LegiStorm

Summary:

Nearly 20% of Medicare beneficiaries aged 65 and over who were admitted to a hospital in 2005 were readmitted within 30 days following their initial discharge. The Medicare Payment Advisory Commission (MedPAC) estimated that these readmissions cost the Medicare program as much as $15 billion per year and that perhaps as much as two-thirds of these readmissions may be preventable. Many policymakers believe that different care transition programs coupled with payment reforms can constrain hospital readmissions among Medicare's fee-for-service (FFS) beneficiaries, could improve patient care, and may generate cost savings for the program. Hospital readmissions are associated with a number of factors and are not necessarily attributable to problems with the quality of patient care, but strong evidence indicates specific interventions to better manage care transitions at the time of hospital discharge could reduce readmissions for certain conditions. Medicare is building on past work by Quality Improvement Organizations (QIOs) to help providers identify the underlying causes of hospital readmissions in their communities and then develop different strategies to prevent those rehospitalizations. In their newest round of Medicare contracts, which began August 1, 2011, QIOs will work to reduce readmissions 20% by 2013 and provide technical assistance to participants in the Community Care Transitions Program (CCTP), a $500 million, five-year demonstration program established by the Patient Protection and Affordable Care Act (ACA as amended, P.L. 111-148) to help participating hospitals improve discharge procedures and manage patients' care transitions more effectively. CCTP may be continued or expanded if the Office of the Actuary (OACT) certifies that the expansion would reduce Medicare spending without reducing quality. By mid-March 2012, 30 sites had been selected. As well as establishing CCTP, ACA included several payment initiatives to encourage FFS providers, particularly hospitals, to work to minimize rehospitalizations and coordinate patient care across settings. Two initiatives in particular are discussed in this report, the Hospital Readmission Reduction Program (HRRP) and bundled payments. The HRRP will penalize an acute care hospital with higher than expected readmission rates by as much as 1% of its base payments starting in FY2013. Initially, the HRRP must use the three existing readmission measures that are endorsed by the National Quality Forum (NQF) and are included on Medicare's Hospital COMPARE website (where publically reported data can be used to assess hospital performance). Hospitals and industry advocates have expressed concerns about the existing measures and the effect of the readmission penalties on certain safety-net hospitals; issues that are likely to attract significant Congressional attention as the program's implementation date approaches. CMS is also exploring bundled payment methods where a single payment is made for a defined group of services rather than individual payments for each service. The national bundled payment pilot program established by the Center for Medicaid and Medicare Innovation (CMMI) is a three-year project starting in 2012 that will encompass four different bundled payment models. Changing these FFS financial incentives may be Medicare's most effective strategy for addressing hospital readmissions. This report examines the complex issue of hospital readmissions along with Medicare's ongoing efforts and future activities to reduce unnecessary readmissions.