Hospitals' efforts to reduce readmissions not recognized under current payment model

May 12 2009

Hospitals' efforts to reduce the portion of patients who are readmitted for follow-up care are proving successful in many cases, but even though the moves often result in savings for insurers, the hospitals do not necessarily benefit financially, the New York Times reports. Because insurer payments are based on treatments provided rather than the health of patients, hospitals can "actually lose money by providing better care," the Times reports.

Robert Berenson, a policy specialist for the Urban Institute, said, "The hospitals who say they are penalized for doing the right thing are absolutely right." He added, "If we can't do this, we can't do much of anything in health reform." Harold Miller, executive director for the Center for Healthcare Quality and Payment Reform, said, "The payer reaps the entire benefit" of more effective care. According to Miller, there are payment models that allow hospitals to benefit from these savings or even receive extra payments for guaranteeing that patients will not need to be readmitted.

The Obama administration has discussed reducing Medicare reimbursements to hospitals with the highest readmission rates. Senate Finance Committee Chair Max Baucus (D-Mont.) and ranking member Chuck Grassley (R-Iowa) have expressed support for changing the way hospital payments are calculated, to create incentives for reducing readmissions. There also is support in Congress for basing payments to providers on the health status of an individual rather than care delivered (Abelson, New York Times, 5/9).

HHS

In a news release last week, HHS Secretary Kathleen Sebelius called on hospitals to reduce the number of health care-acquired infections in their facilities, including reducing Central Line Associated Blood Stream Infections in intensive care units by 75% over the next three years, CQ HealthBeat reports. The agency also plans to make $50 million in grants available for states combating such infections using funds from the federal stimulus package. According to HHS, health care-acquired infections increase U.S. health spending by as much as $20 billion annually and are among the 10 most frequent causes of death.

The release also noted the results of the 2008 National Healthcare Quality Report by the Agency for Healthcare Research and Quality that showed a nearly 1% decline in patient safety from the previous year and that at least 60% of quality of care measures are not improving for blacks, Asians, American Indians/Alaska Natives, Hispanics and low-income individuals. The HHS release said, "Today's report shows why we can't wait to enact comprehensive health reform. The status quo is unacceptable and we cannot allow millions of Americans to continue to go without the care they need and deserve" (Attias, CQ HealthBeat, 5/8).