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Two Birds, One Stone – Reducing Hospital Readmission Rates

Two of the main goals of the health reform legislation are to improve the quality of care delivered to Americans and to reduce the overall costs of the healthcare system. A provision in PPACA aims to kill two-birds with one stone, by improving the quality of care delivered to Medicare patients discharged from hospitals and reducing the unnecessary costs associated with readmissions.

Hospitals that readmit a high number of patients within thirty days after discharge for congestive heart failure, heart attack or pneumonia will be penalized beginning in October of 2012. Medicare will start recouping payments made to hospitals for “unnecessary readmissions” in order to help improve care transitions for patients. The goal is for hospitals to improve the information they provide to patients at discharge to ensure a better understanding of follow-up care and disease prevention to prevent unnecessary readmissions. Patients may be admitted back to the same facility where they originally stayed, or another hospital.

During the first year of the program, Medicare payments to hospitals can be reduced by as much as one percent; in years two and three, the payment reductions can be up to two and three percent respectively. Beginning in 2015, CMS plans to add additional diseases to the list for which payment will be withheld for readmissions. Additionally, readmission rates will also be factored into ACO quality measures.

To prepare for this initiative, CMS has already begun publishing the readmission rates of hospitals on their “hospital compare” website. Patients can compare hospitals based on outcome measures which include the death rate associated with disease and the readmission rate. In March, CMS also announced funding for a demonstration project to assist community organizations in developing a partnership with hospitals to lower readmission rates. The Community Based Care Transition Program aims to help improve transition planning and discharge follow-up and care at acute care hospitals.

Both community based organizations (CBO) and acute care hospitals listed on CMS’ high readmission hospital file are eligible to apply as the primary applicants. However, a CBO is not limited to partnering with a hospital on the CMS list. The goal of the program is to test models for improving care transitions for high risk Medicare beneficiaries. Entities must report process and outcome measures on their results.

While the provision in PPACA and the demonstration may sound like a sensible approach for improving care transitions and reducing spending, some critics are concerned that the law is missing a critical piece of the puzzle. African-American patients and hospitals servicing a disproportionately large number of minority patients generally have higher readmission rates across the board. Critics fear that a hospital could be penalized because of its patient mix, and not because the facility provides sub-standard quality of care. Equally controversial is the inclusion of readmission rates into the ACO quality metrics since the measures are already complex and robust. The use of readmission rates could potentially reduce the willingness of certain hospitals to enter into the Shared Savings Program, given their patient mix.

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

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