One in a series of stories about implementation of the Affordable Care Act.
Eight California hospitals — including four in the Los Angeles area — are among the institutions paying the maximum fine under a new Medicare program designed to reduce high patient readmission rates. (See map of all affected California hospitals below.)
Under the 2010 federal Affordable Care Act, the federal government has started fining hospitals with high readmissions rates as much as 1 percent of the money that Medicare would normally reimburse them. Working to reduce runaway costs, Medicare is now penalizing hospitals across California and nationwide for patients who must be admitted again within 30 days.
The maximum fine has been assessed against Centinela Hospital Medical Center in Inglewood, Glendale Memorial Hospital and Health Center in Glendale, Olympia Medical Center in Los Angeles and San Gabriel Valley Medical Center in San Gabriel, as well as four other hospitals in California.
The prospect of such fines is forcing hospital administrators to reach out and improve how patients are cared for even after they're wheeled out the hospital doors.
Nearly one in five patients discharged from U.S. hospitals ends up returning within a month, often with problems that could have been prevented if those patients received good — and much cheaper — follow-up care.
That worries some health-care experts nationally and in California who say that facilities serving low-income communities could be hit the hardest by the new program.
Most of the eight hospitals in California paying the stiffest penalties this year are located in low-income areas, according to the latest numbers released by Medicare in March and analyzed by Kaiser Health News.
Others say that with Medicare costs spiraling upward, federal officials need to act to curb unnecessary patient readmissions, estimated to cost Medicare nearly $18 billion a year. The penalties, they say, will also promote better patient care.
The penalty system is imperfect, but it's a good place to start, said Dr. Robert M. Wachter, professor and associate chair at the UC San Francisco Department of Medicine.
"It's forcing hospitals to think about things they never thought about before," said Wachter, who writes frequently about health care quality. "If you wait until the tool is less blunt, I think you'll wait forever."
Several of the hospitals paying big penalties this year are scattered up and down the sprawling Central Valley, from Tulare to Oroville, a region known for chronic health problems such as obesity and diabetes.
Small and medium-sized hospitals
Others serve underprivileged Los Angeles area neighborhoods that also have health challenges and lack the medical networks of wealthier communities.
All are small or medium-sized hospitals — not the state's giant academic teaching facilities. In all, 276 hospitals nationally are paying the maximum penalty, according to the Kaiser Health News analysis.
That does not surprise some hospital leaders familiar with the geographic disparities of the California health care system.
"A lot of problems exist in the Central Valley that don't exist in Newport Beach," said Tom Petersen, executive director of the Association of California Healthcare Districts, which represents mainly smaller hospitals with publicly elected boards — half of them in rural areas.
One of those hospitals, Tulare Regional Medical Center in Tulare, is among the eight facilities in the state paying the largest penalty. Some hospitals paying close to 1 percent are also in the Central Valley, in Bakersfield, Colusa and Merced.
Petersen is taking a wait-and-see approach to the penalty rollout, but he notes that hospitals have little control if their patients fail to follow doctors' instructions and dietary restrictions after they're discharged.
"The hospital doesn't have the ability to control behavior outside the hospital," he said.
Medicare disagrees and hopes the new program pressures hospital officials to improve their discharge planning and strengthen ties with primary care doctors and clinics in surrounding communities.
Three types of conditions
The new penalty system focuses on Medicare patients hospitalized with three types of medical conditions — heart attacks, heart failure and pneumonia. The penalties are expected to recoup about $280 million in the first year.
Next, officials plan to add patients with hip and knee implants and chronic obstructive pulmonary disease, Medicare announced April 26. The largest penalties will rise to 2 percent in 2014 and 3 percent in 2015.
The program is an outgrowth of mechanisms in the 2010 Affordable Care Act to curtail rising health care costs.
"The ACA doesn't just go in with a machete and cut up Medicare," said UCLA assistant professor Dylan H. Roby, director of the health economics and evaluation research program at the UCLA Center for Health Policy Research.
Rather, the Centers for Medicare and Medicaid Services is using incentives to make those cuts, Roby said.
Some hospital leaders believe the new program is deeply flawed.
"We think it's fair to ask hospitals to look at readmissions and see what they can do to prevent unnecessary readmissions," said Nancy E. Foster, vice president for quality and patient safety problems at the American Hospital Association.
"But we think the current construction of the program is unfair. It puts hospitals serving low-income patients at risk. We don't think that's right," Foster said. (Story continues below map.)
Several national health policy experts have echoed those concerns in a series of recent articles in prominent policy journals.
In California, a physician shortage plagues both urban and rural areas, undercutting the outpatient care that could prevent unnecessary patient readmissions.
Petersen points out that the California Medical Board's most recent annual report lists only nine physicians with current licenses in Colusa County, where Colusa Regional Medical Center is being slapped with a 0.82 percent penalty, just shy of the worst-case fine.
New programs to reduce readmissions
Amid the debate over the program’s fairness, many hospitals statewide and nationally are designing new tools to reduce preventable readmissions.
In the Los Angeles area, AltaMed Health Services in Commerce has partnered with Hollywood Presbyterian and White Memorial medical centers and two other hospitals.
AltaMed employees will work closely with patients being discharged and teach them certain “red flags” signaling that they should call their doctors.
For instance, they might encourage a heart-failure patient to monitor his or her weight, since quickly gaining two or three pounds could be a sign of congestive heart failure, said Anthony Ridley, a licensed vocational nurse supervising the program.
Deborah Schoch is a senior writer at the CHCF Center for Health Reporting, which does in-depth reporting on health care in California. Based at the USC Annenberg School for Communication and Journalism, it is funded by the nonpartisan California HealthCare Foundation.