Majority of Georgia Hospitals Face Medicare Penalties

usa-dollar-bills-1431130-mAbout two-thirds of Georgia hospitals can expect to be fined for excessive Medicare readmissions, according to a recent article in the Atlanta Journal. According to our Georgia business and healthcare law firm’s research, this places Georgia hospitals well above the national average of 54% of hospitals facing similar fines. The fines are imposed by way of reduced Medicare reimbursement rates for those hospitals with excessive readmissions (readmissions within 30 days of discharge).

Medicare fines imposed as penalties against hospitals with too many patients returning in a month’s time for follow-up treatment, are part of healthcare reform. For the past several years, the federal government has promoted a program to reduce Medicare readmissions, for purposes of improving patient treatment outcomes and saving money. The federal readmission penalty program reflects a strong effort to remove a financial incentive to hospitals for readmitting sick patients. A 2013 article referenced an estimate of The Medicare Payment Advisory Commission (MedPAC), which advises Congress, that 12 percent of Medicare patients may be readmitted for potentially avoidable reasons. “Averting one out of every 10 of those returns could save Medicare $1 billion,” MedPAC says. The readmission penalty program strives to modify hospital behavior by replacing previous financial incentives with financial penalties for avoidable patient readmissions, so that hospital administrators and providers work affirmatively to keep patients healthier and avoid untimely readmissions. Statistics comparing hospital performance as to the readmission reduction program are available on a website maintained by the Centers for Medicare and Medicaid Services (CMS), called “Hospital Compare.”

One news outlet reported that in the fourth year of the federal readmission penalty program, about 2,600 hospitals paid Medicare readmission penalties, resulting in the payment of $420 million to the federal government. “Since the fines began, national readmission rates have dropped, but roughly one of every five Medicare patients sent to the hospital ends up returning within a month.” To minimize or reduce exposure to these federal penalties, of course hospital administrators are taking measures to reduce the likelihood of patient readmissions, such as creating health care teams for focus on high-risk patients during admission and after discharge, and partnering with local clinics and community-based health services where patients can receive follow up treatment without the need for readmission.

Hospital administrators paying readmission penalties feel the financial strain of receiving less income from Medicare for treatment services, as well as the frustration that although the hospitals are singled out for penalties for excessive return visits, not all reasons for patient readmission are within hospital control.  Examples of factors that can impact patient admission outside hospital control are unexpected change of health status, patient failure to comply with follow up care and medication instructions (lower patient income or education can impact this), and prohibitively high costs of medication.

Many hospitals and their lobbyists, along with MedPAC, believe that Congress should consider changing the readmission penalties. “‘Hospitals should not be penalized simply because of the demographic characteristics of their patients,’ Sens. Joe Manchin (D-W.Va.) and Roger Wicker (R-Miss.) wrote in the Journal of the American Medical Association. The senators have introduced a bill to consider socioeconomic factors when calculating the penalties, the KHN article reported. But last Friday, the federal Centers for Medicare & Medicaid Services reiterated that it has no plans to make such changes in the program, noting that some safety-net hospitals have been able to keep their readmission rates low.”

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