Most hospitals in Southeast Michigan have been working on projects to reduce readmission rates as Medicare and some private payers no longer reimburse for certain patients who are re-hospitalized within 30 days.

Driven primarily by Medicare's financial penalties for above-average readmissions that began last October, hospitals have mobilized their medical staffs, their department heads and health providers that receive their discharged patients to develop new procedures to reduce preventable readmissions.

National data shows that up to 20% of all Medicare patients are readmitted to hospitals within 30 days and 33% are readmitted within 90 days, costing Medicare more than $17 billion dollars annually, according to a much-quoted study in the New England Journal of Medicine.

Henry Ford Wyandotte Hospital has had success the past year in reducing readmission rates by working more closely with nursing homes and home health agencies, said Jalal Thwainey, M.D., a Wyandotte internist who is the hospital's adviser for case management.

"Some changes at nursing homes included a push to hire more nurses, educate them more, keep an eye on diagnosis and, if necessary, ask doctors to see patients within 24 hours," Thwainey said. "Heart failure and COPD (chronic obstructive pulmonary disease) patients need to be evaluated more often" to prevent readmission or emergency.

St. John Providence Hospital in Southfield is focusing on difficult-to-manage heart failure patients and also seeing positive results in a small pilot study using a telemedicine device, said Shukri David, M.D., the hospital's chief of cardiology.

The telemonitoring approach "could save hospitals millions of dollars if it turns out to be beneficial" because the typical admission costs patients or insurers $20,000 to $40,000 per stay, depending on the condition, David said.

While national and state data are just starting to show improvements, most hospitals in Michigan are feeling the pinch by the dual loss of admission revenue and up to 1% Medicare reimbursement reduction penalties this year for patients readmitted with congestive heart failure, heart attack and pneumonia conditions.

Despite reducing readmissions, for example, Beaumont Health System in Royal Oak will lose $2.3 million in Medicare reimbursement this year, Dearborn-based Oakwood Hospital and Medical Center stands to lose $1.2 million and St. John Providence Health System in Warren expects to lose $2.3 million.

Henry Ford Health System projects it will lose $2.2 million for having higher-than-average readmission rates the past three years. Some $1 million of those cuts will come from Henry Ford Hospital in Detroit.

But those losses for the Henry Ford system will increase in 2014 to $4.3 million, including $2 million at Henry Ford Hospital, because the penalties will increase to 2% in 2014 and 3% in 2015.

The readmission penalties are part of a broader push under healthcare reform to improve quality while saving money. Medicare plans to add other conditions to the list in coming years.

Peter Schonfeld, senior vice president for of policy and data services with the Lansing-based Michigan Health and Hospital Association, said hospitals are doing a much better job at identifying areas in which they need to improve to reduce the financial penalties.

"We are seeing incremental improvement on readmission rates, but there is a fair amount of variation on who is hit on the penalty," Schonfeld said.

"It is high on the list of every hospital because it is lost revenue."

Alvin "Skip" Strauchman, executive director of the Michigan unit of IPC-The Hospitalist Company, a North Hollywood, Calif.-based hospitalist company, said hospitals have a long way to go to develop complete systems to reduce readmissions, but they are making progress.

IPC Michigan, which has offices in Troy and Livonia, has contracts with many health systems in Southeast Michigan and more than 30 hospitals and 70 post-acute care facilities in Michigan. Hospitalists are hospital-based physicians, generally internists, who specialize in inpatient care.

Strauchman said challenges to lowering readmissions include patients self-selecting inefficient long-term care facilities, patients going home and not complying with hospital discharge instructions, and hospital discharge departments failing to more involve physicians in choice of home health agencies.

"Hospitals haven't paid enough attention to what services are provided in skilled nursing and rehabilitation facilities," Strauchman said. "If you send a patient to a facility and the attending doctor only sees the patient once a week, that is not enough to catch the early decline.

"If you have a provider in the facility five to seven days a week, they will see that patient, identify early decline and keep the patient out of the hospital."

In a recent report on three counties in Southeast Michigan, Farmington Hills-based Mpro, a quality improvement organization, said Macomb, Oakland and parts of Wayne counties, including Detroit, reduced readmission rates 11.13% during the study period that compared October to December 2011 with July to September 2012.

"Hospitals have made some headway (in reducing readmission rates), but the needle is moving so slightly," said Strauchman.

But regional differences for readmissions were large. Wayne County, excluding Detroit, cut its readmission rate the most at 18.7%. Next was Macomb County at 11.9%, then Oakland County at 8.4%. The city of Detroit reduced readmissions the least at 4.38%.

Nationally, the readmission rate dropped 9.56% in that same period.

Strauchman said hospitals need to do a better job coordinating discharge plans with primary care physicians and hospitalists.

"Hospitals use physicians to work with nursing homes and post-acute care facilities, but not as much with home health agencies," Strauchman said. "Physicians need to be more involved in decisions of where patients are discharged."

In another recent study in the Journal of the American Medical Association, providers that used care transition programs cut readmission rates 5.1% compared with other providers without such programs that reduced readmissions only 2.1%.

Mpro contributed data to the report from the Lansing area. For example, readmissions in Lansing dropped by 4.17% from the 2006-2008 period to 2009-2010, Mpro said.

By June 2012, readmission rates had fallen by 9%. Estimated savings for Medicare totaled $5 million for the 42-month study period.

The decline in readmissions is good news for hospitals because last October, Medicare launched its readmissions reduction program, which imposes financial penalties ranging from 0.01% to 1% on hospitals with higher-than-expected readmission rates.

Despite improvements, Medicare increases those penalties to 2% in October for fiscal 2014 and 3% for fiscal 2015. The cost-containment rule is contained in the Affordable Care Act of 2010.

"I would like it to be an incentive, not a penalty, because you don't get credit for improving," Schonfeld said. "They should reward success, not punish you for improving at a slower rate than other hospitals."

He said Michigan's hospitals improved very quickly in 2009 by sharing best practices and having experience in total quality improvement projects.

"Other states are catching up. We are still improving, but not as quickly, so we are still being hit by the penalty," Schonfeld said.