Hospital Penalties More For Re-Admissions, Than Patient Deaths: Report

Hospitals are more likely to be penalized by Medicare when patients require readmissions, than when a patient dies, according to the findings of new research. 

In a study published last week in the medical journal JAMA Cardiology, researchers from the University of Michigan and the Ann Arbor Veterans Affairs Health System in Ann Arbor, Michigan indicate that the current policy for Medicare hospital incentives may not encourage facilities to keep mortality rates low, focusing instead on lower hospital readmission rates. Researchers say penalties for one-third of hospitals would have substantially changed if 30-day readmissions and mortality were weighted equally.

Researchers used publicly available hospital data for fiscal year 2014, including excess readmission ratios, 30-day mortality rates for heart failure, pneumonia, acute myocardial infarction, and readmission penalties.

Of the nearly 2,000 hospitals with complete data, hospitals with higher readmission rates did a better job of keeping patients alive overall. About 17% of hospitals were penalized for excess readmissions, even though they kept patients alive more often than would be expected.

About 16% of hospitals that were rewarded for low 30-day readmission rates had patients more likely to die in the first month after leaving the hospital than other hospitals.

U.S. hospitals are assessed penalties for excess 30-day readmissions and mortality in Medicare patients. However, under the current policy, preventing readmissions is incentivized over 10 times more than reducing patient deaths.

Hospitals can lose up to three percent of Medicare payments for excess readmissions. At the same time they will only recoup about 0.2%  of payments for low mortality rates.

From a patient perspective, death rates should be weighted higher than readmission. In the majority of cases, patients would rather be readmitted to the hospital than die. Researchers said hospitals should align financial incentives more closely with patient-oriented goals and find ways to reduce post-discharge mortality.

“Current Medicare financial penalties do not meet the goals of aligning incentives and fairly reimbursing hospitals for patient-centered outcomes,” study authors wrote.

Changing the policy to incentivize mortality could also save the Medicare system money, as one measure of provider quality may not be strongly correlated with another measure.

A study published earlier this year indicated hospitals with higher patient rating had lower death rates and readmission rates. The Medicare hospital star ratings were given by patients based on experience, quality and medical staff.

Prior to the study, researchers believed the star ratings did not include measures of quality or health outcomes, but the results of the study conclude the star rating is an accurate depiction of better outcomes.