Readmission penalties and miscalculations add to hospitals’ pain

Among the least popular decisions handed down by the Centers for Medicare & Medicaid Services in recent years, it's hard to top the rule requiring hospitals to rein in readmission rates or suffer the financial consequences. As most CFOs are painfully aware, those consequences include substantial reductions in reimbursements.
CMS says about two-thirds of U.S. hospitals will be penalized up to 1 percent of their reimbursement for treating Medicare patients, and those penalties will go up to 3 percent by 2015. The federal initiative, called the Hospital Readmissions Reduction Program (HRRP), is expected to recoup $280 million from over 2,200 hospitals in 2013.
The latest wrinkle in this ongoing story came when CMS recently announced that it had miscalculated some of those penalties and would be slightly reducing those penalties for more than 1,200 hospitals, according to a Kaiser Health News analysis based on data that Medicare published on its website. More than 200 hospitals, however, are now faced with modestly increased penalties as a result of the recalculations.
"The readjustments that I'm aware of are simply corrections of mathematical errors that CMS made in calculating the original penalties," said Nancy Foster, vice president for quality and patient safety policy for the American Hospital Association. "It's the right thing to do." But, she said, "These penalties in general are very challenging to hospitals." 
Some of the responsibilities hospitals are now being asked to take on to reduce readmissions are a stretch from what they have normally been involved in, explained Foster.
"Ensuring that patients get to their healthcare provider [after discharge] has not typically been part of a hospital's responsibility and presents challenges in many communities." It stretches resources and requires hospitals to forge partnerships with community caregivers that may have different priorities. In communities that have too few primary care doctors, pharmacists and home care agencies  -  which tend to be the poorer communities  -  it's an "extraordinary tough job to reduce readmissions," said Foster.
Despite criticisms from hospital administrators about the fairness of the current HRRP rules  -  which kicked in on October 1, 2012  -  they do seem to be having an effect. CMS recently said that the national readmission rate has dropped to 17.8 percent in the last quarter of 2012. In the last five years, it has ranged between 18.5 percent and 19.5 percent. 
When asked if some hospitals are being unfairly penalized in light of the fact that they see a very large number of severely ill and poor patients and can't always control readmissions, Rebecca Armato, executive director, physician and interoperability services, Huntington Memorial Hospital, Pasadena, Calif., said: "No one likes penalties ... but why focus on the negative? ... We focus on how to provide the best care and outcomes for all our patients no matter the severity of their illness or income level."
Armato's department has spent considerable time and resources addressing the readmissions issues with better technology, including using IT tools to identify patients who may need specialized education before they leave the hospital.
There are a many things hospitals can do to curb readmissions, especially when using IT tools, said Dominick Bizzarro, one of the managing directors at InterSystems, a data analytics services company.
Bizzarro pointed out that at admission, IT tools can help identify some patients who may be the most at risk for readmission. IT tools can also communicate the status of a patient to all the providers the patient sees so that better care coordination results in a decreased chance of that patient returning to the hospital.
The thing hospitals need to remember is that they don't have to swoop in with a ton of new technology all at once.
"The reality is, they can be taken in bites, to incrementally improve," Bizzarro said. "And that's the ability technology can give you."