Could Senior Care Partnerships Reduce Number of Hospitals Facing Medicare Penalties?

Starting in October, Medicare will penalize more than 2,000 hospitals whose readmission numbers have been deemed excessive, says Kaiser Health News. As a result of those penalties, the hospitals will collectively lose about $280 million in Medicare payments in the next year, part of a federal push to start reimbursing care providers based on the quality of care that’s being given.

The movement toward managed care puts more emphasis on where patients go once they’ve been discharged from the hospital, and the senior living industry has an opportunity to position itself as post-acute care partners who can effectively keep people from returning to an acute care setting. 

Kaiser Health News reports


With nearly one in five Medicare patients returning to the hospital within a month of discharge, the government considers readmissions a prime symptom of an overly expensive and uncoordinated health system. Hospitals have had little financial incentive to ensure patients get the care they need once they leave, and in fact they benefit financially when patients don’t recover and return for more treatment.

Nearly 2 million Medicare beneficiaries are readmitted within 30 days of release each year, costing Medicare $17.5 billion in additional hospital bills. The national average readmission rate has remained steady at slightly above 19 percent for several years, even as many hospitals have worked harder to lower theirs.

The penalties, authorized by the 2010 health care law, are part of a multipronged effort by Medicare to use its financial muscle to force improvements in hospital quality. In a few months, hospitals also will be penalized or rewarded based on how well they adhere to basic standards of care and how patients rated their experiences. Overall, Medicare has decided to penalize around two-thirds of the hospitals whose readmission rates it evaluated, the records show.


A total of 278 hospitals nationally will lose the maximum amount allowed under the health care law: 1 percent of their base Medicare reimbursements. 

The maximum penalty will increase after this year, to 2 percent of regular payments starting in October 2013 and then to 3 percent the following year. This year, the $280 million in penalties comprise about 0.3 percent of the total amount hospitals are paid by Medicare.

Some of the 2,211 hospitals facing penalties in October are top-ranked institutions, Kaiser notes, while others have made a conscious effort to reduce readmissions but haven’t seen measurable improvements. 

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The article also talks about concerns that have been raised over the penalizations, especially for hospitals whose primary patient census may be more prone to readmissions for various reasons, including race and socio-economic status. 

Read the full piece

Written by Alyssa Gerace