Hospitals may face bigger penalties for readmissions than deaths

(Reuters) – Medicare penalties are tied to fewer repeat hospitalizations for some common health problems, but a new study suggests current policy doesn’t encourage hospitals in the United States to focus on preventable deaths.

Researchers examined nationwide data for both deaths and readmissions within 30 days of discharge for three common problems: heart failure, pneumonia and heart attacks.

About 17% of U.S. hospitals are getting punished for excess readmissions even though they’re keeping patients alive more often than would be expected, the analysis found.

The data came from U.S. hospitals in fiscal year 2014.

Another 16% of hospitals essentially get rewarded for low readmission rates, but their patients are more likely to die in the first month after leaving the hospital, the study also found.

“You could argue that from the individual patient’s perspective, mortality should be weighted much higher than readmission,” said senior study author Dr. Scott Hummel of the University of Michigan in Ann Arbor.

“Aligning financial incentives more closely with this patient-oriented goal would drive hospital behavior towards finding ways to reduce post-discharge mortality,” Hummel added by email.

In 2014, U.S. hospitals could for the first time be penalized for readmission rates that were higher than expected, and earn a financial reward based on a mix of measures that include everything from 30-day death rates to how well patients rated the care they received and the hospital environment, researchers report in JAMA Cardiology.

Under the current policy, hospitals can lose up to 3% of certain Medicare payments for excess readmissions, but can recoup only about 0.2% of such payments for having low mortality rates.

If hospitals got paid less when their patients died soon after a hospitalization, just like they get paid less when those patients end up back in the hospital, it would be a game-changer for one-third of hospitals, the study authors argue.

That’s because some of the hospitals that get penalized for high readmissions are those that may actually do the best job at keeping patients alive – and vice versa, the researchers contend.

If the penalties took both readmission and mortality into account, the Medicare system would save the same amount of money, but incentivize good outcomes more fairly, the researchers say.

To calculate this, researchers developed a ratio for each hospital based on observed and expected readmissions and mortality in the first 30 days for heart attack, heart failure and pneumonia.

They adjusted the data for how sick each hospital’s patients were. They didn’t adjust for patients’ socioeconomic status, which can also affect outcomes.

The authors also call for continued improvement in risk models for estimating patients’ risk of readmission, just like current, well-tested models to predict their risk of death.

Other researchers too have shown there isn’t a tight link between a hospital’s 30-day readmission rate and its 30-day mortality rate for these conditions – suggesting that there’s more to the story when thinking about using them as measures of hospital quality.

“It is not surprising that one measure of provider quality may not be strongly correlated with another – we have known this to be the case for years,” said Dr. Michael Williams, a health policy researcher at Harvard University in Boston who wasn’t involved in the study.

“But we must fight the instinct to measure everything and pay on everything, lest we detract from providers’ ability to provide high-quality care,” Williams added by email. “Lack of correlations should not trigger knee-jerk calls for more measures tied to more bonuses and penalties.”

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