Anesthesiologists Need to Understand Hospital Readmission Penalties
On October 1, 2014, the start of the fiscal year for hospitals, Medicare’s maximum penalties for “preventable” readmissions increased from two percent to three percent. At the same time, CMS added three new conditions, including two frequently performed orthopedic procedures, to the list of conditions for which readmissions are deemed preventable, which now consists of the following:
- heart failure
- acute myocardial infarction (AMI)
- pneumonia
- chronic obstructive pulmonary disease (COPD)
- knee arthroplasty
- hip arthroplasty
Authorized by the Patient Protection and Affordable Care Act, the Hospital Readmissions Reduction Program (HRRP) began in October 2012 (FY 2013) with a maximum penalty of one percent of total Medicare payment. Historically, about one in five Medicare patients discharged from a hospital is readmitted within 30 days. Readmission rates vary considerably by hospital and by geographic area after controlling for case mix and severity of illness. According to a Health Affairs Health Policy Brief, studies have estimated the proportion of readmissions that may be avoidable anywhere from five percent to 79 percent.
For purposes of the HRRP, a readmission occurs when a Medicare patient is admitted to the same or another acute-care hospital within 30 days of discharge. There are exceptions, including transfers to another hospital and planned readmissions for chemotherapy, rehabilitation or other treatment.
CMS calculates, for each hospital, the expected readmission rates for the target conditions, adjusting for patients’ characteristics and coexisting conditions. Hospitals must have a minimum of 25 discharges for each applicable condition to be included. The rates are compared with actual readmission rates in a given period to derive an adjustment factor. Penalties are assessed when the observed rate exceeds the expected rate, which is the national average readmission rate risk-adjusted for certain demographic characteristics and severity of illness for that hospital’s patients, on a rolling three-year basis. The penalties for FY 2015 penalties will reflect readmissions from July 1, 2010 to June 30, 2013, and FY 2016 will be based on the period July 1, 2011 to June 30, 2014. (Public reporting of readmission rates began on CMS’ Hospital Compare website in 2009.) Lower rates of readmissions for the target conditions in the coming year will not lower penalties for the hospitals affected until 2017.
During the first year of the program, FY 2013, CMS reduced payments by a total of about $280 million for 2,213 hospitals with higher than expected readmission rates for heart failure, AMI and pneumonia. In FY 2013, 2,225 hospitals in 49 states experienced penalties of up to two percent, for an aggregate Medicare savings of $227 million. This year, 2,610 hospitals will be penalized. Only about 10 percent of hospitals were or are subject to the maximum penalties. Individual penalties are calculated using a complex formula based on the amount of Medicare payments received by the hospital for the excess readmissions.
Criticism of the HRRP
Because of the HRRP’s structure, half of all hospitals in the program will face a penalty each year, and the maximum penalty is set to continue indefinitely at the three percent level.
Many observers have criticized the HRRP because it hits hardest those hospitals that treat higher proportions of poor and underserved patient populations. Seventy-seven percent of hospitals serving large numbers of low-income patients received penalties, while only about half that number (36 percent) of hospitals with the highest-income patient populations were penalized for excess readmissions.
The methodology used to adjust for differences in hospitals’ patient populations explicitly excludes adjustments for patients’ socioeconomic status. Yet much of what drives hospital readmission rates are patient- and community-level factors that are outside the hospital's control, as Karen Joynt and Ashish Jha wrote in the New England Journal of Medicine in 2012. Socioeconomic status, including language and cultural barriers, tend to affect patients’ ability, for example, to comply with medication and other post-discharge instructions, and to make and keep follow-up appointments. Joynt and Jha have recommended that Medicare “create an adjustment factor for patients' socio-economic status. They also advise weighing penalties according to the timing of the readmission, with full penalties for readmissions a few days after discharge (which are more likely the result of poor planning, they said, and therefore more under the hospital's control), and lesser or no penalties for readmissions occurring later after the discharge date (which are more likely a consequence of the severity of a patient's illness, they said.” (Conn J. Predictive analytics do more than dodge readmission penalties. Modern Healthcare, Vital Signs Blog.)
A recent study from Truven Health Analytics found that race and unemployment were particularly strong predictors of higher readmission rates. Unemployment was found to contribute to about 18 percent of a community's readmissions, and about 6 percent were related to poverty among the elderly, the analysis found. The chances of a black patient being readmitted were almost 15 percent higher than they were for a white patient.
The Hospital Readmissions Program Accuracy and Accountability Act, introduced in Congress last June, would require CMS to account for patient socioeconomic status when calculating risk-adjusted readmissions penalties. Holding all other factors constant, socioeconomic conditions—such as poverty, low levels of literacy, limited English proficiency, minimal social support, poor living conditions and limited community resources—appear to have direct and significant impacts on avoidable hospital readmissions, and adjusting for these factors would improve accountability and quality of care, according to the text of the bill.
In California Safety-Net Hospitals Likely To Be Penalized By ACA Value, Readmission, and Meaningful-Use Programs (Health Affairs, August 2014 vol. 33 no. 8 1314-1322), Edmund Becker and his team found that the 30-day risk-adjusted readmission rates for heart failure, AMI and pneumonia were higher in safety-net hospitals than in other hospitals and also that:
A readmission could represent a high-quality outcome (because a patient survived long enough to be readmitted), a low-quality outcome (because a patient needed to be readmitted), or other factors (such as lack of access to primary care) that are potentially beyond a hospital’s control. Higher readmission rates could even lead to less costly overall care. This would occur if the per admission cost were lower in hospitals with higher readmission rates.
Reducing readmission rates is costly. Nearly the entire patient population needs to be treated with additional care to prevent readmission because predicting readmission is notoriously difficult, and this cost might be higher than the additional cost of simply allowing the additional readmissions to occur.
Critics have also noted that hospitals performing the highest volumes of hip and knee replacements—hospitals that might be considered “centers of excellence”—tend to have the highest rates of readmissions and complications for those procedures.
Effectiveness of the HRRP
There is general agreement that the HRRP has already had some success in reducing readmission rates for the target conditions. Overall, the national rate of Medicare readmissions dropped from 19.5 percent in 2011 to 18.5 percent in 2013, a five-percent decrease. (The State of Hospital Readmissions, Vree Heath Infographic, April 4, 2014). CMS’ longer-term goal is to decrease readmissions by 20 percent.
What Can Hospitals Do to Help Prevent Readmissions?
Preventing readmission begins before the first admission, when the patient’s condition and co-morbidities are identified and documented so that they can be managed effectively after discharge. Indeed, the most important strategy for reducing the rate of readmissions is the maintenance of high quality and safety standards in general. As the number of conditions for which hospitals are at risk increases, some experts say hospitals fare better in preventing readmissions when they focus on improving patient care overall rather than targeting specific conditions.
Many hospitals have taken significant steps to support their patients post-discharge. The Advisory Board has developed a toolkit to help hospitals “isolate and correct patient and systemic issues” in what it identifies as “the four critical stages of care:”
Stage 1: Transition planning during the inpatient stay
Stage 2: Discharge education
Stage 3: Post-acute care coordination
Stage 4: Transitional care support
Measures implemented by some very committed hospitals include using “navigators” to assist patients with obtaining medications or with follow-up care or making appointments, visiting patients at home and assessing their support systems, arranging telemedicine consults, providing training to affiliated federally qualified health center and skilled nursing facility staff so that they can better manage high-acuity patients, and even using unit secretaries to call patients to make sure that they keep up with their scheduled appointments. (LeTourneau R. Realizing Readmission Goals. Health Leaders, September 2014; Adamopoulos H. Focusing on the Patient, Not the Condition: What Hospitals Need to Know About Avoiding Medicare Readmission Penalties. Becker’s Hospital Review, February 5, 2014.)
Now that there are two surgical conditions among those on Medicare’s preventable readmissions list—and one more, coronary artery bypass graft, to be added in 2017—there are increasing opportunities for anesthesiologists, nurse anesthetists and anesthesiologist assistants to help their hospitals reduce the rate of certain avoidable readmissions. Preoperative optimization of the patient, antibiotic prophylaxis and other measures to prevent surgical site infections and postoperative pain management are perhaps the most familiar steps to improve outcomes and reduce readmissions. Anesthesia’s responsibilities need not stop there. As other clinicians and other departments take on new functions in post-discharge patient care, and as the Perioperative Surgical Home develops, we expect to be reporting on anesthesia’s evolving role in bringing down the rate of preventable readmissions.