Altruis Blog

Reducing Hospital Readmissions: Adjusted re-admission penalties may now be fairer, but they remain potentially devastating to safety-net hospitals

May 7, 2019 2:12:23 PM / by Chris Caspar, CEO


Hospital readmission penalties seem to have been working as intended, by driving down 30-
day hospital readmissions and saving Medicare roughly $2.3 billion between 2010 and
2016. The unintended consequence, however, was that hospitals serving the poorest of
the poor were the most frequently penalized. Medicare has made changes to mitigate
that, but safety-net hospitals still struggle with reducing hospital readmissions largely attributable to social determinants of care, and they still risk penalties that could push them over the fiscal

Why it didn't help reduce hospital readmissions

Medicare’s Hospital Readmissions Reduction Program (HRRP), part of the Affordable
Care Act, penalizes hospitals financially if they have higher-than-expected unplanned
30-day readmission rates.

Initially, the penalties were tied to only three conditions: heart failure, acute myocardial
infarction and pneumonia. It now also covers COPD, elective hip and knee
replacements and coronary artery bypass graft surgeries.

In 2018, hospitals lost more than $550 million, and 81% of hospitals took a hit. And,
notably, readmission rates are dropping. From 2010 to 2015, hospital readmission rates
decreased for not only Medicare patients but also those with Medicaid or private
insurance, according to research published in the American Journal of Medicine.

Meanwhile, Congress’ Medicare Payment Advisory Commission --MedPAC--determined that the penalties from previous years successfully resulted in reducing hospital readmissions by pressuring hospitals to reduce the number of returning patients--and helped save Medicare about $2 billion a year. It concluded the penalties “contributed to a significant decline in readmission rates without causing a material increase in ED visits, a material increase in observation stays, or a net adverse effect on mortality rates.”

All good, right? Paying for value, right?

It wasn’t that simple.

Reducing hospital readmission: Punishing hospitals for society's ills

As every safety-net provider knows, reducing hospital readmissions can be a struggle for
hospitals in areas where patients may be unable to afford medication or healthy food, or
they lack transportation for check-ups or follow-ups. Those hospitals nevertheless faced
the same financial penalties as more affluent ones.

As we’ve written before on why rural hospitals are closing, those hospitals struggle to stay afloat as it is. Moreover, they were being penalized for what is a societal problem. Their patients are more likely to suffer post-discharge complications not because the institution failed, but because they
can’t afford medication, lack access to a regular provider and/or lack access to post-
discharge support.

Someone listened and managed to convince Congress to act. The 2016 21st Century
Cures Act called on CMS to account for patients’ backgrounds when it calculates penalties.
And CMS finally did, for FY 2019. 

A more equitable distribution of penalties

Here’s how it works: Instead of comparing all hospitals directly, the new rules stratify
hospitals into five groups according to the proportion of their dual-eligible population.
Hospitals are then only compared to their peers that treat similar proportions of dually
eligible patients.

Of note: Because the changes are based on Medicaid patients, they benefit only those
treating patients on Medicaid--not poor patients in general. That may be a problem for
those in non-expansion states.

Still, it’s a start. “It's pretty clear they were really penalizing those institutions more than
they needed to,” Dr. Atul Grover, executive vice president of the Association of
American Medical Colleges, told Kaiser Health News. “It's definitely a step in the right

Overall, safety-net hospitals will see a drop in hospital readmission rate penalties of about 25% on
average for fiscal year 2019 as a result. Some penalties are being cut by half or more,
and 65 safety-net facilities that were penalized last year will not be this year, according
to Kaiser Health News.

A 2019 JAMA Open Network paper arrived at a similar conclusion. The new approach
associated with a more equitable distribution of penalties among hospitals, lessening
the disproportionate burden on safety net hospitals. They found the change: 
  • reduced penalties from 79% to 75% across all hospitals
  • reduced penalties from 91% to 77% across safety-net hospitals

“Dual-eligible patients, those eligible for both Medicare and Medicaid, represent a
complex, high-risk cohort that account for a third of spending in both programs, said
one of the papers’ authors, Dr. Muthiah Vaduganathan of Brigham and Women’s
Hospital. “The new stratified peer group-based assessment of hospital performance is a
welcome initial step and addresses variation in care provided to dual-eligible patients
across hospital systems in the U.S.”

What's next for reducing hospital readmission rates?

Safety-net hospitals continue to provide the best possible care, but “possible” is the
operative word. Meanwhile, despite the changes, they still face the specter of
readmission penalties. And it’s not just the penalty, of course: They want to provide the
best care. But although the algorithm has changed, the root causes of disproportionate
readmissions has not.

Unfortunately, no single approach consistently reduces hospital readmission rates, although “a
multi-pronged approach appears to be helpful,” Sameed Ahmed M. Khatana, MD, of the
University of Pennsylvania told a recent scientific meeting. “Safety-net hospitals report
more barriers to implementing strategies and lower utilization of strategies.” But the barriers he identified sound familiar, including mental health and substance abuse disorders, homelessness, lack of transportation. Community-related barriers include poor mental health and substance abuse services and lack of access to primary care.

There's also the issue of racial disparities in hospital readmission, which appeared to widen after
HRRP was enacted.

The situation is--as usual--worse in rural areas, where people tend to be older, sicker
and poorer, with less access to primary care than their non-rural counterparts. In
particular, they have more chronic conditions. And as a person’s number of chronic
conditions increases, so does the likelihood of hospitalization, re-hospitalization and
premature death.

One solution is to partner with an organization that can provide remote chronic care

Chronic care: the need for access

Improving access to care is essential. Research demonstrates that better access to
primary care can improve outcomes and lower costs. That’s especially true for people
with chronic conditions.

By taking a coordinated, whole-person approach, chronic care management can
address the root causes. By doing so, it encourages more efficient health-system
utilization and helps contain costs overall. That’s why CMS pays for chronic care
management--which it defines as “care coordination services that occur outside of the
regular office visit for patients.”

And all of this can be delivered remotely.

Altruis’ Chronic Care Management solution allows hospitals and health systems and
other providers to extend their practices to include chronic care management and
transitional care management services.

Our chronic care management telehealth solution offers additional help managing the
most common chronic conditions including arthritis, asthma, diabetes, hypertension,
heart disease and HIV/AIDS. With Medicare and Medicaid covering the cost of care, offering medication management, 24/7 access for urgent care needs, medication review and other chronic care needs helps the community and the provider with additional revenue streams.

We can help!

You don’t need to add staff--or to the workload of your existing team. Our care delivery
and coordination team acts as an extension of your organization. Our care managers
become part of your practice. You know them, and your patient knows them. It’s a voice
on the phone, but it’s not just any voice--it’s the familiar voice of your practice.

Implementation and training are included, and we handle all aspects of billing and
reimbursement. You’ll pay Altruis a percentage of the revenue you receive for the CCM
program--after you receive those funds.

You can keep your patients healthier, better monitor their physical, mental and
environmental health, and avoid costly penalties.

Let us help. Contact us for a free analysis of your RCM and to see how we can help you
avoid readmission penalties.

Free Needs Assessment

Topics: FQHC, medicare chronic care management, medicare reimbursement, Revenue Cycle Management, Chronic Care Management, Medicare, denials, reducing hospital readmissions

Chris Caspar, CEO

Written by Chris Caspar, CEO

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