Readmissions and Safety Net Hospitals

The Hospital Readmission Reduction Program used by Medicare seems well-intentioned.  Many hospital readmissions are reflective of poor quality of care in the hospital.  As we have noted several times before, however, the program is poorly designed, with little ability to discriminate between inappropriate and appropriate readmissions.  Another flaw of the program is its disproportionate penalty impact on hospitals which serve poor patients, the safety-net hospitals, an issue examined in a new Commonwealth Fund Report.   (Commonwealth Fund Report)    This is a significant issue for these hospitals, which often have little or no net margins, so that the escalating penalties under the readmission program may create severe financial distress.  While the penalty is only 1% of Medicare payments this year, it rises to 3% by 2015.

The authors’ analysis of Medicare data confirms what other studies, most notably by the Kaiser Foundation, have shown, that these safety-net hospitals are far more likely to end up subject to the penalties.  According to this analysis 12% of safety-net hospitals will receive the maximum penalty compared to only 6% of hospitals serving the smallest number of poor patients.  The underlying problem appears to be that the program does not adequately adjust for socio-economic factors that may affect readmissions, including the difficulty of getting these patients to take more responsibility for themselves and their health after discharge and the fewer resources that these financially-strapped hospitals have to create programs to reduce readmissions.  While the program design could be tinkered with, the thing that would most help fix the program is to do away with the current mathematical formula and look at each readmission for appropriateness.