Hospital readmissions are costly but largely preventable. Reducing inpatient readmissions are a top priority for Medicare, state Medicaid programs, and private health plans.  The opportunities to lower costs and improve patient outcomes are considerable.  Therefore, healthcare purchasers are realigning hospital payment methods to reward hospitals for fewer readmissions and penalizing hospitals when a high number of patients return within 30 days of discharge.

For example, under the Affordable Care Act (ACA), the Centers for Medicare and Medicaid Services (CMS) now reduces Medicare Part A payments to hospitals with excessive readmissions. New, episode-based payment methods, such as bundling, are designed to improve outcomes and lower costs, with reduction of inpatient readmissions a priority. State Medicaid programs are using new technology to track preventable events and align payment with better hospital and physician performance – again, with hospital readmissions an obvious target.

The Healthcare Cost and Utilization Project, a program of the Agency for Healthcare Research and Quality (AHRQ), has produced an interesting statistical brief outlining the dimensions of this costly issue. Here is more information on readmissions and why they are of major concern:

A Brief Definition of Readmissions:

For purposes of the AHRQ statistical brief, information was collected from hospitals during the first eleven months of 2011. Readmissions are defined as an admission into any hospital within 30 days of a previous (or “index”) admission. Individual patients were followed regardless of whether the second admission was into the same or a different hospital. There is also no separation regarding whether the conditions that resulted in the second admission were in any way related to the earlier admission. For example, someone who was admitted the first time for symptoms relating to severe diabetes might show up as a readmission two weeks later because of an allergic reaction to a bee sting.

Conditions Vary Among Major Payors:

The clinical conditions involved in hospital readmission events vary among the top three payors of inpatient services:

  • Medicare: Readmissions within 30 days cost U.S. hospitals over $4.3 billion dollars annually. The conditions that most commonly result in readmissions vary with patient demographic. For Medicare patients, who are generally 62 years of age and older, congestive heart failure is the number one cause of readmissions. This condition is responsible for an annual rate of 134,500 readmissions. The next two most common causes are septicemia (92,900 readmissions) and pneumonia (88,800 readmissions.)
  • Medicaid: Medicaid patients constitute a different demographic, consisting of individuals of all ages who are disabled and/or low income. For this patient cohort, the largest cause of hospital readmission is mood disorders, such as depression or bipolar disorder. This category of severe mental illness is responsible for an annual total of 41,600 readmissions. Schizophrenia and diabetes are the second and third most common causes of Medicaid hospital readmission, with 35,800 and 23,700 readmissions, respectively.
  • Private Health Insurance: Those patients who are privately insured constitute still another major sector of the insured population, which also covers all age groups but primarily those age 0-65. Privately insured patients tend to be employed at greater rates and belong to higher socioeconomic levels of society. In this population, the greatest number of readmissions (25,500 annually) arose from the need for maintenance chemotherapy. Mood disorders (19,600 readmissions) are the second most frequent cause in this group, demonstrating the prevalence of this mental health issue across all socioeconomic boundaries. Miscellaneous complications of medical and surgical care were the third most common reason for hospital readmissions among the privately insured, bringing about 18,000 people annually back into the hospital soon after discharge.

Rates of Hospital Readmission Compared Across Payors

As the figures shown above suggest, Medicare patients constitute the largest group (56 percent) of readmitted patients. Furthermore, these Medicare-paid readmissions are also responsible for the greatest share of all costs related to readmission, amounting to 58 percent of the costs. Medicaid patients’ percentages were second in this ranking, falling well behind the Medicare numbers with 21 percent of readmissions and 18 percent of related costs, but still representing a significant cost to states and taxpayers. Those patients with private health insurance (who constitute the larger part of the under-62 national population) represented 19 percent of readmissions and 20 percent of related costs. Finally, the uninsured sector of the population made up 5 percent of readmissions and 4 percent of costs.

As the Centers for Medicare & Medicaid Services continues to study this problem with an eye to improving care, it is focusing on several specific conditions which are especially responsible for causing elderly patients to return to the hospital. The conditions being examined by CMS in their Hospital Readmissions Reduction Program are: congestive heart failure, pneumonia, and acute myocardial infarction.  For 2015, this list was expanded to include acute exacerbation of chronic obstructive pulmonary disease (COPD) and elective total hip and knee replacement. With the growing body of information available, strategies for reducing readmission rates can be identified and payment methods and performance measures refined, lowering the overall cost of caring for patients.

Measuring and Reducing Potentially Preventable Events:

To learn more about the latest in data-empowered technologies to identify, manage, and reduce the full spectrum of potentially preventable events (PPEs) – including hospitalizations, readmissions, hospital-acquired complications (HACs), ED visits, and ancillary services that may be preventable – please listen to my podcast interview with Norbert Goldfield, MD on health payment reform and outcomes measurement. In this episode of the MediStrategy podcast, Dr. Goldfield, one of the nation’s top healthcare thought leaders and a passionate, engaging expert on best practices in reducing potentially preventable events, describes innovations in outcomes-based payment of physicians, hospitals, and other providers.

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