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10 Things We Don't Know About Looming Readmission Penalties

Cheryl Clark, for HealthLeaders Media, March 29, 2012

3. What is the "index hospitalization"?
What is the definition of the index hospitalization that starts the 30-day clock ticking?

Foster asks, "Is it the first one you come across in a year? Or, is it an admission to a critical access hospital that then warrants further admission to a general acute care hospital? Those are the sorts of questions we hope they'll answer."

4.  What unrelated readmissions might be excluded?
In general, CMS will impose a penalty if a hospital has greater-than-expected risk-adjusted readmissions regardless of the reason for the readmission. If a heart attack patient falls at home after discharge and must be readmitted, perhaps the hospital might have first inspected the home for a fall risk.

However, some readmissions could be justifiably unrelated, and even typically required as a standard of care. 

So far, however, CMS has noted it would not count as a readmission the case of a heart attack patient who is subsequently scheduled for a heart bypass procedure within 30 days, since that would be a typical occurrence.

However, CMS has not named any "typically scheduled" exclusions for pneumonia or a heart failure. But neither has it closed the door on the possibility.

5.  How much will Medicare save?
The law will result in gradually increasing savings to the Medicare program, totaling $7.1 billion over the next seven years, according to the Congressional Budget Office.

But will penalized hospitals lose the maximum 1% of base DRG, or will there be thresholds, for example, .5%?

So far, Foster interprets the penalty as one that includes the hospital's number of risk-adjusted readmissions factored with its expected number and the hospital's base payment for that diagnosis, calculated with a complex formula set forth by the ACA.

However, CMS still must clarify terms in the formula, such as base operating DRG, ratio, and floor adjustment factors.

6. How will each condition be weighted?
Will readmission rates for each condition be weighted equally? The answer could be pivotal, because heart attack patients are much less likely to be readmitted than patients with heart failure or pneumonia and they incur readmission care costs that are one-fourth what is spent to treat heart failure or pneumonia readmissions, according to a 2007 Medicare Payment Advisory Commission (MedPAC) report.

CMS intends to clarify its definition of "aggregate payments for excess readmissions."

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