This article appears in the October issue of HealthLeaders magazine.
Hospital leaders have long known that they would be at risk for penalties from the Centers for Medicare & Medicaid Services based on how well they prevent 30-day readmissions for three targeted diagnoses. But that amount of lead time may not have been enough: More than 2,000 hospitals faced penalties in the 2013 fiscal year based on discharges between July 1, 2008, and June 30, 2011.
Still, no matter how badly they missed, hospital penalties for FY 2013 were capped at 1% of Medicare reimbursements. But that cap ratcheted up to 2% for FY 2014 and 3% for FY 2015. Besides that, the number of conditions and diagnoses at risk also are likely to increase dramatically.
There's ample disagreement about how much control hospitals can exercise over readmission rates, or whether readmissions rates are indicators of quality patient care. Regardless, that is a political debate that has already been fought on the Medicare side, and commercial payers are likely to follow suit. The rule is the rule, and it's left to hospital leaders to figure out how best to reduce readmissions such that quality patient care and the metric are both best served, if that's possible.
Looking at all causes
In terms of strategy, what's the best way to approach this large and growing risk of reduced revenues? Not necessarily by targeting the conditions CMS has highlighted for penalties, say those who have had success in reducing readmissions. The debate centers over whether hospitals and health systems should target the three diagnoses—heart attack, heart failure, and pneumonia—that are guaranteed to provide an immediate return on investment by avoiding penalties or instead focus on so-called all-cause readmissions, says Laura Jacquin, managing director at Huron Consulting Group, a Chicago-based consulting firm.
"What we feel is best practice is to consider all-cause because it reflects better preparation for the future and knowing that, in true CMS fashion, we can expect more diagnoses to be added," she says.
Still, it's a big endeavor to attack readmissions for all causes. Therefore, it may be easier to manage by staging your system's interventions by focusing on certain diagnoses as pilots with the goal of expansion, says Jacquin.
Regardless of the approach, one of the most important decisions that can be made is to ensure there's a standard method to how the organization is treating all patient populations. That's where WellStar Health System, a five-hospital, 1,321-licensed-bed system based in Marietta, Ga., chose to begin six years ago.