Next Stop on Cost-Cutting Train: Readmission Reductions


When and how the national focus on reducing hospital readmissions will hit hospitals’ bottom lines is not clear, but it’s more a matter of when, not if, says Eric Coleman, MD, MPH, AGSF, FACP, director of the Care Transitions Program at the University of Colorado Denver.

Reducing readmissions “jumps off the page as an area where we could see enormous savings in national health expenditures,” Dr. Coleman told participants in an SHM webinar last month. The challenge, he said, is to align incentives with quality and safety for a moving target that also happens to be highly politicized. “We’re generally pretty good at identifying who’s at risk of readmission, but it’s harder to say who’s at modifiable risk,” he explained.

Evidence shows that hospitalists already reduce costs through improved length of stay. “Can hospitalists demonstrate the ability to reduce readmission rates as well?” Dr. Coleman asked.

Bundling payment for hospital stays with various post-hospital providers is a major focus of national efforts to reduce healthcare costs. Bundling gives providers on the healthcare continuum strong motivation to work together, Dr. Coleman said. The government won’t tell providers how to divide bundled payments, but Dr. Coleman predicts that consulting firms offering ideas for divvying up the money will emerge.

The Medicare Payment Advisory Commission (MEDPAC) has signaled its interest in changing payment incentives by reducing reimbursement for readmissions as well as several provisions that directly address readmissions in the healthcare reform package signed by President Obama in March. These include:

- A national pilot program on payment bundling;

- A hospital readmissions reduction program with financial penalties starting in October 2012 for select conditions; and

- A QI program to help hospitals with high severity-adjusted readmission rates.

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