October 9, 2019

Showing hospitality to others is an American tradition, and we tend to demonstrate it in a variety of ways.  Out West, they might have folks over for an old-fashioned barbecue.  In the Midwest, neighbors might gather over bratwurst and brew.  Down South, you might be given some sweet tea and invited to have a chat out on the porch.  We love to have people over to our homes—as long as they don’t stay too long, mind you.  Yes, American hospitality is surely one of our greatest virtues.  How ironic it is, then, that one of our federal agencies is handing out fines for being “too hospitable.”

In 2010, with the passage of the Affordable Care Act (ACA), the central government in Washington became the arbiter of just how hospitable a hospital can be.  Under that law, the Department of Health and Human Services (HHS) was directed to create the Hospital Readmissions Reduction Program (HRRP), which would be given the task of penalizing hospitals that failed to meet certain metrics.  Since that time, hospital administrators have been under gun to significantly lower the readmission rate for certain patients.

Removing the Welcome Mat

Too many times, patients have to be readmitted within a month of being discharged for issues connected to their initial admittance.  The federal program is designed to reduce the rate of readmittance during that initial 30-day post-discharge period, specifically as it pertains to the following issues:

• Acute Myocardial Infarction (AMI)
• Chronic Obstructive Pulmonary Disease (COPD)
• Heart Failure (HF)
• Pneumonia
• Coronary Artery Bypass Graft (CABG) Surgery
• Elective Primary Total Hip Arthroplasty and/or Total Knee Arthroplasty (THA/TKA)

The government-imposed penalties are based on the number of unscheduled readmissions of Medicare patients who had originally been treated for heart failure, heart attack, pneumonia, chronic lung disease, hip and knee replacement or coronary artery bypass graft surgery.  To clarify, readmissions that had been previously scheduled are not counted against the facility.  Importantly, if one of these patients is admitted, on an unscheduled basis, to a different hospital within the 30-day period, the readmission is counted against the first hospital, rather than the second.

Raining on the House Party

The Centers for Medicare and Medicaid Services (CMS) determines whether or not, and the extent to which, a hospital is penalized based on the facility’s readmission rate as compared to the national average.  The 2020 fiscal year (FY) penalty is based on the most recent three-year performance period of July 1, 2015 to June 30, 2018.  Hospitals incurring a penalty will be hit with a percentage reduction in reimbursement on each of their Medicare cases, beginning October 1 of this year and running to September 30 of next year.  The maximum payment reduction that can be assessed is three percent.

According to an October 1 report from Kaiser Health News (KHN), of the 3,129 general hospitals eligible for HRRP consideration, 83 percent will receive a penalty in FY 2020, with the average Medicare payment reduction being under one percent (0.71).  The KHN analysis additionally provided the following findings:

• 1,177 hospitals received a higher penalty than they did last year
• 1,148 hospitals received a lower penalty than last year
• 64 hospitals received the same penalty as last year
• 194 hospitals that had not been penalized last year will be penalized in 2020
• The maximum penalty—3 percent adjustment—was assessed against 56 hospitals
• Only 372 hospitals avoided penalties in both years

It should be pointed out that Medicare exempted 2,142 facilities from the program this year, due to case threshold or hospital classification considerations.  For example, veterans’ hospitals, children’s hospitals, psychiatric hospitals and critical-access hospitals were not included in the HRRP.  In addition, all Maryland hospitals have been exempted from the program by Congress, as the state is allowed to establish its own readmission regulations.

Showing Them the Door

While the program has been in place since 2010 and penalties have been imposed since 2012, there has been minimum success in significantly lowering unscheduled readmissions.  According to Dr. Karen Maddox, co-director of the Center for Health Economics and Policy at Washington University in St. Louis, “a lot of hard work has gone into trying to reduce readmissions, and the needle has not moved very far.”  She went on to say, “It’s been a huge investment by hospitals but not very much in outcomes.”

So, what are the hard numbers that will help us determine the overall success or failure of this government initiative?  A recent analysis performed by the Medicare Payment Advisory Commission (MedPAC) found that the readmission rate dropped from 16.7% in 2010 to 15.7% in 2017.  From MedPAC’s perspective, this seemingly negligible change was more significant when taking into consideration the overall uptick in patient frailty from 2010 to 2017.  According to one MedPAC analyst, “On a risk-adjusted basis, it appears that readmissions have declined in 2010 to 2018 without causing a material increase in mortality.”  To see where your hospital stands relative to the HRRP penalty for 2020, you can visit the following KHN link: https://khn.org/news/hospital-penalties/readmissions/.

Despite the relative success or failure of the program to deliver on its intended purpose, it is significant to note that the vast majority of eligible hospitals are being penalized for a perceived failure to keep patients from making a return visit.  In response, some administrators have begun implementing strategies to address the problem, including follow-up calls to the patient, assistance with procuring medications, and arranging for follow-up care at a doctor’s office.  These and other strategies may be necessary to keep those nice visitors from returning to our door too often.  After all, hospitality does have its limits.