Understanding your Readmissions: How to Reduce Penalties?

by Marie Stinebuck, MBA, MSN, ACM & Tiffany Ferguson, LMSW, ACM
Published on Jan 20, 2021

Hospitals already suffering from the financial hemorrhage of the COVID-19 pandemic will be hit again by the readmission penalty. More than 2,500, or 83 percent of hospitals in the U.S., will receive reduced Medicare funding for the 2021 fiscal year because of their readmissions from 2016 to 2019.

The penalty per hospital is up to 3 percent, and is dependent on the percentage of readmissions that the facility exceeded, per Centers for Medicare & Medicaid Services (CMS) requirements. CMS continues to include the following six conditions for 30-day unplanned readmission measures: acute myocardial infarction (AMI), chronic obstructive pulmonary disease (COPD), heart failure, pneumonia, coronary artery bypass graft (CABG), and elective hip or knee arthroplasty (THA/TKA). The 30-day readmission period was chosen by lawmakers as a proposed timeframe that readmissions could be attributed to hospital care. The intent of this timeframe is for hospitals to have processes and resources in place to manage patients post-hospitalization.

The Hospital Readmission Reduction Program (HRRP) was created by CMS and put into effect on Oct. 1, 2012, as a progressive effort to encourage value-based measures in our healthcare systems. Readmissions affect 18.2 percent of Medicare beneficiaries, and cost Medicare between $15-17 billion per year. In 2015, Medicare created the Hospital Value-Based Purchasing Program (VBP), which includes the Medicare Spending Per Beneficiary (MSPB). MSPB evaluates the Medicare Part A and B spending for patients three days prior and 30 days after inpatient hospital admissions; thus, a hospital readmission of any cause impacts a hospital’s MSPB ratio. In fact, many commercial payers have followed suit, and have included some type of language in contracts regarding reduced payment or monitoring of hospital readmissions, with penalties as high as full denial of payment for the readmission. 

Reports suggest that about 25-40 percent of readmissions are preventable, highlighting the percentage of patients with chronic conditions that warrant appropriate rehospitalization. Nonetheless, the quest for creative thinking in our push for value asks health systems to think creatively in how to handle these patients. Hospitals need to evaluate how they can financially maintain as much of their payments as possible during a time when revenue is being pulled back from all areas (and during a pandemic, when elective procedures are at an all-time low). This will require an eye on process improvement, front-end quality, and revenue management to avoid back-end layoffs or broad-stoke cost-cutting measures. 

Focus on What You Can Control
Hospitals often track and trend exhaustive amounts of generic data without attributing the appropriate questions of “why am I tracking this?” and “how can I make these data points move?” All readmissions should be evaluated first, labeled as preventable or non-preventable. Then work groups should dive deeper into the preventable readmissions by breaking them down by the time they returned to hospital, discharge disposition, referral source, and the attributing categories for each readmission. Once each category is put together, look for the trends and determine actionable steps that can impact the readmissions. Put any questions that the data creates, pertaining to a front-end process, with case management, asking key questions at the time of discharge for initial hospitalizations and for the assessments during readmission.

Look at Your Readmissions of Fewer than Seven Days
Per CMS guidelines, hospitals are expected to have a mechanism to evaluate readmissions that occur within 30 days. Research tells us that readmissions occurring within seven days of the index admission were likely hospital-related and preventable. Such readmissions should be reviewed by case management and hospital leadership as an opportunity to improve physician decision-making, post-surgical infection rates, discharge planning from inpatient care to outpatient care, management of symptoms after discharge, and patient follow-through with appointments. How comfortable was the patient with the transitional plan put in place? Will this key conversation and assurance at time of discharge ensure greater success? Interventions should be targeted at patients within the first week of discharge, and the implementation of an outpatient case management plan should focus on populations at high risk for readmission. 

Do Your Research before Investing in Costly Programs
Harriette, G.C., et al, (February 2017) found in their comprehensive network meta-analysis published in the European Journal of Heart Failure that home nurse visits, disease management clinics, and care management programs made the greatest impact to reduce mortality and readmission rates for heart-failure patients. Research tells us that getting a patient in with their PCP within 5-7 days post-discharge will help avoid a return to the hospital. We also know that the highest percentage of avoidable readmissions come through admission requests by emergency room physicians. The meta-analysis from Harriette, G.C. et al also found that singular interventions such as education at discharge, telephone support, or telemonitoring did not make any difference in preventing readmissions. Rather, the recommendation is a comprehensive program that includes face-face connection with the patient – or, in today’s times, at least videoconferencing to see the patient and what their home situation looks like. We also know that social determinants of health (SDoH) have a large impact on readmissions and high utilization. The recommendation is to include SDOH questions in all case management assessments to determine risk factors and ways to counteract societal issues that patients face.

Use Strategy and Community Partners to Tackle Preventable Readmissions
Most electronic medical records (EMRs) and case management departments should already include or be familiar with the key components to identify, alert, and hand off patients at high risk of readmission to outpatient case manager counterparts, ideally while the patient is still hospitalized. A proficient inpatient case management program should work closely with the hospitalist and physician teams to create an assessment and transitional care plan that decreases the risk of readmission. A case management team that is trained to identify at-risk populations will help decrease the risk of readmission by addressing issues during the hospitalization. Creating a program in which the outpatient case managers communicate with the inpatient case managers during hospitalization to collaborate as a team with the patient will ensure a safe transition at discharge. Outpatient case managers do not necessarily have to be funded at the cost of the hospital; most Accountable Care Organizations (ACOs), home health providers, and public health partners now have case management programs in place that can assist hospitals in the handoff process. 

In addition to all other stressors, 83 percent of hospitals nationwide are losing additional revenue for their Medicare payments from October 2020 to September 2021 because of CMS’s readmission reduction program. Readmissions ripple into MSPB, Medicare shared savings, bundle payments, and commercial reimbursement. Understanding the financial impact and how your health system is creating outcome-driven results to mitigate these factors will not only ensure survival, but improve patient quality.