Readmissions are no longer just painful for patients; hospitals are now feeling some acute discomfort thanks to the CMS program launched last year that’s taking a bite out of revenue for unacceptably high 30-day readmission rates.

The readmissions issue is pretty straightforward; while many patients with complex conditions are hard to keep out of the hospital, too many are coming back because of a failure by caregivers to monitor the conditions of post-discharge patients and understand the socioeconomic and clinical hurdles they must clear to recover.

“Hospitals readmit almost 18 percent of Medicare beneficiaries who are discharged within 30 days,” says Robin Shannon, director of performance solutions at T-System. “This costs the Centers for Medicare and Medicaid Services approximately $15 billion per year.” Many readmissions are unavoidable, and many doubtless result from patients and their families not adhering to care plans. Even so, the Medicare Payment Advisory Commission estimates that hospitals could have prevented two-thirds of readmissions it analyzed.

The Affordable Care Act addresses the problem via the Hospital Readmissions Reduction Program, which requires CMS to reduce payments to hospitals that have excessive readmissions for a limited set of diagnoses.

In October 2012, CMS began penalizing hospitals for excessive readmissions rates for acute myocardial infarctions (AMI), congestive heart failure (CHF) and pneumonia.

That first fiscal year, CMS applied a financial penalty of up to 1 percent of CMS’ payouts against hospitals with 30-day readmission rates exceeding the agency’s established acceptable rate.

Sixty-six percent of hospitals received penalties the first year. The average penalty was 0.42 percent, with total penalties nationwide of $280 million.

Plans for expansion

CMS is now increasing the scope of the diagnoses and the size of the penalties under the reduction program.

As of fiscal year 2015 (which starts in October 2014), CMS will add diagnoses for chronic obstructive pulmonary disorder (COPD) and voluntary hip and knee replacements to the set of diagnoses in the reduction program.

CMS also increased the existing financial penalties by 1 percent at the start of fiscal year 2014 and will do so again starting in October of this year.

As the penalties ratchet up, so do efforts to avoid them. Some hospitals receiving patients in the ED prior to the 30-day mark for readmissions might have held them there to avoid the penalties. “I have heard the rumors but I can’t confirm it,” says Betty Smith, CEO, Four Seasons Healthcare Consultants. Whether or not the rumors are true, CMS passed the “two midnight” rule in 2013, which makes such strategies impossible. “Now, if the patient is in the hospital over two midnights, it is considered an inpatient status,” says Smith.

But overall the industry response has been more substantial. Many hospitals are starting to bulk up I.T. efforts by adding more sophisticated analytics software and consumer apps combined with more aggressive monitoring of patients with a high risk of readmission.

CMS also has shown some bend by recognizing, as providers do, that many readmissions are unavoidable and expected when dealing with elderly, chronically ill patients, many with co-morbidities and an array of factors stacked against them. In September 2013 the agency released new disposition codes that enable physicians to identify planned hospital readmissions for seriously ill patients. These readmissions are part of their overall care plan.

“Where the physician knows he will readmit the patient because of the need for continuity of care, for another procedure for example, CMS has provided new disposition codes so that Medicare can recognize the readmission issues that are connected to that continuity,” says Smith. As long as the doctor has documented specifically that the patient is going to be readmitted, it’s up to the hospital to use the correct disposition code in order for Medicare to recognize that this patient falls within that particular category.

I.T. to the rescue

To reduce readmissions, hospitals need I.T. solutions that identify patients who are at high risk for readmission. With respect to identifying at-risk patients, add-on technologies that probe EHRs searching for factors that affect readmissions are the ones that are proving to make that process easiest, according to Jane Metzger, research principal at CSC’s Global Institute for Emerging Healthcare Practices. “These types of technologies give hospital clinicians access to the patient’s ambulatory medical record and records from recent admissions,” says Metzger.

“The big players such as Cerner, Allscripts and McKesson are all in this field,” says Patrick Riley, connected health senior industry analyst, Frost & Sullivan. Cerner is integrating the project BOOST toolkit from the Society of Hospital Medicine into its EHR system, according to Riley. The Project BOOST (Better Outcomes by Optimizing Safe Transitions) program offers a toolkit for hospitals seeking discharge process optimizations to reduce events that lead to readmissions. Cerner is targeting BOOST toolkit-enabled software modules for release later this year.

Allscripts also will soon offer a hospital readmissions app associated with its Caremerge senior living facility technology. And McKesson is using the coordinated care transition approach from the Agency for Healthcare Research and Quality-i.e., Project RED (Re-Engineered Discharge) in conjunction with McKesson Performance Analytics to tag patients at-risk for readmission and target them with appropriate handoffs for post-discharge care.

There is a multitude of vendors offering solutions tethered to existing EHR platforms that identify high-risk patients and assign them a degree of risk of readmission. These tools pull data from EHRs daily to look at the patient’s symptoms, look at why they’re being admitted to the ER or to the hospital, look at any past family history and look at lifestyle factors and any history of depression, says Ramesh Sairamesh, managing director, strategic planning at The Advisory Board Company.