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Boston and Beyond

September 15, 2013

Hospitals pay price for 'excessive' readmissions under Obamacare

Massachusetts hospitals will lose millions of dollars in funding this year – and perhaps tens of millions more in the future – because of penalties imposed by the federal Medicare program on hospitals that excessively readmit some of the state’s sickest patients, the New England Center for Investigative Reporting has found.

“In Massachusetts, we’re facing approximately $5 billion in cuts to Medicare over 10 years,” said Tim Gens, executive vice president with the Massachusetts Hospital Association. Add to that an anticipated $1.5 billion in sequestration cutbacks due to be imposed in January along with other potential funding cuts, and “it’s a very scary time for hospitals,” Gens notes.

The Hospital Readmission Reduction Program, a provision of the Affordable Care Act of 2012, better known as Obamacare, was designed to force hospitals to change the way they treat elderly patients by keeping them out of the hospital and in their own homes. To realize that goal, Medicare imposed penalties that increase annually from less than one percent in fiscal 2012 to a top rate of three percent by 2014, based on a hospital’s total Medicare payments

“In the long run, it will reduce per patient cost because if a patient isn’t going back into the hospital to have the same treatment done, we’re not going to be paying for those same treatments twice,” Ray Hurd, regional administrator of the Centers for Medicare and Medicaid Services, said of the penalties.

It’s not that Medicare is against readmissions, Hurd said. Patients who need hospital care will still be able to get it. The policy only aims to cut unnecessary readmissions.

With Medicare’s penalty program in its early stages, however, it’s still too soon to tell whether reducing readmissions will actually result in better patient care, said Katherine Baicker, a professor of Health Economics at Harvard.

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