Rules on readmissions may bite Las Vegas-area hospitals

Las Vegas hospitals stand to lose several million dollars of revenue in the coming year because the federal government has determined they have excessive readmissions of patients.

The new payment provision, part of the 2010 health care overhaul law, will reduce hospital Medicare payments by as much as 1 percent for the fiscal year that starts on Oct. 1. Had this rule been in place in 2011, the most recent year for which Medicare payments data are available, it would have cost the valley's 13 hospitals $3.8 million.

This would have amounted to less than half of 1 percent of the $866 million in net Medicare payments and less than a tenth of 1 percent of their $2.9 billion in operating revenues, state statistics show.

A list compiled by the research organization Henry J. Kaiser Family Foundation shows the penalty rates set by the Centers for Medicare and Medicaid Services range from nothing for the Siena campus of St. Rose Dominican Hospitals to the full 1 percent for Valley Hospital Medical Center. Only Valley would have lost as much as $1 million last year. Deductions at all but one of the other hospitals amount to less than $500,000 each.

Bill Welch, CEO of the Nevada Hospital Association, said the penalties are part of a trend of private insurance companies trying to tie reimbursement to outcomes, rather than how many services are used by a patient or for their type of medical condition.

However, he said that using a nationwide formula to calculate the penalty rate does not take into account data showing that Nevada patients tend to be less healthy than elsewhere, or that the state has fewer follow-up services after discharge.

Further, even though the dollar amounts are small, they are "significant for an industry that has a negative operating margin in this state."

Doctors and hospitals have already started working to reduce readmissions within 30 days of discharge, said Larry Matheis, executive director of the Nevada State Medical Association. Those efforts include trying to ensure patients take their prescriptions once they are on their own.

Representatives of Valley and St. Rose said they have instituted programs to reduce readmissions.

However, Dr. Howard Baron, a Las Vegas gastroenterologist, said that most readmissions stem from a person's health breaking down near the end of life, not from factors controlled by hospital.

The provision was built into the Patient Protection and Affordable Care Act to try to curb a nationwide pattern of what federal officials consider slack quality. According to federal statistics, about 20 percent of patients covered by Medicare return to a hospital within a month after discharge, so the penalty is supposed to give hospitals an incentive to get it right the first time.

The rates were calculated from three years of data concerning heart attacks, heart failure and pneumonia.

Starting in 2013, the penalty will kick up to 2 percent, then 3 percent the next year.

Contact reporter Tim O'Reiley at toreiley@reviewjournal.com or 702-387-5290.