Readmission Penalties Looming – Millions at Stake

By John Tempesco, ICA

There is a looming government transition which will occur this fall that will dramatically affect hospital reimbursement … and it’s not the presidential election. It is the implementation of Section 3025 of the Patient Protection and Affordable Care Act, also known as the Hospital Readmission Reduction Program. This program, which takes effect for any admission on or after 1 October 2012, will focus on three diagnoses with inordinately high readmission rates in the 2013 fiscal year. The three diagnoses are Acute Myocardial Infarction (AMI), Heart Failure (HF) and Pneumonia (PN). In FY2014, CMS adds Coronary Artery By-Pass Graphs (CABG) and Chronic Obstructive Pulmonary Disease (COPD) while others will be added in FY2015.

Although the readmission ratios will take into account risk adjustment methodology used by the National Quality Forum (NQF), the Medicare Payment Advisory Commission disclosed that penalties for a high readmission ratio will affect two thirds of all U.S. hospitals. The risk adjustment includes patient demographics, co-morbidities and patient frailty. Discharging hospitals will struggle to improve their readmission ratios simply because: a) they have little impact on patient compliance with discharge plans; b) they do not control protocols in place at other regional hospitals that may readmit their patients; and c) they cannot influence follow-up procedures at post-acute healthcare providers including long term care facilities, rehabilitation centers, home care agencies or ambulatory physician practices.

Although the program’s maximum penalty is one percent of base Medicare reimbursement in the first year, because the penalty  Continue Reading Article..>>