Only Innovation Will Reduce Readmissions

Body, Mind, Soul, And Spirit ConceptAs reported on yesterday in Kaiser Health News, over 2,600 US hospitals – the most to date – will have their average Medicare reimbursement rates reduced over the period October 1, 2014 through September 30, 2015, due to the Hospital Readmissions Reduction Program. The overall reduction is projected to realize $428 million in savings to Medicare – i.e., translated as lost revenue to hospitals.

For anyone still unfamiliar with the reductions program, in a nutshell it is an attempt to use public policy to achieve more efficient alignment between patent care requirements and the overall cost of care provided – particularly to the extent costs are driven by care setting. Or, more pragmatically, Medicare does not want to pay the comparatively higher overhead costs associated with acute care settings if a patient’s readmission to that setting could have been avoided.

Of course, there’s the rub that will eventually have to be reconciled if the program is to remain: can we really objectively and often times arbitrarily determine what’s avoidable? The primary reason this is so difficult is because of the myriad environmental considerations that impact patient recovery and sustainable treatment away from the acute care setting. Where someone lives (housing), their neighborhood, their human support network, access to transportation, cognitive state and capacity for engagement, recognition of comorbid considerations such as anxiety and depression – the list goes on.

Hospitals and their clinical teams are taking the readmission program seriously. A three-percent reduction in revenue from your largest source when you are already struggling with narrow margins has that effect. New efforts to forge relationships with post-acute/long-term care providers, patient communication strategies, multi-provider think tanks, post-discharge follow-up programs, transitional care planning, utilization of telehealth and telemonitoring technology, targeted disease intervention – these primarily represent the extension, or repurposing, of core clinical capabilities.

Not to discount the importance of these initiatives, but by and large there is nothing all that innovative here when compared to the fundamental nature of the problem we are trying to solve. And there is a limited ability to address the fundamental challenge driving hospital readmissions: the environmental obstacles shared above. Worse yet, these tactical approaches fail to embrace the holistic reality that is patient treatment and recovery.

That’s where innovation efforts have to be focused: not on keeping someone out of the hospital but on removing the environmental obstacles that drive readmissions as a consequence of undesirable recovery and sustainability. As Toby Cosgrove, President and CEO of the Cleveland Clinic wrote earlier this week, “as my friend Professor Michael Porter of Harvard Business School says, innovation is the only solution to … long term issues faced by American healthcare.”

And it will ultimately be the only solution to lowering hospital readmissions.

  ~ Sparky

Accountability Without Responsibility?

PHO-10Sep15-267645Earlier this week Rep. Jim Renacci (R-Ohio), together with a bipartisan group of 25 other House members introduced H.R. 4188, the Establishing Beneficiary Equity in the Hospital Readmission Program Act. Text of the bill is not available through the Library of Congress yet, but from what has been discussed publicly its purpose is to provide hospitals with financial relief from Section 3025 of the Affordable Care Act: Hospital Readmissions Reduction Program.

The hospital readmissions program has received a great deal of discussion, but with implementation beginning last year hospitals that exceeded the excess readmission ratio in their 2013 fiscal years are now seeing reductions in Medicare reimbursement of up to 1%. Unless those hospitals are able to improve that ratio the potential payment reduction could increase to 2% next year and 3% the year after. For an organization already struggling with tight margins a 3% reduction in revenue that represents approximately 20% of total revenue without any commensurate reduction in costs has serious clinical and operational ramifications.

Previous PolicyPub posts on Hospital Readmissions:

The Trouble With Avoidable Readmissions ~ February 2012
Is Focus on Hospital Readmissions Misguided ~ May 2012
Update: Hospital Readmissions ~ February 2013

Not unsurprisingly, H.R. 4188 has already garnered rather broad industry support from the likes of hospitals and the trade associations representing them – i.e., anyone standing to benefit from more revenue as opposed to less.

As I understand it H.R. 4188 doesn’t provide blanket relief for hospitals affected by the readmissions program. Rather it is intended to recognize and adjust for the penalty impact of caring for patients who are financially unable to afford post-acute housing, services and care in a manner that would otherwise facilitate their ability to avoid a readmission. And the logic goes that if all those altruistic hospitals are unselfishly willing to open their doors to care for the poor, well then penalizing them for that willingness is grossly unfair.

But hold on. The readmissions reduction program wasn’t thought of, planned or designed in a vacuum. The challenges associated with securing and providing affordable post-acute housing, support services and care has been a widely recognized problem that predates Medicare and Medicaid. The purpose of the program is to provide incentives for hospitals to take a more active and holistic approach to managing patient care post-discharge – regardless of the patient’s wealth and income. No penalties – no incentives.

The program wasn’t designed to change the type of patient cared for – but the manner and scope of patient responsibility. What hospitals have argued in return is that they are being held accountable for a scope of services and care for which they have not historically been responsible (accountability without responsibility). CMS’s de facto response is pretty straight forward: then don’t accept Medicare anymore. If hospitals want to continue benefitting from taxpayer dollars, they will have to help find ways to reduce the costs of healthcare subsidized by those taxes – and not just the costs that manifest inside their walls (or more properly, their historical sphere of influence).

We are just now beginning to see the benefits of the readmissions program’s incentives manifested in efforts of hospitals across the country to integrate with post-acute/long-term care provider organizations. That has required their gaining a better understanding of PA/LTC patient care models, understanding the challenging dynamics of care transitioning and working with physicians to better appreciate the post-acute challenges they have wrestled with for generations.

So now that hospitals are finally taking notice of the potential cost and quality benefits of post-acute care integration we want to tell them “ah, never mind – it’s too hard?” Really?