The Centers for Medicare and Medicaid Services will withhold $420 million in Medicare payments to nearly 2,600 hospitals in fiscal year 2016.
The number of affected hospitals is down marginally from this year, and 30-day readmission rates nationwide have declined since CMS instituted the penalties in 2012, as called for in the Affordable Care Act. Readmissions hovered around 19 percent of all hospital admissions from 2007 to 2011, then dropped to 18.5 percent in 2012 and dipped below 18 percent in 2013, according to CMS.
That rate is too high, according to Dan Hogan, CEO of Medalogix, a fledgling healthcare analytics firm based in Nashville, Tenn., in part because the incentive to coordinate and provide post-discharge care isn’t all that great.
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When CMS first started penalizing hospitals in 2012 for preventable readmissions, the payment adjustment was no more than 1 percent. It has since grown to a maximum of 3 percent, but that still may not be much of a hammer. “Even today, a 3 percent penalty won’t deter large hospitals,” Hogan told MedCity News.
CMS has announced that it will base 95 percent of all Medicare fee-for-service payments on outcomes or efficiency by 2018. That, along with similar initiatives among private payers, should make a difference. “I think everybody is coming to the realization that alternative payment models will be the way of the world in the next five years,” Hogan said.
Another thing that could lower readmissions, according to Hogan, is greater use of palliative and hospice care, which saves money and improves quality of life compared to long-term hospitalization for people who are dying. In 2013, Medicare spent $170 billion on care in the last six months of life, or 28 percent of total Medicare spending of $554 billion.
For this reason, four-year-old Medalogix has invested in analytics of mortality rates related to readmissions. “When we started, we were just delivering risk stratification,” Hogan said. Recently, the company has hired more clinicians to manage patients. Medalogix also is pushing clinical decision support, which Hogan said is underutilized in healthcare in general and “almost nonexistent in home health.”
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The company’s Medalogix Touch analytics engine for home health agencies pulls from electronic health records to identify post-acute patients at the highest risk of hospital readmission. Medalogix reported in April that home health providers using this technology saw transfers to inpatient care fall by 20.1 percent in seven months.
“What we’re seeing is the evolution of the electronic medical record,” Hogan said. EMRs started out as a mechanism for hospitals to capture charges and bill insurance companies. Soon, according to Hogan, EMRs will be integrating clinical decision support, particularly in post-acute care.