A recent article from Kaiser Health News noted that the Centers for Medicare and Medicaid Services (CMS) will soon release a final rule “aimed at getting hospitals to pay more attention to patients after discharge.”
The rule is seen as an effort on the part of the federal government to “save money and improve care,” by making hospitals accountable for patients after they are discharged from a hospital. While this kind of thinking is certainly logically, especially given that Medicare says readmissions alone cost $26 billion in a decade, implementation of the rule may pose difficulties to hospitals who are already faced with numerous challenges to implement other areas of health care reform.
A key component of the new approach is to cut back payments to hospitals where high numbers of patients are readmitted, prodding hospitals to make sure patients see their doctors and fill their prescriptions. Focusing on hospitals is seen as necessary given that hospital care is the largest chunk of Medicare spending and “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.”
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.
Nevertheless, Kaiser noted that, “hospital groups complain that Medicare’s plans could punish them for things they can’t control, such as unavoidable readmissions and patients who can’t afford the costs of prescriptions.”
Blair Childs, a vice president at Premier, an alliance of more than 200 hospitals, noted that, “A lot of this is very unfair.” He asserted that, “hospitals that don’t have a lot of money to invest in improving their oversight of former patients and could end up losing more money under Medicare’s proposals, putting them in an even bigger financial hole.”
In particular, he says, the changes may hurt inner city hospitals, which “are often very stressed hospitals, and who are likely to be penalized the most.”
Some academics who have studied hospitals also think Medicare may be being too harsh. Dr. Ashish Jha, a professor at Harvard’s School of Public Health, noted that, “the 30-day readmission is a relatively lousy quality measure for a hospital, because a lot is happening outside a hospital’s control.”
Consequently, Medicare’s penalties could be significant-and widespread. Almost 7 percent of acute-care hospitals — 307 out of 4,498 — had higher-than-expected readmissions 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; hospitals with the worst readmissions 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 long list of quality measures.
“The incentives we’re putting into place have created a whole new way to think about hospital care,” says Jonathan Blum, deputy administrator of the federal Centers for Medicare & Medicaid Services, or 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,” where 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,” (ACOs) where 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.
Discussion
Kaiser noted that, “CMS has limited leeway to tinker with the readmissions rule, because much of it was spelled out in the health care law.” However, CMS has more freedom to change its plan to measure per-patient spending, as the law didn’t detail how it should work.
Regardless of what CMS ultimately decides, Kaiser noted that, “many hospitals are already scrambling to change how they supervise former patients, says Chas Roades, chief research officer at The Advisory Board Company, a health care consultancy.
Roades noted that, “One of the big themes he’s 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.'”
For example, Kaiser profiled Trinity Health, which owns 50 hospitals around the country, including Holy Cross in Silver Spring, Md. 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, either 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,” says Dr. Terry O’Rourke, Trinity’s chief clinical officer. But he says there are limits to what they can do: “The majority of physicians are not employed by the hospital, and we don’t have control over their practices.”
Dr. Kavita Patel, a Brookings Institution fellow and former Obama administration official, says 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 says, 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 says.
Ultimately, the proposed CMS changes for readmissions, coupled with other CMS programs such as the ACOs, will mean a significant amount of restructuring at hospitals. This will require tremendous amount of staff changes, resources, education and training, as well as regulatory and legal oversight. As hospitals already continue to face the everyday challenges, and with an influx of 30 million more patients set to enter the healthcare system by 2014, the next few years will be extremely challenging for hospitals to begin complying with such standards.
While it is certainly important to emphasize quality care on the part of hospitals, these kinds of changes cannot happen overnight and will require a significant amount of oversight and implementation. Moreover, as noted above, there are many factors that occur after a patient is discharged from a hospital, and this rule could place a significantly unfair burden on hospitals, especially considering some believe that the 30-day readmission rate is a poor measure of quality to begin with.
Hopefully, hospitals can meet these challenges, but as noted by the article, the CMS rule will likely have negative impacts on inner city and rural hospitals who face tough budgets and fewer resources already.