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High Readmission Rates Mean Lower Medicare Payments for New Jersey Hospitals

Loren Bonner | October 9, 2012

Robert Wood Johnson University Hospital working to reduce readmissions.
Credit: Robert Wood Johnson University Hospital
Robert Wood Johnson University Hospital working to reduce readmissions.

All but two New Jersey hospitals will get hit with a Medicare reimbursement reduction for excess readmissions, as defined by the Affordable Care Act of 2010, which links Medicare payments to the quality of care that hospitals provide.

The penalty kicked in at the beginning of the month.

“New Jersey will be facing some of the highest downward adjustments that you could call readmission penalties,” said Sujoy Chakravarty, assistant research professor at the Rutgers Center for State Health Policy.

The penalties don't come as a surprise to state healthcare facilities, which have been struggling to rein in readmission rates. The New Jersey Hospital Association (NJHA) has been looking into the issue for almost three years now. Its Readmissions Collaborative has helped hospitals implement programs that attempt to address the problem, which they believe primarily stems from readmitted patients not having access to a primary care physician -- a critical first step to curbing readmissions. Thus far, 50 state hospitals are participating in NJHA's Readmissions Collaborative.

Whether under the aegis of the NJHA or independently, New Jersey hospitals are trying a variety of approaches to improve critical aftercare. Some are scheduling face-to-face visits with discharged patients to ensure that they set up appointments with primary care physicians and that they understand how and when to take their medications. Others are using the phone to follow-up. Still others are hiring advanced-care registered nurses, who hold advanced degree and are trained in critical analysis, problem solving and evidence-based decision making. Still others are teaming up with Accountable Care Organizations, which provide a continuum of care for patients, extending from discharge for as long as it is needed.

According to data from the federal Centers for Medicare and Medicaid (CMS) and compiled per state by Kaiser Health News only Overlook Hospital in Summit and Morristown Memorial Hospital will be spared the Medicare cuts -- out of a total of 64 acute care hospitals in New Jersey.

The reductions are capped at 1 percent this year and are enforced if the number of patients readmitted at a particular healthcare facility climbs above the national average for readmissions. The CMS has set up a penalty schedule for the next three fiscal years.

  • FY2013 payment adjustments are based on readmission rates from July 1, 2008 through June 30, 2011;
  • FY2014 will be based on readmission rates from July 1, 2009, through June 30, 2012;

  • FY2015 payment adjustments will be based on readmission rates from July 1, 2010, through June 30, 2013.

The Medicare cuts are already in place for FY2013 and FY2014. Hospitals that can bring their readmission rates in line should be able to reduce their reductions for FY2013.

CMS based its calculations for fiscal year 2013 on readmission data for heart attack, heart failure, and pneumonia. According to the Medicare Payment Advisory Commission, or MedPac, these three conditions were singled out because they account for the highest hospitalization and readmission rates. The CMS may ultimately penalize hospitals for other conditions and procedures that MedPac identifies as preventable readmissions.

There appears to be no mystery to reducing readmission rates.

“For virtually all hospital discharges, the best practice is to see a primary care physician within seven to 10 days,” said Aline Holmes, senior vice president of clinical affairs at NJHA.

But even if a patient has access to a primary care physician, she said, scheduling an appointment in a timely manner is next to impossible for patients.

Besides doctors’ appointments, Holmes said that understanding medication and discharge instructions were additional obstacles contributing to high readmission rates among Medicare patients.

Since follow-up is outside the province of hospitals, Chakravarty said there is a concern about the fairness of these facilities facing a penalty

“If you come to see who the patients are who have less access to primary care, it might be minority and poorer patients, so the hospitals getting hit the most are the safety net hospitals. They are the ones serving patients with less access to outpatient care and also operating on low margins,” he said.

In fact, a majority of the New Jersey hospitals being slapped with the top 1 percent penalty are in the Camden and Newark referral regions, according to Kaiser Health News.

Although it may take some time to really know how the penalties will affect hospitals throughout the state, those that have adopted aftercare programs this year are already seeing lower readmission rates.

Robert Wood Johnson University Hospital in New Brunswick launched a transitions-in-care program in January. Since then they’ve seen a 25 percent reduction in readmissions for heart failure and pneumonia.

“We are not yet there with heart attack and we feel it may be because of coding. Some patients who have heart attacks come back for procedures so when they come back, it’s kind of like a readmission [code],” said Teresa De Peralta, the hospital’s transitions-in care-coordinator.

The program, funded through a grant from the Robert Wood Johnson Foundation, includes face-to-face home visits with patients 24 hours after discharge by Robert Wood Johnson Visiting Nurses.

De Peralta said the home visit portion is mostly about making sure patients are on the correct medications and helping them with their primary care follow-up appointments.

Face-to-face visits are also critical to get patients to participate in the program.

“Our enrollment is about 95 percent and we feel that’s because of our initial face-to-face explanation of the program,” said De Peralta.

The program includes an advanced screening process, in which electronic health records alert the provider if the patient is high risk (individuals who have been back in the hospital within 30 days of discharge) and eligible for the program. The care team then comes up with a list of candidates, visits each one in the hospital and explains the voluntary program.

Other hospitals in the state are enhancing the discharge process using similar models.

According to Holmes, many state hospitals have put in phone programs that call patients within 24 hours of discharge to see if they are setting up doctor's appointments and taking their medications correctly -- a model created by Dr. Eric Coleman from the University of Colorado School of Medicine. (Coleman is one of 23 recently announced MacArthur Fellows for 2012.) Other New Jersey hospitals have hired advanced practice registered nurses to follow high-risk patients from the hospital to the primary care doctor’s office. And many hospitals in South Jersey have equipped patients with telehealth tools so providers can monitor their vital signs remotely.

Finally, some New Jersey hospitals are making aftercare their business, teaming up with Medicare Accountable Care Organizations (ACOs) to ensure that doctors and nurses follow up on patient progress starting with the first day of discharge. This is more than good medical practice. Readmissions drive up the cost of healthcare. Medicare will share some of the savings that accrue from keeping people out of the hospitals with ACOs.

“We’re just trying to learn more about what the best model is,” said Holmes.

Whatever the NJHA learns will probably be all the good. The association has also been working with agencies on advanced care planning, since New Jersey holds the dubious distinction of having the highest readmission rates for nursing homes in the country.

Loren Bonner is a healthcare reporter based in New York City. She currently writes for a medical trade publication focused on technology and imaging.

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