You’ll rarely hear “hope to see you soon” in an acute care setting. Clinicians are generally motivated to help their patients stay as healthy as possible – and avoid readmissions.

But as new delivery and payment models emerge that tie reimbursements to medical outcomes, hospitals have another motivation. They are receiving a stern warning from healthcare payers, Medicare in particular: High readmission rates for ostensibly preventable conditions could cost you.

Rules outlined by the Patient Protection and Affordable Care Act (PPACA) require the Centers for Medicare and Medicaid Services (CMS) to adjust payments to hospitals with higher-than-average readmits beginning Oct. 1, 2012. On Aug. 1, 2012, CMS released its Inpatient Prospective Payment System (IPPS) final rule, including the initial framework for the Hospital Readmission Reduction Program (HRRP). HRRP, unlike the inpatient quality reporting program currently in place, could result in reduced payments to hospitals with high readmission rates for certain conditions.

The Medicare Payment Advisory Commission (MedPAC) reported in 2005 that about 11 percent of hospital stays resulted in readmission within 15 days of discharge and 18 percent within 30 days, accounting for $17 billion in spending.

Examining data from 10.7 million hospital discharges of Medicare patients, the Dartmouth Institute for Health Policy and Clinical Practice found that readmissions following surgery in 2009 were at about the same level as in 2004.

Payment adjustments impact revenue

Under the new rules, the program will begin with three applicable conditions: acute myocardial infarction (AMI), heart failure and pneumonia. Hospitals with above-average 30-day readmission rates for patients with these three conditions could lose up to 1 percent of their Medicare reimbursements. And that’s just the beginning: The payment reduction is slated to rise to a 3 percent risk-adjusted maximum by 2015 and cover more conditions, including many related to vascular surgeries. According to a 2010 Thomson Reuters study, a hospital with 250 heart failure patients and a readmission rate 20 percent higher than the national average should expect to see a Medicare payment reduction of $250,000.

Hospitals that serve higher numbers of low-income and indigent patients are at greater risk of payment reductions. Unfortunately, this anomaly isn’t addressed in the CMS regulation. Nor does the agency plan to reward high-performing hospitals, which has some pundits questioning how effective the new rules will be.

Assessing the problem

Experts point to a variety of systemic failures that lead to high readmission rates, including the reality that many patients don’t adequately follow their care plans. In fact, the Dartmouth Atlas Project found that more than half of discharged Medicare patients fail to visit their primary care physician within the typically recommended timeframe of two weeks – a situation that can be improved with better ongoing care coordination efforts by providers, according to Dr. David Goodman, lead author of the Dartmouth study.

Poor care handoffs, which can include a lack of standardized procedures guiding the transition process, are also a source of blame for high readmission rates. Addressing the problem of sentinel events, for example, the Joint Commission reported in 2005 that 70 percent of these unintended occurrences were caused by communication failures, with at least half of the problems occurring during care handoffs.

It’s well known that healthcare providers often lack complete or accurate patient medication histories. Without adequate medication data, patients are at increased risk of drug-related errors.

Today’s clinicians acknowledge they must do a better job of ensuring their patients aren’t soon readmitted to the hospital. And they are looking to solutions – such as medication reconciliation technologies, utilization and case management tools, population health and disease management efforts, and advanced IT analytics – to assist their efforts.

Applying effective solutions

Medication reconciliation solutions, for example, applied at key points in the care continuum, such as during care handoffs when patients are most likely to receive new medications or alternative doses, are playing a bigger role in the prevention of readmissions. Among the solutions, clinicians increasingly are utilizing claims-based drug history information to intelligently match patients with the medications they have received over time and at different locations. When combined with health information-exchange technologies and e-prescribing modules, clinicians have a powerful tool for preventing potential drug-to-drug or drug-to-allergy interactions.

Additionally, utilization management is being used effectively to lower readmission rates. On a daily basis, caregivers must assess the most appropriate course of treatment for a patient’s set of circumstances. Effective utilization management adds to the ongoing evolution of team-based healthcare by delivering intelligence to groups of providers and health plans in a way that allows them to collaborate on medical decisions. Enhanced by technologies that provide utilization alerts, either at the point of care or shortly thereafter, hospitals can start discharge planning and begin utilization reviews much sooner.

Population health and disease management efforts are also coming to the forefront as a preventive measure against readmission. Disease management attempts to engage patients with information about their chronic condition and encourage them to make lifestyle and behavior changes, often through a variety of health coaching programs. With relevant data aggregated from multiple points along the care continuum and delivered to patient, provider or health plan, all constituents are empowered to make important healthcare decisions that will prevent return trips to the hospital.

Of course, with the prospect of payment reductions for preventable readmissions, caregivers must also effectively use IT to help monitor potential impacts on the revenue cycle. Analyzing claims data, for example, allows an organization to track readmission rates hospital-wide to identify troubling variations. This information could be used to pinpoint root causes and inspire physician performance improvements. And with claims data analysis tools, hospitals have the ability to model the financial impacts of re-hospitalizations and continually make the necessary adjustments.

Preparation benefits patients, revenue

In addition to the CMS plan to reduce payments to organizations for disproportionately high readmission rates, providers are being further incentivized to step up re-hospitalization prevention efforts, given the prospects of an emerging delivery system driven by pay-for-performance reimbursement models.

Granted, high readmission rates are not always – or at least easily – solved. But hospitals that don’t make the proper adjustments today will face significant revenue cycle challenges in the future. Hospitals can take a proactive approach to reducing re-hospitalizations through an effective combination of medication reconciliation, utilization and disease management programs, and revenue cycle analytics. Many are already experiencing the cost and quality benefits of such measures. HMT

About the Author

Carla Engle is a director of product management at Emdeon and a former contributing editor at RACMonitor. For more on Emdeon:

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