Nav: Home

Safety-net hospitals fare better under new Medicare reimbursement rules

April 15, 2019

New Medicare reimbursement rules provide some relief to safety-net hospitals, shifting the burden of financial penalties toward hospitals serving wealthier patient populations, according to a new study led by Washington University School of Medicine in St. Louis. The new rules also reduce the burden of such penalties on hospitals in states that have more generous Medicaid programs.

The study, conducted by researchers at Washington University, the Missouri Hospital Association and the Henry Ford Health System in Detroit, is published April 15 in JAMA Internal Medicine.

In an effort to reduce health-care costs, Medicare issues financial penalties via the Hospital Readmissions Reduction Program (HRRP) to hospitals with higher than expected readmission rates. The program -- which can cut a hospital's Medicare reimbursements by up to 3 percent -- has been criticized for unfairly penalizing so-called safety-net hospitals that serve the poorest patients, who are more likely to be readmitted for reasons beyond the hospital's control.

Rather than comparing all hospitals directly, the new rules divide hospitals into five groups according to the proportion of their Medicare patients who are also enrolled in Medicaid, a program intended to help the poorest patients. Hospitals are then only compared to their peers that treat similar proportions of disadvantaged patients. Across the five groups of hospitals, the average proportion of patients dually enrolled in Medicare and Medicaid ranged from a low of 9.5 percent to a high of almost 45 percent.

"The new rules recognize the reality that it is harder to prevent readmissions when people don't have stable housing or social support," said Washington University cardiologist Karen Joynt Maddox, MD, the study's first author and an assistant professor of medicine. "If you have patients who struggle to put food on the table, it's going to be tougher for them to manage their end-stage heart failure. The old system took money away from hospitals that serve the most vulnerable patients. It created a significant disincentive to provide health care to poor people, and that's the last thing we want."

Looking at the most recent data published by the Centers for Medicare & Medicaid Services, the researchers calculated and compared the penalties under the old and new reimbursement rules for just over 3,000 hospitals nationwide. Using the published data, the researchers projected how the penalties will shift by comparing projected penalties under the new rules to what they would have been under the old rules. Under the new rules, penalties for the hospitals serving the fewest poor patients are projected to increase more than $12 million in total. Meanwhile, penalties for the hospitals serving the highest proportion of poor patients are projected to decrease by more than $22 million in total. On an individual hospital level, the changes are projected to range from an increase in penalties of $225,000, to a decrease of $436,000.

Large hospitals and teaching hospitals are the most likely to see reduced penalties. The researchers also found reduced penalties among hospitals serving patients from the most disadvantaged neighborhoods and those serving the most patients with disabilities. Hospitals in states with more generous Medicaid enrollment also fare better than those in states with fewer poor patients enrolled in the Medicaid program.

"States differ widely in the percentage of people living in poverty who are able to enroll in Medicaid," Joynt Maddox said. "Since the new rules, as written by Congress, only give credit to hospitals for treating patients on Medicaid and not poor patients in general, the states with more people enrolled in Medicaid are going to benefit more from the new system."

According to Joynt Maddox, the researchers were surprised at the magnitude of the state and regional differences in the shift in penalties, with more penalties for hospitals in the South and Midwest and fewer penalties for hospitals in the West and Northeast. California, which has generous Medicaid enrollment, had the most reduced penalties. Meanwhile, South Dakota and Florida, two states with fewer poor patients enrolled in Medicaid, had the greatest increases. Overall, much of the shift in penalties between states could be explained by differences in state Medicaid enrollment.

"This was a positive change for the HRRP," Joynt Maddox said. "Making the program more fair doesn't take away from its goal, which is to use financial incentives to make hospitals think differently about care beyond their walls. Hospitals are increasingly working to provide a soft landing, including discharge planning and communication with outpatient-care providers."

Still, Joynt Maddox said there is work to be done, even if the new rules more fairly consider the socioeconomic reality of hospitals' patient populations.

"There are still marked disparities in readmissions related to social determinants of health," she said. "We need to find innovative solutions to improve outcomes for our most vulnerable patients after they leave the hospital."
-end-
Joynt Maddox reports intermittent contract work for the U.S. Department of Health and Human Services.

This work was supported by the National Institutes of Health (NIH), grant numbers R01MD010243 and RF1AG057784; and by the Washington University School of Medicine Office of Medical Student Research Dean's Fellowship.

Joynt Maddox KE, Reidhead M, Qi AC, Nerenz DR. Association of stratification by dual enrollment status with financial penalties in the hospital readmission reduction program. JAMA Internal Medicine. April 15, 2019.

Washington University School of Medicine's 1,500 faculty physicians also are the medical staff of Barnes-Jewish and St. Louis Children's hospitals. The School of Medicine is a leader in medical research, teaching and patient care, ranking among the top 10 medical schools in the nation by U.S. News & World Report. Through its affiliations with Barnes-Jewish and St. Louis Children's hospitals, the School of Medicine is linked to BJC HealthCare.

Washington University School of Medicine

Related Medicare Articles:

Medicare coverage varies for transgender hormone therapies
A new study has shown substantial variability in access to guideline-recommended hormone therapies for older transgender individuals insured through Medicare.
Medicare changes may increase access to TAVR
The number of hospitals providing TAVR could double with changes to Medicare requirements.
Inequitable medicare reimbursements threaten care of most vulnerable
Hospitals, doctors and Medicare Advantage insurance plans that care for some of the most vulnerable patients are not reimbursed fairly by Medicare, according to recent findings in JAMA.
Medicare may overpay for many surgical procedures
For most surgical procedures, Medicare provides physicians a single bundled payment that covers both the procedure and related postoperative care over a period of up to 90 days.
Only 1 in 4 Medicare patients participate in cardiac rehabilitation
Only about 24% of Medicare patients who could receive outpatient cardiac rehabilitation participate in the program.
How common is food insecurity among Medicare enrollees? 
Nearly 1 in 10 Medicare enrollees age 65 and over and 4 in 10 enrollees younger than 65 with long-term disabilities experience food insecurity.
Medicare for All unlikely to cause surge in hospital use: Harvard study
Despite some analysts' claims that Medicare for All would cause a sharp increase in health care utilization, a new study finds the two biggest coverage expansions in US history -- Medicare and the ACA -- caused no net increase in hospital use.
Critical heart drug too pricey for some Medicare patients
An effective drug to treat chronic heart failure may cost too much for senior citizens with a standard Medicare Part D drug plan, said a study co-authored by a John A.
Research suggests strategy for more equitable Medicare reimbursement
Those who were enrolled in both Medicare and Medicaid were sicker, had more cognitive impairments and difficulty functioning, and needed more social support than those who were not enrolled in both government programs, Saint Louis University research found.
BU finds Medicare Advantage networks are broad and getting broader
A new study led by Boston University School of Public Health (BUSPH) researchers finds that networks in Medicare Advantage -- a private plan alternative to traditional Medicare -- are relatively broad and may be getting broader.
More Medicare News and Medicare Current Events

Trending Science News

Current Coronavirus (COVID-19) News

Top Science Podcasts

We have hand picked the top science podcasts of 2020.
Now Playing: TED Radio Hour

Making Amends
What makes a true apology? What does it mean to make amends for past mistakes? This hour, TED speakers explore how repairing the wrongs of the past is the first step toward healing for the future. Guests include historian and preservationist Brent Leggs, law professor Martha Minow, librarian Dawn Wacek, and playwright V (formerly Eve Ensler).
Now Playing: Science for the People

#566 Is Your Gut Leaking?
This week we're busting the human gut wide open with Dr. Alessio Fasano from the Center for Celiac Research and Treatment at Massachusetts General Hospital. Join host Anika Hazra for our discussion separating fact from fiction on the controversial topic of leaky gut syndrome. We cover everything from what causes a leaky gut to interpreting the results of a gut microbiome test! Related links: Center for Celiac Research and Treatment website and their YouTube channel
Now Playing: Radiolab

The Flag and the Fury
How do you actually make change in the world? For 126 years, Mississippi has had the Confederate battle flag on their state flag, and they were the last state in the nation where that emblem remained "officially" flying.  A few days ago, that flag came down. A few days before that, it coming down would have seemed impossible. We dive into the story behind this de-flagging: a journey involving a clash of histories, designs, families, and even cheerleading. This show is a collaboration with OSM Audio. Kiese Laymon's memoir Heavy is here. And the Hospitality Flag webpage is here.