Reports and Resources

By: 
PFM

 

What You Need To Know: Medicare + Hospital Readmissions

What is a hospital readmission?

When a patient is admitted to a hospital, they receive care until deemed healthy enough for discharge, either to another care facility or their home.  Unless readmission is a predetermined part of a patient’s care plan, returning to the hospital is generally viewed as a result of poorly delivered care or inadequacies in transition or follow-up.  The Centers for Medicare and Medicaid Services (CMS) measure hospital readmissions within a 30-day window, known as the 30-day readmission rate, which includes hospital readmissions to any hospital, not just the hospital at which a patient was originally hospitalized.[1],[2]  CMS’ measurement captures all readmissions in traditional Medicare for particular diagnoses, no matter the cause of readmission, excluding those who upon discharge were transferred to another hospital or those who left the hospital against medical advice.

Why are readmission rates important to Medicare?

Hospitalizations, and subsequent hospital readmissions, are costly.  CMS estimates that readmissions cost the Medicare program $17.5 billion just in inpatient spending.[3] While hospitalization is generally expensive, there is widespread belief that hospital readmissions (specifically those within a 30-day window) are troubling because many may be potentially preventable or avoidable, signaling inefficient care and contributing to unnecessary costs. Readmission rates are particularly concerning for Medicare where almost one in five beneficiaries is readmitted within 30 days of discharge.[4] In 2013, the readmission rate for Medicare beneficiaries was 18 percent and the cost to the Medicare program was $26 billion in inpatient spending alone.[5] According to CMS officials, $17 billion of this spending was due to potentially avoidable readmissions.[6]

How are hospital readmissions currently being addressed in Medicare?

In 2012, Medicare began its Hospital Readmissions Reduction Program, which penalizes hospitals that exceed 30-day readmission rates for select conditions – heart attack, heart failure, pneumonia, chronic lung problems, such as bronchitis, and elective hip and knee replacements.[7]  Authorized under the Affordable Care Act, the program serves as a disincentive for hospitals by levying financial penalties on those that exceed expected readmissions. The maximum payment reduction for hospitals that exceed readmissions standards – set in 2014 – is 3 percent, and the payment reduction will not exceed 3 percent going forward.[8]  According to CMS, this year 2,592 hospitals will face payment reductions from October 1, 2015 through September 30, 2016, totaling about $420 million – a slight decrease from last year in both the amount of the average fine and number of hospitals penalized. [9]



 

Date: 
Monday, August 17, 2015