September 10, 2012 Firece Healthcare | By Karen Cheung-Larivee

Two-thirds of hospitals will see penalties in the coming weeks for higher-than-average readmissions, according to the Medicare Payment Advisory Commission (MedPAC).

Starting Oct. 1, hospitals will face up to a 1 percent penalty in 2013 for readmissions related to acute myocardial infarction, heart failure and pneumonia. In 2014, the penalty will go up to 2 percent and up to 3 percent in 2015, with four more conditions added to the list.

Sixty-seven percent of hospitals will face a penalty, averaging $125,000. A third (33 percent) will have no penalty, for instance, because they do not have enough cases. In aggregate, penalties will equal 0.24 percent of all inpatient payments in 2013.

The commission, which recommended the program in 2008, met Friday to discuss refining the hospital readmissions reduction program. Although it continues to support hospitals curbing readmissions, MedPAC called out some concerns with the program in the long-term.

As the American Hospital Association has noted before, some readmissions are not preventable and other readmissions are planned. MedPAC suggested shifting all-condition measures and including exceptions for planned and unrelated readmissions.

Another concern is that readmission penalties may not account for socio-economic factors. Hospitals that have the largest share of low-income patients are 2.7 times as likely to have high readmission rates, Kaiser Health News previously reported.

MedPAC also expressed concerns about the math related to the penalties in the long run. For instance, the penalty amount increases as the industry presumably reduces readmissions. Therefore, MedPAC sees a fixed penalty multiplier or using all-condition readmissions as possible solutions.

Using all-condition readmissions also could help solve random variations in hospitals with a small number of cases in distinguishing true improvement performance.

MedPAC said it is, indeed, feasible for hospitals to cut down on readmissions by identifying at-risk populations, reducing hospital complications and improving communication with providers outside the hospital. Hospitals also can improve care transitions by providing patient education and self-management tools, scheduling follow-up visits and reconciling medication before discharge, and calling or visiting patients after discharge.