More than 2,000 hospitals — including some nationally recognized ones — will be penalized by the government starting in October because many of their patients are readmitted soon after discharge, new records show.
These hospitals will forfeit more than $280 million in Medicare funds over the next year as the government begins a wide-ranging push to start paying health care providers based on the quality of care they provide.
With nearly one in five Medicare patients returning to the hospital within a month of discharge, the government considers readmissions a prime symptom of an overly expensive and uncoordinated health system. Hospitals have had little financial incentive to ensure patients get the care they need once they leave, and in fact they benefit financially when patients don’t recover and return for more treatment.
Nearly 2 million Medicare beneficiaries are readmitted within 30 days of release each year, costing Medicare $17.5 billion in additional hospital bills. The national average readmission rate has remained steady at around 19 percent for several years, even as many hospitals have worked harder to lower theirs.
The penalties, authorized by the 2010 health care law, are part of a multipronged effort by Medicare to use its financial muscle to force improvements in hospital quality. In a few months, hospitals also will be penalized or rewarded based on how well they adhere to basic standards of care and how patients rated their experiences. Overall, Medicare has decided to penalize 71 percent of the hospitals whose readmission rates it evaluated, the records show.
A total of 307 hospitals nationally will lose the maximum amount allowed under the health care law: 1 percent of their base Medicare reimbursements. Several of those are top-ranked institutions, including Hackensack University Medical Center in New Jersey, North Shore University Hospital in Manhasset, N.Y. and Beth Israel Deaconess Medical Center in Boston, a teaching hospital of Harvard Medical School.
“A lot of places have put in a lot of work and not seen improvement,” said Dr. Kenneth Sands, senior vice president for quality at Beth Israel. “It is not completely understood what goes into an institution having a high readmission rate and what goes into improving” it.
Penalties Will Increase Next Year
The maximum penalty will increase after this year, to 2 percent of regular payments starting in October 2013 and then to 3 percent the following year. This year, the $280 million in penalties comprise about 0.3 percent of the total amount hospitals are paid by Medicare.
The penalties have been intensely debated. Studies have found that African-Americans are more likely to be readmitted than other patients, leading some experts to be concerned that hospitals that treat many blacks will end up being unfairly punished.
Hospitals have been complaining that Medicare is applying the rule more stringently than Congress intended by holding them accountable for returning patients no matter the reason they come back.
Even some hospitals that won’t be penalized are struggling to get a handle on readmissions. Michael Baumann, chief quality officer at the University of Mississippi Medical Center, said in-house doctors had made headway against heart failure readmissions by calling patients at home shortly after discharge. “It’s a fairly simple approach, but it’s very labor intensive,” he said.
There are several problems afflicting many of the center’s patients—including obesity and poverty that makes it hard to afford medications—make it more challenging. “It’s a tough group to prevent readmissions with,” he said.