Breaking Down the Distribution of Hospital Readmission Penalties

Approximately two-thirds of eligible hospitals will be penalized a percentage of their Medicare inpatient revenues

On August 2, CMS finalized the list of hospitals that will be penalized in year two of the Readmissions Reduction Program. Approximately two-thirds of eligible hospitals will be penalized a percentage of their Medicare inpatient revenues for excessive readmissions. The penalties take effect October 1, 2013 or fiscal year (FY) 2014.

The payment reduction schedule for the first three years of the program is a 1% maximum reduction of Medicare inpatient revenues in 2013, 2% in 2014, and 3% in 2015 and onward. In 2013 and 2014, the program concentrates on three conditions with high readmission rates: congestive heart failure (CHF), pneumonia (PN) and acute myocardial infarction (AMI). According to the Medicare Payment Advisory Commission’s (MedPAC) June 2013 Report to Congress, the readmission rate across acute care hospitals in 2011 for CHF was 24.2%, for AMI was 21.3% and for PN was 17.0%. CMS is finalizing three additional measures for 2015: chronic obstructive pulmonary disease (COPD), elective total hip arthroplasty (THA) and total knee arthroplasty (TKA).

Below is a snapshot of penalty distribution across U.S. hospitals for FY 2013 and FY 2014:

 

Penalties Across All U.S. Hospitals
Total hospitals penalized in 2014 2,225
Total hospitals penalized in 2013 2,195
Total fines across all U.S. hospitals 2014 $227M
Total fines across all U.S. hospitals 2013 $280M
Hospitals with a penalty increase 2013-2014 1,074
Hospitals with a penalty decrease 2013-2014 1,371
Hospitals with no change in penalty 2013-2014 912
Hospitals fined in 2014 but not fined in 2013 283
Hospitals fined in 2013 but not fined in 2014 255
Hospitals that received the maximum penalty for 2014 (2%) 18
Hospitals that received a penalty ≥ 1% for 2014 172
Hospitals that received a penalty ≥ 0.75% for 2014 342
Hospitals that received a penalty ≤ 0.25% for 2014 1,076
Hospitals that received the maximum penalty for 2013 (1%) 274
Hospitals that received a penalty ≥ 0.75% for 2013 474
Hospitals that received a penalty ≤ 0.25% for 2013 916
Average penalty per hospital 2014 0.38%
Average penalty per hospital 2013 0.42%

 

Implementing a readmissions reduction strategy should be a top priority for any hospital with excessive readmissions. CentraState Healthcare System in Freehold, NJ, who recently reported a 50.5% reduction in CHF readmissions in the first half of 2013, published the white paper “Solving Preventable Readmissions: Challenges, Strategies and the Need for a Clinical Analytics Solution” which states an effective strategy for reducing readmissions entails five components:

  1. Identifying at-risk patients upon arrival at the ED
  2. Assessing which patients are most likely to be readmitted by running real-time patient data through risk modeling software
  3. Continually tracking at-risk patients from the hospital to the PCP and home care settings
  4. Educating patients about their disease, their risks, and what they can do to self-monitor their condition as part of a mandatory pre-discharge procedure
  5. Monitoring performance improvement and providing a real-time feedback loop

Managing readmissions poses considerable difficulties for many hospitals though. Manual processes commonly used to track admissions, discharges and readmissions are a strain on FTE resources and not conducive to effective readmissions management. A successful readmission strategy will be driven by a Clinical Analytics Solution that can access a hospital’s clinical data and transform it into “actionable information” that enables quality improvement. SpectraMD’sFOCUS Actionable Analytics platform empowers hospital stakeholders to improve readmission management, accelerate readmission reduction and facilitate other quality improvement initiates with real-time predictive analytics.

Source for penalty distribution data: Kaiser Health News

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