Gains in Health System Seen as Lasting by Some

The new health care law is already transforming the way care is delivered, and the changes will continue regardless of how the Supreme Court rules on the mandate for most Americans to carry health insurance, a Democratic senator and an Obama administration official said Tuesday.

The comments by the senator, Sheldon Whitehouse of Rhode Island, and the official, Dr. Richard J. Gilfillan, director of the federal Center for Medicare and Medicaid Innovation, indicated how Democrats were preparing for a Supreme Court ruling on the 2010 law. The law, which President Obama pushed through Congress on a party-line vote, promises to be a salient issue in elections for the White House and Congress this year.

Mr. Whitehouse said “there is no link, no link whatsoever,” between the insurance mandate and the work of Dr. Gilfillan’s agency, which promotes innovations in Medicare and Medicaid.

“The delivery system reforms will survive, and we should not be stalling and dawdling because we are anxious about what the court will do,” Mr. Whitehouse said at a forum held by the Center for American Progress, a research and advocacy group with close ties to the White House. “We don’t have that luxury, and I don’t think it’s a genuine risk.”

Dr. Gilfillan said, “We are confident that the law will be upheld” by the court. But in any event, he said, “the marketplace is boiling with new ideas, new opportunities,” and the private sector is seizing the opportunities.

Increasingly, Dr. Gilfillan said, private insurers are embracing ideas that Congress authorized for Medicare, like coordinating care, rewarding providers who deliver superior care and penalizing those who subject patients to needless risks.

As an example, Dr. Gilfillan cited a recent announcement by Wellmark Blue Cross and Blue Shield of Iowa and the Iowa Health System that they would team up to form an accountable care organization, intended to coordinate care and hold down costs. This collaboration is not for Medicare patients, but for 25,000 people with group or individual coverage provided by Wellmark.

Dr. Gilfillan and Senator Whitehouse said other changes in the delivery and financing of health care were gaining momentum. These include paying a fixed amount to doctors and hospitals for a bundle of services, rather than a separate fee for each service; designating a “medical home” with a primary care doctor to coordinate services for each patient; and imposing financial penalties on hospitals with large numbers of patients who are readmitted within a few weeks after they are discharged.

Mr. Whitehouse said these efforts could be contributing to a slowdown in the growth of health spending, first observed during the recent recession.

Dr. Gilfillan said “there is too much work going on for it not to be having some effect.”

But, recalling how the growth of health costs seemed to slow when President Bill Clinton tried to remake the health care system, Dr. Gilfillan said: “We saw this in the 1990s, a pause and then bang up again. We don’t want to relax.”

Republicans said the changes described by Dr. Gilfillan could speed the consolidation of hospitals, physician groups and other health care providers, increasing their ability to charge higher prices to patients and insurers.

The new law “scrambles the economics of America’s health care system in a way that reduces competition,” said Representative Lamar Smith, Republican of Texas and chairman of the House Judiciary Committee. He and other Republicans cited that as a reason for trying to repeal the law.

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Poll: What It's Like To Be Sick In America

In the lull between the Supreme Court arguments over the federal health overhaul law and the decision expected in June, we thought we'd ask Americans who actually use the health system quite a bit how they view the quality of care and its cost.

Most surveys don't break it down this way.

When the results came back, we found that people who have a serious medical condition or who've been in the hospital in the past year tended to have more concerns about costs and quality than people who aren't sick. No big surprise there.

But what was notable: 3 of 4 people who were sick said cost is a very serious problem, and half said quality is a very serious problem.

Nearly half of those with recent serious illness say they felt burdened by what they had to pay out of their own pocket for care.

The recently ill are more likely to say the cost and quality of care have worsened over the past five years, compared to people who weren't sick.

Among people who've recently required a lot of care, significant proportions say their treatment was poorly managed, with nearly a third complaining of poor communication among their caregivers. One in eight believe they got the wrong diagnosis, treatment or test.

Compared to the not sick people in our poll, Americans who've been sick in the past 12 months ...

Source: NPR/Robert Wood Johnson Foundation/Harvard School of Public Health Poll
Credit: Alyson Hurt/Nelson Hsu, NPR

Those findings led us to investigate the problems people are having, both in our poll and in a series of stories on the radio and the Web we're calling "Sick in America."

The poll, a joint venture of NPR, the Robert Wood Johnson Foundation and the Harvard School of Public Health, is one of very few focusing on people who've actually been seriously ill, injured or hospitalized in the past year.

"This poll listens to the voices of the sick," says Robert Blendon of Harvard. "That provides a good barometer of what's happening in health care in America."

The poll randomly surveyed 1,508 adults across the nation. A little more than a quarter of them had a serious illness, injury or disability requiring "a lot of medical care," or overnight hospitalization within the past 12 months.

If you want to dive deeper, here's a summary of the poll findings, plus the topline data and charts. And you can meet some of the real people who shared their experiences of being sick in America with NPR in this post.

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Bigger hospitals, mergers drive higher prices

Large hospital systems are using their size and market clout to boost prices, a trend that started long before the health reform law passed, according to a study in this month's Health Affairs.

It's the "must-have" hospital systems and large physician groups--providers that health plans must include in their networks--that can command hefty payment rates from insurers, the study found.

The study noted that providers offering specialized or unique services also have increased market clout and can leverage higher prices. Meanwhile, stand-alone community hospitals usually receive payments in line with Medicare fees, Politico reported.

"What we found is that the leverage of some hospitals is growing," report coauthor Paul Ginsburg, president of the Center for Studying Health System Change, told Politico. "That's a contributor to rising healthcare spending."

So hospitals are looking to buy "must-have" hospitals and services to enhance their market clout and demand higher prices from payers. However, such mergers are oftentimes not subject to anti-trust review, according to the National Journal.

A March report by Moody's Investors Service reinforces this trend of healthcare consolidation. It concluded that the ever-changing healthcare environment is prompting hospital groups to grow even bigger, with hospitals teaming up with other facilities, insurers and for-profit companies. It agreed that higher payments from insurers and a competitive advantage in the marketplace are driving the wave of hospital consolidations.

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Nonprofit US hospitals to do more with less-Moodys

Nonprofit hospitals in the United States face a future of rising costs and dwindling funds as the healthcare reform is implemented and the Congress battles over the budget, according to a Moody's Investors Services report released on Wednesday.

To survive what the rating agency is calling a "transition period," the hospitals, which frequently provide free or discounted care for lower-income patients, will have to drastically cut spending.

"As the era of reform and tightened federal funding unfolds, not-for-profit hospitals face an imperative to deliver higher-quality service with lower reimbursement rates per unit of service," it said in a report titled "Doing More with Less."

Moody's has a negative outlook for the sector and expects rating downgrades for nonprofit hospitals to outpace upgrades this year. Another agency, Standard & Poor's Ratings Services, has a stable outlook on the sector, but expects operating pressures to worsen over time.

At the heart of the matter lies Medicare, the health insurance program for seniors which currently serves 49 million beneficiaries.

Last month, an annual federal report on the Medicare fund found it is headed for exhaustion in 2024. Costs for the $549 billion-a-year program will likely leap from about 3.7 percent of gross domestic product in 2011 to 5.7 percent by 2035.

Moody's said some of the health reform law's changes to how Medicare pays for procedures will stress nonprofit hospitals' finances. The law, which the Supreme Court could overturn in coming months, has lowered annual increases to Medicare payment rates.

"While recent annual Medicare rate increases have still been positive, ranging from 1 to 2 percent, they are lower than historical increases of 2 to 3 percent, and lower than if healthcare reform had not been passed," the agency wrote.

Also, the law strengthens ways to recoup Medicare overpayments and will institute "value-based payments" that "reward only those hospitals that show improvement in core measures and report favorable patient satisfaction scores." It will cut off payments for some preventable hospital readmissions, as well, Moody's said.

Even if the law is upheld, there are other threats to Medicare. An agreement between Obama and Congress to bring down the U.S. debt and deficit will result in a 2 percent annual reduction in Medicare rates beginning in January, Moody's said.

"More Medicare reductions are inevitable given the intense federal budget pressure irrespective of whether the healthcare reform law is deemed unconstitutional or not," it added. "The timing and extent of these reductions are unknown at this time, thereby creating more challenges."

Commercial payers will also likely slow their rate increases and many states have cut the Medicaid health insurance program for the poor that they run with the U.S. government, eating away at money sent to hospitals, Moody's said. Meanwhile, healthcare inflation has outpaced U.S. inflation for more than a decade. SECRETS TO SUCCESS: CUT, RESTRUCTURE

Hospitals poised to survive the funding drought are seeking new areas to cut beyond where they slashed spending during the 2007-09 recession. They are also using financial models to estimate future gaps and seeking savings through scale, mostly by creating partnerships or expanding centers, Moody's said.
Many are changing physicians' contracts, tracking physician performance, and shaking up their governance, as well.

The agency said nearly all of the hospitals it rates must build reserves and many have restructured their debt portfolios.

It warned that some have held on to swaps, finance contracts leftover from before the banking crisis, to avoid paying hefty termination penalties. That leaves them exposed to "fund large swap collateral calls, which for certain organizations, exceeded $100 million at various times in the last three years," it said.

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Massachusetts Moves Toward Health-Care Price Controls. Is America Next?

Under Governor Deval Patrick, Massachusetts has tried a couple of methods for limiting the government’s exposure to rising health-care costs. First, Patrick forced insurers to stop raising premiums, which led to a predictable train wreck, as insurers started hemorrhaging cash. When a state appeals board overturned Patrick’s decree, he shifted gears, and began going after the prices charged by hospitals and doctors. On Friday, the Massachusetts House unveiled new legislation toward that end. And progressive health-care observers around the country are taking notes.

The 178-page bill, entitled the “Health Care Quality Improvement and Cost Reduction Act of 2012,” will be followed by similar legislation from the Massachusetts Senate this week. As the Pioneer Institute’s Josh Archambault puts it, “the character who should be the hero of this drama, the patient, is nowhere to be found.” Rachel Zimmerman and Carey Goldberg summarize the bill this way:

1. Oversight: A new, quasi-governmental agency called the Division of Health Care Cost and Quality would oversee the transition to the new payment and delivery system with a board including consumer, government and industry representatives.
2. Cost-Cutting: To curb the increase in medical spending, the plan establishes a cap for health-care spending linked to the local economy, the Gross State Product, minus one-half a percent.
3. Leveling The Field: The state could impose a 10 percent “luxury tax” on pricey hospitals that charge more than 20 percent of the state median price for a given service without being able to justify that higher price. (Two earlier reports by Attorney General Martha Coakley found that certain hospitals exploited their market clout and charged higher prices without offering better quality care.) Hospitals would pay this penalty into a “distressed hospital” fund for institutions that serve a high proportion of poor and vulnerable patients.
4. Accountable Care Organizations would take on greater prominence, though the bill stresses that joining an ACO would be voluntary for patients and providers. The bill defines the size of an ACO as bigger than 15,000 people and no larger than 400,000. Patients would have the right to appeal decisions made by their ACO doctors, and have the right to a second opinion.
5. Shifting Payments: The state’s medical establishment would continue its shift toward global payments and away from fee-for-service systems. The measure would “transition the industry to adopt alternative payment methodologies such as global payments and bundled payments for acute and chronic conditions.”
6. Technology: Electronic health records would be required for all providers by 2017.
7. Greater transparency would be attained through detailed pricing available to consumers on the Web, as well as greater disclosure of out-of-pocket costs to patients up front.
8. Streamlining Care: The measure stresses greater coordination of care through primary care, and the establishment of “patient-centered medical homes” so that patients could have a single point of coordination for all types of care.
9. Medical Malpractice: New rules on medical malpractice would create a 180-day cooling off period while both side try to negotiate a settlement. Also, the measure would allow providers to freely offer an apology to a patient.
10. Tiering: Under a provision called “smart tiering” patients might pay more for more expensive services.
11. Upping The Rates: The bill would make several changes to Medicaid, including increasing MassHealth rates paid to providers.
12. Training: Funding for workforce training and development are included in the measure, and a provision would forgive loans to primary care doctors who practice in rural or underserved areas.

Bureaucrats will decide which providers are charging too much
Section 56 of the House bill directs the newly empowered Division of Health Care Cost and Quality to “assess a surcharge” to providers who charge more than 20 percent more than the state median. The surcharge will equal 10 percent of the difference between the provider price and the state median.

The bill provides two exemptions to this “luxury tax.” The first is if “said service has limited or exclusive availability in the commonwealth, as determined by the division.” The second is if “the division determines that the quality of the service is reasonably related to the price.” These vague definitions lend themselves to political hanky-panky, in which politically powerful and well-connected providers exempt themselves from the bill’s luxury tax, or set up its definition of “quality” in self-serving ways.

Providers are “prohibited from passing along the costs of this surcharge to customers,” but this is empty rhetoric. Given the incredible complexity of hospital billing, it will be very easy for high-priced hospitals with significant market power to charge more for other services—say, those in which their prices are under the 120-percent-of-median threshold—to make up for lost revenue in other areas.

Low-cost providers will have an incentive to increase prices
The beauty of government-controlled relative pricing is that it creates an incentive for everyone to raise prices. There are two ways for a high-cost provider (say, Partners HealthCare) to get their prices within the 20-percent band: (1) lower their prices; (2) get everyone else to raise their prices.

Thanks to the transparency provisions of the bill (and transparent prices are, in general, a good thing), low-cost providers will know what their peers are charging. They will therefore have the ability to raise their prices considerably.

For example, let’s say Mass General charges $32,000 for a coronary angioplasty, whereas the state median is $21,000, driven in part by low-cost Tufts, which is charging $16,000. Now that Tufts knows that MGH is charging $32,000, Tufts knows that it can charge, say, $25,000 per procedure, and still gain favorable status from insurers, without incurring the new “luxury tax.”

Once Tufts raises its price to $25,000, the “median” price for angioplasties in the state goes up, allowing MGH to raise its price further, and the cycle repeats itself.

Unserious about medical malpractice reform
If Massachusetts were serious about cost control, the House bill would have Texas-style caps on malpractice damages. In 2010, in Texas, there were 209 paid medical malpractice claims per 10 million residents, compared to 433 for Massachusetts. (The national average was 326.) And the average medical malpractice payment in Texas that year was $170,632, compared to $336,437 nationally and $484,290 in Massachusetts.

Section 107 of the Massachusetts bill caps malpractice claims against a non-profit charity at $100,000, exclusive of interest and costs. Other non-profit organizations, and for-profit ones, still face unlimited liability.

Don’t worry, though: providers will be able to issue an “apology” to the harmed party, which will be “inadmissible as evidence in any judicial or administrative proceeding.” Studies show that such apologies do reduce the frequency of lawsuits, so legalizing apologies isn’t nothing.

But any doctor will tell you that it is the personal fear of liability that drives defensive medicine. Until and unless that liability is numerically capped, doctors will continue to over-prescribe tests and procedures that protect them from lawsuits.

In Texas, capping malpractice damages led to a huge influx of physicians into the state. Given that Massachusetts has among the longest wait times in the nation for physician appointments, you’d think they’d be interested in addressing this problem. They were not.

Increased Medicaid spending is great, but doesn’t lower costs
On a humanitarian level, it’s great that the law increases reimbursement fees to physicians for MassHealth, the state’s Medicaid program. But it’s not clear to me, based on an initial reading of the bill, how much that will cost. Especially given that Massachusetts has an especially extensive Medicaid program.

Global budgeting never works
Finally, the bill assigns a “global” budget to the state health-care system, linking state health spending to the Gross State Product less 0.5 percent. While it would be great for health spending to grow at a lower rate than the rest of the economy, it’s ironic that Democrats in Massachusetts find this appropriate, given that, on the national level, when Republicans advocate such a spending trajectory, they’re lambasted as cruel and inhumane.

More importantly, global budgeting doesn’t work. If you’re an individual doctor in Massachusetts, you’re not thinking about a state-mandated “global budget” when you make your prescribing decisions. You’re thinking about the best interests of the patient you have, and about protecting yourself from lawsuits.

In the Medicare program, we’ve been trying to impose various price-control systems since the 1970s. None of them worked. As I wrote in my National Affairs article, “Saving Medicare from Itself,” the fundamental problem with top-down price controls is that individual doctors are always capable of outsmarting the bureaucrats, who don’t figure out that they’ve been had until it’s too late.

Democrats in Massachusetts are labeling their efforts as “Health Reform 2.0.” They think they will save $160 billion over the next 15 years. And we can be sure that Democrats in Washington will aim to impose similar provisions on the U.S. health-care system when they have the chance.

As Harvard Medical School Dean Jeffrey Flier put it in 2009, “The majority of our representatives…quietly [understand] that [the Affordable Care Act] can only be the first step of a multiyear process to more drastically change the organization and funding of health care in America. I have met many people for whom this strategy is conscious and explicit. We should not be making public policy in such a crucial area by keeping the electorate ignorant of the actual road ahead.”

Thanks to our neighbors in Massachusetts, the electorate can now know what to expect.

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How Will Healthcare Reform Affect Unnecessary Care?

President Obama's healthcare reform law focuses in part on reducing "unnecessary care," or tests and procedures ordered for reasons other than medical necessity. Despite the goal's good intentions, many physicians object to the push to reduce "unnecessary care," saying reality often forces the hand of providers prescribing care. In some cases, patients need multiple tests to diagnose a difficult problem; in others, the patients request those tests regardless of physician advice. If a patient dies because a physician skipped a test that could have provided a solution, the physician could be sued for malpractice — a costly, time-consuming and stressful process.  

According to the Medscape Physician Compensation Report: 2012 Results, the majority of physicians (67 percent) said they do not plan to reduce the number of tests, procedures and treatments they perform. Only about a quarter of physicians (27 percent) said they would reduce the number of tests and procedures because the guidelines are valid. These numbers do not bode well for this aspect of healthcare reform; despite a push by hospitals and governmental agencies to reduce redundant or avoidable care, a lack of physician support may signal a death knell for the initiative.

Why physicians order unnecessary care
Interestingly, physicians and policymakers seem to be on the same page about the issue of unnecessary care — they just don't agree on a solution. In a nationwide survey of 627 internists and family care physicians published in the Archives of Internal Medicine, 43 percent believed that much of the healthcare received in the United States is unnecessary. Twenty-eight percent acknowledged that they were personally ordering more tests and referring more patients to specialists than they would "ideally like to be."

But acknowledging the problem doesn't mean an end to it. According to the survey, 76 percent of physicians blamed malpractice concerns as the cause of unnecessary care. Eighty-three percent of physicians thought they could be sued for not ordering a test, suggesting that tests are ordered simply to avoid the possibility — however remote — of a lawsuit. Another 52 percent said they ordered excess tests and other procedures because they were under pressure to meet clinical performance measures, which are used to evaluate physicians' job performance.

Forty percent of physicians blamed their workload, saying time constraints made it difficult to determine the cause of medical complaints for many patients. In those cases, they ordered tests to get answers. While most physicians did not admit to personally ordering extra tests to generate more income, they said that "other" primary care physicians would order fewer diagnostic tests if not for the financial incentive. They were even more accusatory towards specialists.

The break-down by specialty
In the Medscape survey, physicians most commonly responded that they would not follow "unnecessary care" guidelines because of defensive medicine or patient welfare concerns. Of those profiled below who believed in the guidelines, cardiologists, internists and family medicine physicians were the most likely to try and prevent unnecessary care. Ophthalmologists, orthopedic surgeons and ER physicians were least likely to trust the guidelines. The statistics below detail how each specialty responded to the question on preventing unnecessary care.

Cardiologists
No, because I am still going to practice defensive medicine: 20%
No, because these guidelines are not in the patient's best interest: 38%
Yes, because they affect my income: 9%
Yes, because they are good guidelines: 32%

Emergency medicine physicians
No, because I am still going to practice defensive medicine: 36%
No, because these guidelines are not in the patient's best interest: 25%
Yes, because they affect my income: 25%
Yes, because they are good guidelines: 14%

Family medicine
No, because I am still going to practice defensive medicine: 23%
No, because these guidelines are not in the patient's best interest: 39%
Yes, because they affect my income: 7%
Yes, because they are good guidelines: 31%

Gastroenterologists
No, because I am still going to practice defensive medicine: 29%
No, because these guidelines are not in the patient's best interest: 40%
Yes, because they affect my income: 9%
Yes, because they are good guidelines: 23%

General surgeons
No, because I am still going to practice defensive medicine: 27%
No, because these guidelines are not in the patient's best interest: 44%
Yes, because they affect my income: 7%
Yes, because they are good guidelines: 22%

Internists
No, because I am still going to practice defensive medicine: 23%
No, because these guidelines are not in the patient's best interest: 31%
Yes, because they affect my income: 9%
Yes, because they are good guidelines: 36%

Neurologists
No, because I am still going to practice defensive medicine: 20%
No, because these guidelines are not in the patient's best interest: 49%
Yes, because they affect my income: 7%
Yes, because they are good guidelines: 24%

Ophthalmologists
No, because I am still going to practice defensive medicine: 21%
No, because these guidelines are not in the patient's best interest: 60%
Yes, because they affect my income: 9%
Yes, because they are good guidelines: 10%

Orthopedic surgeons
No, because I am still going to practice defensive medicine: 30%
No, because these guidelines are not in the patient's best interest: 46%
Yes, because they affect my income: 7%
Yes, because they are good guidelines: 16%

Radiologists
No, because I am still going to practice defensive medicine: 26%
No, because these guidelines are not in the patient's best interest: 47%
Yes, because they affect my income: 9%
Yes, because they are good guidelines: 18%

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Reining in Readmissions at New Jersey Hospitals

Starting in 2013, the Affordable Care Act will financially penalize hospitals that readmit Medicare patients within 30 days of discharge

Medicare will soon begin penalizing hospitals for readmitting patients within 30 days of their discharge, and New Jersey hospitals are bracing for what could be thousands of dollars in lost revenue. As they have worked over the past few years to get a grip on this issue, hospitals have come to realize that it takes an entire community to reduce readmissions. 

For that reason they are increasingly joining forces with nursing homes, home healthcare providers, and physicians to figure out why some patients wind up back in the hospital within a few days or weeks of being discharged.

Hospitals with readmission rates deemed excessive by Medicare for heart failure, heart attack, and pneumonia will see their Medicare reimbursements reduced in fiscal 2013, which starts October 1, with the penalty capped at 1 percent of their annual Medicare revenue. The cap rises to 2 percent in 2014 and 3 percent in 2015. 

Readmissions penalties are being imposed under the 2010 Affordable Care Act, and New Jersey hospitals have been working for several years to reduce their 30-day admissions rates -- that is, a readmission within 30 days after a patient leaves the hospital -- in the hope of easing the financial pinch, or avoiding it altogether.

A “readmissions collaborative,” convened by the New Jersey Hospitals Association and now in its third year, brings hospitals, nursing homes, home healthcare, and hospice providers together to seek ways to reduce avoidable readmissions. Theresa Edelstein, vice president, post-acute care policy at the NJHA, said there is now “a laser-like focus by all hospitals” on reducing readmissions.

Edelstein said the Centers for Medicare and Medicaid Services has signaled that while hospitals may be the first providers to face payment reductions for readmissions, they won’t be the last: nursing homes and other providers eventually expect similar sanctions. “CMS has made it very clear that this is an issue that crosses [healthcare] settings and needs to be tackled collaboratively and cooperatively by all the providers.” 

Paul Langevin is president of the nursing home association, the Health Care Association of New Jersey, whose members are working with hospitals to reduce excessive readmissions from nursing homes to hospitals. Langevin said hospitals frequently discharge Medicare patients to nursing homes “and they want to discharge patients to nursing homes where they know the resources and skill sets are there so they can take care of people and not just panic on a Friday afternoon and call the hospital and say, ‘I’m sorry, I have to send Mrs. Jones back.” 

Langevin said the nursing home should be able to provide the care the patient needs, and should not in most cases need to send patients to acute care hospitals. The idea is to stabilize the patient where they are living, whether in their home or a nursing home, and keep them healthy enough so that a stay in an acute care hospital can be avoided. “Every time you transfer an elderly, frail, confused patient to a different venue it upsets them tremendously, and it is not good quality care to be bouncing to and from the hospital,” Langevin said.

Working alongside the NJHA on readmissions issues is the nonprofit Healthcare Quality Strategies Inc. of East Brunswick, which receives contracts from the CMS to spearhead healthcare quality initiatives in New Jersey. Said Dr. Andrew Miller, medical director “The key thing is that if you want to prevent avoidable readmissions, it’s not just a hospital issue, it is a whole community issue.”

Miller said all providers in the community -- hospitals, nursing homes, home health agencies, physicians, hospice, dialysis, behavioral health, and county offices on aging -- “have to be involved if you are really going to have an impact on reducing readmissions rates.” Since August 2011 HQSI has been working in three regions to reduce readmissions: the greater Trenton area; Cape May and Atlantic counties, and Cumberland County, and should have some results in three or four months. 

Figures compiled by HQSI from Medicare claims show that moving the needle on readmissions is a challenge: New Jersey’s overall readmission rate declined slightly to 21.05 percent in the third quarter of 2011, compared with 21.39 percent in the third quarter of 2009. There is wide regional variation on readmission rates, from 15.8 percent in Hunterdon to 25 percent in Hudson County, and Miller said he is optimistic that “it will be possible to get these rates down lower.”

At this point, there is no available estimate of how many of New Jersey’s 72 acute care hospitals will be penalized, or how much revenue they might lose. Hiten Patel, managing director, research and insights, for the healthcare consulting firm The Advisory Board Company, explained that when judging whether a particular hospital’s 30-day readmission rate is excessive, CMS first does a risk adjustment designed to avoid unfairly penalizing hospitals. 

“CMS will look back one year at what other diseases or conditions the patient has, so if you are a hospital that sees sicker patients, [CMS] accounts for that,” Patel said. An Advisory Board analysis estimates that less than 1 percent of U.S. hospitals will have a penalty of $1 million or more; about a quarter of the hospitals will see no penalty, and 50 percent of U.S. hospitals will see penalties ranging from $1 to $100,000. “We have been trying to let people know that this is not a doomsday scenario for 2013, because the math comes out to be fairly small in the first year,” Patel said. But he added it is not surprising that hospitals are worried, since the penalties rise in subsequent years, and clamping down on readmissions rates has proven to be a problem that can’t be remedied quickly.

Reducing readmissions is a major initiative of the Robert Wood Johnson Foundation, which last awarded grants to nine hospitals and healthcare providers in New Jersey for pilots exploring the effectiveness of various strategies for reducing readmissions. One of those pilots, at Robert Wood Johnson University hospital in Hamilton, has a coach visit newly discharged patients at home, to make sure medication instructions are understood and followed. 

University Hospital in Newark, the teaching hospital of the University of Medicine and Dentistry of New Jersey-New Jersey Medical School, received grants from the RWJF and the Healthcare Foundation of New Jersey for a pilot program that uses intensive case management to try to reduce readmissions of patients with multiple chronic conditions. A partnership with the Visiting Nurse Association Health Group in Newark, the pilot uses a four-tiered approach that involves home health aides, registered nurses, advanced practice nurses, and physicians.

Dr. Melissa Scollan-Koliopoulos, assistant professor of medicine at New Jersey Medical School, said the majority of the patients enrolled in the pilot are low-income Newark residents, many of whom are uninsured and don’t have a regular primary care physician. The pilot began recruiting patients last October; it is now working with 105 patients and expects to have between 300 and 500 over the next two years. 

“We see patients coming into the hospital with complex medical conditions who have not seen a physician in many years,” Scollan-Koliopoulos said. “The first thing we do is get at the root cause of why they were not able to establish a relationship with a primary care physician. We have to find a physician who can see them within 48 and 72 hours after they are discharged from the hospital” which is when most medication problems surface. If patients don’t fill a prescription because it’s too expensive; her team will go back and find an affordable substitute. 

Since the pilot began, “We’ve had 28 calls for medication-related issues and we’ve been able to prevent an emergency room visit in 17 of them.” Scollan-Koliopoulos said the visiting nurse sees the patients every day while they are in the hospital “so they will trust [the nurse] enough to call if they have problems when they get home.”

Leigh Bailey is corporate director of case management at Jersey City Medical Center, which two years ago joined a national readmissions collaborative that exchanges best practices among healthcare providers. She said the critical first step is an “enhanced assessment” of each readmission case “to really get at the root cause of why patients are being readmitted. We keep asking ‘Why? What happened after the hospitalization? What went wrong.’?” For example, heart failure patients have to weigh themselves each day, since weight gain is sign their condition is worsening. 

“We found out that patients didn’t have scales, and they really didn’t understand the significance of weight gain. So we did fundraising and purchased scales" with large, bold numbers that are easy for the elderly to read. 

And her team wrote an easy-reading booklet that explains heart failure, with instructions on how to shop for low sodium foods to prevent fluid retention. Medication compliance is a major problem: “We have patients being sent home with eight or nine prescriptions, and making sure they take them at the right time is extremely difficult.” These efforts are having an impact: Bailey said the hospital has been able to cut its heart failure readmission to 22 percent, compared with 32 percent several years ago.

David Knowlton, president of the New Jersey Health Care Quality Institute, said the key to lowering readmission rates is to improve discharge planning, which he called “the orphan sister of healthcare. We’re not sending patients back with customized information on what to do after they leave the hospital, and therefore they take the wrong pill, they take it at the wrong time, they don’t know how to change the dressing, and they end up back in the ER. The decision (by the hospital) to discharge is a decision that says the patient is capable of self care. That is what it comes down to, and we don’t do it well.”

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