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Life Health > Health Insurance > Medicare Planning

Medicare penalizes hospitals for readmission rates

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For years now, hospital readmissions within a month of discharge have been driving up the cost that insurers and others pay for the care received by patients who end up back to the hospital.

Medicare is finally fed up with it, and has adopted a multi-pronged approach to reducing those costly admissions.

On the research side, Medicare is the focus of the Independence at Home federal demonstration project, designed to identify processes and policies that will reduce the one-month readmission rate. The three-year program just celebrated the conclusion of Year One.

On the payment side, Medicare is not waiting nearly so long for action. On Friday, it released records of 2,225 hospitals that it says are reporting readmission rates that need to be lowered. To get them to do so, Medicare is cutting its reimbursement payments to those hospitals.

In this second round of levying penalties in the form of lower payments, Medicare will nick hospitals for a total of $227 million, according to Kaiser Health News. This performance-based payment strategy began last October.

The hospitals in question represent about two-thirds of the hospitals eligible for Medicare payments. About the same number were cited during the first round of penalties.

Of the hospitals sanctioned, fines for 1,371 were lower this time around, 1,074 sustained more damage, and 283 that escaped penalties last time were included this time.

Hospitals that treated large number of low-income patients were more likely to be penalized than those treating the fewest impoverished people.

The Independence at Home demonstration involves 18 health providers nationwide that were selected as test sites to help develop new strategies for reducing both one-month hospital readmissions and trips to the ER. 

Participating organizations may be eligible for substantial increased Medicare payments based upon the cost savings they realize from reducing such events. These strategies would them become best practices for the industry.

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