Medicare program penalizing hospitals for readmissions

CHCF Center for Health ReportingMay 14, 2013 

A new Medicare program that punishes hospitals with high patient readmissions rates is forcing administrators to reach out and improve how patients are cared for even after they're wheeled out the hospital doors.

Working to reduce runaway costs, Medicare is penalizing hospitals across California and nationwide if patients must be admitted again within 30 days.

Nearly one in five patients discharged from U.S. hospitals ends up returning within a month, often with problems that could have been prevented if they had received good and less costly follow-up care.

So the federal government has begun disciplining hospitals with high readmission rates, withholding as much as 1 percent of the money that Medicare normally would reimburse them.

That worries some health care experts nationally and in California who say that facilities serving low-income communities could be hit the hardest by the program that's part of the 2010 federal health care reform law.

Confirming their fears, most of the eight hospitals in California paying the stiffest penalties this year are in low-income areas, according to the latest numbers, released by Medicare in March and analyzed by Kaiser Health News. One of them is Doctors Hospital of Manteca.

Others say that with Medicare costs spiraling upward, federal officials need to act to curb unnecessary patient readmissions, estimated to cost Medicare nearly $18 billion a year. The penalties, they say, will promote better patient care.

The penalty system is imperfect, but it's a good place to start, said Dr. Robert M. Wachter, professor and associate chairman of the University of California at San Francisco's Department of Medicine.

"It's forcing hospitals to think about things they never thought about before," said Wachter, who writes frequently about health care quality. "If you wait until the tool is less blunt, I think you'll wait forever."

Several of the hospitals paying big penalties this year are scattered up and down the Central Valley, a region known for chronic health problems such as obesity and diabetes.

Others serve underprivileged Los Angeles area neighborhoods that have health challenges and lack the medical networks of wealthier communities.

All are small or medium-sized hospitals — not the state's giant academic teaching facilities.

That does not surprise some hospital leaders familiar with the geographic disparities of the California health care system.

"A lot of problems exist in the Central Valley that don't exist in Newport Beach," said Tom Petersen, executive director of the Association of California Healthcare Districts, which represents mainly smaller hospitals with publicly elected boards — half of them in rural areas.

One of those hospitals, Tulare Regional Medical Center in Tulare, is among the eight facilities in the state paying the largest penalty. Other hospitals paying close to 1 percent are in Merced, Bakersfield and Colusa.

Petersen is taking a wait-and-see approach to the penalty rollout, but he notes that hospitals have little control if their patients fail to follow doctors' instructions and dietary restrictions after they're discharged.

"The hospital doesn't have the ability to control behavior outside the hospital," he said.

Medicare disagrees, and hopes the program pressures hospital officials to improve their discharge planning and strengthen ties with primary care doctors and clinics in surrounding communities.

The penalty system focuses on Medicare patients hospitalized with heart attacks, heart failure and pneumonia. The penalties are expected to recoup about $280 million in the first year.

Next, officials plan to add patients with hip and knee implants and chronic obstructive pulmonary disease, Medicare announced April 26. The largest penalties will rise to 2 percent this October and 3 percent a year later.

In all, 276 hospitals nationally this year are paying the maximum penalty, according to the Kaiser Health News analysis.

The program is an outgrowth of mechanisms in the 2010 Affordable Care Act to curtail rising health care costs.

"The ACA doesn't just go in with a machete and cut up Medicare," said UCLA Assistant Professor Dylan H. Roby, director of the health economics and evaluation research program at the UCLA Center for Health Policy Research. Instead, the Centers for Medicare and Medicaid Serv-ices is using incentives to make those cuts, Roby said.

But some hospital leaders believe the program is deeply flawed.

"We think it's fair to ask hospitals to look at readmissions and see what they can do to prevent unnecessary readmissions," said Nancy E. Foster, vice president for quality and patient safety policy at the American Hospital Association. "But we think the current construction of the program is unfair. It puts hospitals serving low-income patients at risk. We don't think that's right."

In California, a physician shortage plagues urban and rural areas, undercutting the outpatient care that could prevent unneeded patient readmissions.

Petersen points out that the California Medical Board's most recent annual report lists only nine physicians with licenses in Colusa County, where Colusa Regional Medical Center is being slapped with a 0.82 percent penalty, just shy of the worst-case fine.

Amid the debate over the program's fairness, many hospitals statewide and nationally are designing tools to reduce preventable readmissions.

Sutter Health, which operates Memorial Medical Center in Modesto and has hospitals across Northern California, has been working since 2009 to improve its assessment of patients, discharge planning and post-hospital care, one official wrote in an email.

Some hospitals and clinics have launched pilot projects in partnership with the Centers for Medicare and Medicaid Services.

The first such pilot in the state began last year in Marin County, with county public health employees working with Marin General Hospital and Sutter-owned Novato Community Hospital.

The county provides four trained coaches, all nurses, to assist patients recently discharged from both hospitals, said Ana Bagtas, a program manager in the county Department of Health and Human Services.

"When you're discharged, it's overwhelming. It's hard to follow your discharge plans. The patient just needs a little attention, a boost," Bagtas said.

Another program is gearing up in the Los Angeles area, led by AltaMed Health Services in partnership with Hollywood Presbyterian and White Memorial medical centers and two other hospitals.

AltaMed employees will work closely with patients being discharged and teach them certain "red flags" signaling that they should call their doctors.

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