High Readmission Rates Mean Lower Medicare Payments for New Jersey Hospitals

All but two New Jersey hospitals will get hit with a Medicare reimbursement reduction for excess readmissions, as defined by the Affordable Care Act of 2010, which links Medicare payments to the quality of care that hospitals provide.

The penalty kicked in at the beginning of the month.

“New Jersey will be facing some of the highest downward adjustments that you could call readmission penalties,” said Sujoy Chakravarty, assistant research professor at the Rutgers Center for State Health Policy.

The penalties don't come as a surprise to state healthcare facilities, which have been struggling to rein in readmission rates. The New Jersey Hospital Association (NJHA) has been looking into the issue for almost three years now. Its Readmissions Collaborative has helped hospitals implement programs that attempt to address the problem, which they believe primarily stems from readmitted patients not having access to a primary care physician -- a critical first step to curbing readmissions. Thus far, 50 state hospitals are participating in NJHA's Readmissions Collaborative.

Whether under the aegis of the NJHA or independently, New Jersey hospitals are trying a variety of approaches to improve critical aftercare. Some are scheduling face-to-face visits with discharged patients to ensure that they set up appointments with primary care physicians and that they understand how and when to take their medications. Others are using the phone to follow-up. Still others are hiring advanced-care registered nurses, who hold advanced degree and are trained in critical analysis, problem solving and evidence-based decision making. Still others are teaming up with Accountable Care Organizations, which provide a continuum of care for patients, extending from discharge for as long as it is needed.

According to data from the federal Centers for Medicare and Medicaid (CMS) and compiled per state by Kaiser Health News only Overlook Hospital in Summit and Morristown Memorial Hospital will be spared the Medicare cuts -- out of a total of 64 acute care hospitals in New Jersey.

The reductions are capped at 1 percent this year and are enforced if the number of patients readmitted at a particular healthcare facility climbs above the national average for readmissions. The CMS has set up a penalty schedule for the next three fiscal years.

• FY2013 payment adjustments are based on readmission rates from July 1, 2008 through June 30, 2011;

• FY2014 will be based on readmission rates from July 1, 2009, through June 30, 2012;

• FY2015 payment adjustments will be based on readmission rates from July 1, 2010, through June 30, 2013.

The Medicare cuts are already in place for FY2013 and FY2014. Hospitals that can bring their readmission rates in line should be able to reduce their reductions for FY2013.

CMS based its calculations for fiscal year 2013 on readmission data for heart attack, heart failure, and pneumonia. According to the Medicare Payment Advisory Commission, or MedPac, these three conditions were singled out because they account for the highest hospitalization and readmission rates. The CMS may ultimately penalize hospitals for other conditions and procedures that MedPac identifies as preventable readmissions.

There appears to be no mystery to reducing readmission rates.

“For virtually all hospital discharges, the best practice is to see a primary care physician within seven to 10 days,” said Aline Holmes, senior vice president of clinical affairs at NJHA.

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