• Would we trade Medicare savings for accelerated readmissions reduction?

    Reducing hospital readmissions requires some investment by hospitals and clinicians of time, effort, and money. As Burke and Coleman write, these are barriers that are not lowered by financial penalties.

    Physicians seeking resources from their hospital partners may find that many hospitals do not consider themselves able to make this investment, particularly if discretionary resources are consumed paying readmission penalties. Even with sufficient financial resources, physicians may find implementing multicomponent interventions with high fidelity (ie, reproducing complex interventions in exactly the same way as the original) challenging given competing priorities and time pressures.

    This makes sense. In fact, it’s aligned with one of the arguments against penalizing hospitals that are under-resourced. It could harm their ability to do the very things that readmissions penalties are supposed to motivate.

    One doesn’t have to think too far outside the box to arrive at a solution. Why isn’t the money taken from a hospital in penalties placed in escrow, to be returned to the hospital either (a) when readmissions come down or (b) for the purpose of funding (approved) programs designed to improve care and lower readmissions?

    Such a scheme would, I think, effectively double the readmissions-reducing incentive. Of course hospitals don’t want to lose the money in the first place (incentive #1). But, if they do, they can get it back by doing the right thing (incentive #2). The latter incentive doesn’t exist now. Why shouldn’t it?

    Of course, this approach would defeat the other objective of readmission penalties: reducing net Medicare spending. I consider this a feature, not a bug. It separates the two goals of spending reduction and care improvement. Which is the primary objective of Medicare’s Hospital Readmissions Reduction Program? Would a revised program that saved less money by providing more resources for hospitals to reduce readmissions be an improvement or a step backward?


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    • If it’s an under-resourced hospital in the first place, the argument is that applying a quality withhold like that hurts their cash flow. Just like any business, they need that cash coming in the door to pay the bills. A big wealthy hospital or large insurer can handle having one to three percent of their annual payments withheld pending their meeting whatever quality metric. A poorer hospital could be further strained.

      Maybe you could restructure things as a quality bonus to be earned if their readmissions come in below whatever threshold. But of course that would require legislative change.