Will CMS' readmissions penalties have unintended consequences?

January 12th, 2015

Last December, CMS boasted the first significant nationwide reduction in 30-day readmissions since 2007, perhaps due to the threat of financial penalties. In fact, more than half of the hospitals in this country reduced readmissions in less than a year – certainly an accomplishment worth cheering.

But are penalties the right way to go when it comes to enforcing hospital behavior – and might they have unintended consequences? Should CMS instead focus on broader plans that reward successes?

Three researchers from the Dartmouth Institute for Health Policy & Clinical Practice raise these questions in an editorial in the Journal of the American Medical Association.

The authors compare the situation to a quote from hockey pro Wayne Gretzky: “I skate to where the puck is going to be, not where it has been,” Hospitals, they say, have been “playing to the puck to avoid financial penalties,” and have been allocating more resources to areas to improve readmissions, including case management, transitional care, home monitoring, and follow-up. While working to prevent early readmissions is all well and good, the focus may have the unintended consequence of shifting focus off of “the more important goal of improved population health and high-value health care, which both CMS and accountable care organizations are trying to promote,” the authors write. In fact, the authors raise the valid point that early readmissions could be symptoms of larger problems, rather than problems in and of themselves. Errors in hospital and transition care, low threshold for readmissions, and pressure to discharge early to free up bed space are all problems that can raise early readmission rates.

A better approach, they say, could be if CMS encourages hospitals to invest in broader goals (such as a broad-focused readmissions program) and rewards successes; study the unintended consequences of the targeted programs (which hospitals should also monitor); and create broader incentives for hospitals to improve quality and performance. “Hospitals must ask whether the penalty targets are important enough to justify diverting resources from broadly based programs that could improve quality and safety for other patients,” they declare.

Awkward hockey analogy aside, the authors raise a good point on diverting hospital resources to quality improvement initiatives (in this case, readmissions reductions). CMS encouraging broader goals and rewarding smaller successes would be a good starting point.