Orthopedic hospitals are now on Medicare’s radar and will begin receiving penalties for readmissions.
$428 Million Penalties
In the next year, over 2, 600 hospitals are going to lose $428 million in expected payments from Medicare as a penalty for having too many patients return within a month for additional treatments. That’s 496 more hospitals than last year.
One of the reasons for the increase in the number of hospitals fined from last year is that Medicare began evaluating readmissions this year for patients admitted for elective knee or hip replacements. Also joining the list of patients with heart failure, heart attack, and pneumonia are those suffering from lung ailments such as chronic bronchitis
Nearly three-quarters of hospitals subject to the Hospital Readmissions Reduction Program are being penalized, according to an October 2, 2014, Kaiser Health News (KHN) analysis. According to KHN, the average fines will be higher than last year, with 39 hospitals receiving the largest penalties allowed. One of those is the oldest hospital in American founded by Ben Franklin in 1751, Philadelphia’s Pennsylvania Hospital.
Avoiding Readmissions
The purpose of the penalties is to get hospitals to focus on what happens to patients after they leave the hospital. In a perverse incentive, hospitals used to gain financially from readmissions. Roughly 2 million patients returning per year cost Medicare $26 billion. Officials estimate $17 billion of that comes from potentially avoidable readmissions. Last year, nearly 18% of Medicare patients who had been hospitalized were readmitted within a month.
Not all hospitals are subject to penalties. Certain cancer hospitals and critical access hospitals, as well as facilities dedicated to specific services such as psychiatry or rehabilitation, are exempted from the program.
Socio-Economic Challenges
One group of hospitals, those dealing with low-income and indigent patients, say the penalties aren’t fair to them because the socio-economic status of their patients makes follow up care outside of the hospital problematic.
“Low [socio-economic status] patients do often—but not always—have worse outcomes, and yet we know they are often exposed to lower quality of care, whether that’s the places that they go or the access to care that have, ” said Dr. Susannah May Bernheim, director of quality measurement at the Yale School of Medicine’s Center for Outcomes Research and Evaluation, which created the method Medicare uses to count readmissions in a KHN article. However, she said, “it is important to understand that safety net providers both may be more vulnerable to payment penalties and may in fact need more than average resources to achieve good outcomes for their patients.”
Researchers, led by Dr. Karen Joynt and other current and former academics at Harvard’s school of public health and the medical school, discovered in a study that one particular hospital was not trying to cut readmissions because its financial stability would be undermined by fewer patients. “It’s a quagmire, ” an anonymous hospital official was quoted in the study as saying. “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.”
Hospital Targets
KHN reports that this year every hospital but one in New Jersey will lose money. So will a majority of hospitals in 28 other states, including California, Florida, Georgia, Illinois, Massachusetts, New York, Ohio, Pennsylvania, Tennessee and Texas, as well as the District of Columbia. Hospitals with the highest readmission rates are losing 3% of each payment, an increase from a maximum punishment of 2% last year.
Another 496 hospitals will lose 1% or more of their Medicare payments. Those include Northwestern Memorial Hospital and Rush University Medical Center in Chicago, Beth Israel Medical Center in Manhattan, Tufts Medical Center in Boston, and a few satellite hospitals owned health systems, including the Mayo Clinic and Geisinger Health System.
Penalty Parameters
A hospital is fined if it had higher than expected readmission rates in any category.
Medicare uses the national readmission rate to decide what is appropriate for a particular hospital, so even if a hospital lowered its readmission rate from the previous year, its payments are lowered if it don’t do better than the industry overall.
Round three of the penalties have begun and orthopedics is now on Medicare’s radar. We’ll report on specific orthopedic hospital penalties as they become available.
