By Jordan Rau
The Affordable Care Act honed in on hospital readmissions because many health policy experts believe they’re symptomatic of the broad dysfunction of the health care system where providers don’t work with each other as patients pass from one setting, like a hospital, to another, like a primary doctor’s oversight or a nursing home.
New readmissions penalties that begin in October are intended to prod hospitals to start making sure patients get the care they need after they walk out the door. There’s a lot more data now on readmissions, but some of it is quirky so you have to work with it carefully.
Last month, the Centers for Medicare & Medicaid Services (CMS) released the penalty figures for hospitals in the upcoming fiscal year. A total of 2,211 hospitals will lose a piece of their Medicare reimbursement because Medicare has calculated that too many of their patients are readmitted – that’s about two-thirds of all the hospitals Medicare evaluated. (Some, such as certain cancer hospitals, critical access hospitals, and hospitals in Maryland, are exempted from the penalties in the first year of the program.) The most a hospital can lose this year is 1 percent of its base operating diagnosis-related group (DRG) reimbursements for the fiscal year beginning Oct. 1, 2013. Next year the maximum penalties rise to 2 percent and then to 3 percent thereafter.
Here’s where it gets a bit hinky: CMS expressed the penalty as an “adjustment factor,” which is a multiplier CMS will apply to all reimbursements. The lowest adjustment factor, 0.9900, is the maximum penalty and means that a hospital would be reimbursed 99 percent of its Medicare payment. The highest adjustment factor is 1.0000, meaning that a hospital would receive its full reimbursement, or 100 percent.
When Kaiser Health News wrote about the Readmissions Reduction Program, we decided to translate the adjustment factor into a penalty, which is a lot simpler to understand. To do this, we subtracted each adjustment factor from 1. An adjustment factor of 0.9900 thus was converted to a 1.00 percent penalty. An adjustment factor of 1.0000 was converted to a 0.00 percent penalty. If you don’t want to do the math yourself, feel free to use Kaiser Health News’ data, which you can download and sort by hospital name, state, hospital referral region and penalty.
Medicare didn’t publish the specific readmission rates along with the penalties, although it does offer a data file with ratios of actual readmission rates as compared to expected rates given the case mix of patients. To use that file, you need to match up the Medicare provider numbers to the names and address of hospitals, which you can get from the downloadable Hospital Compare data that can be found on Hospital Compare website or Data.Medicare.Gov’s Hospital Compare page.
Hospital Compare also includes the most current readmission rates for the three conditions Medicare looked at in assessing penalties: heart attack, heart failure and pneumonia. The readmissions rates are in the three Hospital Compare Outcomes of Care Measures files (one has individual hospitals, another has state rates and the third has the national rates.) The most recent update was July 19, 2012, covering the same period that CMS looked at in assessing the penalties.
Working with the readmissions rate data is tricky because there’s a wide margin of error in CMS’s estimates. The data files give you estimated readmission rates for the three conditions at each hospital, but they also give you upper and lower estimates. Statistically, the actual rate could be anywhere within that range.
For example: at Casey County Hospital in Liberty, Ky., Medicare estimates the heart failure readmissions rate was 28.2 percent. But for Casey, the lower estimate is 23.3 percent and the upper estimate is 33.7 percent — meaning that the true readmission rate could fall anywhere within that range. Since the national rate (24.7 percent) also falls within that range, we can’t definitively say that Casey County Hospital’s readmissions rate is higher than average. (That’s why Medicare labels it as “average” — along with the rates of about 95 percent of hospitals, and doesn’t publish the estimated rates on Hospital Compare’s web page.)
Beyond the numbers, hospitals are doing a lot of interesting things to try to clamp down on readmission rates. It’s a nice window into many of the most important issues in health care, including cost, access and disparities, and the CMS data allow reporters to write about hospitals with specificity and authority.
