Safety Net Hospitals Face Disadvantages Under 30-Day Readmission Program

30-day readmission penalties may unfairly impact safety net hospitals because those facilities tend to care for more patients with socio-economic challenges, according to researchers and health policy analysts.

 

Earlier this year, the National Quality Forum (NQF) issued a draft report where it noted: “failing to adjust performance measures for socio-demographic factors could produce incorrect conclusions about quality.” It announced last week that it plans to undertake a “robust” trial to study the impact of socio-demographic factors on 30-day hospital readmissions. The trial will examine factors such as income, education, race and primary language. Details about the trial duration and specific measures are forthcoming. (“NQF to study socio-demographic factors in 30-day readmissions,” Modern Healthcare, July 24, 2014)

 

Another recent study found race, unemployment  and poverty among the elderly were particularly strong predictors of higher readmission rates. Truven Health Analytics reviewed CMS data from more than 2,225 hospitals that had been penalized for 30-day readmissions through October 2013.

 

And Health Affairs published a study in May that found that patients living in high-poverty neighborhoods in Detroit were 24% more like to be readmitted to the hospital. (The study looked specifically at readmission rates at Henry Ford Health System.)

 

CMS Response

 

CMS maintains its commitment to ensure that hospitals serving disadvantaged populations are not unfairly penalized, but it has found that safety net hospitals can and do perform well on readmissions measures, according to an agency statement. It noted in its statement that association between certain socio-demographic factors and health outcomes can be due, in part, to differences in the quality of the healthcare received. “Adjustment for these factors could confound the results,” the agency added. (“Safety net hospitals face socio-economic disadvantages,” Modern Healthcare, June 7, 2014)

 

Though it acknowledges the complexities of the issue, the CMS contends that hospitals can influence some of the socio-economic factors in their communities. “The scope of activities that fall within a hospital’s control is wider than it may seem, giving hospitals a range of opportunity to influence readmission rates in their community.” (“Safety net hospitals face socio-economic disadvantages,” Modern Healthcare, June 7, 2014)

 

Background

 

As a result of a provision of the Affordable Care Act (ACA) the Centers for Medicare and Medicaid Services (CMS) is required to reduce payments to hospitals with “excess readmissions.” Currently, conditions affected by the 30-day readmission policy are acute myocardial infarction, heart failure and pneumonia. (Readmissions Reduction Program, CMS.gov)

 

 

 

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Medicare Patients at Some Hospitals Get Special Exemptions

Traditionally, Medicare has required that its beneficiaries have at least three days in the hospital to qualify for follow-up nursing home care. The Centers for Medicare and Medicaid Services (CMS) is testing the effectiveness of that requirement by exempting patients at some hospitals participating in certain Affordable Care Act (ACA) pilot projects. These projects have been set up to test ways to improve Medicare service while reducing or stabilizing costs.

 

Medicare has applied the waiver of the three-day rule even to patients kept for observation, which is considered an outpatient service. Until the waiver, no matter how long observation patients stayed, it didn’t count toward Medicare’s requirement for short-term nursing- home coverage.

 

The experiment has a rational basis. Experts have noted that getting patients into skilled-nursing facilities expedites their care and prevents them from clinically declining at home—and potentially another admission. And if patients spend less time in the hospital, it frees up resources for sicker patients and saves money for Medicare (nursing home  or home-health care is less expensive than a hospital stay).

 

One of the payment experiments involves about 600,000 Medicare beneficiaries at more than 170 hospitals participating in Pioneer Accountable Care Organizations. Under this pilot, patients who spend little or no time in the hospital can still qualify for Medicare’s nursing-home benefit.  (Susan Jaffe, Kaiser Health News, “Some seniors win Medicare exemptions for nursing-home coverage in pilot program,” Washington Post, July 20, 2014)

 

CMS has similar experiments underway with hospitals that are part of the bundled payment care initiative.

 

Hospital officials participating in the pilot programs say the waiver should be used conservatively to ensure that patients don’t leave the hospital prematurely, are not kept longer than necessary and enter a nursing home only if they have the potential for short-term rehabilitation. (Susan Jaffe, Kaiser Health News, “Some seniors win Medicare exemptions for nursing-home coverage in pilot program,” Washington Post, July 20, 2014)

 

A Medicare spokesperson said if these tests are successful, the Secretary of Health and Human Services has the authority to expand the tests.

 

Observation Status

 

Medicare’s three-day rule has frustrated seniors who don’t qualify for nursing-home coverage because they were in the hospital under observation rather than being admitted, noted Susan Jaffe from Kaiser Health News in her Washington Post article. The number of observation patients ineligible for Medicare-covered nursing-home care has shot up by 88 percent in just six years, to 1.8 million in 2012, she wrote.

 

As reported in earlier posts here, patients must be in the hospital over two midnights in order to qualify as an inpatient rather than as a patient under observation. The two-midnight rule has generated a great deal of controversy and has been delayed.

 

 

 

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CMS Proposes Adjustment to Two-Midnight Rule

Hospitals may have some leeway with the controversial two-midnight rule. Buried in the Centers for Medicare and Medicaid (CMS) proposed rule to increase outpatient rates (reported here in last week’s newsletter blog) is a plan to alter the two-midnight inpatient admissions rule. The two-midnight rule requires physicians to document that they expect the patient must stay in the hospital over at least two midnights; admission is based on that expectation.

 

CMS proposed amending requirements for physicians to certify to the medical necessity of inpatient services for all inpatient admissions. Certification would be required only for long stays (defined in the proposed rule as 20 days or longer) or cost-outlier cases. CMS would continue to require a written inpatient order as a condition for Medicare payment. (“Medicare Proposes Tweaking Two-Midnight Rule in Pay Update,” HFMA Weekly News, July 10, 2014)

 

The two-midnight rule went into effect in October 2013, but enforcement was partially delayed in April. At that time, CMS directed contract auditors to conduct “probe and educate” audits to assess hospitals’ compliance with the rule.

 

Hospitals have repeatedly expressed their concerns about the two-midnight rule, asserting it places unnecessary burden on both the hospital and the patient. They have noted the lack of clarity in guidance about proper compliance with the new admissions policy, which replaces the use of medical necessity to decide on an inpatient admission.

 

Even if the proposed changes are adopted, they are not likely to satisfy provider concerns, according to the director of healthcare finance policy, strategy and development at the Healthcare Financial Management Association. “CMS needs to suspend the two-midnight rule until it can develop—in conjunction with providers—a workable, budget-neutral, short-stay payment policy that pays providers appropriately for the care provided to patients. The new short-stay policy should be designed to work with the two-midnight rule to address the outstanding operational issues that providers have with the two-midnight rule.” (“Medicare Proposes Tweaking Two-Midnight Rule in Pay Update,” HFMA Weekly News, July 10, 2014)

 

Moody’s Investors Service noted in an analysis of the rule in March that the two-midnight rule could reduce hospital revenue by up to $4,000 per case.

 

 

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CMS Proposes Outpatient Rate Increases for 2015

With all the news about declining payments to hospitals, gratifying news surfaced last week: the Centers for Medicare and Medicaid Services (CMS) wants to raise Medicare outpatient payments to hospitals by 2.1 percent in 2015. Ambulatory surgery center payments would increase by 1.2 percent. The proposed increases are higher than those finalized by CMS for 2014.

 

If the proposed rule goes into effect, Medicare would pay hospitals $56.5 billion under the policy in 2015, an increase of $5.2 billion over 2014. Ambulatory surgery centers would receive $4.1 billion, an increase of $243 million compared to 2014, according to the proposed rule.

 

Hospitals would still be required to meet outpatient quality reporting requirements. Those that fail to meet those requirements would continue to have their Medicare payments reduced by 2 percent. However, CMS also proposed removing three quality measures from the reporting program: emergency department heart attack patients who receive aspirin within 24 hours and two metrics involving administering antibiotic prophylaxis to surgery patients. (“CMS plans to raise outpatient rates, bundle payments for ancillary services,” Modern Healthcare A.M., July 7, 2014)

 

CMS also wants to pay a bundled rate for ancillary services that have an average cost of $100 or less, according to the proposed rule. Preventive services, psychiatric services and drug administration-related services would be excluded from this bundled rate.

 

CMS has been pushing for “comprehensive ambulatory payment classifications,” which would result in a single Medicare payment to providers instead of several separate charges. For 2015, CMS proposed 28 comprehensive ambulatory payment classifications. (“CMS plans to raise outpatient rates, bundle payments for ancillary services,” Modern Healthcare A.M., July 7, 2014)

 

The rule would affect more than 4,000 hospitals and 5,300 ambulatory surgery centers. Comments on the proposed rule will be accepted through September 2 and a final rule is expected around November 1.

 

 

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