There Are Legitimate Criticisms of Obamacare – Hospitals Should not be Penalized for Readmissions

Crazy ranting about impending socialism/fascism aside, there are legitimate critiques to be made of Obamacare. One policy in particular that raises my ire is penalizing hospitals over performance metrics and penalizing readmissions in particular. The way it works is, patients are admitted to the hospital, treated, and eventually discharged, but a indicator of failure of adequate care is if that patient then bounces back, and is readmitted shortly after their hospitalization:

Under the new federal regulations, hospitals face hefty penalties for readmitting patients they have already treated, on the theory that many readmissions result from poor follow-up care.
It makes for cheaper and better care in the long run, the thinking goes, to help patients stay healthy than to be forced to readmit them for another costly hospital stay.
So hospitals call patients within 48 hours of discharge to find out how they are feeling. They arrange patients’ follow-up appointments with doctors even before a patient leaves. And they have redoubled their efforts to make sure patients understand what medicines to take at home.

Seems reasonable, right? These are things that are part of good medical care; good follow up, clarity with prescriptions, etc. It should be the responsibility of hospitals to get patients plugged into the safety net, assign social workers, and make sure patients won’t fail because they lack resources at home. However, the problem arises when the ideal of punishing readmissions as “failures” crashes into the reality of the general failure of our social safety net:

But hospitals have also taken on responsibilities far outside the medical realm: they are helping patients arrange transportation for follow-up doctor visits, get safe housing or even find a hot meal, all in an effort to keep them healthy.
“There’s a huge opportunity to reduce the cost of medical care by addressing these other things, the social aspects,” said Dr. Samuel Skootsky, chief medical officer of the U.C.L.A. Faculty Practice Group and Medical Group.
Medicare, which monitors hospitals’ compliance with the new rules, says nearly two-thirds of hospitals receiving traditional Medicare payments are expected to pay penalties totaling about $300 million in 2013 because too many of their patients were readmitted within 30 days of discharge. Last month, the agency reported that readmissions had dropped to 17.8 percent by late last year from about 19 percent in 2011.
But increasingly, health policy experts and hospital executives say the penalties, which went into effect in October, unfairly target hospitals that treat the sickest patients or the patients facing the greatest socioeconomic challenges. They say a hospital’s readmission rate is not a clear measure of the quality of care it provides, noting that hospitals with higher mortality rates may also have fewer returning patients.
“Dead patients can’t be readmitted,” Dr. Henderson said.

This is a problem with the careless application of rewards and penalties tied to medical outcomes. While I think it’s a healthy response that hospitals are taking on more of the social work that formerly would have been the arena of government programs, there is another defense mechanism used when government creates perverse incentives in health care. When you create payment incentives for good outcomes, you run the risk of patient selection, discrimination, and fraud. My favorite paper on this topic comes from the British NHS, and their attempt to reward physicians based on better clinical outcomes. My advice with this paper (and with most papers frankly) is to ignore what the authors say about their data (and the amazing success of their program!) and just look at the data for yourself. What they found with rewarding physicians based on health metrics was that doctors that treated the young, healthy, and rich did well, those with more patients, poorer patients, and older patients did more poorly. Finally, physicians that filed lots of “exception reports” to eliminate all their poorly-performing patients did great (yay, fraud!).
Metrics are good for identifying problems, but the mistake is the assumption that poor performance at a metric has everything to do with the physicians or the hospitals, or that slapping a penalty on poor performance will fix the problem. Sometimes, you’re studying society, not medical care. Incentive structures that put the burden on hospitals to take care of the most basic needs of their patients are going to penalize those hospitals that take care of the neediest, sickest, oldest patients, and reward those who treat insured, wealthy, younger, and fewer patients. Worse, if you penalize hospitals for taking care of difficult patient populations, I can predict the outcome. More bogus (and occasionally dangerous) transfers, more patients dumped on public and university hospitals, and all the other tricks of patient selection private hospitals can engage in to avoid getting stuck with the economic losses. That is, patients who are really sick, really poor, really old, and most in need of care will get transferred, obstructed, and dumped. Hospitals that are referral centers, major university and public hospitals that can’t refuse or transfer problem patients, will end up with the disproportionate amount of the penalties because they are often the healthcare providers of last resort. Not surprisingly, the early data already shows this is happening:

The second important development was the release of data on who will be penalized: two thirds of eligible U.S. hospitals were found to have readmission rates higher than the CMS models predicted, and each of these hospitals will receive a penalty. The number of hospitals penalized is much higher than most observers would have anticipated on the basis of CMS’s previous public reports, which identified less than 5% of hospitals as outliers. In addition, there is now convincing evidence that safety-net institutions (see graphsProportion of Hospitals Facing No Readmissions Penalty (Panel A) and Median Amount of Penalty (Panel B), According to the Proportion of Hospital’s Patients Who Receive Supplemental Security Income.), as well large teaching hospitals, which provide a substantial proportion of the care for patients with complex medical problems, are far more likely to be penalized under the HRRP.3 Left unchecked, the HRRP has the potential to exacerbate disparities in care and create disincentives to providing care for patients who are particularly ill or who have complex health needs, particularly if the penalties are larger than hospitals’ margins for caring for these patients.

It would be unfortunate if in the course of creating incentives for better care, we fall into the same old trap of punishing those who take care of the neediest. What we need instead is to acknowledge one major source of bad outcomes is a broken social-safety net. We can’t just keep creating these unfunded mandates that put all the onus of taking care of the uninsured, the poor and elderly on hospitals, and punish the centers that already carry the largest social burdens with responsibility for the failure of our nation to take care of its own. Unfortunately, our answer to problems like these is always to create one more shell game that hides the real, unavoidable costs of taking care of people by shifting it around. This will just result in higher bills on the insured, more crazy chargemaster fees, overburdened public and university hospitals, and ultimately, a system of regressive taxation.


7 responses to “There Are Legitimate Criticisms of Obamacare – Hospitals Should not be Penalized for Readmissions”

  1. Increasingly, these performance metrics require the doctor to coerce patients into excessive screening and excessive treatment, e.g., a doctor may be penalized if too many 40-year-old females “fail” to get annual mammograms, or if too many patients are not statinized down to an acceptably low LDL no matter how low the expected benefits in their subgroup or what harms they suffer as a result. I do not want to know that my doctor may have her pay cut because she facilitates my making rational, informed decisions, rather than abusing me, lying to me, or “firing” me because I wish to do so. It’s either grossly unfair to her, or creates such a conflict of interest that I would no longer be able to trust any of her advice.

  2. Bluegrass Geek

    I wonder if this penalty applies to repeat ER visits. Because the number of drug seekers that keep coming back would put most hospitals out of business.

  3. This is a concept that has very broad application. For instance, we’ve gone down the path of rewarding and punishing teacher based on performance when many of the causes of student performance are out of their control. Who suffers? Those teachers and the kids they teach in the schools that have economically disadvantaged populations.

  4. faustusnotes

    Another problem with this scheme is that we don’t really understand what causes readmissions. Reducing readmissions is the holy grail of health services management in single payer systems, but research on the problem doesn’t give clear results and predictive efforts are poor. Given this, even hospitals trying their very best to reduce readmissions won’t necessarily be able to.
    Obamacare includes a range of methods to save money that are based on fanciful use of IT and predictive stuff. I think I read somewhere the intention to save $50billion through computerization. These schemes won’t work …
    Your comments on the British QOF system are a bit unfair – that system is an add-on to the standard contract and is largely aimed at improving public health practice rather than core services. Also patients in the NHS don’t pay for anything and GPs can’t exclude anyone. Failures of QOF aren’t necessarily clinical failures.

  5. @ Mac
    Agreed. Metrics are frankly poison, because they give stupid thoughtless people a blunt instrument to punish others despite an incredible complexity of factors at work. Before metrics are systematically applied to reward/punish behaviors you really have to think about what you’re studying, and figure out if youre measuring performance, or society.
    I agree, the IT thing has not worked, EMRs have raised costs as for-profit EMR manufacturers design their software to bilk Medicare. Now, if we had a real progressive at the helm we’d just flush all these worthless companies down the john, or at least come up with a universal record format, that both inhibits fraud, and promotes the cost-saving advantages of EMR. As long as we have a dozen EMR companies competing for market share by making their software incompatible with everyone elses while at the same time screwing the payers with automatically-checked boxes, we’re going to see increased costs. Screw those guys. Some people hate Monsanto. I hate medical software companies.
    I wasn’t being unfair to the British QOF system, that’s what the data shows their program is doing. I agree, it’s not worsening care, but it is just rewarding doctors who take care of easy patients. As such, it’s a waste of money, and kind of offensive.

  6. Bluegrass Geek – No, this does not apply to patients who make multiple ER (or doctor) visits, only patients who are admitted to the hospital. The idea is that if you are admitted for heart failure, say, and you are treated and released and a week later you are back in the hospital for it again, obviously they must have failed to stabilize your condition adequately, and they shouldn’t be financially rewarded for the fact that you now need more inpatient care. I’d like to buy this argument, having seen a family member repeatedly hospitalized for the complications of malpractice committed during a first hospitalization. However, not all repeat hospitalizations are preventable. When people are seriously or chronically ill or FTD (fixin’ to die), things do happen.
    What’s more, this policy could lead to more harm for patients, and in more ways than those Dr. Hoofnagle has already noted. It is widely accepted in American medicine that providers may put butt-covering ahead of patients’ well-being. If a doctor is not punished for finding excuses to keep patients in the hospital longer, but will be punished if he “lets” them go home quickly, where most will be happier and safer, and then some of them return, then he may well bully them all into staying until he is very sure they’re stable. During that time, some of them will contract C. difficile or MRSA and be entered into horrific intervention cascades – for which the hospital will be paid .

  7. faustusnotes

    Mark, I think the problems are bigger than just private companies competing the way you describe. Big IT projects are doomed to fail, and it doesn’t matter which system one tries to use. The NHS is now something like 10 years behind on its NpFit project for just this reason. My opinion is that conservative-thinking health managers see IT improvements as an easy alternative to real innovative thinking about cost-cutting and efficiency improvement, and introduce bloated and impossible programs where small, simple changes would be enough.
    I do like the idea of hospitals being required to provide some kind of warranty to their patients, especially on large-volume, low-risk procedures like cataract surgery, etc. But not until we have a better understanding of what factors affect rehospitalization.
    I think QOF doesn’t so much encourage doctors to pick up the easy patients as it reveals quantitatively what NHS doctors have always been doing. There are huge inequalities in the NHS even though it is a free service, and although it hasn’t fixed those inequalities QOF does show the difference in service quality up. I don’t know if you’ve ever experienced NHS care, but the quality and depth of service provided by British family doctors is absolutely terrible, and they are really overpaid for it. Reforming that sector is crucial to improving inefficiency in the NHS. I think that Obamacare is also going to include a shift towards increased role for primary care – I think this is another example of buzzword panacaea that never delivers the gains its advocates claim.
    Sadly, Obamacare is a dog’s breakfast…

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