Hospitals that reduce readmissions still hit with penalties

Even if a hospital succeeds in cutting readmissions, it could still experience steep financial penalties from the Centers for Medicare & Medicaid Services, according to a new report by the Altarum Institute's Center for Elder Care and Advanced Illness.

The study points out a fundamental flaw in CMS's equation for determining how hospitals fare in the program: dividing the number of readmissions by the number of overall discharges from each hospital. This formula means good practices reduce discharges at nearly the same rate as admissions, making it difficult to budge the needle in this area.

San Diego County's hospitals were able to cut readmissions per 1,000 patients by more than 15 percent between 2010 and 2013, but the relative readmission rate appears to have dropped by only 4.3 percent, according to Altarum's data. And partly as a result, 10 of 14 hospitals in San Diego County are going to be penalized by CMS next year. In San Francisco County, where the readmission rate is even lower than San Diego's, eight out of its 10 hospitals will be penalized, according to Altarum.

"Some hospitals and communities are creating the standard for best practices, and the rest of the country should be learning from them. Instead, the measure that Medicare uses makes them appear to make little progress and most of their hospitals are being penalized. Medicare is knowingly using a measure that does not reliably indicate progress or failure," said Joanne Lynn, the Altarum Center's director, in a statement.

Readmissions of inpatients within 30 days of discharge has been a huge fiscal issue for the U.S. healthcare system, costing it more than $41 billion during the first 11 months in 2011, according to data from the Agency for Health Care Quality and Research. About two-thirds of U.S. hospitals have been hit with readmissions penalties.

To learn more:
- read the Altarum statement
- check out the Altarum data