Readmissions penalties at work

Effort pushed most hospitals to reduce or eliminate penalties in second year

There was plenty of good news in the second-year results from the CMS’ 30-day hospital readmissions penalty program, which was largely overlooked by the press. A large majority of hospitals either stayed out of the penalty box or reduced their fines. Even the minority of hospitals that absorbed higher penalties had a significant share that improved their readmissions performance once you factor in the doubling of fines this year.

Overall, 1,370 or 40% of the 3,355 eligible hospitals reduced their penalties between 2012 and 2013. Another 912 or 27% stayed the same—no penalties in either year. And the number of hospitals that received the maximum penalty dropped significantly from 274 in 2012 to 19 in 2013.

Even among the 1,073 or one-third of hospitals with higher penalties, the numbers suggest their overall performance actually improved. Stony Brook (N.Y.) University Hospital on Long Island, for instance, saw its penalty increase from the maximum 1% in 2012 to 1.48% in 2013, which is well below this year’s maximum penalty of 2%. While readmissions obviously remained a problem there, the movement was in the right direction.

The improved performance for most hospitals wasn’t an overnight affair. Medicare calculated last year’s penalties based on a rolling average of 30-day readmissions between 2008 and 2011 for three major conditions—heart attack, heart failure and pneumonia. This year, they advanced the evaluation period by a year. Including another post-reform year mattered.

It made a difference for Alegent Creighton Health Midlands Hospital in Papillion, Neb., which lowered its readmissions penalty from the maximum 1% in 2012 to zero this year—the most dramatic reduction among the 3,355 hospitals affected by the program. Officials at the facility, part of the larger Catholic Health Initiatives system, recognized as early as 2008 that they had major problems with excess readmissions, especially among its congestive heart failure patients.

“We initiated an entire care redesign,” said Dr. Jeffry Strohmyer, a family medicine doctor and campus quality chief at Midlands. “We pulled all the stakeholders together, employed evidence-based treat- ment guidelines, and initiated discharge planning from the beginning of a hospital stay.”

The latter part of the program was crucial, he said. They deployed case managers at the hospital to make sure the discharged patients were aware of the importance of taking their medications and scheduling follow-up appointments. They even made followup phone calls within three days of discharge to make sure everything was on track. “It’s resource-intensive, but that’s what you need to make sure patients have everything they need,” he said.

None of that is complex. But it does require some resources, and more importantly, it requires the will to get the job done.

Using readmissions penalties as a tool to improve outcomes has long had its critics within the provider community. Use of a rolling average penalizes hospitals long after they have improved their performance.

Safety net hospitals serving impoverished communities face a patient population that’s more difficult to manage, and they have fewer resources. Targeting specific conditions rather than an all-cause readmission rate can unfairly penalize some hospitals.

The CMS has already factored in some of those complaints. It eliminated planned readmissions from the overall calculation, for instance. But CMS officials in Baltimore reading these results can conclude only that the program is having the desired effect, which probably means it is here to stay.

For those hospitals still losing ground, the path ahead won’t get any easier. The maximum penalty for the fiscal year beginning in October 2014 escalates to 3%. Medicare is also planning to include chronic obstructive pulmonary disorder and elective orthopedic operations on its 30-day readmissions evaluation list.

The take-home lesson for providers is that a focused effort on quality improvement has the potential to rapidly improve performance. That’s good for patients, who get better outcomes. That’s good for the CMS and taxpayers, because they get lower costs. And it will be good for providers, who will see the penalties shrink to zero—like at Alegent’s Midlands.