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Colorado Medicaid set to save millions on readmissions
Every year, Colorado Medicaid spends $20 million on hospital readmissions that occur within 30 days. This fact was brought to light as a result of a comprehensive data analysis done a year ago. It is one of the reasons that readmissions have become a key priority for the program.
"Not all of those readmissions are avoidable, but we think a pretty big percentage of them are," says Sandeep Wadhwa, MD, chief medical officer with the Colorado Department of Health Care Policy and Financing. "This is one of our top priority areas, in terms of initiatives that can reduce expenditures and also promote the health of our clients." The department's goal is to reduce readmissions by 5%, which would save $1.25 million annually. "That is the first step, and we think it is well within our reach," says Jed Ziegenhagen, manager of the rates section for the department.
"Right now, we are nearing the end of the analysis phase," says Dr. Wadhwa. The department's analysis looked at how readmission rates in Medicaid compared with Medicare, and also examined how different eligibility groups compared, such as pregnant women vs. elderly clients.
In the Medicaid program, 13.5% of hospitalizations are readmitted within 30 days, which is lower than the Medicare percentage. However, "apples to apples" comparisons are not always possible.
"It's hard to compare rates, as different entities use different metrics," says Mr. Ziegenhagen. Colorado is one of a number of state Medicaid agencies working with the Medicaid Medical Directors Learning Network to try to come up with a common metric for benchmarking readmission rates.
Though there is a lot of research on readmission rates in the literature, there is no standardized methodology to measure these rates. "We are working with other state Medicaid medical directors to come up with a consistent methodology by which we measure readmissions, so Medicaid programs aren't comparing apples to oranges," says Dr. Wadhwa.
While Medicaid's raw readmissions rates are lower than the Medicare rates, that may not be meaningful given the important differences in the two populations.
"We have a large number of pregnant moms, and our data shows that new moms tend to be readmitted less often than other patients discharged from hospitals," says Mr. Ziegenhagen. "If you adjust our data for the acuity of our populations, we think that we could do much better, especially compared to commercially insured people."
In addition, it is the underlying reasons for readmissions that make the information actionable. "It's important for Medicaid agencies to look at the reasons for readmissions, because they are going to be very different from what Medicare sees," says Dr. Wadhwa. "Heart failure is to Medicare what asthma is to Medicaid. We've got our own set of clinical opportunities."
A year ago, a bill was passed to raise payments to hospitals through a provider fee with a quality incentive component. "We have been working with our hospital association to make readmissions one of four categories to make them eligible for the incentives," says Dr. Wadhwa. While increased revenue is one factor driving this, better clinical outcomes are another. "You've got to [be] a careful and prudent steward of the taxpayer's money. I think that's something all states care about in the current fiscal environment," says Mr. Ziegenhagen. "So, if there are needless readmissions we can avoid, that's compelling."
From the hospitals' point of view, readmission constitutes a bad clinical outcome. "This is not good for patients. There is a lot of research out there that shows a readmission is ultimately linked to increased rate of death and disease," says Mr. Ziegenhagen.
While the Medicare methodology looked more at the type of readmissions, Medicaid's data analysis focused more on the events behind those readmissions. "We felt that better reflected the costs of the Medicaid system," says Dr. Wadhwa. "It gave us a better sense of what we thought was impactable."
The analysis showed that almost 27% of admissions within 30 days happen within the first 24 hours. "This was a profound finding, that fully one quarter were same-day readmissions," says Dr. Wadhwa.
That finding spurred a key change in payment policy. Colorado Medicaid no longer pays for a same-day readmission that is clinically related, such as a patient admitted for surgery who has an infection related to that surgery, which brings the patient back into the hospital.
Even though new mothers have a low readmission rate overall, Medicaid pays for more than one-third of all deliveries in Colorado. Because of Medicaid's high share of payment for deliveries, despite that low rate of readmission, postnatal readmissions are the most frequent reason for readmission for Colorado Medicaid. "We'd really like to further dive into the data and see why new moms are coming back to the hospital and figure out a way to impact that," says Mr. Ziegenhagen.
"What is exciting is that we are seeing states take some of the findings on readmissions in the academic literature and say, 'How do we translate this research into policies for program improvement initiatives?'" says Dr. Wadhwa. "We are going through the heavy lifting of saying, 'Do our payment policies support readmissions? Can our payment policies incent reductions in readmissions?'"
Dr. Wadhwa says he believes that being proactive with prevention of avoidable readmissions will benefit Colorado Medicaid both in the long and the short term. "We are getting a head start out of fiscal necessity," he explains. "One of the sad features of this past recession was that when we would get budget forecasts that were worse than the previous forecasts, oftentimes we had to turn to rate reductions as our means of managing the budget."
Instead of continuing with this approach, attention is directed toward reducing inappropriate volume in the Medicaid program. "If we can ease the pressure on volume, that would mean we wouldn't always need to go to rate reduction," says Dr. Wadhwa. "We felt that there was a quality imperative as well. That brought readmissions high on our list."
Over a quarter of readmissions occurred at a different facility than the one from which the patient was discharged. "That percentage really spoke to us," says Dr. Wadhwa. "We wanted to look not just at same-facility readmissions, but also other facilities, but hospitals don't necessarily know about those events. So, that added to the complexity of solving the problem."
The statistic underscores the importance of looking at the bigger picture. "When we are speaking about readmissions that occur at other hospitals, there needs to be a discussion about the responsibility of the broader health community," says Mr. Ziegenhagen. "It's a mistake to say the hospital is totally to blame for any given readmission. It takes a community to avoid a readmission. Multiple folks are accountable for some part of the solution."
After a patient is discharged, the goal is for that patient to obtain a prompt referral to a primary care provider, preferably one who operates as a fully functional medical home. For this reason, there is a recognized need to give support to providers in the community. This includes nursing agencies, which see patients post-discharge.
Hospitals will begin receiving incentive payments based on their performance in FY 2011, with FY 2010 serving as the benchmark year. "We will measure results the following year, so we won't know if we succeeded in our 5% goal until then," says Mr. Ziegenhagen. "But we think that some of the activity around preventing readmission is generating savings right now."