Medicare readmission penalties may hit hospitals in poor areas hardest

A total of 2,610 U.S. hospitals will see their Medicare payments docked in fiscal 2015 for having excessive numbers of patients return to their facilities within 30 days of discharge.

The CMS last week posted its third round of readmission penalties, which will affect Medicare reimbursements from Oct. 1, 2014, through Sept. 30, 2015.

The tally of hospitals subject to fines is 400 more than in the first two years of the program (2,225 in fiscal 2014 and 2,217 in fiscal 2013). Of those facing the newest round of penalties, 39 received the maximum fine of 3%.

Because the maximum penalty is higher in fiscal 2015, comparing changes from 2014 to 2015 requires measuring the penalty as a percentage of the largest possible reduction. By this measure, 13 hospitals improved their standing by more than 50%, but 75 hospitals did at least 50% worse.

Some experts, reacting to the new numbers, warn it may be time to re-evaluate the program, which has added new measures and increased penalties. Recent studies and leading safety experts point to the need to consider socio-economic factors, which they say cause hospitals in poor communities to be disproportionately penalized.

Others note that if only 769 of more than 3,370 hospitals are avoiding fines, perhaps the measures are not achieving their desired goals of improving care.

“What it suggests to me is that this isn't really as strong a signal for quality of care,” said Dr. Peter Pronovost, director of the Armstrong Institute for Patient Safety and Quality at Johns Hopkins Medicine. “It looks like it's becoming a mechanism to reduce payment rather than improve quality.”

The Hospital Readmissions Reduction Program was created by the Patient Protection and Affordable Care Act. Hospitals with excess numbers of patients returning within 30 days of discharge following treatment for heart attack, heart failure or pneumonia began having their Medicare payments docked up to 1% in fiscal 2013. That number increased to 2% in fiscal 2014.

For fiscal 2015, the fine increases to 3%, and two additional measures have been added: readmission rates for chronic obstructive pulmonary disease and total hip and total knee replacements. Adding those measures may account for the increased number of fines, experts say.

A 3% penalty could affect a hospital's entire profit margin, which provides strong incentive to keep patients from being readmitted, Pronovost said. The problem with linking fines to readmissions, however, is that the measure does not exclude factors beyond a hospital's control, such as patients' ability to afford medications or to have transportation for follow-up visits. That can ultimately create disincentives for providers and quality.

“Sometimes the safer thing, and the higher quality of care might be to be readmitted,” he said. “But with significant penalties, the incentive is to do the opposite.”

Several recent studies also have noted socio-economics as a problem. In an analysis published in the October issue of the Joint Commission's Journal on Quality and Patient Safety, leaders from eight safety net hospitals said readmissions were a priority, but despite improvements to patient-discharge processes and community outreach, they felt they had little impact on off-site factors.

Nine of the 39 hospitals receiving the maximum penalty are in Kentucky. Forty counties in Kentucky are considered to have “persistent poverty,” meaning 20% or more of their residents have fallen below the poverty line over the past three decades, according to the U.S. Census Bureau's American Community Survey.

Seven of the nine hospitals that received the maximum fine in that state were in persistent-poverty counties, and three received the maximum fine all three years.

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