Can You Afford Readmission Penalties in 2015?

CMS recently released the final regulations for 2015 in regard to readmission penalties. The major changes include new conditions as well as higher readmission penalties.

History of Readmission Penalties

October 2012, CMS created the Hospital Readmission Reduction Program as part of the Affordable Care Act (ACA). The goal was to improve quality of care and reduce healthcare spending. The premise was to assess hospitals with excessive readmission rates penalties in the form of reductions in IPPS payments. Readmission penalties are assessed for specific conditions in which a patient is readmitted within 30 days of a previous discharge. The program excludes readmissions which were unavoidable or planned, focusing solely upon preventable readmissions. According to CMS, one in five Medicare patients discharged from a hospital are readmitted within 30 days. Just so you don’t have to do the math, that equates to 20%.

Initially (2012-2014), the 3 conditions in which readmission penalties could be assessed included:

• Acute Myocardial Infarction (AMI)
• Heart Failure (HF)
• Pneumonia (PN)

Additionally, the Hospital Readmission Reduction Program established a method for calculating excessive readmissions for each condition, a policy for determining and calculating risk adjustment factors and a period of 3 years in which to create a baseline for establishing individual hospital rates as well as national averages.

FY2014, an algorithm was added to the calculation to exclude planned readmissions as they relate to the 3 conditions listed above.

What is new for 2015 readmission penalties?

Just when you thought readmission penalties were high enough, boom, you get hit between the eyes with more stringent regulations and penalties. How will these affect your organization? Can you afford to be complacent and roll with the punches in terms of readmission penalties and conditions?

The final regulations have been approved for 2015. CMS has added 3 new conditions to the mix:

• Chronic Obstructive Pulmonary Disease (COPD)
• Elective Total Hip Arthroplasty (THA)
• Total Knee Arthroplasty (TKA)

In addition to new conditions being added, CMS is also raising the stakes by increasing the reduction.

• FY2013 – IPPS reduction up to 1%
• FY2014 – IPPS reduction up to 2%
• FY2015 – IPPS reduction up to 3%

So, what does this really mean in terms of numbers of hospitals receiving penalties and what dollar amount was assessed?

• According to CMS, as of August 2013 – 2225 hospitals were assessed readmission penalties. That equates to about $280 million. So, we are not talking peanuts here.
• As of October 2014 – 2,610 hospitals will be assessed readmission penalties equating to about $428 million.

Are the readmission penalties fair?

While the overall goals of improving quality of care and reducing healthcare spending are the thrust of the Hospital Readmission Reduction Program, many concerns have been raised producing much controversy. Some of these concerns include:

• Should all hospitals be included and compared to the national average?
• Should rural hospitals be treated different than non-rural?
• If you achieve a reduction in readmissions but it is less than the national average reduction, should you still be penalized?
• Should hospitals be penalized for things that are outside of their control such as patient behavior?
• What if a hospital tends to have patients that are “sicker” than other hospitals?
• What if the readmission is due to patients not adhering to discharge plans?
• Are the current risk adjustment factors comprehensive enough?
• How does the socioeconomic factors come into play per hospital?

How can readmissions be reduced?

Certain processes can be put into place to reduce readmissions:

• Follow up after discharge to ensure that he patient is adhering to discharge instructions and no complications have arisen
• Partnering with pharmacies to make sure prescriptions have been filled
• Partnering with primary care to make sure the patient receives post-discharge care and follow-up
• Tracking closely all readmissions and creating plans to continually assess and reduce readmissions
• CMS to provide incentives for readmission reduction programs
• Having mechanisms in place in the Emergency Department to flag someone that is a recent discharge (within the last 30 days)
• Providing better and safer care for inpatient stays

So given the current situation regarding readmission penalties, can you afford not to reduce your readmissions?