Medicare Revises Hospital Readmission Penalties

As previously reported by NAHAM News, the Centers for Medicare and Medicaid Services (CMS) are modifying the way in which hospitals are being reimbursed for services performed for Medicare patients. As part of the Affordable Care Act (ACA), known in this campaign season as Obamacare, or more generally as healthcare reform, hospital reimbursement rates will be modified based on their readmission rates. The basis for the program is the fact that nearly one in five Medicare patients return to the hospital within a month of discharge, costing the government an extra $17.5 billion in 2010. The original article from NAHAM News can be found here.

Since our first report, CMS has discovered errors in its initial reimbursement calculations in August, however. As a result, 1,422 hospitals with comparatively high readmission rates will lose slightly more money than they were expecting, according to a Kaiser Health News analysis of the revised penalties. Fifty-five hospitals will lose less than they were previously told.

The full article from KHN can be found here. Kaiser Health News had also published the penalties for all hospitals, and has since updated their PDF chart and downloadable csv file with the corrected readmission penalties.

The changes were mostly small, averaging two-hundreds of a percent of a hospital’s regular Medicare reimbursements. The largest changes affect Florala Memorial Hospital in Florala, Ala., which will see its penalty increase from 0.62 percent to 0.73 percent of its reimbursements, and Western Pennsylvania Hospital in Pittsburgh, which will see its penalty drop from 0.51 percent to 0.4 percent.

Kaiser Health News reports that a total of 2,217 hospitals are being punished in the first year of the program and of those, 307 will be docked the maximum amount of 1 percent of their regular Medicare reimbursements.

While CMS alters the rates, many providers and hospital administrators are still questioning the fact that the program ties readmission rates with reimbursement rates. The penalties are not popular among most hospitals since they don’t get any extra payments for efforts to reduce readmissions. In addition, the hospital industry has complained that Medicare doesn’t do an adequate job of distinguishing between necessary and planned readmissions and ones that could have been avoided. Experts say many of these readmissions are unavoidable given the infirmity of the population, but others are due to surgical mistakes or lapses in patient care after patients leave the hospital.

And KHN reports that “hospitals have been preemptively increasing their efforts to cut back on return customers. Some make sure patients get follow-up appointments and take their medication after they return home. Others send nurses to visit patients at high risk of return at home.”  In a related story, KHN features how networks between hospitals and local clinics and providers can also address the readmission issue.  Find that article here.