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CMS to punish over half of U.S. hospitals for readmission rates



For Kaiser Health News

The federal government’s readmission penalties on hospitals will reach a new high as Medicare withholds more than half a billion dollars in payments over the next year, records released this week show.

The government will punish more than half of the nation’s hospitals — a total of 2,597 — having more patients than expected return within a month. While that is about the same number penalized last year, the average penalty will increase by a fifth, according to a Kaiser Health News analysis.

The new penalties, which take effect in October, are based on the rehospitalization rate for patients with six common conditions. Since the Hospital Readmissions Reduction Program began in October 2012, national readmission rates have dropped as many hospitals pay more attention to how patients fare after their release.

The penalties are the subject of a prolonged debate about whether the government should consider the special challenges faced by hospitals that treat large numbers of low-income people. Those patients can have more trouble recuperating, sometimes because they can’t afford their medications or lack social support to follow physician instructions, such as reducing the amount of salt that heart failure patients consume. The Centers for Medicare & Medicaid Services says those hospitals should not be held to a different standard.

Medicare said the penalties are expected to total $528 million, about $108 million more than last year, because of changes in how readmissions are measured.

Medicare examined these conditions: heart attacks, heart failure, pneumonia, chronic lung disease, hip and knee replacements and — for the first time this year — coronary artery bypass graft surgery.

The fines are based on Medicare patients who left the hospital from July 2012 through June 2015. For each hospital, the government calculated how many readmissions it expected, given national rates and the health of each hospital’s patients. Hospitals with more unplanned readmissions than expected will receive a reduction in each Medicare case reimbursement for the upcoming fiscal year that runs from Oct. 1 through September 2017.

The payment cuts apply to all Medicare patients, not just those with one of the six conditions Medicare measured. The maximum reduction for any hospital is 3 percent, and it does not affect special Medicare payments for hospitals that treat large numbers of low-income patients or train residents. Forty-nine hospitals received the maximum fine. The average penalty was 0.73 percent of each Medicare payment, up from 0.61 percent last year and higher than in any other year, according to the KHN analysis.

Under the Affordable Care Act, which created the penalties, a variety of hospitals are excluded, including those serving veterans, children and psychiatric patients. Maryland hospitals are exempted as well because Congress has given that state extra leeway in how it distributes Medicare money. Critical-access hospitals, which Medicare also pays differently because they are the only hospitals in their areas, are also exempt.

As a result, more than 1,400 hospitals were automatically exempt from the penalties. Other hospitals did not have enough cases for Medicare to evaluate accurately and were not penalized.  Of the hospitals that Medicare did evaluate, four out of five were penalized.

The KHN analysis found that 1,621 hospitals have been penalized in each of the five years of the program.

Kaiser Health News staff writer Sydney Lupkin contributed to this report.

Dangerous new risks at rural hospitals


Medicare financial incentives are driving more and more inpatient orthopedic surgeries to be  performed at rural hospitals (often called critical-access hospitals). But these institutions generally do not do this sort of work as  often or as well as general hospitals, which are mostly in urban and suburban areas. This imperils the health of some patients.

In an investigative piece, The Wall Street Journal reported that “Patients getting the five most common major orthopedic procedures at critical-access hospitals, including joint replacements, were about 34% more likely to die within 30 days than those getting the same services at typical general hospitals during the period from 2010 through 2013, according to the {Medicare} billing data.”



Rural hospitals’ lucrative rehab business


The Associated Press reports that federal investigators have found that a law lets rural hospitals bill Medicare for rehabilitation services for seniors at higher rates than nursing homes and other facilities and cost billions of dollars in extra government spending.

Yet more reasons why Medicare spending is out of control.

Most patients could have been moved to a skilled-nursing facility within 35 miles of the hospital at about one-fourth the cost, the U.S. Department of Health and Human Services’ inspector general said.

The AP reported that hospitals ”juggling tough balance sheets have come to view such ‘swing-bed’ patients as lucrative, fueling a steady rise in the number of people getting such care and costing Medicare an additional $4.1 billion over six years.”

”Legislation passed by Congress in 1997 created the designation of ‘critical-access hospitals’ to help small facilities in remote areas survive. Rather than paying set rates for services as throughout the rest of the Medicare system, the federal government reimburses the hospitals for 101 percent of their costs. They also often receive state funding and grants.”

Congress, as now, was controlled by Republicans in 1997. Many represent rural areas in the South and West with many such “critical-access hospitals.”

The AP said that Alan Morgan,  chief executive of the National Rural Health Association, agreed  that Medicare could save money by modifying the system. But he told the AP that  dozens of rural hospitals have closed in the past five years, and nearly 300 others are very financially fragile. The Obama administration has already proposed  cutting all reimbursements  to critical-access hospitals, which  Morgan said would further accelerate the closures.

”Some hospitals received critical access designation under old rules and were grandfathered in. A previous report from the inspector general’s office found the vast majority would not meet the requirements if forced to requalify,” the news service reported.



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