Medicare Will Penalize 26 Local Hospitals for Readmissions Beginning Oct. 1

Twenty-six hospitals in the four-county Dallas-Fort Worth metropolitan area are among the more than 2,000 hospitals across the country that will be penalized by the federal government, because too many of their patients are readmitted soon after discharge, according to Centers for Medicare and Medicaid Services (CMS).

More than two-thirds of the nation’s hospitals will be penalized for readmissions starting in October.

The penalties, which CMS characterizes as “adjustments,” were authorized by the Affordable Care Act (ACA) to prod hospitals to lower unscheduled patient readmissions. Research consistently shows that about one out of five Medicare patients return to the hospital within 30 days. That translates to about 2 million Medicare beneficiaries, and costs the insurance program for the elderly more than $17 billion in additional hospital bills.

The maximum penalty allowed under the ACA was 1 percent. Only one local hospital—Dallas Regional Medical Center—received that maximum 1 percent penalty. Nationally, 278 hospitals—or about 8 percent of U.S. hospitals—were assessed the maximum penalty.

The maximum penalty will rise to 2 percent starting in October 2013 and to 3 percent in 2014. The $280 million in penalties levied this year will represent about 0.3 percent of what hospitals are paid annually by Medicare.

Kaiser News Service analyzed the data geographically. Based on its analysis, assessed Texas hospitals were penalized an average of .18 percent, compared with the national average of .28 percent. Kaiser also examined the data based on Medicare hospital referral regions (HRR), which were established by the Dartmouth Atlas, based on where patients are referred for major cardiovascular surgical procedures and neurosurgery. The Fort Worth HRR had an average penalty of .1 percent, compared with .2 percent for the Dallas HRR.

Some argue that hospitals are being unfairly penalized for giving good care. For example, recent research has found that some hospitals with higher than average readmission rates have lower mortality rates. In other words, a hospital readmission trumps a patient death.

Kaiser News Service’s analysis also found that some safety-net hospitals that treat large numbers of low-income patients tend to have higher readmission rates. Its analysis found that 76 percent of the hospitals that many low-income patients will lose Medicare funds, compared with 55 percent of the hospitals that treat few poor patients.

However, Medicare wrote “many safety-net providers and teaching hospitals do as well or better on the measures than hospitals without substantial numbers of patients of low socioeconomic status.”

Local safety net hospitals JPS Health Network in Fort Worth and Parkland Health and Hospital in Dallas will be penalized .08 percent and .01 percent, respectively—each at a fraction of the average Texas and U.S. rates. UT Southwestern and Baylor University Medical Center, also known to treat large numbers of poor patients, received no penalties.

The government’s penalties are based on 30-day readmission rates for three conditions: heart failure, heart attack, and pneumonia. They were based on data from July 2008 to June 2011. The data was adjusted based on the severity of illness, but not for race or poverty level.

The penalty will be deducted from reimbursements each time a hospital submits a claim. For example, a $10,000 Medicare claim submitted by Dallas Regional Medical Center after Oct. 1 will be reimbursed $9,900 because of its 1 percent penalty.

Click here for a full list of DFW area hospital penalties.

CMS’s explanation for how it calculated the adjustment factors can be found on its Readmissions Reduction Program web page and in the FY 2013 Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals. CMS’s adjustment factors for individual hospitals can be found in the FY 2013 Final Rule Impact file.

Steve Jacob is editor of D Healthcare Daily and author of the new book Health Care in 2020: Where Uncertain Reform, Bad Habits, Too Few Doctors and Skyrocketing Costs Are Taking Us. He can be reached at [email protected]


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