Every American hospital has two front doors: The real one, and an imaginary revolving door. Any patient who winds up back in the hospital within a few weeks of getting out travels through that imaginary door, and the more of them there are, the more money the hospital stands to lose from the Medicare system.
This readmission penalty aims to spur hospitals to prevent unnecessary costly care, but a new study shows that after several years of rapid improvements in re-admissions, the readmission penalty program may be spinning its wheels more than it’s slowing the spinning of the revolving hospital door.
Writing in the journal Health Affairs, a team from the University of Michigan reported findings from their analysis of data from nearly 2.5 million Medicare patients. They focused on those who had hip or knee replacement surgery before and after penalties affecting these operations were announced.
The study shows the readmission rate for these patients had already started dropping by the time the idea of readmission penalties was announced as part of the Affordable Care Act in 2010. Soon after that, the re-admissions rate for these surgical patients started dropping faster — even though the penalties announced in the ACA did not apply to surgical patients.
The rate kept dropping rapidly for several years — even though hospitals weren’t getting penalized yet for hip and knee replacement-related re-admissions. But that improvement started to slow down.
After the government announced in late 2013 that penalties would expand to hip and knee replacement, the rate of re-admissions for these patients kept dropping, but at nearly half the rate. In other words, improvements in surgical re-admissions slowed to the same pace they had before any penalties were announced in 2010.
WHAT’S THE IMPACT
At the same time the readmission rates were changing, the average cost of caring for a Medicare hip or knee replacement patient did too, the study showed. In fact, it dropped by more than $3,000 from 2008 to 2016.
And hip and knee patients’ chance of heading home from the hospital, rather than to a skilled nursing facility or other setting, has increased over that time. So has the likelihood that they will have assistance from a home health aide when they get home.
The authors contend that the same efforts that hospitals may have launched to prevent readmission of medical patients may have extended to these surgical patients. These might include care coordination programs and phone check-ins with recently discharged patients, or better patient education about home care or changes to their medications.
The Hospital Readmission Reduction Program, or HRRP, still carries large penalties — up to 3% of what a hospital earns for certain Medicare patients. It has also expanded to include more conditions, including heart bypass surgery and more types of pneumonia, including those with sepsis.
But researchers say that adding more conditions to the program is not likely to result in much more readmission prevention or cost savings.
In the end, some re-admissions are inevitable, they said, and trying to drive rates lower through penalties may mean some patients who should have been readmitted won’t be.
Instead, the authors suggest that more use of bundled payments — where Medicare sets a defined amount of money it will pay for the episode of care surrounding a surgical patient’s operation — could produce better results. This is because bundled payments ensure hospitals focus on costs and complications around the entire episode of care, not just one metric like re-admissions.
THE LARGER TREND
There’s been ongoing debate regarding the equity of the HRRP. For example, safety net hospitals have long held they are unfairly penalized for their readmission rates under HRRP’s current performance model because it doesn’t account for social risk factors that put these patients at risk for readmission.