Penalties Help Lower Hospital Readmissions, Medicare Says

December 09, 2013

Hospital readmission rates for Medicare beneficiaries continue to inch downward, thanks in part to a healthcare-reform penalty for revolving-door patients, the federal government announced last week.

A decrease in hospital readmissions within 30 days of discharge is often used as a proxy for improved patient care, because such readmissions may result from poor discharge planning or follow-up care. In addition, fewer readmissions save Medicare millions of dollars.

From 2007 to 2011, the 30-day readmission rate for Medicare fee-for-service beneficiaries reflecting all causes hovered around 19%, according to the Centers for Medicare & Medicaid Services (CMS). In 2012, however, this readmission rate declined to 18.5%.

Last week, CMS said that the rate of 30-day readmissions averaged less than 18% over the first 8 months of 2014. That's the equivalent of 130,000 fewer readmissions during the period, according to the agency.

The decline coincides with the introduction of Medicare's Hospital Readmissions Reduction Program (HRRP). Authorized by the Affordable Care Act, HRRP reduces reimbursement to hospitals judged to have an excessive rate of 30-day readmissions. Initially, the program has confined itself to Medicare patients who were hospitalized for heart attack, heart failure, or pneumonia. In federal fiscal year 2015, CMS will expand the list of conditions to include elective total hip arthroplasty, total knee arthroplasty, and acute exacerbation of chronic obstructive pulmonary disease.

Last year, CMS announced that it would penalize 2211 hospitals to the tune of $280 million during fiscal year 2013 because of excessive 30-day readmissions. Almost 280 hospitals incurred the maximum penalty of 1%. Unlike other Medicare quality improvement programs, HRRP does not couple penalties with bonuses for top performers.

During fiscal 2014, 2225 hospital will pay $227 million in readmission penalties, according to an analysis of CMS data by Kaiser Health News. The maximum penalty is now 2%.

In its announcement last week, CMS said other quality-improvement programs deserve some of the credit for the decline in 30-day readmissions. One of these programs, Partnership for Patients, aims at reducing readmissions by 20% from 2010 to 2013. More than 3700 hospitals have signed up for this initiative, as have medical societies, patient and consumer organizations, state governments, and employers. Another initiative cited by CMS is the Community-based Care Transitions Program, which focuses on effectively discharging patients to the likes of nursing homes, hospice care, and home care.

More information about last week's announcement is available on the CMS Web site.


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