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Medicare Penalties: What causes hospital readmissions?

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Medicare Penalties: What causes hospital readmissions?

Picture of Jenna Flannigan

Jenna Flannigan is a senior editor at and a freelance writer. This story was produced as a project for the California Health Journalism Fellowship, a program of the USC Annenberg School for Communication and Journalism.

Other stories in this series include:

Medicare penalties take heavier toll on hospitals with the most vulnerable patients

Medicare Penalties: The search for value-based care

Medicare Penalties: Trying to stop hospital infections


Healthline News
Sunday, September 20, 2015

Hospitals are penalized by Medicare for high readmission rates, but does this system really encourage better healthcare?

After leaving the hospital, most patients don’t want to return any time soon.

That’s a goal Medicare shares.

Since 2012, Medicare has penalized hospitals where higher-than-average rates of patients with certain conditions — such as heart failure and pneumonia — return within a month of discharge.

In 2015, hospitals with too many readmissions were docked up to 3 percent from the funds that Medicare would normally pay them for in-patient care.

Created under the Affordable Care Act, the Hospital Readmissions Reduction Program is one of three penalty programs designed to promote quality improvement at acute care hospitals. Readmission penalties push hospitals to discharge patients only when they are well enough to leave — and to provide follow-up services to help them get well.

However, the penalties are taking a heavier toll on hospitals that care for the most vulnerable patients.

Researchers have noted that two types of hospitals are more likely to be penalized under the program: major teaching hospitals, which tend to care for the sickest patients; and safety net hospitals, which care for the poorest.

Jersey City Medical Center, in New Jersey, is both. The hospital was founded as a charitable institution and it continues to serve a high portion of patients who have low incomes.

The hospital has faced readmissions penalties every year since the penalty program began — and it expects to get dinged again in 2016.

“It is frustrating because we’re doing a lot to try to reduce readmissions,” Joseph Scott, FACHE, the hospital’s president and chief executive officer, told Healthline. “Many of the patients we treat are different from a socioeconomic perspective. They don’t necessarily have the same resources that other patients have.”

In winter, for example, Scott noted the hospital sees a spike in readmissions that could be due to low-income patients not having heat at home.

Even with health insurance, people who have low incomes can face difficulties managing their health conditions.

They may not have money for co-payments or transportation to get to medical appointments. And poorer patients also have lower rates of “health literacy,” meaning they’re less likely to know how to seek healthcare, live a healthy lifestyle, or understand health information.

Poverty Linked to Readmission Rates

A growing body of research suggests that poverty, rather than quality of care, is the driving force behind high readmissions at hospitals such as Jersey City Medical Center.

Last year, a study at Henry Ford Hospital in Detroit found that patients from poor neighborhoods were more likely to be readmitted — even when they received the same care protocols as other patients.

Another study, by researchers at Emory University, found that safety net hospitals in California were more likely to face readmissions penalties compared to other hospitals — even though they had lower death rates for heart failure, heart attack, and pneumonia.

“If you only look at the raw mortality rates, you don’t see a big difference between the safety net hospitals and the non-safety hospitals — on what most people would argue is the ultimate outcome,” said Jason Hockenberry, Ph.D., associate professor at Rollins School of Public Health, Emory University, who coauthored the study.

Whether safety net hospitals should be held accountable for high readmissions, Hockenberry said, is a philosophical question: “How much burden do we put on the hospital to manage the social ills that might be driving readmissions?”

Jersey City Medical Center has expended a lot of resources to try to prevent readmissions, Scott said.

One program, called “Wealth From Health,” costs the hospital more than $1 million per year — but it appears to be working.

The program gives reward points to patients who make efforts to manage their conditions, such as picking up medication or scheduling doctor’s appointments. Patients redeem the points for gift cards to local businesses.

“We mainly work with patients who are really struggling,” Jennyfer Morel-Carvajal, R.N., the program’s director, explained to Healthline.

Staff help low-income patients apply for services like free medication, food stamps, or Meals on Wheels.

In one case, Morel-Carvajal said they helped a patient with heart failure apply for Social Security income. The patient was facing eviction, but the extra income meant he could keep his apartment. He also didn’t end up back at the hospital.

Thanks in part to the Wealth From Health program, Jersey City Medical Center cut its readmission penalties from about 2 percent in 2014 to roughly 1 percent for this year.

But Scott said the hospital’s readmission rates still fluctuate. He added that it’s discouraging for the hospital to be penalized year after year when it is working so hard to address the issue.

New Bill Could Help Hospitals

Some of the challenges that safety net hospitals face could change if Medicare adjusts how it calculates readmissions penalties.

This fall, a bipartisan group of senators is pushing forward legislation that would require Medicare to account for patients’ socioeconomic status.

“Hospitals serving disproportionate numbers of disadvantaged, low-income patients have higher rates of readmissions, even when those hospitals provide high-quality, patient-focused care,” Sen. Joseph Manchin, D-West Virginia, who cosponsored the bill, told Healthline via e-mail.

He hopes the legislation will be enacted this year.

In the past, Medicare expressed concerns that accounting for socioeconomic factors would mean accepting a lower standard of care from hospitals that serve poor communities.

Those concerns are unfounded, according to Beth Feldpush, vice president of policy and advocacy at America’s Essential Hospitals, a trade group for safety net hospitals.

“Our hospitals have made it their mission to care for patients that other places don’t want,” Feldpush said.

She finds the idea that safety net hospitals are trying to be “let off the hook” offensive.

Scott said he doesn’t want a two-tiered system with different standards for different hospitals. But he thinks the legislation will make the readmissions reduction program fairer to safety net institutions.

“There’s got to be an adjustment for resources that are unavailable to some patients,” he added.

[This story was originally published by Healthline News.]