Penn Medicine and IBX say they cut readmissions 25 percent

Harlan Krumholz, professor of cardiology at the Yale School of Medicine, says that in the past, if doctors at hospitals didn’t help primary care doctors follow up with patients who are discharged, or messed up the drug treatment so patients had to go back to the hospital, the hospital doctors were actually rewarded.

“They were being paid ‘fee for service,’ so somebody went out of the hospital and had to come back? You got paid again,” Krumholz said, adding that means hospitals had no incentive to get things right so patients don’t have to go back.

“Hospitals sometimes would say to me, 10 years ago, ‘why should I implement a readmission reduction program because all we’ll do is end up losing money?’ And you know, that’s an awful thing for somebody to say, but that’s what I have heard.”

Penn Medicine and Independence Blue Cross now say they have cut readmissions 25 percent by making it costly to hospitals when patients come back to treat the same problem.

The hospital system and Philadelphia’s largest insurer haven’t been doing this solely on their own. Hospitals have been trying to deal with this problem since 2012, because as part of the Affordable Care Act, Medicare has financially penalized hospitals that have too many readmissions. The government estimated because of these penalties, it can pay hospitals $566 million less in 2019.

For the past year, four Penn Medicine hospitals that have a contract with Independence Blue Cross had a similar deal. If the patient has to go back to the hospital within a month of being discharged, Independence Blue Cross would not pay for the readmission and Penn Medicine has to swallow the cost.

The idea is to make sure doctors work with outpatient providers so patients get better over the long run. For example, a patient’s discharge documents now say which primary care physician they would be going back to, and now have their accurate, most up-to-date diagnosis for why they were hospitalized in the first case. That information wasn’t always correct in the past, says Patrick Brennan, chief medical officer and senior vice president of the University of Pennsylvania Health System.

He says Penn Medicine has been working on reducing hospital readmission rates for a decade, but what this program did was “coalesce around a plan and dispense with the literally dozens and dozens of experiments that were going on across the system on inpatient units and in practices.”

Penn Medicine says hospital readmission rates went down by more than 25 percent at the four hospitals, the Hospital of the University of Pennsylvania, Penn Presbyterian Medical Center, Pennsylvania Hospital, and Chester County Hospital. This contract will run for another four years.

The Hospital of the University of Pennsylvania has a readmission rate worse than the national rate of 15.3 percent, Penn Presbyterian Medical Center and Pennsylvania Hospital are no different than the national rate, and Chester County is doing better than the national rate, according to Medicare data.

Brennan says the contract even benefited Penn Medicine hospitals that didn’t have a contract with Independence Blue Cross and therefore weren’t a part of the program, which are Lancaster General Hospital and Princeton Medical Center. He says hospital readmission rates went down by 8 percent overall across the system. He adds that he expects to negotiate similar programs for the contracts for the other two hospitals, so that all Penn Medicine patients can enjoy the benefits.

Kumar Dharmarajan, chief scientific officer at the Medicare health insurance company Clover Health, says it’s notable that Penn Medicine is partnering with an insurance provider to reduce readmission rates.

“I think the distinction between payer and provider is growing smaller,” he said, adding that healthcare providers will start thinking more creatively about how to make sure patients improve over the long run.

The research shows that among other things, if hospitals set up follow-up appointments for a patient before discharging them, and send discharge documents directly to a patient’s primary care doctor, readmission rates do go down, Dharmarajan adds.

In 2014, Maryland changed how hospitals got paid statewide, as reported by NPR. Instead of being paid for patients being admitted, hospitals would get a budget for patient care for the whole year, and if there was money left over, the hospital could keep it. The Maryland Hospital Association says in the first year alone, they saved more than $100 million, and hospital readmissions went down more than the national average.

The federal government has had to adjust the Medicare readmissions penalties. NPR and Kaiser Health News reported this September that Medicare will ease up on the sanctions against hospitals where patients suffer complications before they can’t afford medications or don’t have regular doctors to help them recover.

Reducing hospital readmissions is not a problem unique to the U.S. England, Denmark, and Germany also have policies for it.

Disclosure: Independence Blue Cross is a corporate supporter of WHYY.