Focusing on the Patient, Not the Condition: What Hospitals Need to Know About Avoiding Medicare Readmission Penalties

Patients might leave the hospital with discharge instructions to ensure they stay on the mend, but there's plenty that could go wrong once they get home.

Medication, for instance, can prove problematic, says Kathy Donofrio, associate vice president of nursing and director of cardiology at Swedish Covenant Hospital in Chicago.

"Patients have a tendency to worry about finances, so they save their medications," she says. "We actually have patients who went home with generic medication…at home they had the brand name, and took both. They were double-dosing themselves. Then they're back in the ER because their blood pressure is low because they took the same medication twice."

SCH Logo Centered SCHBlue notaglineBecause of scenarios like that, between July 2011 and June 2012, Swedish had an overall 30-day Medicare patient readmission rate higher than the national average of 16 percent. However, since then, Swedish has implemented a care transition program, funded by grants from organizations like the Retirement Research and Ackerman foundations. The initiative involves interventions like home visits from wellness coaches who help clear up confusion about medications. During the first 10 months of 2013, the safety-net provider's readmission rate dropped to 14.25 percent.

Aside from the desire to improve outcomes for patients, Ms. Donofrio says the hospital was motivated by the threat of penalties for high readmission rates under the Medicare Hospital Readmissions Reduction Program. The program, which began in fiscal year 2013, incentivizes hospitals across the nation to reduce preventable readmissions by cutting Medicare payments for those with rates deemed unacceptably high. This October, reducing readmissions will become an even more urgent objective for hospitals as the potential reimbursement reductions get bigger and the list of conditions CMS scrutinizes gets longer.

More risk for hospitals: What readmissions reduction will look like in FY 2015
The readmissions reduction program, which was established by the Patient Protection and Affordable Care Act, took effect in fiscal year 2013. During the first year, CMS cut Medicare reimbursement by up to 1 percent for 2,213 hospitals with high readmission rates for heart attack, heart failure and pneumonia. The second round of penalties started Oct. 1, 2013, and CMS cut reimbursements for 2,225 hospitals in 49 states by up to 2 percent.  

According to the reduction program, a readmission occurs when a Medicare patient is readmitted to the same or another acute-care hospital within 30 days of discharge, with certain exceptions such as transfers to another hospital and planned readmissions for chemotherapy, rehabilitation or other treatment. CMS penalizes hospitals for readmissions exceeding a hospital's expected readmission rate, which is the national mean readmission rate risk-adjusted for demographic characteristics and the severity of illness of a particular provider's patients, according to Health Affairs.

In fiscal year 2015, the stakes will get even higher. Hospitals could see their Medicare payments cut by as much as 3 percent, and CMS plans to add chronic obstructive pulmonary disorder and total hip and knee replacement to the program.

The added conditions will extend the program's reach to more hospitals and increase the financial risk for those that were already affected during the first two years of penalties, says Karen Joynt, MD, an instructor at the Harvard School of Public Health in Boston.

"Right now, a lot of hospitals are barely included in the program because they just don't have very many patients that are included in one of the three conditions," Dr. Joynt says. "The more conditions get added, the more hospitals will be at risk."

Richard Juknavorian, senior director of performance technologies at The Advisory Board Company, sees the program's upcoming expansion as part of a larger transition to a healthcare industry where hospitals won't get paid for readmissions at all. Soon, he says Medicare and commercial payers alike won't reimburse providers for preventable readmissions, and hospitals that display "ostrich syndrome" will suffer.

"All reimbursements attributed to readmissions will be at risk," he says. "Before you know it, your average hospital that is potentially operating right now at a margin of 3 to 4 percent is all of a sudden looking at a margin that's underwater by 22 percent."

Focus on safety-net hospitals: More conditions mean a larger financial burden
Some researchers, hospital industry members and policymakers have expressed concerns that the readmissions reduction program unfairly penalizes safety-net providers, which treat significant numbers of low-income, uninsured and vulnerable patients.

In fiscal year 2014, 77 percent of safety-net hospitals have received penalties as a result of the program, compared with only 36 percent of hospitals with the fewest poor patients, according to a Kaiser Health News report.  

The program disproportionately cuts payments to hospitals that serve socioeconomically challenged communities, which have limited resources outside of the hospital to help patients maintain their health, says Nancy Foster, the vice president of quality and patient safety policy at the American Hospital Association.

"This is a very complex group of patients, and there are gaps in the services that could and should exist in the community that would assist those patients in staying out of the hospital," she says. "Sometimes the hospitals themselves are able to help fill those gaps…sometimes the hospital doesn't have the resources or expertise. We feel the hospital is being held accountable for something that's a problem for the community."

The AHA and other advocates for safety-net hospitals have called for CMS to look into revising the formula it uses to calculate readmission penalties to adjust for socioeconomic factors. The higher penalty cap and added conditions will increase financial pressure on safety-net hospitals, which makes concerns about the fairness of the program's methodology even more pressing, Ms. Foster says.

In The New England Journal of Medicine, Dr. Joynt wrote there's "convincing evidence" that the readmission reduction program is more likely to penalize safety-net institutions, a trend that could exacerbate disparities in care. She has also suggested adjusting readmission rates for socioeconomic status.

"So much of readmission is about what happens outside the hospital," she says. "There are some hospitals that just lack the resources, especially hospitals that serve patient groups that themselves lack resources."

Ms. Donofrio agrees that safety-net providers like Swedish Covenant shouldn't be held to the exact same standard as hospitals that serve more affluent populations.

"To say that everyone in the entire country needs to be at 21 percent for congestive heart failure readmissions is saying that we're all dealing with the same population, and we're not," she says. "I think the program is a worthwhile program, but I would like to see it have some adjustment so a certain set of hospitals only need to bring their readmission rate down to 22 instead of 21, based on who they're working with."

Reducing readmissions in 2015: How hospitals should approach the expanded penalty program
When CMS adds more conditions to the reduction program this year, hospitals that have focused on specific conditions such as heart failure will have to change how they approach readmission prevention, Dr. Joynt says.

"When you get into a more diverse group of conditions, you can implement a range of specific clinical interventions, or you can shift to think more generally about assessing risk across conditions – which may mean focusing not just on the condition itself but also on the patient," she says. "Hospitals will need to move toward thinking more about social risk assessment, including what resources this patient is going home to."

Mr. Juknavorian of The Advisory Board Company agrees psychosocial factors are crucial to consider when working to prevent readmissions for a range of conditions. "Patients' environmental characteristics, psychological and emotional health…we're really trying to get our members to think very closely about that," he says. "There's no silver bullet, but if there's anything closest to a silver bullet, that would be it."

Swedish Covenant is already tackling readmissions with this philosophy by visiting patients at home and assessing their support systems, Ms. Donofrio says. From the beginning, the hospital has also focused on conditions beyond the ones CMS picked to initially penalize and has seen great results with COPD patients. At the end of the day, she says the hospital would work to reduce preventable readmissions even if it didn't have the funding to do it or the threat of Medicare penalties driving it.

"Even if we didn't have the grants, we'd continue to do it because it makes sense," she says. "It's the right thing for patients."

More Articles on Hospital Readmissions:
Reducing Readmissions to Reduce Penalties: Where to Begin?  
ACC's "Hospital to Home" Initiative Reduces Readmissions, But Slowly
High Volume Hip and Knee Hospitals Also Have Highest Readmissions 

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