The Dangers of the Readmission Reduction Act

It is amazing what the Obama administration and its Department of Health and Human Services are willing to do to avoid dealing with the politically difficult areas of America’s health needs. The Affordable Care Act is rightfully impugned for extending health coverage without any reasonable means to keep premiums down, keep quality up, or keep from invading Americans’ constitutional liberties. Likewise on Medicare. As Medicare’s finances, even before the bulk of the baby boom generation have hit peak age for health service consumption, look progressively grimmer, cost-cutting efforts have been focused almost exclusively under the hood. Rather than addressing the real problems of huge enrollment in an insolvent system that is in many cases unprofitable for hospitals, the CMS seeks to push hospitals into doing even more with even less.

There are countless ways in which today’s hospitals turn a profit. In the recent Affordable Care Act, the administration tried to correct one of the most counterproductive ones for patient health. That is hospitals’ tendency toward readmitting patients for complications stemming from a previous medical issue, that could have been avoidable with proper advice or post-acute care. Prior to the introduction of the Readmission Reduction Program, hospitals were allowed to treat each admission as a new service, each garnering its own Medicare reimbursement. The new policy is being introduced gradually, starting with three acute conditions, and gradually spreading to more [Health Affairs].The solution of penalizing hospitals based on their number of readmissions, though, may pose more danger to seniors’ health than the problem of readmission does for Medicare overspending. Past attempts to deal with this issue on a state level seem to offer a more nuanced and individualized approach to reducing readmissions, without the oversights inherent to more centralized policy.

In an effort to reduce costs, officials from the Department of Health and Human Services (HHS), and their contracted metrics organization, the National Quality Forum (NQF) have made initial steps toward cutting down on abuses of the fee-for-service system. In order to save an increasingly insolvent Medicare from collapse, the government is focusing on the politically less risky hospital reimbursement. This could be bad news for healthcare providers, but avoids the perpetual third rail of Medicare eligibility or government rationing of care. Here as always, though, policies that hurt healthcare providers will eventually find their way to patients.

Introduced through the ACA and modifications to the Social Security Act, the new Readmission Reduction Program claims to reduce the potential benefit to a hospital of readmitting Medicare patients. The outward goal of this program is, by reducing hospitals’ reimbursements the more they readmit patients, to make health providers ‘get it right the first time.’ However, this nice idea inevitably falls prey to one of the Affordable Care Act’s greatest weaknesses, its tendency to foist decision making (in this case, how much readmission is ‘excess’) on an increasingly powerful third party. It gives a centralizing body the power to determine standards for an incredibly geographically and economically diverse group of hospitals and patients, to assign ‘expected’ rates of readmission for every type of illness, and rate hospitals accordingly. Besides the sheer arbitrariness of this way of incentivizing, the changes are likely to have a significant adverse effect on the way hospitals treat patients.

A main pretext for readmission reduction in the first place is as a response to hospitals’ alleged overuse of services in order to earn greater revenue in a fee-for-service system. For many local hospitals, according to one physician I spoke with, this readmission is necessitated by overly short hospital stays in an effort to clear more beds so hospitals can make ends meet. Studies such as a recent one by the Dept. of Health and Human Service, indicating rapidly decreasing length of hospital stays over recent years, seem to corroborate this. [link below]

More optimistic from a policymaking perspective, though, are the conclusions of the aforementioned recent state-based study in Health Affairs, which asserts that perhaps the biggest roots of too much readmission lie in a lack of communication between providers. The Massachusetts portion of the study also concluded that insurers’ lack of coverage for post-acute care check-ups leads to more readmissions. This problem provides fertile ground for state-based reform of insurance. Most importantly, though, the study seems to recommend against a one-size-fits-all approach to dealing with readmission. Reform on the state level is held to be far preferable, because the types of existing infrastructure and ‘transitional care’ planning within states vary. Such more nuanced findings seem to cast doubt on the administration’s aim to fix the readmission problem by Medicare fines – the ACA holds healthcare providers exclusively responsible for readmissions, instead of focusing on the local health infrastructure or other local conditions.

With that considered, why wouldn’t hospitals respond to the change in policy by maximizing their Medicare payments through keeping patients away from the hospital, even to the detriment of their health? This question is one of a few that indicate possible unintended consequences of readmission reduction. Another: Why should we assume that hospitals will prudently prevent avoidable readmissions through responsible outpatient services, but will not discourage those who really need it from coming back if they need help? Another possibility is that hospitals in low-income areas, serving patients from poor backgrounds, will not be able to keep up and meet the overall patient health standards imposed by the program. Other providers, dealing with a wealthier patient-base, may become even more incentivized to drop Medicare coverage altogether. Such problems should have been addressed with serious public debate prior to passing the Affordable Care Act, and could have serious consequences in the future.