A pair of Triangle hospitals will see a marked increase in Medicare penalties this year as the federal program adds knee and hip replacements to the medical procedures tracked for excessive hospital readmissions.
The penalties are part of the Patient Protection and Affordable Care Act’s strategy to reduce spiraling medical costs by forcing health care organizations to manage expenses more efficiently by preventing patients from returning to the hospital.
In the current round of penalties, the maximum fine for too many readmissions goes up from 2 percent to 3 percent as the program enters its third year. No hospital in North Carolina was charged with the maximum fine, which was levied on 39 hospitals of the 2,610 penalized nationally, according to an analysis of the data by Kaiser Health News.
However, one of the local health care facilities, Duke Raleigh Hospital, was dinged with the third-highest penalty in North Carolina. Duke’s hospital on Wake Forest Road escaped penalties last year but will take a 1.43 percent hit on all Medicare reimbursements from Oct. 1 through Sept. 30, 2015.
Duke officials estimate the penalty will reduce Medicare payments by $557,950 to the Duke health system, and by $483,715 to Duke Raleigh Hospital, during that period. The total cost to Triangle hospitals will likely be several million dollars.
WakeMed Cary hospital dodged the penalties for the past two years and will sustain a 0.55 percent penalty on Medicare reimbursements in the coming fiscal year, reducing its Medicare payments by about $400,000.
Both facilities were snagged by the federal penalty system after Medicare officials added joint replacement surgeries to the procedures tracked for readmissions. Under a federal formula that sets acceptable readmission limits, Duke had eight admissions in excess of its allowance in Raleigh, and WakeMed was seven over the limit in Cary.
“We were surprised based on our internal data,” said Thomas Owens, chief medical officer at Duke University Health System. “We know we have more work to do.”
Hospital systems are experimenting with a variety of solutions to keep down excessive readmissions. Duke has established special clinics for heart patients that allow patients to seek medical care that doesn’t count as a hospital visit.
WakeMed, which traditionally sees some of the region’s sickest and most vulnerable patient populations, has put in place numerous programs in which nurses and others keep in contact with patients to make sure they take their medications, follow up on appointments and report problems early before they become serious.
The penalties are levied for excessive readmissions of Medicare patients within 30 days of discharge. They are tracked for five conditions: heart failure, heart attack and pneumonia, plus chronic lung problems and elective knee/hip replacements being added this year.
When a readmission is deemed over the limit, the patient does not necessarily come back to the same hospital. That means a heart patient coming out of a hospital could count against that facility if she is readmitted within 30 days to a different hospital for an unrelated health condition.
That’s what happened with WakeMed patients, who come from surrounding counties to get their knees and hips replaced in Cary. “About half of WakeMed’s excessive readmissions were the result of readmissions to hospitals outside of Wake County,” said WakeMed spokeswoman Kristin Kelly.
Additionally, WakeMed’s Raleigh hospital has a 0.38 percent penalty this year, slightly lower than the year before. Duke Regional Hospital in Durham will face a 0.11 percent penalty and Duke University Hospital, 0.02 percent.
Rex Hospital in Raleigh has a penalty of 0.04 percent, while UNC Hospitals in Chapel Hill will be penalized 0.17 percent. UNC Health Care did not provide estimates of how much the penalties will cost.
All the readmissions under review took place between June 2010 and July 2013, and WakeMed’s Kelly said they are lagging indicators that don’t take into account performance improvements in the past 16 months.
On average, North Carolina’s hospitals will face a 0.65 percent penalty, compared with a national average of 0.63 percent. Fifteen hospitals in the state were not penalized, while the biggest penalty was 2.35 percent against Halifax Regional Medical Center in Roanoke Rapids.