By Paul Levy

First Posted at Not Running a Hospital on 3/25/2013

Paul Levy, Host of (Not) Running a Hospital

Paul Levy, Host of (Not) Running a Hospital

Massachusetts is home to health policy researchers of the highest order.  Some have pointed out the flaws and the unintended consequences of applying financial penalties to the rate of readmissions experienced by hospitals.  Beyond Massachusetts, other researchers have pointed out the statistical meaninglessness of such comparisons.  Nonetheless, the state government stubbornly insists on applying such penalties based on the experience of Medicaid patients.

The MA Hospital Association is doing its best to reverse this action, but people on Beacon Hill don’t seem to be listening.  Here is the most recent MHA statement on this subject:

Reducing readmissions at hospitals is a goal that every hospital in Massachusetts is committed to. Deliver high-quality care with strong follow-up care and other proven strategies that involve patients and their families and you may be able to prevent readmissions to a hospital. But hospitals can’t control all the factors that can influence a readmission.

That is, a patient may be readmitted to a hospital within days of his discharge, but for an ailment entirely unrelated to the first admission. But these could be counted as a readmission under some measurement approaches. Some readmissions are scheduled readmissions, but they too could be counted. And some patients and their families even fail to follow discharge instructions for taking medicine or avoiding certain foods, and wind up back in the hospital. That’s counted as a readmission too and can result in payment penalties for the hospital.

Couple these pitfalls with the fact that there is not a widely accepted tool for measuring readmissions, and you’re left with ever-increasing penalties against providers for readmissions that are hard to measure and over which they may have no control.

The FY2012 MassHealth acute hospital RFA contract between hospitals and the state introduced a new preventable readmission penalty for certain hospitals that MassHealth has determined to have higher-than-expected preventable readmission rates. More than 20 hospitals were given a 2.20% reduction to their inpatient reimbursement rate in FY2012. In FY2013, the administration increased the penalty to 2.4%, 3.4%, and 4.4% for 31 hospitals. The penalty applies to all the hospital’s discharges, not just readmissions. A score of cases can produce millions of dollars in penalties to an already financially stressed hospital. The MassHealth penalties can apply against hospitals that are doing a lot to address readmissions and which deal with some of the most challenging patient populations. Add to these problems the fact that MassHealth uses data that is several years old and doesn’t reflect the current effectiveness of hospital efforts.

MHA opposes the original penalty as well as the increases and argues that it is time to step back from the penalty mindset and look at a reasonable approach to readmissions.

“The current penalty is seriously flawed from both a public policy and a methodological perspective. It unfairly punishes hospitals without advancing the objective of reducing preventable readmission,” said MHA’s Executive V.P. Tim Gens. “It may work as budget-cutting initiative for the state, but it does little to promote better patient care. It is clear that addressing readmission requires collaboration among the community of participants in healthcare delivery – not arbitrary and punitive measures against hospitals.

“The application of this penalty across all payments for inpatient services results in an unwarranted punishment that is far greater than the amounts actually paid by MassHealth to the hospital for the so-called ‘excess’ readmissions themselves,” Gens continued. “The data the state relies upon to determine each hospital’s performance is three years old, the methodology the state uses to identify preventable readmissions has not been approved by the state’s own panel of experts, and it is clear that hospitals do not control all of the factors that contribute to readmissions.”

In its budget letter to House Ways & Means Committee Chairman Brian Dempsey (D-Haverhill), MHA has requested that the House, in its FY14 budget proposal, direct MassHealth to use a more equitable system for assessing penalties related to preventable readmissions; an appropriate penalty would limit it to only those readmissions above the expected number calculated by MassHealth. Hospitals exceeding the expected number would face up to a 75% penalty for those readmissions that exceed the expected rate. MHA also believes consideration should be given to hospitals that have made important advances in reducing preventable readmissions by requiring EOHHS to limit penalties for those hospitals that have shown demonstrable progress.