A recent article in the New England Journal of Medicine (NEJM) revealed that 20% (1 in 5) of Medicare patients were rehospitalized within 30 days of being released from the hospital.
Readmissions accounted for about $17.4 billion of the $102.6 billion in hospital payments that Medicare made in 2004.
In response, lawmakers are considering bundling payments to hospitals and doctors. Under such an arrangement, hospitals would be paid a lump sum by Medicare for administering inpatient, and post-acute care to patients (care given within the first 30 days that a patient is discharged).
Would bundling payments help to reduce readmissions, and lower spending? How?
Some readmissions are inevitable, and necessary.
But the NEJM report also indicates that roughly 50% of readmitted patients did not meet with a physician at any point during the time when they were at home.
In other words, patients did not receive much, if any, follow-up care once released from the hospital setting. Such care, including physician visits, nurse check-ups and hospital consultations with the patient and her family members, could go a long way towards preventing readmissions.
Just think: if patients had assistance in managing their medications, and healthcare generally, following a hospital stay, they would be more likely to stay on course with their treatments and recover fully.
President Obama and Director of the Office of Management and Budget (OMB) Peter Orszag believe that bundling Medicare payments to include treatments administered within the first 30 days of a discharge will incentivise hospitals to make sure that patients receive the follow-up care that they need. In the past, hospitals would have simply billed Medicare or private insurers when a patient was readmitted.
Under this payment reform, the cost of readmitting a patient would be taken out of the original bundled payment. Since it is more expensive to readmit a patient than it is to see him/her in an outpatient setting, the hospital would have an incentive to retain contact with the patient, and to pay providers to administer the less costly check-up appointments.
Bonuses would also be given to hospitals with lower readmit rates and better patient outcomes.
The bundled payment would cover the cost of all of the services administered to a patient. It would presumably be a smaller amount in total than paying for each of the services separately. One concern is that the bundling of payments will encourage hospitals and doctors to withhold needed care until absolutely necessary, as a way of saving money.
Senators Max Baucus (D-MT) and Charles Grassley (R-IA), two Senate leaders in healthcare reform, assert that the bundling of hospital and post-acute care payments will save $18 billion over a ten-year period in a new report.
Another interesting finding in the NEJM article is that five states, Maryland, Louisiana, Mississippi, Illinois and New Jersey had the highest readmit rates, which were 45% higher than the states with the lowest readmit rates, such as Idaho, Utah, Oregon and Colorado.
The states with the highest readmit rates are also high-spending states for Medicare, which means that they tend to have (and use) more medical equipment and specialists than other areas.
High-spending regions do not always produce better patient outcomes. The focus in high-spending areas is to provide more treatments and tests, rather than to deliver the most effective care possible. See our newest As We See It article on this topic.
Once again we see that more care does not always lead to better patient outcomes.