CMS: 223 Calif. Hospitals To See Lower Medicare Reimbursements

Wed Oct 8 20:14:13 PDT 2014

October 3, 2014

California Healthline

California facilities are among the 2,610 hospitals facing Medicare reimbursement reductions in fiscal year 2015 because they failed to curb the number of patients who were readmitted within 30 days of discharge, according to federal records released Wednesday,Kaiser Health News reports (Rau [1], Kaiser Health News, 10/2).

Background

The payment reductions are part of the third phase of the Hospital Readmissions Reductions Program (Rau [2], Kaiser Health News, 10/2). Under the Hospital Readmissions Reductions Program, which was implemented in October 2012, CMS in the first year withheld up to 1% of regular reimbursements for hospitals that have too many patient readmissions within 30 days of discharge because of three medical conditions: heart attack, heart failure and pneumonia (California Healthline, 8/5/13). The penalty increased to a maximum of 2% in 2013.

For the latest round of penalties, CMS increased the maximum fine to 3% and assessed two additional conditions: chronic lung problems and elective hip and knee surgery. Specifically, CMS examined the readmission rates for all five conditions that occurred between July 1, 2010, and June 30, 2013. About 1,400 hospitals were excluded from the program, including certain critical access hospitals and cancer hospitals (Rau [2], Kaiser Health News, 10/2).

Details of Readmissions, Penalties

About 18% of Medicare patients were readmitted last year, which is lower than in previous years. However, the federal government paid about $26 billion in health care costs for those individuals (Ferris, The Hill, 10/2). According to Kaiser Health News, health care experts believe about $17 billion of that came from potentially avoidable readmissions.

CMS in the latest round of fines penalized roughly three-quarters of hospitals subject to the program (Rau [1], Kaiser Health News, 10/2). Specifically, CMS penalized about 400 more hospitals than in prior years, up from 2,225 in FY 2014 and 2,217 in FY2013 (Rice, Modern Healthcare, 10/2).

Of hospitals included in the program:

• 39 will be fined the maximum penalty of 3%;
• 496 will lose 1% or more in Medicare reimbursements (Rau [1], Kaiser Health News, 10/2); and
• 769 will not experience any reduction related to readmission rates (Modern Healthcare, 10/2).

In California, a total of 223 hospitals will be penalized under the program, with the average penalty at 0.41% (Kaiser Health News, 10/2).

Overall, the penalized hospitals will miss out on an estimated $428 million in reimbursements. CMS penalized hospitals an average of 0.63% in this round, up from 0.38% in 2014, KHN reports (Rau [1], Kaiser Health News, 10/2).

Bryan Sloane
Deputy Editor, CAL/AAEM News Service

Brian Potts MD, MBA
Managing Editor, CAL/AAEM News Service

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