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The Dose - JK Wall

Welcome to The Dose, which tackles the finances behind local health care and life sciences and points to the most interesting national analysis. Your host is J.K. Wall.

Medicare / Government Health Care

More hospitals hit with do-over penalties

October 6, 2014

In health care, there is very little agreement over how to measure the quality of the care delivered.

So the quickest shorthand that has emerged—at least for hospitals and health systems—is how many patients who have been hospitalized come back, for any reason, within 30 days of leaving the hospital.

Have too many of these 30-day readmissions and the federal Medicare will dock your pay—not just for the patients who came back, but for all of Medicare’s senior patients.

That program, now in its third year, is a big deal because Medicare is the nation’s largest health insurance program. The readmission penalties will take a bite out of the revenues of 68 Indiana hospitals—or just more than half of those not excluded from Medicare’s readmission program.

That’s up from 42 hospitals hit with penalties last year—a 62-percent increase. That’s mainly because more hospitals qualified for the program this year, and because the number of conditions for which they could be penalized was also expanded from three to five.

Those conditions now include heart failure, heart attack, pneumonia, chronic lung problems and elective hip and knee replacements.

Nationally, the number of hospitals hit with readmission penalties rose 17 percent to 2,610, according to Kaiser Health News.

These penalties are still fairly small for most hospitals—averaging 0.62 percent of Medicare payments in Indiana and 0.63 percent nationally.

The size of the penalties has grown as the maximum penalty stepped up in phases from 1 percent in 2013, the program’s first year, to 2 percent this year and 3 percent next year. (The penalties kick in at the beginning of the federal government’s fiscal year, which began Oct. 1.)

Here are the 10 central Indiana hospitals that will be hit with the largest penalties next year:

1.    Franciscan St. Elizabeth Health-Crawfordsville: 1.75 percent
2.    St. Vincent Anderson: 1.5 percent
3.    Community Hospital Anderson: 1.38 percent
4.    Community Hospital South: 1.15 percent
5.    Monroe Hospital (Bloomington): 1.14 percent
6.    IU Health West: 0.71 percent
7.    Henry County Memorial Hospital: 0.54 percent
8.    Eskenazi Health: 0.42 percent
9.    The Indiana Heart Hospital: 0.41 percent
10.    Franciscan St. Elizabeth Health-Lafayette Central: 0.31 percent

(Note: Franciscan St. Elizabeth Health closed its Central campus last month and consolidated its Lafayette operations at its East campus.)

There were also 11 central Indiana hospitals, out of those eligible for penalties, that will avoid any hits to their Medicare revenue next year. Here they are, in alphabetical order:

Fairbanks
Franciscan St. Elizabeth Health-Lafayette East
Franciscan St. Francis Health-Carmel
Franciscan St. Francis Health-Mooresville
Hancock Regional Hospital
Indiana Orthopaedic Hospital
IU Health Morgan
Riverview Hospital
St. Joseph Hospital (Kokomo)
St. Vincent Fishers Hospital
St. Vincent Heart Center of Indiana

Before you use these numbers to change your health care buying behavior, you should note this: It has been shown that hospitals with higher numbers of poor and minority patients perform worse on Medicare’s system.

Medicare tries to adjust its scorekeeping to reflect the different levels of illness handled by different hospitals. For example, IU Health’s downtown facilities treat far sicker patients than, say, IU Health Saxony.

But so far it does not adjust the data based on the socioeconomic status of patients. But socioeconomic status has been linked to health status ad infinitum by researchers—which makes it no surprise that the hospitals in Anderson are seeing more readmissions than those in Carmel.

As I wrote last year, what’s most telling are the differences in performance between hospitals in the same area--meaning the patinets probably have very similar socioeconomic characteristics. I’m particularly intrigued by the St. Vincent Heart Center of Indiana in Carmel having no penalty for readmissions, while the Indiana Heart Center in Castleton (now called Community Heart & Vascular) was hit with a 0.41 percent penalty.

Similarly, IU Health West in Avon will suffer a penalty of 0.71 percent while its nearest competitor, Hendricks Regional Health, had only a 0.09 percent penalty.

Also, Riverview Hospital in Noblesville has no readmissions penalty and St. Vincent Carmel has a 0.02 percent penalty, while their nearby competitor, IU Health North, has a 0.20 percent penalty.

You can see Hendricks Regional, St. Vincent Carmel, IU Health North and other hospitals with modest penalties below:

11.    Columbus Regional Hospital: 0.25 percent
12.    IU Health North: 0.20 percent
13.    IU Health Ball (Muncie): 0.19 percent
14.    Johnson Memorial Hospital: 0.16 percent
15.    Franciscan St. Francis Health-Indianapolis: 0.14 percent
16.    Community Howard Regional (Kokomo): 0.13 percent
17.    Witham Health Services: 0.11 percent
18.    Community Westview: 0.10 percent
19.    IU Health (downtown hospitals): 0.10 percent
20.    Community Hospital North: 0.09 percent
21.    Hendricks Regional Health: 0.09 percent
22.    St. Vincent Carmel: 0.08 percent
23.    Major Hospital (Shelbyville): 0.05 percent
24.    IU Health Bloomington: 0.04 percent
25.    Community Hospital East: 0.03 percent
26.    IU Health Arnett (Lafayette): 0.03 percent
27.    St. Vincent Indianapolis: 0.02 percent

Even though these penalties are small, they are one of the key factors pushing hospitals to focus on patients’ health not just when they are inside their four walls, but also when they are outside it.

For example, Eskenazi Health has purchased apartment buildings to serve as transitional housing for homeless and mentally ill patients, so they make fewer visits to the Eskenazi ER. Eskenazi also works with local lawyers to get landlords to clean up mold-infested housing units, to prevent asthma attacks and other maladies. And it created a program that sends nurses and social workers into homes of low-income seniors, which reduced hospitalizations 44 percent.

“It’s a health model as opposed to a disease model,” Eskenazi CEO Dr. Lisa Harris told me a couple years ago. “This is the right model for everyone.”

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