Readmission Rates Impact Medicare Reimbursements

Under the Affordable Care Act, hospitals with high readmission rates are beginning to see their Medicare reimbursements cut by up to 1%.

See “Denver Health: Low Readmission Rate Not Easy to Emulate,” by Eric Whitney, Colorado Public Radio (August 16, 2012). This story is part of a collaboration that includes Colorado Public Radio, NPR and Kaiser Health News.

Find the article here: http://capsules.kaiserhealthnews.org/index.php/2012/08/denver-health-low-readmission-rate-not-easy-to-emulate/

According to the article, Medicare now sets a standard of tracking readmissions within 30 days of discharge. Those with the worst rates can be fined up to 1% of reimbursements, and that rate will increase to 3 percent in 2014. And as Colorado Public Radio reports, Medicare says two out of three hospitals it evaluated failed to meet its new standards for preventing readmissions within 30 days of discharge.

This may be a particular problem with safety net hospitals – calling the penalties unfair, because the low-income patients they serve often lack access to follow-up care and medications after discharge. But Medicare has pointed to Denver Health, saying it should serve as a model for other safety net hospitals.

So take a look at Denver Health, who despite being a safety net hospital, has an enviable low readmission rate. As reported by Colorado Public Radio, Denver Health’s quality chief calls the new policy imprecise and perhaps unfair.

“The Affordable Care Act has put a ton of pressure on hospitals to focus on this, and my fear is that that is being done at the expense of other quality improvement and safety initiatives,” said Dr. Thomas MacKenzie of Denver Health. “It’s important that we have some incentive in place to try to reduce readmissions; I’m not sure that having a penalty for readmission rates is the way to go.”

But Dr. MacKenzie notes that there are a number of aspects at Denver Health that are hard to replicate everywhere.

Denver Health, Colorado’s biggest safety net system, includes a 477-bed hospital and eight community primary care clinics. About a third of its patients are uninsured, another third are on Medicaid. The integrated system and low reimbursement rates create both a financial incentive and an opportunity to provide as much care as possible in the lower cost outpatient settings.

The hospital is often at full capacity – creating an incentive to make sure patients aren’t readmitted unnecessarily.

Denver Health was also an early adopter of electronic medical records. Colorado Public Radio quotes Dr. MacKenzie: “easy sharing of patient information between the hospital and clinics effectively keeps admissions down. It also helps those recently discharged get priority in scheduling follow-up appointments, putting them at the head of what can be long wait lists at community clinics.”

So here’s the policy conundrum, according to someone on the ground: “It’s a bit of a leap to say that one hospital’s readmission rate being different from another reflects a difference in quality and care… Only a proportion of [readmissions] within 30-days are preventable. We think probably a quarter of them are preventable, at most.”

Dr. MacKenzie told Colorado Public Radio that hospitals should only be held responsible for readmissions within three days to a week of discharge. That’s because readmissions after that period could be either more the patient’s responsibility, or medically necessary for reasons beyond the hospital’s control.