Hospitals Seek to Avoid Penalties by Minimizing Readmissions

hospitalGeorge Oldt, 82, is afflicted with the double whammy of congestive heart failure and chronic obstructive pulmonary disease, conditions that can make breathing so frighteningly difficult he has to be rushed from his assisted living home in Lewisburg, Pa., to the hospital. It happened most recently in April, and might have happened again in July if it weren’t for the close monitoring of a team of health care workers.

Despite the use of supplementary oxygen, he once again found himself struggling for breath. “He called me on Monday [July 22] and said he was having some symptoms,” says Sonia Hoffman, Oldt’s case manager with Geisinger Health System, his Medicare provider. Hoffman saw him at a nearby clinic and, after consulting with his physician, altered Oldt’s medications and made sure he had the prescriptions before he returned home. When she called him later that day, his breathing had improved.

Hospitalization averted.

That’s good news for Oldt. But it’s also good news for a health care delivery system that is searching for ways to keep people out of hospitals.

[READ: Hospital of Tomorrow: How the Industry is Facing the Future]

No doubt, hospitals will continue to dazzle with futuristic robotic surgery, imaging technology that can watch the brain at work and personalized treatments aimed at an individual’s unique DNA.

But now, one of the biggest challenges for the future of hospitals is coming up with ways to keep people out.

Hospitals are the most expensive setting for health care delivery, costing between $1,600 and $2,000 a day per patient and consuming $850 billion of the $2.7 trillion spent annually on health care in the U.S.

The federal government says that one in five elderly patients is readmitted within 30 days of leaving a hospital. Many of those readmissions can’t be helped, owing to an unanticipated change in a patient’s condition or a planned follow-up treatment. But too many are the result of patient confusion over new drug regimens, inadequate follow-up with primary care physicians, or a family’s inability to deal with home care. An estimated 12 percent of Medicare patients may be readmitted for such avoidable reasons, according to the Medicare Payment Advisory Commission. Avoiding even one of every 10 of those readmissions could save Medicare $1 billion, the commission says.

Those staggering numbers are behind an Oct. 2012 change in Medicare payment rules. Where once hospitals were paid piecemeal for every admission and procedure during patients’ stays, now hospitals are penalized when patients return within 30 days for the same problem, or because of a complication from their previous stay, if the readmission is deemed by Medicare to be unnecessary. There are no rewards given to hospitals that manage to reduce their readmission rates, and hospitals cannot opt out of the penalty program. Some places are already feeling the pain: According to Kaiser Health News, federal records released on Aug. 2, show that Medicare will impose $227 million in fines on 2,225 hospitals in 49 states starting Oct. 1.

The Medicare rule change, which is likely to be followed by private insurers as they move toward similar payment systems, is an attempt to stop the revolving door of hospitalizations. So far, Medicare is refusing payment for unnecessary readmissions for three high cost conditions: heart failure, heart attack and pneumonia. That list is expected to expand by 2014 to include Chronic Obstructive Pulmonary Disease (COPD) and coronary bypass surgery. There are additional penalties for what Medicare deems excessive readmissions overall. It is one step toward turning payment incentives upside down. “It’s certainly a challenge,” says Bob Malte, CEO of EvergreenHealth in Kirkland, Wash. “Readmissions are a worry of every health care executive I talk to.”


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