Medicare rule would decrease payments to hospitals with high re-admission rates

When hospitals discharge patients, they typically see their job as done. But soon they could be on the hook for what happens after Medicare patients leave the premises, and particularly if they are re-admitted within a month.

In an effort to save money and improve care, Medicare, the federal program for the elderly and disabled, is about to release a final rule aimed at getting hospitals to pay more attention to patients after discharge.

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A key component of the new approach is to cut back payments to hospitals where high numbers of patients are re-admitted, prodding hospitals to make sure patients see their doctors and fill their prescriptions.

Medicare also wants to pay less to hospitals with higher-than-average costs for patient care. It has proposed calculating the costs by combining a patient’s hospital expenses with fees incurred up to 90 days after discharge.

The efforts, called for in last year’s health-care law, are part of a push to make hospitals the hub for coordinating care. Hospital care is the largest chunk of Medicare spending; Medicare says re-admissions alone cost $26 billion a decade. Plus, many experts argue that hospitals are the most organized actors in a splintered and often dysfunctional health system and thus best able to take the lead in overseeing patient care.

Hospitals’ objections

Hospital groups complain that Medicare’s plans could punish them for things they cannot control, such as unavoidable re-admissions and patients who cannot afford the costs of prescriptions.

“A lot of this is very unfair,” said Blair Childs, a vice president at Premier, an alliance of more than 200 hospitals.

He said hospitals that do not have a lot of money to invest in improving their oversight of former patients could end up losing more money under Medicare’s proposals, putting them in an even bigger financial hole. In particular, he said, the changes may hurt inner-city hospitals.

“These are often very stressed hospitals, and they’re the ones that are going to be penalized the most,” Childs said.

Some academics who have studied hospitals also think Medicare is potentially being too harsh.

“The truth is the 30-day re-admission is a relatively lousy quality measure for a hospital because a lot is happening outside a hospital’s control,” said Ashish Jha, a professor at the Harvard School of Public Health.

Medicare’s penalties could be significant — and widespread. Almost 7 percent of acute-care hospitals — 307 out of 4,498 — had higher-than-expected re-admission rates for heart failure, heart attack or pneumonia, according to Medicare data. Under Medicare’s draft proposal, which it put out in May, penalties would start in October 2012 and hospitals with the worst re-admission rates eventually could lose up to 3 percent of their regular Medicare payments.

Hospitals with patients who cost Medicare lots of money during and after their hospital stays also could be hurt. Beginning in October 2013, these spending levels would count for a fifth of Medicare’s “value-based purchasing program,” which alters hospital payments based on a long list of quality measures.