The Truven Health Blog

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The CMS Readmission Program — Plus or Minus for Seniors and Hospitals?

Thursday, February 19, 2015

Michael Taylor photoAs CMS expands its 30-day readmission penalty program, more financial pressure is placed on hospitals and seniors. This program has driven hospitals to increase the use of outpatient observation services. Inpatient stays are paid by Medicare Part A, but outpatient observation is paid by Medicare Part B which covers only 80 percent of the bill. Here is what is happening in some markets. Let’s say a person is admitted to a hospital for heart failure. The length of stay might be 3-4 days and then the patient is discharged. If that same person has a recurrence of heart failure within 30 days of the initial discharge, the hospital will not be paid for that episode. However, if the 2nd episode is handled under outpatient observation status, the hospital is paid, but the patient (who probably didn’t realize he/she was not admitted to the hospital) receives a bill for 20 percent of the charges. 

This is an issue, but the larger issue is how the law assigns all the risk to the hospital. Perhaps the thought was that poor inpatient care is the cause for readmissions, but the reality is that many other factors not under the hospital's control can drive readmissions. The patient has some responsibility — the patient needs to be compliant with medications, follow up with his/her primary care physician, and follow all discharge instructions. In some cases, a primary care physician might not be available, or the patient might not be able to travel to pharmacies and doctors offices, thus not getting needed follow-up care.

Another issue is that heart failure is a complex clinical condition, and despite the best level of care, sometimes symptoms recur and patients need to be re-admitted. The 30-day provision doesn’t seem fair to hospitals in the case of heart failure; if the patient is readmitted on day 29, the hospital is not paid, but if the 2nd episode occurs on day 31, the hospital is fully paid. The 30-day rule makes more sense for certain surgeries such as hip and knee replacements. With those surgeries, a readmission within 30 days could be avoided.

Given these issues, I believe the 30-day rule should be modified. Certain medical diagnoses could use a “sliding scale” based on number of days since discharge. I don’t think the rule should be dropped, however. This rule is forcing hospitals to consider continuity of care issues, ensuring that appropriate post-discharge planning and care does occur. It also further encourages ACO and patient centered medical home approaches, which are designed to provide continuity.  It discourages fee-for-service approaches, which are typically not structured to provide these services very well. For these reasons, I think the 30-day rule is (and should be) here to stay.

Michael L. Taylor, MD
Chief Medical Officer