Aug. 6—More than 2,000 hospitals will face a new round of Medicare payment penalties starting in October due to excess readmissions, according to the Centers for Medicare & Medicaid Services (CMS). But the changing composition of hospitals facing penalties may indicate improvement is possible.

A CMS rule issued Aug. 2 identified 2,225 hospitals for $227 million in Medicare payment reductions starting Oct. 1 due to their higher relative 30-day readmission rates for acute myocardial infarction (heart attack), heart failure, and pneumonia. 

The program’s roughly two-third penalization rate among the 3,359 eligible hospitals was generally similar to the number of hospitals fined under the first round of readmissions penalties, which began in October 2012. The program is designed to exempt from penalties the best-performing one-third of eligible hospitals as a way to continuously drive care improvements in 30-day readmission rates at all hospitals.

Some critics have warned that the readmissions penalties disproportionately target safety net hospitals and academic medical centers because their disproportionately poorer and sicker patients are less responsive to readmission reduction initiatives.

But reduced fines faced by some such providers in the latest round of the readmissions penalty program demonstrate that they can improve, according to one readmissions expert.

“I was very pleased to see that the readmission rates are changing, because there’s been a lot of talk about how difficult it is for hospitals to impact the CMS measures,” said Amy Boutwell, MD, president of Collaborative Healthcare Strategies. “There is reason to believe that hospitals and their care partners are improving these measures.”

Among the changes CMS planned for FY14 was expanding the program’s readmission measures to also include hip and knee surgery and chronic obstructive pulmonary disease. Additionally, in FY14 the program will increase the maximum penalty from 1 percent to 2 percent of a hospital’s Medicare payments.

Eighteen hospitals face the maximum 2 percent cut, while another 154 hospitals will lose 1 percent or more of each Medicare inpatient payment.

The latest results show the program is successfully pushing policy improvements at some hospitals because their penalties are decreasing under the program, Boutwell said.

“There will be a point at which we realize that further improvement has much more to do with [a hospital’s] geographic, cultural, and socio-economic environment, at which point refinements to the policy will be necessary,” Boutwell said.

Among the changes that may help some hospitals improve their scores was CMS’s increase in the number and types of planned readmissions that will no longer count against a hospital’s readmission rate.

Publication Date: Tuesday, August 06, 2013