October 2012 marks the beginning of CMS penalties for high readmission rates, but it's clear that great confusion over these penalties continues. Just how substantial are they and how much will it cost providers?
Hospitals, ACOs, and providers of post acute services of all types should be both aware and concerned. Either you're a target of these readmission penalties and at risk financially, or you're part of the solution because you provide care in homes and communities that helps reduce readmissions and costs by keeping patients healthier and in their homes. Either way, you're not immune.
Ignore these penalties at your own peril, and know that they will only get worse. Many providers remain confused about the size and scope of these penalties, but are faced with penalties of .42 to 1% starting immediately in October.
According to KHN, 2,211 hospitals will be penalized for readmissions for certain conditions in October, amounting to $280 MILLION dollars in penalties in the next 12 months alone. The average penalty will be 0.42 percent of revenue, but 278 facilities will receive the maximum penalty of 1 percent. The costs associated with such readmissions could run well into the high six and low seven figures a year for single, large facilities, reported Kaiser Health News. And that's just in the first year. Penalty rates are scheduled to increase to as much as 3% of revenue.
"And who are those pesky people who have been re-admitted?" asks Lori Orlov in the Aging in Place technology Watch? "Surprise, they are disproportionately comprised of seniors, initially with diseases like pneumonia, heart attack and heart failure, with more diagnoses added each year."
Consider this the new era of financial incentives that force alignment in services provided to reach the common goals of reduced readmissions and lower overall costs. As financial incentives align, the formation of new collaboratives, ie "Care Coordination Models," will only accelerate. Technology will help enable and drive change, and the focus will be on better managing care transisions and better utilizing resources. Hospitals and ACOs will cooperate with post acute providers of all types to achieve this double-aim and Ankota's is leading the wat with technology to connect and manage these ecosystems or providers.