Too often, patients are discharged from the hospital only to be readmitted days later. Now hospitals stand to lose money if that happens too often.

By Rose Hoban

A majority of North Carolina’s hospitals will receive reimbursement cuts from the federal government this year as a result of having too many Medicare patients cycling back into the hospital within 30 days of an admission.

For the past three years, the federal Centers for Medicare and Medicaid Services has been tracking the rate of 30-day readmissions in hospitals around the country and penalizing hospitals that don’t meet benchmarks for keeping people out of the hospital once they’ve been sent home.

The penalties were written into the Patient Protection and Affordable Care Act as part of a larger incentive program to induce hospitals to provide more efficient care that focuses on keeping patients healthy, not just getting them out of the hospital quickly. The idea is to induce hospitals to take responsibility for an entire episode of a patient’s care: not just the time spent in the hospital, but how well patients do once they’re home.

This year’s penalties will apply to all Medicare payments in the coming fiscal year.

The amounts to be withheld for North Carolina hospitals by the federal government range from a low of 0.02 percent of the Medicare payments due to Duke University Hospital in Durham to a high of 2.35 percent withheld from Halifax Regional Hospital Medical Center in Roanoke Rapids.

More than 30 smaller and predominantly rural North Carolina hospitals will not see any penalties, as hospitals with low volumes or in very poor areas are exempt from the program.

Small percentage, big money

For a hospital the size of Duke, which had operating revenues of $2.54 billion in 2013, even a tiny penalty can add up quickly.

But even though only 13 out of 87 hospitals participating in the program were able to avoid any penalties at all, 25 saw improvement from last year with fewer patients cycling back into their facilities. For those hospitals, penalties decreased from last year to this year, and some saw their penalties go away altogether.

(See map below. Hospitals marked in green are those showing improvement from last year, hospitals marked in red are those that did worse this year than last year and those shown in purple have had no penalty at all for at least two years.)

“For decades, the rate sat at 25 percent of Medicare patients ending up readmitted within 30 days,” said Bill Hensel, whose medical practice Triad Healthcare Network is affiliated with Moses Cone Hospital in Greensboro. “People always said, ‘These are sick folks, nothing can be done, it’s inevitable.’”

But Hensel explained that once payers such as Medicare started holding back payments for patients who cycled in and out of the hospital within days, the behavior of hospitals began to change.

Moses Cone Hospital is one of the few in the state not to have received any Medicare penalties in the three years the program has been in effect.

“In our system, we’re down to 10 or 12 percent for 30-day readmits,” Hensel said.

New incentives

Patients can end up returning to the hospital soon after discharge if, for example, their surgeon does not arrange for post-surgery primary care or if a patient gets an infection at their surgical incision site because they were not adequately instructed how to care for the incision. Another common reason for patients to end up back in the hospital is if they need home health care but no one arranges for it or if they lack a primary care physician who can do follow-up care.

Spokeswoman Julie Henry from the North Carolina Hospital Association said there’s a lot of variation among the hospitals receiving penalties.

“It depends on their setting, whether they’re part of a bigger system, patient mix and whether they have sicker patients,” she said. But she also said some larger hospital systems, such as Carolinas Medical System in Charlotte and Mission Hospital in Asheville, are able to standardize their procedures and drive down readmissions.

“Hospitals have traditionally been focused on what happened in the hospital and now they’re more focused on what’s happening beyond,” Henry said, noting that the penalties are helping incentivize hospitals to change the way they manage care.

“Hospitals need to partner with agencies that are not necessarily under their umbrella to make sure the care continuum is not broken,” she said. That might mean hospitals partner with public-health clinics or home health agencies to make sure patients have what they need in order to stay at home successfully.

“In the less comprehensive systems, you have to find community partners to make sure that quality extends beyond your walls,” she said.

Henry also said the Medicare incentives are coming in part as part of the effort to change the way hospitals and physicians get paid for care. In the past, hospitals got paid for each test, each procedure and each day a patient spent there. But in the future, insurers and government payers such as Medicare and Medicaid will be paying hospitals a lump sum for “episodes” of care.

“Initiatives like this encourage hospitals to think in new ways,” Henry said.

Click to see how your local hospital is doing.
Green hospitals are improving, purple hospitals have not had any penalty in two years, red hospitals did worse this year than last year.

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