Hospitals Treating The Poor Hardest Hit By Readmissions Penalties

Updated on Oct. 12 with revised data from Medicare.

Medicare’s new crackdown on readmissions will hit hospitals that treat large numbers of low-income patients especially hard, a Kaiser Health News analysis shows.

The debate over whether readmissions penalties would fall most heavily on safety-net hospitals has been a flash point since penalties were included in the 2010 health law.

The hospital industry has emphasized that poor patients are more likely to be readmitted, as they have a tougher time affording medications, often don’t have access to doctors for check-ups and can have difficulty securing transportation to get follow-up care.  Hospitals also have complained that many safety-net hospitals operate on tight margins.

“You’re probably going to end up penalizing those very places that need to put resources into patients when they leave the hospital,” said Atul Grover, chief public policy officer of the Association of American Medical Colleges.

The federal Centers for Medicare & Medicaid Services has noted that some of the hospitals with the most impoverished patients, such as Denver Health in Colorado, are able to avoid excessive readmissions, proving the challenges are surmountable. “We do not want to hold hospitals to different standards for the outcomes of their patients of low socioeconomic status,” CMS wrote in a regulation issued earlier this month.  The agency added: “We do not want to mask potential disparities or minimize incentives to improve the outcomes of disadvantaged populations.”

The KHN analysis separated 2,095 hospitals into four groups based on an index that the Centers for Medicare & Medicaid Services uses to decide whether a hospital deserves extra payments for treating large numbers of low-income patients. The index looks at the number of patients who qualify for Medicaid, the joint federal-state health program for the poor, and Medicare’s Supplemental Security Income benefit for the poor and disabled.

For each group, KHN examined what penalties the hospitals in each group were assessed by Medicare. Those penalties are based on the rates of readmission within 30 days of discharge for heart failure, heart attack and pneumonia patients between July 2008 and June 2010.

Sixty-five in the group with the most poor patients –12 percent — will receive the maximum penalty from CMS: a 1 percent decrease in their reimbursements starting in October. By contrast, only 35 hospitals, or 7 percent, in the group with the fewest poor patients will receive the maximum penalty, the data show.

Hospitals with lots of low-income patients were generally more likely to receive a penalty of any size.

The data show that 107 safety net hospitals overcame their patients’ challenges to minimize readmissions to a level that Medicare determined did not warrant any penalty. Among the hospitals with the fewest low-income patients, 175 avoided any penalty.

jrau@kff.org