Lower Hospital Readmissions a Mere Label Change, Analysis Says

By John Lauerman
Bloomberg Business, Aug. 27, 2015

  • Fewer returns driven by billing gimmick more than Obamacare
  • Providers seeking to avoid cuts in Medicare reimbursement

Lower U.S. hospital readmission rates that have been touted as an Obamacare victory are due mostly to a billing gimmick that increases costs to patients, health-care researchers said.

To dodge hefty penalties from Medicare for repeat admissions, hospitals increasingly shunt returning patients to emergency rooms or classify them as “observation stays,” which put patients on the hook for more of the bill, according to an analysis published in Health Affairs Blog.

Medicare, the government program for the elderly, has targeted readmissions as a way of improving hospital care. Under the 2010 Patient Protection and Affordable Care Act, known as Obamacare, thousands of hospitals have had their Medicare reimbursement cut because of high rates of patients returning soon after their discharge.

“In essence, it’s a lot of bookkeeping tricks instead of a real effort to improve care,” said David Himmelstein, who co-wrote the analysis with Steffie Woolhandler. “They’re saving Medicare some money by shifting costs onto patients.” Himmelstein and Woolhandler, professors of public health at City University of New York, have argued that Obamacare doesn’t go far enough in reforming the health-care industry and support a single-payer system.

Fewer Returns

While the rate of Medicare patients returning to hospitals within 30 days of discharge stayed relatively steady at about 19 percent from 2007 through 2011, it dropped to about 17.5 percent in 2013, according to government data. Reduced readmissions means patients get better treatment at lower cost, according to the Department of Health and Human Services. The department didn’t immediately respond to a request for comment.

The decline may also mean that hospitals are simply putting another label on returning patients, Himmelstein said. Observation stays doubled from 2006 through 2013, and about a third of the claimed decrease in admissions from 2010 to 2013 is due to an increase in observation stays, according to the study, which analyzed data released last year by the Medicare Payment Advisory Commission.

Akin Demehin, senior associate director of policy for the American Hospital Association in Washington, said hospitals work hard to avoid readmissions and have had some success. Other analyses haven’t found a link between falling readmissions and increased emergency visits or observation stays, he said.

“Unfortunately, this blog post makes sweeping assertions of cause and effect based largely on high-level information on volumes of admissions, observation stays and emergency department visits,” he said in an e-mail.

Observation Stays

Medicare classifies patients in observation stays as outpatients, even though they may spend days in a hospital room. Patients are responsible for about 20 percent of their hospital costs, and Medicare won’t cover a subsequent stay in a physical therapy facility, as it does for regular hospital admissions.

About three-fourths of U.S. hospitals will have their Medicare reimbursement rate cut next year because they’ve exceeded limits on readmissions. The rule hurts safety-net hospitals that serve the poor especially hard, said Peter Pronovost, director of the Armstrong Institute for Patient Safety and Quality at Johns Hopkins Medicine in Baltimore.

“We might treat a lung-disease patient who can’t afford to buy an inhaler we prescribed,” he said. “If the patient is readmitted, there might be a penalty to the hospital that doesn’t reflect the quality of care.”

The Obamacare rule should be changed to account for patients’ socioeconomic status, Pronovost said.

The readmission measure is just one of many pay-for-performance ideas that have failed in health care, Himmelstein said.

“Get rid of it,” he said.