CMS Readmissions Pilot Could Be a Sleeper Hit

(MoneyWatch)  CMS, which has recently targeted "never" events and avoidable complications in hospitals, is now tackling an even bigger challenge: readmissions. According to a recent study in the New England Journal of Medicine, one in five Medicare patients is readmitted within a month of discharge; a third are back in the hospital three months after they're discharged. The cost to Medicare was $17.9 billion in 2004, and is probably much higher now.

CMS' ambitious new Care Transitions Project aims to smooth the transition from the hospital to community settings and to ensure that patients get the care they need to prevent them from being readmitted. Initially, the project will involve 14 Medicare quality improvement organizations (QIOs) that will work in these areas: Upper Capital Region around Albany, N.Y.; east metropolitan Atlanta; Baton Rouge, La.; Evansville, Ind.; northwest Denver; Harlingen, Texas; the greater Lansing, Mich., area; Miami; Southwestern New Jersey; Omaha, Neb.; Western Pennsylvania; Providence, R.I.; Tuscaloosa, Ala.; and Whatcom County, Wash.

The QIOs, private organizations that contract with Medicare on a statewide basis, will begin by providing a report to CMS that "characterizes the selected target population for which the QIO will aim to reduce readmission rates," according to a summary by the Colorado QIO. "The report will give examples of inappropriate or wasteful services affecting rehospitalization rates, describe how health services are delivered to the target population, and specify any opportunities to address disparities."

Whoa! If these QIOs are halfway honest about local conditions, and their reports are made public, they could ignite a firestorm among healthcare providers. For one thing, the NEJM study found that the highest readmission rates were in Maryland, New Jersey, Louisiana, Illinois and Missisippi. Those rates were 45 percent higher than those in the low-readmitting states of Idaho, Utah, Oregon, Colorado and New Mexico. Poorer coordination of care in some states is a likely culprit. Signaling potential provider discomfort with CMS' crackdown, the Miami Herald ran a story noting that Miami, "long known for its high healthcare costs," had been chosen as one of the sites for the CMS pilot program.

Wait--there's more. The QIOs are supposed to work with providers in each community to implement quality improvement initiatives that will reduce readmissions, targeting specific conditions such as acute myocardial infarction, congestive heart failure and pneumonia. Considering that half of all readmitted Medicare patients had not even seen an outpatient provider after their first hospitalization, these QIO-inspired interventions could lead to a revolution in the trenches that would both benefit patients and help control costs. There's just one snag: who's going to pay?

Although CMS is about to launch a "medical home" pilot, it's not clear that Medicare is going to start paying anyone for coordination of care. However, it might punish hospitals that don't do more to coordinate post-discharge care. The Medicare Payment Advisory Commission (MedPAC) has recommended that hospitals be financially penalized for high readmission rates of patients with certain conditions. It has also suggested that the government relax its anti-kickback rules so that hospitals can bonus physicians who help it reduce readmissions. And MedPAC would have CMS test the idea of bundling payments for episodes of care that encompass hospitalization and post-acute care. Both of the latter policies are included in President Obama's 2010 budget proposal.

Maybe the Care Transitions Project will start something, after all.