Rehospitalizations Hurt Medicare

ROBERT POZEN AND CATHY SCHOEN
How rehospitalizations are hurting Medicare

By Robert Pozen and Cathy Schoen | August 14, 2008

GETTING Medicare costs under control is no easy job. Congress recently overrode a scheduled 11 percent cut in Medicare's physician fees by freezing them for the rest of 2008 with a slight raise in 2009. But the program's finances will continue to worsen as baby boomers retire. Avoiding deep cuts in physician fees from 2010 onward will require a $20 billion fix every year for the following decade.

But there is a straightforward way to pay for half of this fix. Medicare spends vast sums on hospital care for patients readmitted within 30 days of their previous stay in a hospital. These readmissions are often avoidable. And if Congress focuses on reducing the need for rehospitalization in areas where the practice is most common, Medicare could save many billions of dollars.

The percentage of Medicare patients readmitted to the hospital within 30 days averaged 18 percent in 2005 - based on an analysis by the Commonwealth Fund of 30 prevalent medical conditions. But the readmission rate varies from area to area. Near the low end, 12 percent of hospitalized patients were readmitted in San Jose and St. Paul; near the high end, the rate was 22 percent for Las Vegas and St Louis. Boston's rehospitalization rate, 19 percent, was 1 percentage point greater than the national average.

According to a Medicare Payment Advisory Commission study, 75 percent of all 30-day hospital readmissions in Medicare in 2005 were potentially preventable - or 13 percent of total admissions. This represents a potential savings to Medicare of $12 billion in one year. To realize these savings, Congress should focus on three objectives: decreasing complications during hospital stays, improving patient communications in the discharge process, and monitoring patients after discharge.

Higher rates of hospital readmissions are associated with infections and other complications acquired by patients during hospital stays. Under traditional procedures, Medicare can pay a higher rate for hospital stays involving complications, or can pay for readmissions due to complications or medical errors. In a pilot project in which hospitals were paid bonuses and held accountable for better outcomes, quality improved and readmission rates fell substantially.

Another main cause of preventable readmissions is poor communication with patients in the discharge process, especially regarding medications. One hospital cut readmission rates by giving cardiovascular patients a checklist of indications for five medications to prevent complications. Some hospitals have had success providing patients at discharge with a "transition coach" to review their medication needs, supply a copy of their health records, and encourage timely follow-ups.

The most important cause of rehospitalization is insufficient monitoring of patients after discharge. For example, Hackensack University Medical Center asked nurses to telephone cardiac patients after discharge to check on health indicators like weight, swelling, and shortness of breath. These calls led to a 78 percent drop in the center's readmission rate for such patients. Similarly, studies have found that properly timed follow-up visits to doctors will reduce rehospitalization rates. These studies suggest that the optimal time for such visits is 5 to 10 days after discharge. However, another study found that at most one-third of physicians received complete discharge summaries at the first post-discharge visit.

Unfortunately, Medicare does not pay hospitals for most mentoring or monitoring procedures during or after patient discharge. Medicare should bundle extra payments for these procedures as part of the initial hospital stay - and claw back the additional payment for any patient who is readmitted to any hospital within 30 days.

Medicare needs to create the right incentives. Now, if a hospital succeeds in reducing readmissions, it will lose revenues because Medicare will be paying for fewer second stays. By contrast, if a hospital increases its readmission rate, it will receive more revenues because Medicare will pay for both hospital stays.

Congress should require hospitals to publicly disclose their readmission rates. Furthermore, any hospital above the national average for readmissions should receive a lower rate from Medicare for the second hospital stay. Any hospital with a lower readmission rate than the national average should receive a bonus payment from Medicare for the first hospital stay.

With the right incentives in place, Medicare should generate over $100 billion in savings over the next decade by bringing the high-cost areas down to the national average on 30-day rehospitalizations.

Boston Globe