For several years, rightly or wrongly, hospital readmissions have been targeted as a quality improvement subject. CMS has taken the lead by designing and implementing a program to penalize hospitals with “excessive” readmission rates. The first year’s experience is in and the Kaiser Family Foundation has several articles reporting on and analyzing these. (KFF Articles) We and others have strongly criticized the CMS program because the literature does not not suggest that we have good methods for identifying truly inappropriate readmissions within the control of the hospital and the CMS program does not address this fundamental flaw, which tends to hit hospitals treating the poor disproportionately. Many of these hospitals are already in a financially precarious positions and the Medicare penalties worsen that, likely leading to fewer resources to maintain or improve the quality of care. And the first year’s results suggest that this is exactly what is happening. Unfortunately, this kind of lunacy is exactly what we can expect from a government bureaucracy.
Overall, 278 hospitals, or 8.3% of those evaluated, will face the maximum penalty of 1% of reimbursement and 1,933 or 57.4% will incur a penalty less than the maximum, while only 1,156 or 34.3% get no penalty. The penalties will save Medicare about $280 million in the next year and the amount of the penalty rises in future years. Hospitals in New Jersey, New York, DC and several southern states are hit the hardest. Several very highly regarded hospitals are being penalized, and these hospitals tend to have high general quality and outcome measures, further evidence that something is seriously amiss with the CMS design. The penalties are hitting hospitals treating the poor hardest–76% of these hospitals are being penalized compared to 55% of hospitals with only a few poor patients. The program does not take into account demographic or socio-economic factors, which seems to be an obvious mistake. We have said repeatedly that the only right way to do a readmissions program is to review each one and make a clinical determination about whether it was caused by the care the hospital delivered. If so, the readmission simply shouldn’t be paid for at all but viewed as a continuation of the initial episode of care. The current program is bad and going to have very bad consequences, especially for hospitals treating poor patients.