Hospitals in D.C., Va. to lose millions from Medicare

September 30, 2012

Hospitals in the District and Northern Virginia will lose millions of dollars in Medicare funding over the next year because too many of their patients were re­admitted to a hospital within weeks of being released, according to Medicare data and interviews with hospital officials.

Beginning Monday, the hospitals will receive lower reimbursements on Medicare claims filed with the government for each admitted patient. Over the year, the total amount of those reductions will vary from $1.2 million for MedStar Washington Hospital Center in Northwest Washington, the region’s largest private hospital, to about $12,000 for Reston Hospital Center in Virginia. Of 16 hospitals in the District and Northern Virginia, all but three will get paid less.

The penalties do not apply to Maryland hospitals because the state has a special payment arrangement with Medicare, the federal health program for the elderly and disabled.

Although the penalties represent a tiny fraction of the institutions’ revenue, they have caught the attention of hospital executives, who already are grappling with tight budgets and taking steps to avoid even steeper penalties next year.

The readmission penalty, authorized by the 2010 health-care law, is one of the first examples of the incentives Medicare, the single largest payer of hospital services, is using to try to lower costs and improve care.

Medicare will begin penalizing hospitals if readmission rates for patients with heart failure, heart attack or pneumonia are too high.

Some of the hardest-hit facilities are inner-city hospitals that tend to treat sicker, poorer patients. These patients sometimes end up being readmitted because they have a harder time getting medication and follow-up doctors’ appointments, often because they lack transportation, hospital officials said.

“Not only do we have the very sick patients, they also have very significant social needs,” said
Kamaljit Sethi, who heads quality and safety at Providence Hospital in Northeast, where officials estimate they will lose about $320,000 in the coming year.

Cash-strapped Howard University in Northwest was the only area hospital hit by the maximum penalty of 1 percent of its Medicare payments. Howard will receive about $400,000 less in payments in the coming year, according to an analysis of Medicare data for fiscal 2011.

The hospital said that the penalty wouldn’t affect its services but that it planned to “give greater assistance to this population.” Officials declined to comment or provide details.

Besides Howard and Providence, the other District facilities with the highest penalty rates are MedStar Washington Hospital Center and George Washington University Hospital.

Hospitals generally are paid for each admission. All too often, experts say, the problems that send patients back to the hospital might have been avoided if there had been a better handoff from the hospital to the people responsible for the next phase in a patient’s recovery, whether it’s the patient and his or her family, a home health agency, a nursing home or a hospice.

Many patients aren’t in the best position to understand what hospital staff tell them at discharge. “They’re sleep-deprived, on pain medicine, maybe worried about the dog or whether someone is going to steal the Social Security check in their mailbox,” said Eric Coleman, a national expert on readmissions at the University of Colorado School of Medicine.

Hospitals also face few consequences for failing to send medical records to doctors or other health-care providers after discharge. As a result, doctors often don’t know patients need follow-up care.

Readmissions have been considered a huge and costly problem. Nearly one in five Medicare patients returns to a hospital within a month of discharge; three-quarters of these readmissions — costing an estimated $12 billion a year — are considered potentially preventable, especially with improved care after patients leave the hospital, according to a recent Health Affairs article.

Nationally, about 2,200 hospitals will lose about $300 million out of a total of $140 billion in Medicare inpatient payments over the next year because their readmission rates for patients with heart failure, heart attack or pneumonia were too high, according to data from the federal Centers for Medicare and Medicaid Services.

Coleman said that the penalty was a good way to motivate hospitals. “They want to be known as hospitals that are doing a good job,” he said. “Before, they were quietly profiting from not doing such a good job.”

Among area hospitals, the bad publicity arising from the penalties is indeed creating a sense of urgency.

In Northern Virginia, the Inova health system has spent $2.4 million to hire eight health coaches and four case managers to coordinate and keep track of patients after discharge, said Vera Dvorak, vice president for transitional care. The company also opened two special clinics where doctors see Inova patients who can’t get appointments with their regular providers within a week after discharge. Inova’s five hospitals will get paid about $250,000 less from Medicare this coming year because of the penalties, officials said.

“From a PR perspective, this is something they don’t want. They don’t want to be called out,” said Eric Hammelman, a vice president at Avalere Health, a consulting firm whose clients include hospitals outside Washington and Northern Virginia. “They want to know, ‘What can I do to avoid a penalty and to avoid a negative perception?’ ”

Sibley Memorial Hospital in Northwest Washington, Virginia Hospital Center in Arlington and Prince William Hospital in Manassas escaped the penalties.

The government’s penalties were based on the frequency that Medicare heart failure, heart attack and pneumonia patients were readmitted to any hospital within 30 days between July 2008 and June 2011.

Patients don’t have to be rehospitalized for the same condition or even at the same hospital. Medicare took into account the sickness of the patients when calculating whether the rates were higher than those of the average hospital, but not their racial or socioeconomic background.

Federal regulators say hospitals should be held to the same standards of quality regardless of their patients’ socioeconomic status. Many hospitals that treat low-income patients have performed well, they say.

Here’s how the penalty works: If a hospital is hit by a 1 percent penalty and submits a claim for $10,000 for a patient stay, Medicare will reimburse it $9,900. Depending on their performance, hospitals’ penalties can go up to a maximum of 2 percent in October 2013 and to 3 percent the following year.

Many local hospitals either have measures in place to reduce unnecessary readmissions or are considering them. Some want to partner with nursing homes and other community organizations. Other say more hospital staff will spend more time doing a better job explaining diseases and medications to patients and their caregivers.

Even hospitals that were not penalized have taken steps.

Virginia Hospital Center opened a pharmacy on its campus and launched its own home health service. The penalty, said Robin Norman, chief financial officer, “is enough to have every hospital’s attention.”

At MedStar Washington Hospital Center, a shortage of primary-care doctors in the community makes it difficult for hospital patients to get appropriate follow-up, said Allen Birenberg, co-chair of the readmissions task force at the parent company, MedStar Health. By contrast, MedStar Georgetown University Hospital, has a much smaller penalty rate because more patients there have their own doctors, he said.

To better transmit information “down the line” to doctors, nursing homes and other providers, MedStar is tracking its most high-risk patients through a special database “built from scratch,” he said.

Financially struggling United Medical Center, which serves many low-income patients, had one of the lowest penalty rates in the District. The city-owned hospital is expected to lose about $28,000 in payments, according to a spokesman for the city’s chief financial officer. UMC officials did not return e-mails or telephone calls to provide additional explanation.

Lena H. Sun is a national reporter for The Washington Post, focusing on health.
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