Three Valley hospitals face Medicare fines

Three area hospitals will have to pay hundreds of thousands of dollars in penalties for having too many Medicare patients return to the hospital within a month of being discharged.

The penalties, part of the federal Affordable Care Act, are designed to encourage hospitals to reduce readmissions, which cost taxpayers an estimated $17 billion a year.

Community Regional Medical Center in Fresno expects to lose the most, $500,000 to $1 million. Tulare Regional Medical Center could be penalized about $106,000, and Coalinga Regional Medical Center about $16,000.

The Tulare and Coalinga hospitals were slapped with the maximum 1% penalty of their Medicare reimbursement, and Fresno’s was .85%. A hospital’s penalty is based on readmissions within 30 days of discharge for Medicare patients who had been treated for heart attack, heart failure or pneumonia.

Four hospitals in the Valley — Clovis Community Medical Center, Fresno Surgical Hospital, Kaiser Permanente-Fresno and Corcoran District Hospital — face no penalty.

According to a Kaiser Health News analysis, safety-net hospitals — those that care for low-income patients — are more vulnerable to the penalties. The analysis found 76% of those hospitals will lose Medicare funds compared to 55% of hospitals treating few poor patients.

Valley hospital executives say those that serve the poor are getting clobbered the hardest.

Community Regional in downtown Fresno has a contract with Fresno County to provide care to indigents, and it sees a disproportionate share of low-income patients. Its sister hospital in Clovis has more patients with private insurance.

“It’s vastly different for a safety-net hospital like the downtown facility than for a hospital like Clovis,” said Dr. Thomas Utecht, chief quality officer for Community Medical Centers, which operates both Community Regional and Clovis Community.

“A lot of this has to do with the socioeconomic status and the health-care status and the ability to get outpatient care for the patients at the different facilities.”

There are factors once a patient is discharged that hospitals have no control over. Patients might not have the money to fill prescriptions. They might be unable to make follow-up appointments because they don’t have a primary-care physician or transportation, hospital executives said.

Said Utecht, “If the penalty is to take the resources away (that) we can use to combat the problem, I’m not sure that goes to helping fix the problem.”

Cutting into revenues

Coalinga is challenging the penalty, said hospital Administrator Sharon Spurgeon, calling any kind of reimbursement cut “a significant problem for us.” She expects to have an answer within 60 days.

Coalinga and Tulare are among 278 hospitals nationally to receive the maximum penalty, according to the analysis by Kaiser Health News, an independent program of the nonprofit Kaiser Family Foundation. Another 1,933 hospitals got smaller penalties.

The penalties, which kick in Oct. 1, are based on Medicare and Medicaid readmission data from 2008 to 2011.

The federal government should receive about $280 million in penalties nationwide in the first year, according to the analysis. The maximum penalty increases to 2% in 2014 and 3% in 2015.

“Medicare has to bring down health-care costs,” said Carol Furgal, a Tulare Regional Medical Center vice president, “so we’ll work with what they say and we’ll put our patients as our primary concern and do what’s right for them.”

But the penalties just add to a cut in revenue, said Jan Emerson-Shea, vice president at the California Hospital Association. Reimbursement rates from Medicare currently fail to cover the costs of care, she said. California hospitals lose $3.5 million annually in providing the care, she said.

And hospitals have objected to the penalties because they apply to any readmission — from a broken leg to a gallbladder attack — that can have nothing to do with the original admission for a heart attack, heart failure or pneumonia.

Learning from each other

Tulare Regional has joined with other hospitals in the state to share information on how they have reduced readmission rates. In Tulare, the focus is on reducing return visits by congestive heart patients, Furgal said.

Community Regional belongs to a national collaborative, Utecht said. As part of its effort to reduce readmission rates, the hospital flags patients who are likely to be readmitted and provides more intensive case management for them, he said.

These patients can lack an understanding of discharge instructions and may be indigent or have no support system at home or no transportation to doctor appointments, he said.

In cases like those, patients who are at risk for readmission receive more teaching about their health condition before discharge and receive follow-up telephone calls once they go home, he said.

Utecht expects to see an improvement in readmission rates from the intensive case management that is now in place for patients at risk of readmission, but it won’t be a huge drop immediately, he said.

Medicare will include only one new year of data to determine the penalty for 2014, he said.

And he questions Medicare taking money from safety-net hospitals that have the most challenges in reducing readmission rates. “It’s a vexing problem.”

By Barbara Anderson