Blog » Medicare Implements Steepest Fines Yet for Readmissions

Medicare Implements Steepest Fines Yet for Readmissions

Created Dec 08 2014, 07:00 PM by Lippincott Solutions
  • Readmission Rates
  • Readmissions
  • Penalties
  • CMS
  • Medicare

Tuesday, December 9, 2014

A record 2,610 hospitals will face fines over the next 12 months for patient readmission rates that Medicare says are too high, Kaiser Health News reported Oct. 2.

The increase in the number of hospitals receiving financial penalties is due to an expansion in patient categories for which Medicare is tracking readmissions. In addition to patients with heart failure, heart attack, and pneumonia, the Centers for Medicare & Medicaid Services now evaluates readmission rates for patients initially admitted for elective knee and hip replacements as well as patients with lung ailments such as chronic bronchitis.

With a bigger pool of hospitals now subject to readmission scrutiny (including specialty hospitals that perform knee and hip replacements, which didn’t qualify before), more are eligible for fines when they fail to meet CMS’ readmission rate standards.

How Penalties are Imposed

Furthermore, fines increase with each of the five patient categories that boast readmission rates above what CMS considers appropriate for that hospital.

“Every time they add conditions, the penalties go up,” the American Hospital Association’s Nancy Foster told Kaiser Health News.

Penalties take the form of reductions in Medicare reimbursement over the next year. Some 39 hospitals with the highest readmission rates will receive a 3% cut in reimbursement (up from last year’s 2%) for every Medicare patient stay between October 2014 and September 2015. Hospitals that exceeded set reimbursement rates with lower percentages receive lower cuts. According to Kaiser Health News, the average penalty for the 2,610 hospitals receiving Medicare reimbursement cuts was 0.63%.

Three-quarters of hospitals eligible for CMS’ Hospital Readmissions Reduction Program received penalties in this third round of annual fines.

Making What’s Good for the Patient Good for the Hospital

Although the number of penalized hospitals has reached an all-time high, there is good news: The nationwide readmission rate is dropping. Hospitals whose discharge plans at one time consisted of a patient handout have upgraded their efforts in recent years to include enhancing care coordination with outside providers and supplying medications to patients who can’t afford to buy them, Kaiser Health News reported.

Still, some argue that the Medicare penalties are too hard on safety-net hospitals with bigger low-income populations, which face socio-economic barriers to healing and avoiding readmissions that more affluent populations do not. In fact, Congress is considering bills that would require CMS to factor in the socio-economic status of a hospital’s patient population when setting its readmission rate standards.

The Obama administration, however, has been leery of lowering expectations, seeing it as a lowering of quality standards for the treatment of low-income patients, according to the Kaiser Health News report. There’s concern, too, that without penalties, hospitals would become complacent about reducing readmissions since they’d actually benefit their bottom line.

Consider what an anonymous official from a safety-net hospital recently told Harvard researchers:  

“It’s a quagmire. If you affect the population correctly, you will reduce both readmissions and overall admissions, which is good for the patient but financially bad for the hospital.”

Nurse Changemakers

As the struggle continues, nurses are a key resource for hospitals working to reduce readmissions through patient education, care coordination and evidence-based research.

Southwest Regional Medical Center, Waynesburg, PA, got a hand from changemaker Carol J. Adams, DNP, while she was studying for her doctorate of nursing practice degree at Waynesburg University. Adams’ capstone project, a re-engineered discharge toolkit, was implemented at the 49-bed hospital— and ended up slashing readmission rates there nearly a third, to 8%.

The national average is 19%.

The toolkit “provided valuable insight to the discharge process, which has the potential to benefit many other hospitals,” said Jeanne Katruska, the hospital’s director of case management.  “We are proud of the progress we made.”

You can read more about Adams’ quality improvement initiative in the July issue of Quality Management in Health Care.