Limited Warranty on Patient Care

Through provisions in the Affordable Care Act (ACA), The Centers for Medicare and Medicaid (CMS) is preparing to save $11,000,000,000 over the next ten years by incrementally cutting reimbursements for preventable readmissions and hospital acquired conditions. These cuts are in the form of penalties.  Insurance companies are likely to follow using the same methodology as CMS, helping to push healthcare facilities to reduce readmissions. In turn, this should better assure a patient that he or she will have fewer complications and remain on a healing path once discharged from hospital. 

The policies to reduce readmission, in my opinion, establish a kind of “limited” warranty as a side effect.  Whether you agree with the analogy or not, both a warranty and the pending cuts have 4 things in common.

- The user/patient

- Placing a great product or service on the market

- A great support team in place

- Preventing losses by mitigating risks to the lowest possible levels attainable 

The perception of the patient affects the latter 3 points.  How does the patient treat the product after it has left the lot or rather, the lobby?  How does the patient continue to enjoy the value of a service once it has been rendered?  For example, a sponsor pays for your class but you sleep through it.  The class is held after a starchy lunch.  The speaker talks at you as if trying to put a 2 years old to sleep.  The room is warm.  The lights are dim and there is no smell of brewing coffee drifting in from anywhere.  You have a responsibility to stay awake but the company giving the class could really have structured the class better.  Where does that line fall when it comes to readmissions? After all, a patient's behavior can result in a readmission.  Should a patient be penalized?

So, I spoke with Michael Ryan, CEO of CareTrax, about how ACA addresses readmissions in this regard. Specifically:

1.         The definition of readmissions

2.        Who is affected by the penalties

3.        How the penalty rules are applied

4.        Grants associated with reducing readmissions

Michael stated, “The Centers for Medicare & Medicaid Services, CMS, defines readmission as an admission to a subsection (d) hospital within 30 days of a discharge from the same or another subsection (d) hospital.”

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Again, this answer underlines the need for me to have this discussion with Michael.  The official government answer is within the tradition of the best bureaucratic answers which transcends through the political hierarchy of global nation-states; never answer a question without creating the need to be asked another question.  He knew both the official answer and how to interpret for and assist the rest of us in managing our stakes in readmission policies.  If a hospital receives Medicare funds, the readmission reduction initiative applies… most likely.

Michael explained readmission by putting it in context to the subject.  “When a patient arrives at hospital within 30 days of being discharged, even from another hospital, there is an assessment as to whether the condition has anything to do with the previous treatment.  Depending on what’s found, the new diagnosis and treatment may be classified as a preventable readmission.

I asked, “How does a hospital know if the patient’s condition has anything to do with the previous treatment?”

“Codes,” he answered simply.  Diagnosis and treatments are assigned codes.  These codes go into a patient’s medical records.  Codes serve as:

- The basis in which a patient’s healthcare is paid

- A standardized way of communicating the patient’s diagnosis and treatment

- A method of storing information in electronic medical records that can be queried with some certainty

“Examining these codes aides the process of determining a connection with the previous discharge.”  He explained further, “CMS has identified about 17.4 B in preventable readmissions costs due to infections, mistakes, and bad practices.  The projected savings is $11.4B based on CMS data which show that 50% of readmissions are preventable.  CMS previously paid for what it sees as preventable readmissions and seeks not to do this anymore. 

“CMS acknowledges some issues with readmission and bases the penalties on readmission numbers above the national averages listed in policy.  It started the penalties in October 2012.  They will continue to phase them in to 2017.  In phase 1, CMS focuses on 3 diagnosis groups:

-Acute Myocardial Infarction

-Heart Failure

-Pneumonia”

* Acute Myocardial Infarction – Interruption of the blood supply.  Heart tissue can die or become damaged.

Other groups will be added in the future.

My closing remarks for this segment: Any trip back in hospital related to those conditions above makes for a bad day.   To think that a good percentage of such may be preventable is not very assuring.  As far as putting a great service in the market place… well, clearly, this implies that there is work to be done. 

In the next segment, Michael Ryan and I will discuss how the penalties are assessed and discuss further readmission as it relates with patient versus hospital responsibility.

Part-2 Limited-Warranty on-Patient Care