Great job reducing readmissions, hospitals (but it's about to get harder)

If unnecessary hospital readmissions are, as some suggest, the low-hanging fruit in the pursuit of better healthcare, hospitals should get ready to pluck less and less.

Hospital administrators have had years—four since Medicare's Hospital Readmissions Reduction Program took effect, and six since the Affordable Care Act spurred a slew of other initiatives to improve healthcare value—to scrutinize and cut down on unnecessary readmissions. And in those years, the U.S. has largely managed to do so, new numbers from the CMS show.

From 2010 to 2015, readmission rates among Medicare beneficiaries fell in Washington, D.C., and every state but one, the CMS reported. That drop translates to about 565,000 avoided readmissions for Medicare beneficiaries since 2010, including 100,000 in 2015 alone.

That momentum could soon slow. That's not necessarily a bad sign, because not all readmissions are preventable. But it also means hospitals and other providers will have to work smarter to keep making progress on readmissions.

A bevy of CMS initiatives have taken aim at improving healthcare quality while holding down or even trimming costs, with the ambition of tying 90% of traditional Medicare payments to quality or value by 2018. Unnecessary hospital readmissions, regarded as an indicator of poor quality care, play a burgeoning role.

The idea that hospitals can avoid readmissions by providing better follow-up care once patients are discharged is at the heart of the Hospital Readmissions Reduction Program. Under it, those that fail to curb excess readmissions lose out on a portion of their Medicare reimbursements.

The program took effect Oct. 1, 2012, and has imposed increasingly hefty financial penalties on hospitals whose avoidable 30-day readmission rates for a limited list of conditions exceed the national average. For fiscal 2017, which starts Oct. 1, the CMS will penalize more than 2,500 hospitals, saving the agency about $538 million.

Readmissions targeted by the Medicare program are for a narrower set of conditions than the 30-day all-condition hospital readmission rates published by the CMS last week, but the CMS said the program was one factor in reducing avoidable readmissions.

But some providers and policy experts are concerned that imposing financial penalties to drive down excess readmissions could move hospitals to take measures that go too far.

“I think we're going to reach a point of diminishing return, where to reduce readmissions further is eventually going to be perceived as underdelivering care and almost being cruel,” said Dr. Martha Radford, chief quality officer at NYU Langone Medical Center in New York. “Not all readmissions are preventable, and it's kind of tough to know which ones are and which ones aren't, particularly in advance.”

Hospitals can still do more to reduce the unnecessary ones, said Dr. Eric Coleman, a professor at the University of Colorado, where he also heads the healthcare policy and research division. “But the relative return on investment going forward will be less,” Coleman said.

Medicare views hospital readmission rates as an important indicator of the quality of care because they reflect the breadth and depth of care a patient receives. If hospitals fail to treat a patient fully or ensure that the patient has a feasible discharge plan, that patient could end up coming back to the hospital for care. Unnecessary readmissions are also expensive, costing the U.S. $25 billion annually, by one estimate.

More tightly coordinated care and better communication between hospitals and post-acute providers have indeed helped hospitals prevent readmissions and improve the quality of patient care, Coleman said.

“This is a fairly dynamic process, where we believe that what we're doing is reducing modifiable risk,” Coleman said. But, he warned, “There certainly are people whose risk may not be so modifiable. They really do need to be readmitted. We don't want to deny care on that end.”

One unintended consequence of Medicare's focus on readmissions, according to some critics, is that hospitals are keeping patients in outpatient observation status rather than admitting them.

“It has been the case that the hospitals have been gaming the system in extraordinary ways,” said Ross Koppel, a sociology professor at the University of Pennsylvania who conducts healthcare research.

A Wall Street Journal analysis of Medicare billing data late last year concluded that hospitals were indeed gaming the system by classifying patients as being on observation status. Two months later, HHS researchers countered in the New England Journal of Medicine that the small increase in observation claims couldn't explain a more substantial drop in readmissions.

Providers and their advocates argue that it's often better for patients to be held for observation rather than admitted. “Observation status helps ensure that the most appropriate setting of care is where the patient ultimately receives their care,” said Lorraine Ryan, senior vice president of legal, regulatory and professional affairs at the Greater New York Hospital Association. It gives a provider more time to evaluate patients before deciding if they should be formally admitted.

And other challenges remain. Despite the progress by hospitals and post-acute care providers, the quality of care that patients receive after they're discharged still leaves much to be desired. Improving it will require grappling with thorny issues such as insurance coverage and weak healthcare infrastructure in many parts of the U.S.

The reasons for gaps in care as patients transition out of the hospital and back home vary from the financial and logistical to the socio-demographic.

Some hospitals, especially safety net providers, care for disproportionate numbers of lower-income patients who live in communities without other healthcare services and resources essential for follow-up care, such as primary-care physicians and pharmacies. As a result, no matter what the hospital does, some patients might not be able to get the follow-up care they need.

“The strategies that hospitals are using, a lot of them are some of the same,” said Akin Demehin, director of policy for the American Hospital Association. “But certainly the challenges that they may face in their own patient population, in their own communities, in their own space, could look a little bit different.”

In other cases, patients or families are given instructions for care after discharge. But that doesn't mean they can, or will, follow them.

“A lot of folks go home and just feel unprepared and start to panic,” Coleman said. Preventing avoidable readmissions “really is about preparing patients and families to be able to feel confident in their own self-care.”

And sometimes, a patient's insurance will not cover the post-acute care services he or she needs, or will pay for only a portion.

“We've tried a lot of things—we make sure people have a follow-up appointment, we do arrange for visiting nurses, we'll place them in some sort of chronic-care facility if possible. Often, it's not,” said Radford, of NYU Langone. “The payment models don't help here. Some people don't have coverage for that type of thing.”

Of the 49 states where readmissions fell from 2010 to 2015, 43 saw decreases of more than 5%, and rates fell by more than 10% in 11 states. The one state where Medicare's 30-day, all-condition hospital readmission rate rose was Vermont—from 15.3% in 2010 to 15.4% in 2015, which the CMS described as “virtually unchanged.”

And according to hospital leaders there, the state may be seeing what others throughout the country are about to experience: doing well on readmissions means lower rates of improvement.

“While Vermont's readmission rates may not have changed drastically, they remain lower than in more than half of other states,” said Jeffrey Tieman, CEO of the Vermont Association of Hospitals and Health Systems. The state's rate in 2010 was 1.3 percentage points below the median, according to CMS data.

“Our hospitals recognize that it can be hard to make progress on these types of measures when your state is already a strong performer,” Tieman said. “But they are focused on continuing to reduce readmissions even further by improving the way we coordinate and integrate care.”