NJ Hospitals Hit with Medicare Penalties for High Readmission Rates

By Briana Vannozzi

The cuts total nearly $23 million for the state and just about every hospital in New Jersey will feel it. 64 out of 65 hospitals are being hit with penalties — in the form of lower Medicare reimbursements which are the result of high patient readmission rates.

“When you look at that kind of number, you’ve got to say, ‘this isn’t rational, this isn’t a good measure,’” said New Jersey Health Care Quality Institute President and CEO David Knowlton.

Knowlton says the federal government needs to reevaluate how hospitals are measured and start including socioeconomic factors. Despite improvements in New Jersey, this is the second year in a row nearly every hospital was hit and it’s the highest rate in the nation.

“When people do not have access to primary care, when people do not have money, they get less access to care. We know that. You need to adjust for that as you look at quality,” Knowlton said.

“Readmissions is more than just a hospital problem, it’s really a community problem. We have to work with our communities to develop the support systems,” said New Jersey Hospital Association Senior Vice President of Clinical Affairs Aline Holmes.

“Set up new peer groups, improve but compare apples to apples. So compare safety net hospitals to other safety net hospitals and say how can we collectively raise all the ships in the harbor,” Knowlton said.

The cuts came about with the ACA, as an incentive to ensure patients receive better care after being discharged. CMS, or the federal Centers for Medicare and Medicaid Services, reviews hospital data and hands down a penalty ranging from 0 to 3 percent of the Medicare reimbursement.

“The hospitals as a whole in New Jersey went down from last year by 10.35 percent. So they are improving and we had a lot of hospitals who had dropped their percentage penalties down significantly,” Holmes said.

CMS looks at patients returning after being treated for pneumonia, heart attack, heart failure, chronic pulmonary disease, and knee and hip replacements.

Overall New Jersey’s average penalty dropped from 0.79 to 0.72 percent. The highest fine: Palisades Medical Center in North Bergen — 2.49 percent — and the lowest at Saint Barnabas in Livingston — 0.01 percent.

Members of New Jersey’s Home Care Association say looking to programs like telehealth and home health aids could help.

“During the second quarter of our teleheath program, for the patients who were on that the readmission rate is about 3.6 percent for those patients and the national average for those patients — these are heart failure patients — is about 22 percent so it’s a pretty significant reduction,” Home Care Association of New Jersey Board Chair Ann Painter.

This money is particularly important because Medicare funds are the single largest source of revenue for New Jersey hospitals, providing about $3 billion annually. Groups against this type of grading system say it shifts the emphasis from readmissions as a cost factor, instead of a quality factor.