by Lisa Chamoff
, Contributing Reporter | December 16, 2014
From the December 2014 issue of HealthCare Business News magazine
“Some hospitals may have done some remarkable things in trying to address that, but the problems are still there,” Nerenz says. Readmission penalties went into their third year in October, and CMS is fining 2,610 hospitals, a record number. Hospitals with the highest readmission rates lose 3 percent of each payment, up from 2 percent last year.
The problem is, there is no risk adjustment for those readmissions, says Ellen Kugler, executive director of the National Association of Urban Hospitals, and hospitals treating a primarily low-income population are compared to the wealthiest suburban hospitals in the country. Hospitals do a ton of community outreach, but there are personal factors that are difficult to manage.
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“Take the difference between grandparents who have a spouse at home, kids making sure they take their medications, and have meals and adequately secure housing, and compare that to someone staying in a short-stay hotel in downtown San Francisco,” Kugler says. “It’s very different.”
There are bills in the U.S. House of Representatives and the Senate to require CMS to add risk adjustment, taking into account the socioeconomic status of the patients the hospital serves when issuing penalties. “Insurers put all sorts of risk adjustments in there for setting premium rates,” Kugler says.
A smaller DSH
Urban hospitals do have some of the same challenges as rural facilities. For hospitals in the states that have expanded Medicaid, they still face big cuts to Medicaid Disproportionate Share Hospital (DSH) Payments. For hospitals treating the most uninsured patients, that means millions of dollars in reductions, Kugler says. Michigan is one of the Medicaid expansion states, but people didn’t start enrolling until this past April.
“DSH payment cuts preceded Medicaid expansion, even for states that did do the expansion,” Nerenz says. “So, if you’re in a state that expanded Medicaid, there was no corresponding revenue increase for Medicaid expansion for all of 2013 and half of 2014. It’s a tough situation for a hospital in serving an urban area with a disproportionate number of uninsured residents.”
Kugler notes that even for people who were able to secure health insurance under the state insurance exchanges, the affordable plans are usually high deductible plans. “They’re getting care, but they might have a $2,000 deductible, which is absolutely not affordable to them in any way, shape, or form,” Kugler says.
A recent analysis by Kaiser Health News of penalties likely under the CMS Hospital-Acquired Condition (HAC) Reduction Program found that the biggest impact will be on major teaching hospitals, with 54 percent of those facilities set to receive penalties, versus 18 percent of non-teaching hospitals. These facilities tend to be located in urban areas. “Patients are coming in with more comorbidities,” Kugler says. “You’re dealing with a sicker population. You need to be careful when you’re making these comparisons.”