Medicare Plans to Stop Funding Nursing Homes With High Hospital Readmission Rates

In December of 2018, Medicare implemented a new program that will stop funding nursing homes which have high hospital readmission rates. The program is intended to encourage nursing homes to provide better care to residents after their hospital visits. However, some worry the new program will have unintended consequences both for nursing homes running on low margins and seniors who need to be readmitted to the hospital despite good care.Medicare Plans to Stop Funding Nursing Homes With High Hospital Readmission Rates

Learn more about Medicare’s new program and its impact on nursing homes.

Hospital Readmission Rates and Medicare

Medicare monitors how often a nursing home’s residents are readmitted to the hospital within a 30 day period after their release. If a nursing home’s hospital readmission rates are too high, they will now lose almost 2% of their funding for each Medicare patient.

On the other hand, nursing homes that achieve a lower readmission rate will receive a bonus, of up to 1.6%, on each payment. Both the bonus and penalty will not apply for residents who use private Medicare Advantage Plans.

It is expected that the hospital readmission penalties from this program will outweigh the bonuses. Medicare is expected to save $211 million through the program.

Devon Barill, a spokeswoman for the Georgia Health Care Association, views the program as a funding cut. She told The Newnan Times-Herald that the program, “was designed to reduce overall payments to skilled nursing centers through a redistribution of funding. The very nature of this design reduced funding for significantly more centers than those that received the additional incentive payment,’’ she points out.

Still, the program is expected to discourage nursing homes from discharging their patients from the hospital too quickly. Medicare only fully covers the first 20 days of a resident’s stay post-hospital admission. On day 100, Medicare stops funding that resident altogether.

This policy creates a problem where certain nursing homes release their residents sometime between the 21-100 day mark, whether that person is truly recovered or not.

If they are not recovered, they may end up back in the hospital, with infections or other issues that could have been prevented.

Additionally, nursing homes will be incentivized to provide high standards of care to residents, lest they fail to recover and need to return to the hospital.

How Many Nursing Homes Are Impacted?

At the time the program was initiated, it was expected that roughly three-quarters of nursing homes across the nation would experience a penalty. That means 11,000 nursing homes are expected to accrue penalties.

It’s also predicted that certain states will be impacted more than others. Major losses are expected in Arkansas, Louisiana and Mississippi, where 85% of nursing homes are likely to face penalties. However, it’s predicted that more than half of the nursing homes in Alaska, Hawaii and Washington will receive bonuses instead.

Georgia already has data for losses in early 2019. About 75% of nursing homes in the state have received penalties — which is under the national average. Another 23% have received bonuses, while the remaining 2% have not been impacted by the program yet.

Thomas Martin, director of post-acute care analytic at Care Port Health in Georgia, told Kaiser Health News (KHN) that he is worried about how Georgia nursing homes will fare with decreased funding.

“A lot [of nursing homes] are operating on very small margins,” he explained. The penalties, “could mean a significant amount of money.”

According to Patricia McGinnis, executive director of California Advocates for Nursing Home Reform, the program could also hurt residents.

“It may end up causing great pain to residents who actually need to be hospitalized,” she told KHN. That’s because even with the best care, some residents may develop a condition that simply needs hospital readmission.

Why There Is Room for Improvement

Despite the heavy penalties, there is room for improvement. After a nursing home receives a penalty there is a path back. The penalties are reduced as the nursing home makes improvements in their readmission rates.

Kathy Floyd, executive director of the Georgia Council of Aging, believes the program will be an overall benefit.

“The headline cites the cuts but I’m encouraged by the bonuses,’’ Floyd told The Newnan Times-Herald. “Let’s find out what those homes are doing to keep re-admissions down.”

She also argues that “tying payments to quality of care is a big step forward.”

Rewarding nursing homes for the quality of care they provide and not just how many residents they have should benefit many residents who need their nursing homes to provide better post-admission care. Many nursing homes are motivated to meet these new standards.

What thoughts do you have about Medicare cutting funding to nursing homes with high hospital readmission rates? We’d like to hear from you in the comments below.

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