Executive Summary
Despite the huge focus on reducing 30-day readmission rates, a majority of hospitals are still getting penalized. But, in many cases, the penalties may be too small to justify big expenditures for new programs and staff.
- Case management leaders should work with the hospital administration to redesign the way that care is delivered in order to succeed as the healthcare market changes.
- Hospitals need to have a handle on their own readmission data including number of patients readmitted within 7, 14, and 30 days, the top 10 conditions of readmitted patients, and where readmitted patients went after their initial discharge.
- Case managers should take the time to thoroughly assess patients for healthcare literacy, social issues, family support, and educate them on their conditions, their prognosis, and palliative and hospice care if appropriate.
It’s been five years since the Patient Protection and Affordable Care Act of 2010 mandated a program to reduce readmissions, and four years since the Centers for Medicare & Medicaid Services announced that it would penalize hospitals for excess readmissions.
But despite the tremendous focus on reducing readmission rates, a majority of U.S. hospitals are receiving readmission penalties totaling $420 million in the third year of the program. The penalties for this year went into effect Oct. 1 and are applied to all Medicare discharges. Hospitals can lose up to 3% of their Medicare reimbursement if they have higher than average 30-day readmissions for patients with heart failure, heart attack, pneumonia, elective hip or knee replacement, and an acute exacerbation of chronic obstructive pulmonary disease.
According to an analysis by Kaiser Health News, the average penalty and the number of hospitals penalized are less this year than in the past and readmission rates have dropped, but one in five Medicare patients are still being readmitted within a month.1
One reason hospitals still experience so many readmissions is that the penalties are not large enough to have a big impact on the bottom line, says Brian Pisarsky, RN, MHA, ACM, associate director at Berkeley Research Group, with headquarters in Emeryville, CA.
“For some hospitals, right now, the penalties aren’t high enough to justify the cost of adding staff or taking other measures to reduce readmissions,” Pisarsky says.
The average penalty is less than 1% of the Medicare payment, which makes it difficult for hospital administrators to justify spending money to improve the hospital’s performance, says Tawnya Bosko, DHA, MS, MHA, MSHL, vice president of The Camden Group, a national healthcare consulting firm with offices in Chicago.
However, Pisarsky points out that in 2017, penalties for the hospital-acquired condition, value-based purchasing, and readmission reduction programs could total 6% of the hospital’s base operating pay from Medicare if a hospital receives the maximum penalty in all three programs.
“This could be a wake-up call for hospitals. Organizations with a large Medicare population could see their operating margin wiped out by such penalties,” he says.
All the penalties haven’t kicked in and some hospitals are experiencing modest penalties, says Toni Cesta, RN, PhD, FAAN, partner and consultant in New York-based Case Management Concepts.
The data CMS uses to calculate the penalties is based on readmissions in the past, so hospitals that have initiated successful programs are being penalized for what happened before they had the new processes in place, Cesta says.
For instance, the data collection period for 2017 ended on June 30 of this year, Bosko adds. This means that nothing that hospitals do now can impact their readmission penalties that begin on Oct. 1, 2016. CMS has added a new diagnosis — coronary artery bypass graft — to the readmission reduction program for fiscal 2017, Bosko points out.
In addition, the program was designed so penalties are judged against a national average so that there will always be some hospitals that are above average and some hospitals will always be penalized, says Amy Boutwell, MD, MPP, president of Lexington, MA-based Collaborative Healthcare Strategies, and one of the original co-developers of The Institute for Healthcare Improvement’s STAAR (State Action on Avoidable Rehospitalizations) initiative.
Most hospitals are making efforts to reduce readmissions, but many have not worked hard enough yet, Boutwell says. “Some hospitals have simply made a lukewarm, ineffective response to the mandate to reduce admission. They have not taken a high-level strategic approach and mobilized resources to do what has to be done,” she says.
“The rules are changing and to succeed, hospitals need to understand the rules,” Boutwell says.
Healthcare organizations are not connecting the dots between having a robust case management department and avoiding penalties from CMS, Cesta says. “They aren’t taking the readmissions penalties into account when they develop their budget and putting the resources into case management. As a result, they are losing reimbursement,” Cesta adds.
Hospital administration may look at the amount of this year’s penalties and conclude that it’s not big enough to justify hiring staff, Boutwell says. They are not looking at the fact that as penalties have increased, more conditions have been added to the program and even more will be added in the future.
“Even if hospitals aren’t getting big penalties this year, they need to take a longer view and look at all readmissions as undesirable. Then add more case management staff as well as other staff to extend the work of the case manager,” she says.
The business case for more staff is not black and white, Boutwell says.
“The smarter business perspective is to think about what you do this year can pay off over the next five years as the market changes,” she adds.
At this time, hospitals are still getting paid for the majority of readmissions but that is likely to change, Cesta says. “Hospitals need to start now to prepare for something that is coming down the road. If they don’t start preparing now, the bottom line will take a big hit when the penalties kick in,” Cesta says.
“Hospitals need to take action now to protect revenue in 2018 and beyond,” Bosko says. She advises hospitals to determine the diagnoses that are readmitted most frequently and take steps to reduce them. Keep in mind that CMS has been adding diagnoses every other year from conditions included in the Hospital Inpatient Quality Reporting Program, she adds.
“As the U.S. healthcare system continues its transition from volume to value, readmission penalties appear to be here to stay. Deploying proactive and effective strategies for improvement is necessary for success in today’s healthcare marketplace,” she says. (For a look at how one hospital avoided readmissions for three years in a row, see related article in this issue.)
Case management directors need to start by getting the C-suite’s support for initiating changes, says Mindy Owen, RN, CRRN, CCM, principal owner of Phoenix Healthcare Associates in Coral Springs, FL, and senior consultant for the Center for Case Management.
“The hospital administration has got to be willing to invest the resources to build a strong case management program. And they have to understand that they are paying for something up front so that they can reap the rewards on the back end,” she says.
In the past, healthcare leaders tended to think of hospital case managers as a necessary evil required for Medicare participation, but now case managers are being recognized as making the difference between being in the black or being in the red, Pisarsky says.
“Case managers used to be invisible. If they were assisting with discharge planning and making sure that patients met medical necessity criteria, everybody was happy. Now with additional mandates from CMS, and as other payers are jumping on the readmission-reduction bandwagon, hospital systems are beginning to see this as an imperative to get things right every time for every patient and the care management team is at the forefront of these efforts,” he says.
The problem hospitals face with all of CMS’ quality initiatives is that the healthcare infrastructure was built for volume and not value, Pisarsky points out. “We have to make a fundamental change in the day-to-day work of case managers. It’s no longer just utilization review and discharge planning. Care across the continuum is what needs to happen and it takes a different approach from what we’ve done in the past,” he says.
Hospitals are trying a lot of ways to follow patients after discharge, but in many cases the resources aren’t there, Cesta says.
“People talk a lot about post-acute relationships, but the average case manager who is carrying a heavy caseload doesn’t have time to give this a lot of thought. Until hospitals have appropriate staff, the case managers are not going to think that far out. Good handoffs are time-consuming and case managers don’t have that kind of time,” Cesta says.
Case management programs tend to be episodic and focus primarily on patients while they are in the hospital and as they transition into the community but with minimal follow-up, says Bridget Gulotta, RN, senior consultant for The Camden Group, a Los Angeles-based healthcare consulting firm. Often, there is not much support in the community, she adds.
“We really have to redesign the way we deliver care. Patients receive the bulk of their care in the outpatient setting. Hospital case managers need to be able to conduct a warm handoff and collaborate with their counterparts in the next level of care, whether it’s a primary care physician, a specialist, a skilled nursing facility, or a home care provider,” she says.
Some organizations believe that adding a few superficial processes will solve the problem of readmissions, but that’s not the case. A multi-layered approach is necessary, Pisarsky says.
For instance, some hospitals have three or four nurses acting as coaches for hundreds of at-risk patients, and in some cases, visiting the patients in their home and routinely following up with them. “More patients are being identified daily as being at risk for readmission and CMS intends to add more penalty diagnoses. The number of identified patients continues to spiral and those three or four busy coaching nurses won’t be able to keep up with the demand,” he says.
“The concern is how many coaches hospitals will need to keep up. Patient coaching is great, but coaching alone will not solve the problem. A multi-layered approach with adequate staffing along the entire continuum has been show to impact readmission rates,” he adds.
Hospitals should develop a readmission task force that analyzes hospital data and determines the key diagnoses on which the clinical team should focus to prevent readmissions, Owen suggests.
In some hospitals, the initiative is part of the quality committee, Owen adds. Regardless of which committee analyzes the data, case managers should be a part of it, she says.
She suggests sharing data from the quality committee with the physicians so they can see that how they practice and how they document really matters to the fiscal sustainability of the organization, she adds.
“Physicians must understand their role in making sure transitions are safe and effective and as cost efficient as possible, and how it will benefit the patient and the hospital’s bottom line,” she says.
To make the changes needed to avoid or mitigate penalties, hospitals need to have command of their own data and many do not, Boutwell says.
Some hospitals don’t track readmission rates at all, Boutwell says. Others track only disease-specific readmissions. Others may use national or regional benchmarks and assume that they apply to their hospital, but hospital staff can’t assume that their readmission statistics would be the same as those of other hospitals, Boutwell points out. Hospitals next door to each other could have different patient populations and a different set of conditions to focus on, she adds.
“When I consult with a hospital on reducing readmissions, the first questions I ask are how many Medicare patients were readmitted and how many were Medicaid beneficiaries. How many came back in seven days? How many in 14 days? These are basic admissions statistics and what I’ve learned from working with hospitals is that they don’t have this information at their fingertips,” she says.
Boutwell recommends that hospitals start by tracking their top 10 diagnoses that lead to readmissions. “Hospitals are always surprised by this. It’s not just heart failure patients who are readmitted,” she says.
Determine your readmissions by discharge destination. “A lot of hospitals have focused on patients transitioning from the hospital to home because they thought that is where the big problems are. But readmission rates from home health agencies and skilled nursing facilities are very high,” Boutwell says.
Compare the readmissions rates for patients discharged to home to those who went home with home health services and those who went to a skilled nursing facility. Identify where there are opportunities for improvement and work with the providers on ways to improve transitions and how to keep patients from coming back to the hospital, she says.
REFERENCE
- Kaiser Health Network. Half of Nation’s Hospitals Fail Again to Escape Medicare’s Readmission Penalties. August 3, 2015. http://khn.org/news/half-of-nations-hospitals-fail-again-to-escape-medicares-readmission-penalties/.
Despite the huge focus on reducing 30-day readmission rates, a majority of hospitals are still getting penalized.
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