Changes in Hospitals’ Treatment of Medicare Patients

For years hospitals have struggled with the readmission rates of their elderly and disabled patients, those on Medicare.  Government spending on Medicare reached nearly $600 billion last year with a quarter of that cost attributed to hospital inpatient services.  That number is projected to grow 4% a year.

Last year, under Medicare’s Affordable Care Act, the federal government began to crackdown on readmissions.  Under the law, beginning October, 2012, hospitals can be penalized up to 1% for having too many Medicare readmissions, meaning their Medicare reimbursement payments will be reduced by that amount.  The reduction will increase to 2% in October, 2013 and then 3% in October, 2015.

The goal of this penalty is to induce hospitals to pay close attention to what happens to patients once they leave the hospital.  The way Medicare has historically reimbursed hospitals has probably contributed to the readmission problem because hospitals get paid a set fee for a patient’s stay.  The shorter the visit, the more profitable it becomes.  In addition, hospitals have been paid for readmissions so there hasn’t been the incentive to really tackle the problem.

Not all medical conditions are tracked for readmissions.  Only heart attack, heart failure and pneumonia patients are tallied right now, but there are plans to expand that list.  So, what has happened nationally and here in New Jersey in the past 9 months, since the implementation of the Affordable Care Act?  We’ll look at that next week.