Nearly one in five Medicare patients return to the hospital within a month of discharge, costing the government an extra $17.5 billion in 2010. Experts say many of these readmissions are unavoidable given the infirmity of the population, but others are due to surgical mistakes or lapses in patient care after people leave the hospital. A total of 2,217 hospitals are being punished in the first year of the program, which began Oct. 1. Of those, 307 will be docked the maximum amount: 1 percent of their regular Medicare reimbursements.
Overall, Medicare has estimated it will recoup about $280 million from hospitals where it determined too many heart attack, heart failure or pneumonia patients returned within 30 days.The AMA News explains that the penalty ramps up to 2% in the next fiscal year and 3% in the following fiscal year. HHS is considering adding over health events, such as joint replacements to the mix.
The Washington Post has a chart showing the penalties imposed on hospitals in the Washington D.C. area. Maryland hospitals are exempt from the readmission penalty because as the FEHBlog noted in the summer the federal government permits Maryland to use its own hospital rate setting methodology.
Medicare (except in the FEHBlog's home state of Maryland) reimburses hospitals on a prospective payment system. The hospital except in outlier cases receives a fixed diagnosis related group payment based on the patient's admitting diagnosis. The hospital gains financially if the cost of care is less than the DRG amount. Consequently, the system incents patient discharge. The new policy will change this calculus. When hospitals lose money on Medicare, they seek to recover those losses from private sector payors, including the FEHBP.
Of course, hospitals don't make discharge decisions; doctors do. Consequently, as Kaiser Health News points out the new policy will incent further integration between hospitals and doctors.
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