Medicare to Reduce Hospital Payments

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Medicare to Reduce Hospital Payments

Cuts Affect Record 2,610 Hospitals Due to Readmissions Within 30 Days

By       Melinda Beck             connect

Oct. 3, 2014 7:03 p.m. ET

Medicare will cut payments to a record 2,610 hospitals—three-quarters of those eligible—because too many patients were readmitted within 30 days, according to an analysis of federal records by Kaiser Health News.

The hospitals, which include top academic medical centers and small regional ones, will see Medicare reimbursements reduced for every beneficiary they treat, from Oct. 1 through Sept. 30 of next year. Some will be penalized as little as a hundredth of a percent, but 39 hospitals will be cut the maximum 3%. Nearly 500 will lose 1% or more of their Medicare payments. Combined, those penalties will save Medicare an estimated $428 million, a spokesman for the Centers for Medicare and Medicaid Services said.

Reducing readmission has been a top priority in health-care reform in the Obama administration—both to reduce Medicare spending and to spur hospitals to pay more attention to discharge planning for patients, who are being sent home “quicker and sicker” than ever before. Nationwide, the percentage of Medicare patients readmitted within 30 days for any reason dropped from 19% to 18% last year, according to the CMS.

But more hospitals are being fined this year, in part because Medicare added two new categories of patients—those with knee and hip replacements, and those suffering from chronic lung problems—into its calculations. Specialty hospitals that focus on such care are being evaluated for the first time, the Kaiser analysis noted. Some experts have raised concerns that safety-net hospitals are being unfairly penalized, because low-income patients may be sicker and have less support at home; bills in Congress would require Medicare to consider socioeconomic status when calculating fines.

The CMS had no immediate comment.

More than 1,400 hospitals are exempted from the penalties because they provide specialized cancer care, psychiatry or other specific services.

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