MedPAC on Readmissions

The Medicare Payment Advisory Commission was a supported of having CMS adopt a hospital readmission penalty program, believing that many readmissions were avoidable and that Medicare was therefore paying for care that was the result of poor quality care.  The program is now in effect and will penalize a large number of hospitals in the coming year, and many of those hospitals disproportionately serve the poor and can ill afford to be penalized by loss of revenue.  The Commission has examined experience with the program to date and released its recommendations on how it might be refined, in a series of slides.  (MedPAC Slides)   The Commission notes that readmission rates, both all cause and for the three conditions have fallen slightly in the last three years.  The report further notes that there is variation in readmission rates within types of hospitals and by race and income of patients.  In 2013 about 67% of hospitals will have a penalty with the average penalty amounting to around $125,000 in lost revenue.

MedPAC believes the program should be refined by increasing the incentive to reduce readmissions and increasing the number of hospitals that are subject to the incentives and by defining the penalties as a consistent multiple of the cost of readmissions.  To get more hospitals in the system would require figuring out to deal with the many hospitals that have too few cases to be statistically reliable, which is only likely to exacerbate the current unfairness of the program.  The report notes the issues in determining which readmissions are truly avoidable, which the current program doesn’t do at all, but has no specific recommendation to fix this problem.  The Commission also gives lip service to the socioeconomic status of patients issue.  We will say it one more time:  there is no excuse for not designing this program to examine each readmission to determine which ones were avoidable and then just not paying for those.  That is the fairest method.