Much has been made of the financial incentives of the Affordable Care Act. This is true for small practices in particular, who can receive incentive payments from the Centers for Medicare and Medicaid Services upwards of $43,720 (for Medicare) or $63,750 (Medicaid) by demonstrating the meaningful use of electronic health records (EHRs).
But the financial penalties—most commonly referred to as “payment adjustments” in policy wonk circles—aren’t discussed as frequently. The innocuous-sounding payment adjustments account for a serious loss of revenue, especially for hospitals.
In 2013, 2,200 hospitals were penalized for excessive readmissions for a total of over $280-million in withheld Medicare payments. Of those, only 198 hospitals (or 9%) were given the full penalty of 1% of their Medicare payments.
Each year that a hospital fails to meet an acceptable level of readmissions, the penalty increases: up to 2% in the second year and 3% in the third. If more hospitals are given the full penalty and continue to miss their readmission targets, the amount of withheld Medicare payments could skyrocket. A single hospital could lose hundreds of thousands of dollars for not taking steps to reduce readmissions.
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There’s a lot at stake, especially considering what the Affordable Care Act’s Medicare Hospital Readmissions Reduction Program defines as an unacceptable readmission. Currently, the program only looks at Medicare patients over the age of 65 who return to the hospital within 30 days of discharge after a diagnosis of heart attack, heart failure, or pneumonia.
For fiscal year 2015, that will expand to include congestive obstructive pulmonary disease and elective hip and knee replacements. Also, there’s room for further conditions to be added, meaning that hospitals could risk steeper financial penalties in years to come should the scope of unacceptable readmissions widen.
The penalties can be avoided, according to Anay Bedi, the Managing Director at Healthcare Business Insights, by adopting effective patient engagement techniques.
Bedi told Patient Prompt, “The movement toward accountable care organizations and fee for value is pushing providers toward better patient engagement. Hospitals that don’t move in that direction will go into the red. They want to keep patients properly engaged to keep their costs low.” (Read more on this in the white paper. Healthcare Reform: The Journey to Patient Centered Care Through Engagement)
Engaging patients will save organizations money beyond readmissions.
Health Affairs urges organizations to switch their emphasis from high-acuity care to low-acuity care, especially for chronically ill patients. They call this a medical perimeter—a network of support outside of the organization that patients can turn to before returning for primary care.
In fact, Health Affairs suggests organizations that don’t “invest in developing such a ‘medical perimeter’ to provide more appropriate, lower acuity care to chronically ill patients are at risk for being over-capacity within 10 years, swamped by non-surgical cases. Patient engagement is a critical focus of these new primary care access points to support ongoing management and avoid more costly inpatient admissions.”
But to save money 10 years—or even 2 years—down the line, hospitals need to invest now in patient engagement tools. These can be as simple or as complex as dictated by the needs of the hospital, but the basics are always the same: a technological solution that integrates with EHRs to communicate with patients, forming that vital medical perimeter.
If you’re looking for a truly effective patient engagement solution, schedule a brief complimentary online presentation with one of our account managers.
We’ll be happy to explain how Patient Prompt can be customized to meet your unique needs.