Reducing Readmissions: Are Quality Payments a Carrot or Stick?

A decade ago, not much attention was paid to patients who had to be readmitted to hospitals shortly after their discharges. Wasn't that just the normal way of providing care? However, proposals included in the current healthcare reform measures in Congress that call for cutting back on Medicare payments for readmissions tells us that times have changed.

Payments for discharges paid by Medicare could be reduced by up to 3% in the Senate bill or 5% in the House bill. Could these proposed reductions in payments for unplanned readmissions be seen as a carrot or a stick for the healthcare industry? The answers are not simple and require us to look beyond the hospital walls—and at the needs of the patients within our communities once they are discharged.

Nearly 20% of Medicare fee for service patients were readmitted within 30 days of discharge in 2004, according to a study that appeared last spring in the New England Journal of Medicine. The cost of these readmissions to Medicare: $17.4 billion. But the study brought up the point that this was no time for finger-pointing. It is time for cooperation—both inside and outside the hospitals.

The lead author of the study, Stephen Jencks, MD, formerly head of the Centers for Medicare and Medicaid's Office of Clinical Standards & Quality, says that the issue of reducing rehospitalizations initially brought up fears that the policies might be handled in clinically insensitive ways and "create a lot of problems for standard good practices."

This created a challenge for hospitals and providers of how to address readmissions, says Jencks, who is now a preventive medicine specialist in Baltimore. "People need to figure out how to do it right. This doesn't require a huge amount of research, but it does require clinicians sitting down and saying: 'OK, we can do this."

Recent examples have emerged on how to better discharge patients so they don't require readmission within 30 days. For instance, Boston Medical Center has introduced the Re-engineered Discharge that outlines 11 steps to follow before a patient is discharge. The Society of Hospital Medicine has unveiled the "BOOST" (Better Outcomes for Older Adults through Safe Transitions) program that hospitalists could use to improve the discharge transition process, and enhance the flow of information between inpatient and outpatient providers.

Another anxiety is that providers are being asked to see the healthcare business in a different way. "The system is to a very large extent built around the convenience of practitioners and providers,” says Jencks. “The notion that it's simply OK for a patient to go out the door without a [clinical] appointment or follow-up is a challenge to the way things were working."

On another note, reducing payments for avoidable rehospitalizations may not bode well for those hospitals that see many poor patients, says Richard "Buz" Cooper, MD, a professor of medicine and senior fellow in the Leonard Davis Institute of Health Economics at the University of Pennsylvania, Philadelphia. He notes that recent studies have indicated that 25% to 35% of expenditures of this "excess utilization" is related to individuals who are at two times the poverty level or below.

The idea of reducing payments for rehospitalizations is "related to the notion that everybody should have the same readmission rates and that any higher readmission rate are all due to inefficiencies or other aspects of how providers try to fill beds," he says. But this is not necessarily true, he argues.

It's not a matter of whether one has insurance coverage, Cooper says, but understanding how this population may be accessing care multiple times in an untimely and inefficient way—which may contribute to higher costs to hospitals in the long run. With the rates of readmissions initially higher for poorer population groups, hospitals treating them will be penalized even when they try to bring these readmissions down from a high level, Cooper says.

One of the problems is the support and social structures for these patients once they leave. For instance, many do not have family support at home, may not understand directions because of language barriers, or will fail to obtain needed prescriptions. "Even if they do obtain prescriptions, they may take them wrong or miss appointments," he says. As a result, the patients—many with multiple chronic conditions—may be back in the hospital, again, continuing the cycle.

So are reductions in avoidable rehospitalizations a carrot or stick? Maybe instead it's time to see readmissions as a wake-up call and as the beginning of a new dialogue for hospitals—and for the communities they serve—to listen to and address the needs of patients the serve.