Bloomberg News

Hospital Readmissions for U.S. Medicare Patients Decline

February 28, 2013

Hospital readmission rates for Medicare patients are dropping after increasing for more than five years as the 2010 U.S. health-care law begins levying penalties for excessive numbers of repeat patient visits.

Thirty-day readmission rates fell to 17.8 percent late last year after averaging 19 percent for the past five, the Centers for Medicare and Medicaid Services said today on its website. The decline translates to 70,000 fewer readmissions in 2012 for Medicare, the U.S. health plan for the elderly and disabled.

The drop shows the Affordable Care Act is working to rein in costs, Jonathan Blum, a deputy administrator for the Centers for Medicare and Medicaid Services, said today at a U.S. Senate Finance Committee hearing in Washington. He also reiterated that health-care spending is growing more slowly.

“Quality is improving and costs are growing more slowly,” Blum said.

The U.S. is levying fines against hospitals with high rates of patient readmissions under a provision of the health-care system overhaul targeting $8 billion in Medicare cost savings within six years. Almost 1 in 5 Medicare patients hospitalized in the U.S. is readmitted within a month of their release, adding to hospital costs that jumped to $17.5 billion in 2010, according to the Medicare agency.

Saving Money

The effort to lower readmissions is leading to better health outcomes and saving money, said Senator Robert Casey, a Pennsylvania Democrat.

“This is very difficult to tackle, this issue that relates to delivering better care at a lower cost,” Casey said. “It looks like you are beginning to unlock that door.”

Under the health-care law, hospitals with a high number of readmissions within 30 days can lose as much as 1 percent of their Medicare payout for fiscal 2013 and 3 percent in 2015. The program, which started with discharges beginning Oct. 1, focuses on Medicare patients suffering from heart failure, heart attack and pneumonia.

The penalties may cost the industry $280 million this year, according to an August report by Medicare. Average fines for a hospital are about $125,000, according to a September report from the Medicare Payment Advisory Commission.

In addition to a drop in readmission rates, clinicians at some hospitals have reduced their early elective deliveries of newborns to close to zero, according to the fact sheet. Among 135 hospitals reporting common measures, early elective delivery rates have fallen by 48 percent.

Blum also said costs are being contained by a payment and care model called Accountable Care Organizations that seek to coordinate medical services and reduce waste in exchange for a share of the savings produced. There are more than 250 groups participating in Medicare Accountable Care Organizations, serving about 4 million beneficiaries, he said.

ACOs are expected to save as much as $940 million in the first for years, according to Blum’s agency.

“You’ve got more to do, but it’s certainly optimistic,” Senator Debbie Stabenow, a Michigan Democrat, told Blum.

To contact the reporter on this story: Stephanie Armour in Washington at sarmour@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net


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