observation because that doesn't count; it's an outpatient status, not inpatient.'"
The Obama administration in late September sent hospital associations a toughly worded letter warning against efforts to "game the system," as officials put it. The letter, signed by Health Secretary Kathleen Sebelius and Attorney General Eric Holder, vowed that the government will take a hard line in prosecuting hospitals and doctors cited for billing fraud.
Some are hopeful
The Medicare Payment Advisory Commission, or MedPAC, an independent agency established in 1997 to advise Congress on Medicare issues, says readmission transparency combined with coordinated incentives and penalties to encourage hospitals, nursing homes, physicians and health care providers to coordinate outpatient care can help bring down readmission rates.
Dr. Marty Makary, a surgeon at Johns Hopkins Hospital and author of "Unaccountable: What Hospitals Won't Tell You and How Transparency Can Revolutionize Health Care," heartily agrees.
"There hasn't been any incentive for hospitals to widely adopt some best practices except in the rare case when there has been transparency," Makary says. "Where we've seen things publicly reported, like the new readmission rates, we see tremendous resources spent on the local level trying to get things right."
Don't forget about the patients
The Hospital Readmissions Reduction Program is just one of many initiatives currently underway to improve the quality of post-hospital care for discharged Medicare patients and close the door on excessive billing.
"There are a number of things going on around this issue, both sticks and carrots," says Keith Lind, senior policy adviser for AARP's Public Policy Institute. "We don't want people coming back to the hospital if they don't need to and costing extra money. It's both hard on the patients and hard on the (Medicare) program."
Foster hopes the patient will remain central in the search for a solution to the Medicare readmissions issue.
"Hospitals desire for patients to be healthier, to be well," she says. "It's easy to forget that we're talking about individuals' lives."