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

“The incentives we’re putting into place have created a whole new way to think about hospital care,” said Jonathan Blum, deputy administrator of the federal Centers for Medicare and Medicaid Services (CMS).

These initiatives come on top of other Medicare experiments that will make not just hospitals but also surgeons responsible for costs run up from complications that occur beyond the operating room. One approach is “bundled payments,” in which Medicare pays a set fee for the entire cost of a patient’s treatment, including expenses after discharge. And Medicare’s high-profile venture to create “accountable care organizations,” in which teams of doctors and hospitals share the financial risks and rewards for caring for patients, would also hold hospitals partially to account for the costs of treatments that patients get elsewhere.

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CMS has limited leeway to tinker with the re-admissions rule, because much of it was spelled out in the health-care law. CMS has more freedom to change its plan to measure per-patient spending; the law did not detail how it should work.

‘Health-care managers’

Regardless of what CMS decides, many hospitals are already scrambling to change how they supervise former patients, said Chas Roades, chief research officer at the Advisory Board Co., a health-care consultancy.

“One of the big themes I’m hearing now across the hospital industry is, ‘We can no longer think of ourselves as just hospital companies. We have to be full-service health-care managers,’ ” Roades said.

Consider Trinity Health, which owns 50 hospitals around the country, including Holy Cross in Silver Spring. Before patients leave the hospital, Trinity’s nurses now set up appointments for them with their regular doctors. They also make sure patients can get to the appointment, by helping them figure out whether Medicare or Medicaid pays for transportation or by paying for the trips directly.

“We’re trying to do a better job of sending them home better prepared rather than just saying good luck,” said Terry O’Rourke, Trinity’s chief clinical officer. But he said there are limits to what they can do.

“The majority of physicians are not employed by the hospital,” O’Rourke said, “and we don’t have control over their practices.”

Kavita Patel, a Brookings Institution fellow and former Obama administration official, said changes occurring in both the private sector and Medicare will speed up the trend of hospitals’ overseeing the care of former patients.

For example, she said, many hospitals are buying the practices of primary-care doctors, making it easier for them to arrange and oversee the care of patients after discharge.

“The more hospitals realize they’re going to be held accountable, that’s where they are going to get creative,” Patel said.

Rau is a senior correspondent with Kaiser Health News. KHN, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health-care-policy organization that is not affiliated with Kaiser Permanente.