Blog: Medicare begins readmission cuts; Mass. Medicaid set to raise them

The week began with the start of Medicare's penalties for hospitals with higher-than-average rates of heart attack, heart failure and pneumonia patients who leave the hospital only to return within 30 days.

But Medicare is not the only payer to penalize hospitals for repeat visitors. Medicaid, in some states, also cuts hospital payments based on readmissions. As we reported in late September, changes to Medicaid policy have increased financial incentives for hospitals to reduce hospital admissions.

Now Massachusetts Medicaid is scheduled to increase its readmission penalties starting Nov. 1. The state began in 2011 to cut payments by 2.2% for hospitals with excess readmissions.

Massachusetts will increase the penalty based on how significantly hospitals stray from the expected readmission rate, increasing from 2.4% to 3.4% to a maximum of 4.4%.

Hospitals in Massachusetts object to the penalty, said Tim Gens, executive vice president of the Massachusetts Hospital Association. The readmission policy holds hospitals financially accountable for patients' outcomes when other providers and patients themselves also shoulder some responsibility for patient health, he said. He also criticized the policy's methodology as flawed and cautioned that penalties could jeopardize efforts at financially strained hospitals to invest in efforts that will boost quality and reduce readmissions.

Financial strain from Medicare's cuts and the cost of quality investments to reduce readmissions could prompt some independent hospitals to seek a larger partner, my colleague Maureen McKinney reported this week.

You can follow Melanie Evans on Twitter: @MHmevans.