Readmission penalties: Medicare’s ingenious move

A long, long time ago, hospitals existed to admit patients when they were sick, treat them with medicines or surgery and good nursing care, and discharge them after they became well.

Hospital care was at one time a charity, which evolved into a nonprofit service, before it became a very big business.

In olden days, nonprofit hospitals charged patients straightforward fees for their services. Then, when you were just a young whippersnapper or perhaps merely a gleam in your father’s eyes, Medicare and big insurance started collecting premiums from workers and dole it out to hospitals when the workers or retirees needed hospital care.

At that point, hospital fees became confusing. The people who received care didn’t see what the charges were, and the payers didn’t really know how much care was medically necessary or even actually delivered by the increasingly profit-driven hospitals, let alone how much it cost to provide those services.

Insurers demanded deep discounts, and hospitals raised charges. Billing became more and more convoluted and required more hospital documentation and more business staff at both the hospitals and the insurers.

When an aspirin became as expensive as a four-course meal and an overnight hospital stay became more expensive than the monthly lease payment for a Bentley, Medicare thought they had figured out a way to outsmart the hospitals: They started paying a flat rate for each hospital stay, based on the diagnosis. Suddenly, the hospitals were penalized if patients stayed longer or required more procedures or more aspirins than the average case.

That’s when patients no longer got to stay until they were well. People were discharged home at five o’clock on Friday afternoons, only partway cleared of their symptoms, with promises of a visiting nurse the following week and instructions to call their family doctor first thing Monday morning for an appointment.

A few years went by, and Medicare realized patients often ended up back in the hospital shortly after their discharge. Hospitals, of course, got to bill twice for each such episode, and Medicare was obligated to pay the hospitals twice — not what they had expected would happen.

Medicare’s next move came swiftly: They didn’t retreat and say, “We were wrong, keep patients in the hospital until they are well enough to go home.” Instead, they announced they would penalize hospitals if patients with certain hot button diagnoses got readmitted within thirty days of discharge.

This was an ingenious move on Medicare’s part. They are now imposing this penalty not just for patients who were sent home before they were stable, but also for patients who have severe chronic or near-terminal illnesses. For these patients, even the best possible prognosis is multiple admissions or a lengthy stay until they die. Medicare is now forcing the hospitals to spend more money than they receive during each such hospitalization, and, through the penalties, Medicare is giving itself a rebate every time one of these chronically ill patients gets readmitted appropriately, weeks after any shortcomings in the initial care would have been compensated for by the follow-up care or the passage of time.

Today, Medicare is looking outside the hospital wards for a happy ending to this situation. They are starting to spend money (presumably the money they are taking away from the hospitals) paying primary care practices for reaching out to patients immediately after they come home from the hospital in order to identify gaps in care and plan for follow-up visits. We are now becoming more and more involved with the social and economic barriers to health.

So the legend continues to evolve. But, like all legends, it is only partly true: Hospital care doesn’t cure everyone or everything. Primary care practices and their new partners — community care teams and all the other agencies they network with — can only do so much to help patients overcome the obstacles that our society as a whole cannot remedy. And as primary care practices shoulder more and more chronic disease management responsibilities, even with some extra money thrown in, will we be able to also provide the timely urgent medical care our patients need in order to stay out of the emergency department and the hospital?

“A Country Doctor” is a family physician who blogs at A Country Doctor Writes:.

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