An ObamaCare Penalty on Hospitals

This approach to reducing Medicare patient readmissions will have unintended consequences.

Under the Affordable Care Act’s Hospital Readmissions Reduction Program, hospitals that readmit “excessive” numbers of Medicare patients within 30 days of discharge now face significant penalties. The maximum penalty is 1% of a hospital’s Medicare reimbursement, but that will increase to 3% in 2015.

That may not sound like a lot, but for hospitals already struggling financially—especially those serving the poor—losing 1%-3% of their Medicare reimbursements could put them out of business. While the Affordable Care Act addresses important gaps in health care and insurance, this regulation is one of its major failings.

Giving hospitals an incentive to improve the quality of care and reduce the rehospitalization of patients, thereby lowering Medicare costs, is a worthy goal. But the current approach flies in the face of the best medical science and jeopardizes the health of patients and the bottom line of hospitals in three important ways:

Research shows that most readmissions can’t be prevented.

Readmissions are often unavoidable consequence of life-threatening complications that can appear after discharge from the hospital. In 2011, research at the University of Toronto revealed that only about 25% of all readmissions are preventable.

Moreover, according to a review of 72 medical studies—the review was conducted last year at the University of Texas—patients that are elderly, minority, poorly educated, poor, smokers and the noncompliant (among others) have higher readmission rates. These social factors are not controllable by hospitals and are not taken into consideration in penalty calculations.

Readmission penalties will have unintended consequences that harm patients.

Hospitals were initially penalized with reduced Medicare reimbursements if they had higher rates of readmission for patients with heart disease and pneumonia. Last week, the list was expanded to include serious lung conditions and hip and knee replacements. Hospitals will seek to keep such patients in emergency rooms rather than admit them. Why? The simplest way to avoid readmission is not to admit a patient in the first place. But substituting ER services for hospital stays will only increase the chance that patients will deteriorate and return with more complications.

The policy discriminates against poorer hospitals.

Small and financially struggling hospitals lack the resources to effectively manage their discharged patients at home. Attempting to reduce readmissions could create greater financial difficulties for them. The regulations will be particularly hazardous for hospitals in poor neighborhoods. A December 2012 Commonwealth Fund study of 2,200 hospitals found that “safety-net” hospitals that treat a higher number of lower-income patients are “30 percent more likely to have 30-day hospital readmission rates above the national average.”

Rather than penalizing hospitals for readmissions that they can’t prevent, why not fund proven and efficient strategies? A large number of randomized controlled trials—the gold standard of evidence—carried out at Yale and other prestigious institutions now prove that trained physician and nurse-practitioner teams can help homebound elderly and heart-failure patients avoid readmissions, sometimes reducing rehospitalizations by nearly 50%. The programs help patients use medical equipment, comply with medication schedules and diets, educate families, and follow up with patients at home, sometimes via the Internet or mobile devices.

Readmission penalties aren’t the only penalties in the Affordable Care Act. Policy makers too often assume economic penalties and incentives are magic bullets for improving patient safety. The evidence suggests otherwise.

Our recent nationwide study at Harvard Medical School found that Medicare penalties for hospital infections deemed “preventable” failed to reduce infections. Instead, the penalties contributed to misleading coding to give the appearance of fewer infections. What’s more, numerous studies have shown that paying doctors extra money for individual quality metrics (like treating high blood pressure) rarely, if ever, works.

The Obama administration promised to use science to inform policy. Given outsize health-care costs and the moral imperative of patient safety, Americans should especially demand proof of efficacy in this area. The federal readmission penalties are both dangerous and inefficient. It is time to amend these regulations to improve the quality of care through training and mentorship—not blame and punishment.

Dr. Soumerai is a professor at Harvard Medical School and the Harvard Pilgrim Health Care Institute. Dr. Koppel, a professor of sociology at the University of Pennsylvania, conducts health-care research at Penn and Harvard. A version of this article on appeared the U.S. edition of The WSJ

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