As Healthcare Innovation Managing Editor Rajiv Leventhal reported on Nov. 2, “Almost half of the nation’s hospitals will be getting penalized for failing to lower the rate at which patients got readmitted during a three-year period between 2016 and 2019, according to a Nov. 2 report from Kaiser Health News.” Those penalties will be coming out of the Hospital Readmissions Reduction Program, which several years ago began imposing financial penalties on hospitals for readmissions considered avoidable.
As Leventhal wrote, “According to KHN’s Jordan Rau, the penalties imposed by the Centers for Medicare & Medicaid Services (CMS) ‘have been calculated using each hospital case history between July 2016 and June 2019, so the flood of coronavirus patients that have swamped hospitals this year were not included.’ The penalties are the ninth annual round of the Hospital Readmissions Reduction Program created as part of the Affordable Care Act’s broader effort to improve quality and lower costs. The fines for failure to meet the criteria set forth by CMS focus on six conditions: heart attack, congestive heart failure, pneumonia, chronic obstructive pulmonary disease (COPD), elective hip and knee replacements, and artery bypass graft surgery—and are based on readmissions between July 2016 through June 2019.”
What’s more, as Leventhal wrote, “For each applicable hospital, the government calculates 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. CMS calculates the payment reduction and component results for each hospital based on its performance during a rolling three-year performance period.”
As Kaiser Health News’s Jordan Rau wrote on Nov. 2, “The penalties are based on readmissions of Medicare patients who initially came to the hospital with diagnoses of congestive heart failure [CHF], heart attack, pneumonia, chronic obstructive pulmonary disease [COPD], hip or knee replacement or coronary artery bypass graft surgery [CABG]. Medicare counts as a readmission any of those patients who ended up back in any hospital within 30 days of discharge, except for planned returns like a second phase of surgery. A hospital will be penalized if its readmission rate is higher than expected given the national trends in any one of those categories. The industry has disapproved of the program since its inception,” Rau noted, “complaining the measures aren’t precise and it unfairly punishes hospitals that treat low-income patients, who often don’t have the resources to ensure their recoveries are successful.”
Meanwhile, though CMS had said in September that it may suspend the penalty program in the future “if the chaos surrounding the pandemic, including the spring’s moratorium on elective surgeries, makes it too difficult to assess hospital performance,” for this year, the penalties remain in effect, according to KHN. Retroactive to the federal fiscal year that began Oct. 1, Medicare will lower a year’s worth of payments to 2,545 hospitals, the data shows. The average reduction is 0.69 percent, with 613 hospitals receiving a penalty of 1 percent or more.
So, what does all of this mean? The U.S. healthcare system finds itself in a very difficult, challenging, and delicate moment right now. The COVID-19 pandemic has presented the leaders of patient care organizations with something more than a double-whammy: a large group of highly acute patients, along with high supply and other costs; the reluctance of many patients to present themselves in person for care delivery; and intense stresses on clinicians and other front-line workers, leading ultimately to staffing challenges and other problems.
CMS officials understandably want to try to push hospitals forward in terms of value-driven accountability, including for outcomes around patients with chronic diseases and other issues. But is now really the time to impose readmissions penalties, during a time of great financial and operational stress on their organizations? This seems to me like another one of those virtually insoluble federal healthcare policy conundrums. Certainly, on a theoretical level, it remains important to hold hospital leaders accountable for their clinical outcomes for care delivery for patients with such chronic conditions as CHF and COPD, and for care for heart attacks, pneumonia, total joint replacement, and CABG.
At the same time, clinician and administrative leaders are really, genuinely, struggling with COVID-related care, both clinically, and financially. Given that, it seems obvious that CMS should reconsider the financial penalties for readmissions at this time, while tracking all the data and continuing the program, and reinstating the penalties once the pandemic is over.
Certainly, there is no danger to the core integrity of the Hospital Readmissions Reduction Program, either way. As the KHN article noted, “The penalties are the ninth annual round of the Hospital Readmissions Reduction Program created as part of the Affordable Care Act’s broader effort to improve quality and lower costs. The latest penalties are calculated using each hospital case history between July 2016 and June 2019, so the flood of coronavirus patients that have swamped hospitals this year were not included.”
“It’s unfortunate that hospitals will face readmission penalties in fiscal year 2021,” Akin Demehin, director of policy at the American Hospital Association (AHA), told KHN’s Rau. “Given the financial strain that hospitals are under, every dollar counts, and the impact of any penalty is significant.” Demehin really has a point there.
So my recommendation would be that CMS officials continue to track all of the data, maintain the program, and simply suspend the financial penalties to hospitals until after the passing of the pandemic—and then reinstate them. The core objective of the readmissions program remains honorable and correct; and its essential design is also, overall, fundamentally sound.
So much remains uncertain, including at the federal policy-political level. And precisely because of that, it would be wisest for senior CMS officials to rethink the terms of this program—again, specifically, with regard to the penalties—while keeping the program in place and reinstating those penalties again once the pandemic has passed.
