Better Hospital Discharges = Lower Healthcare Costs?

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[Ed. Note: We are pleased to welcome Jae W. Joo to HRW. Jae is a third year student at Seton Hall Law.  He graduated from Rutgers College in 2006 with a B.A. in Psychology and a minor in Philosophy.  In 2009, he interned for the Honorable Denise A. Cobham in the Superior Court of New Jersey. Currently, he is a summer intern at the New Jersey Attorney General's Tobacco and Securities Litigation Section, and also a research assistant for the Healthcare Compliance Certification Program at Seton Hall Law.]

With healthcare reform fresh out of the congressional oven, many changes are taking place in the field of healthcare and a myriad of new challenges will undoubtedly arise.  However, one of the perpetual challenges in the midst of all these changes has been the substantial amount of money needed to fund Medicare.  The Patient Protection Affordable Care Act is laden with economically efficient methods and plans to reduce costs.  However, as Lesley Alderman suggests in her NY Times article, a drastic cost saving measure may be implemented with a simple change in hospital procedure.

According to the article,

[In] a study published last year in The New England Journal of Medicine, one in five Medicare patients returns to the hospital within 30 days of being discharged. The problem is an expensive one: in 2004 these readmissions cost Medicare $17.4 billion dollars, the researchers also found.

As the study shows, readmission within 30 days of discharge has been costly and remains a substantial contributing source to the Medicare deficit.  However, discharge procedures rarely get the same level of attention as admission procedures to a hospital.

At discharge, the assumption is that the patient is better and all will be fine, said Dr. Eric A. Coleman, a geriatrician and professor of medicine at the University of Colorado Denver. But many patients, especially older ones, leave the hospital with a host of issues to manage. They may have additional medications to take, new symptoms to monitor and follow up appointments to keep, all of which require focused attention at a time when patients may not be at their sharpest.

What’s more, while insurers will pay for limited hospital stays, there’s no financial incentive for hospitals to insure that patients get and stay out. ‘A hospital may actually be financially rewarded for mishandled discharge,’ said Dr. Williams, chief of hospital medicine at Northwestern University. ‘If the patient is readmitted, they get paid again.’

While there may be a general lack of concern or awareness to improve conditions of patient discharge, Alderman’s article mentions some initiatives that have been taken to improve the discharge process.  Care Transition Intervention is a hospital-based program that helps reduce readmissions by coaching older adults on how to manage their health and take better care.  Project Boost provides hospitals guidelines to help standardize and enhance the discharge process.  Federal Centers for Medicare and Medicaid has a program to improve hospital hand-offs for high risk patients and has also been developing a program to incentivize hospitals to lower their readmission rates.

Whether or not hospitals decide to implement new discharge protocols and procedures, individual patients can help alleviate the financial burdens placed on the system by taking an active role in managing their health.  Alderman’s article points out a few tips to follow if a hospital does not have an up to date discharge procedure in place.  Following these simple tips can, it seems, make a big difference.

Health Care Reform Law: Help for Hospitals?

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Last week, Samuel Maizel, a bankruptcy lawyer specializing in representing health care businesses in distress, gave a great talk here at Seton Hall Law on “Hospitals in Crisis: Debt Restructuring Options & Issues for Financial Survival.”  Mr. Maizel painted a grim picture of the financial pressures facing hospitals and said he does not believe the situation is going to improve in the near term despite the overall economic recovery.

Near the end of his talk, Mr. Maizel told us that hospitals across the country are combing through the health reform legislation looking for anything that could improve their bottom lines.  This piqued my interest and made me wonder what they will find.  Using the House Committees’ summary of the provisions in the bill relating to delivery system reform as a guide, I came up with the following.

Sec. 3001.  Rewarding High-Quality and Efficient Care.

This provision, which applies to patients discharged on or after October 1, 2012, establishes “value-based purchasing,” meaning that the government will make “value-based incentive payments” to hospitals that provide care to Medicare patients that meets or exceeds certain performance standards to be established by the Secretary of Health and Human Services.  Initially the standards must relate to at least the following five conditions: heart attack, heart failure, pneumonia, surgery, and healthcare-associated infections.  Eventually (by fiscal year 2014) the standards are to incorporate “efficiency measures,” that is Medicare spending per beneficiary must be a factor.

Sec. 3022.  Medicare Shared Savings Program.

This provision, which Jordan Cohen analyzed at length here, directs the Secretary of Health and Human Services to establish a program by January 1, 2012 through which accountable care organizations that save Medicare money would be entitled to a cut of the savings they achieve.  Hospitals are eligible to participate in the program through a partnership or joint venture arrangement with physicians or as employers of physicians.

Sec. 3023.  National Pilot Program on Payment Bundling.

Under this 5-year long pilot program, which the Secretary must establish by January 1, 2013, the government will make one bundled payment “for integrated care during an episode of care provided to an applicable beneficiary around a hospitalization in order to improve the coordination, quality, and efficiency of health care services.”  Episodes of care begin 3 days prior to hospitalization and end 30 days after discharge.  Hospitals can apply to participate in the program (and/or submit a bid) as part of “[a]n entity comprised of … a hospital, a physician group, a skilled nursing facility, and a home health agency.”

While the above three provisions hold out hope of improvement to hospitals’ bottom lines, the House Committees’ summary also highlights two provisions which establish negative incentives.  Section 3008 on Hospital Acquired Conditions provides that, beginning in fiscal year 2015, the government will cut by 1% the payments it makes to hospitals in the top quartile for hospital acquired conditions.  Similarly, Section 3025, the Hospital Readmissions Reduction Program, provides that, after October 1, 2012, the government will begin reducing the amount it pays to hospitals with “excess readmissions.”

Savings Generated From Reducing Hospital Readmissions Could Help Cover the Uninsured

Hospital readmissions cost the U.S. billions of dollars a year, yet many can be prevented with better follow-up care, according to a study published Wednesday in the New England Journal of Medicine.

According to the study,

As many as a fifth all Medicare patients are readmitted within a month of being discharged . . . and a third are rehospitalized within 90 days.

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We recently reported that a pilot program in Baton Rouge and 13 other cities seeks to reduce the number of chronically ill elderly that are readmitted to the hospital. That program, called the Care Transitions Project, provides patients with a “transition coach” who helps them recognize symptoms and create a plan for follow-up care.

The New York Times reports that the Obama administration has already identified hospital readmissions as a potential source of cost-cutting. Hospitals with high numbers of patients who are readmitted would receive lowered payments under the president’s budget, which calls for $26 billion in savings from reducing readmissions over 10 years.

Policy analysts say that insurers, including Medicare, must begin to reward doctors and hospitals that help patients get better and stay healthy. While some hospitals have already shown that they can reduce readmissions by taking simple steps, about one in four of the nation’s hospitals derive 25% of their admissions from returning patients.