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New Study Reveals $120 Million in Annual Medicare Readmission Spending

Improved Care Transitions Can Reduce Costs

Mounting pressure to reduce healthcare costs is a focus of health reform and, over the past several years, geographic analyses of healthcare claims data have demonstrated significant variations in utilization, cost, and quality of hospital services. As purchasers and payers call for better integration of healthcare delivery, these analyses represent an opportunity to develop a systems-based approach to more coordinated, effective, and affordable healthcare service provision.

Qsource conducted a study analyzing geographic healthcare claims data as the Medicare Quality Improvement Organization (QIO) for Tennessee, and is now engaging community stakeholders to share innovative approaches for improving care coordination and to identify root causes of the variations found in the readmissions data. Communities are responding by forming partnerships across Tennessee to improve transitions of care in their areas. Functioning as a community, stakeholders are better able to deliver high-value healthcare to residents, improving the health of the workforce and reducing costs to existing and potential employers.

The breakdowns in healthcare delivery that occur during transition from hospital to home, or another source of care, have major implications for health outcomes, costs, and patient experiences. Targets for improving transitions of care include

  • decreasing the deterioration of health conditions that can occur following discharge for all patients receiving hospital care,
  • making sure that care delivery is responsive to the clinical and social needs of all patients in a hospital service area, and
  • reducing unnecessary readmissions.

The problem of readmissions is not solely hospital-based. It involves multiple providers across settings —primary-care physicians and specialists, nursing home and home health staff, and non-clinical providers of supportive services. To understand this complex problem, focus needs to be directed not only at what is going on within hospital walls, but also what is going on after the patient re-enters the community.

In a typical measure of readmission, the hospital is the unit of analysis where methodologies use complex statistical procedures to attribute a readmission to the hospital in which it occurs and that geographic community. The Qsource study examined readmission data in Tennessee by attributing readmissions to the ZIP code in which the beneficiary resides. These data were then aggregated to the hospital service area (HSA) and subsequent health referral region (HRR) based on the Dartmouth Atlas of Health Care Project and reflective of natural Medicare beneficiary utilization patterns.

Qsource looked at community rates of readmissions for five Tennessee metropolitan areas (Memphis, Nashville, Chattanooga, Knoxville and the Tri-Cities). Community rates adjust readmissions by the size of the Medicare population in each region. The lowest community rate of readmissions in Tennessee occurs in the Chattanooga area, the highest, in Nashville.

Knoxville

  • There are 187,775 Medicare beneficiaries age 65 and older residing within the Knoxville HRR, of whom 26,479 were admitted to the hospital during 2009.
  • Approximately 20% (4,910) of the beneficiaries receiving inpatient care experienced one or more readmissions and accounted for 7,385 readmissions (approximately 39 readmission events per 1,000 Medicare beneficiaries).
  • $57 million was spent by Medicare on readmissions in 2009. All Medicare readmission expenditures are from just 20% of beneficiary patients and about 16% of this spending (more than $9 million) is on 241 individuals.
  • Fifty percent of patients readmitted were originally discharged to self-care/home, approximately 24% to skilled nursing facilities, 18% to home with home health services, and 8% to some other care facility (e.g., hospice, psychiatric hospital).

Chattanooga

  • There are 89,592 Medicare beneficiaries age 65 and older residing within the Chattanooga HRR, of whom 12,146 were admitted to the hospital during 2009.
  • Approximately 16% (1,909) of the beneficiaries receiving inpatient care experienced one or more readmissions and accounted for 2,629 readmissions (approximately 29 readmission events per 1,000 Medicare beneficiaries).
  • $23 million was spent by Medicare on readmissions in 2009. All Medicare readmission expenditures are from just 20% of beneficiary patients and 20% of this spending (nearly $4.6 million) is on 153 individuals.
  • Fifty-two percent of patients readmitted were originally discharged to self-care/home, approximately 19% to skilled nursing facilities, 16% to home with home health services and 13% to some other care facility (e.g., hospice, psychiatric hospital).

Tri-Cities

  • There are 110,434 Medicare beneficiaries age 65 and older residing within the Tri-Cities HRR, of whom 14,722 were admitted to the hospital during 2009.
  • Approximately 20% (3,104) of the beneficiaries receiving inpatient care experienced one or more readmissions and accounted for 5,067 readmissions (approximately 46 readmission events per 1,000 Medicare beneficiaries).
  • $40 million was spent by Medicare on readmissions in 2009. All Medicare readmission expenditures are from just 20% of beneficiary patients and 20% of this spending (more than $8 million) is on 218 individuals.
  • Forty-six percent of patients readmitted were originally discharged to self-care/home, approximately 19% to skilled nursing facilities, 24% to home with home health services and 11% to some other care facility (e.g., hospice, psychiatric hospital).

One way to reduce this spending is to combine system-level interventions that improve all patients’ care transitions with resource allocation targeted toward those who account for a disproportionate share of the spending.

While significant, the Qsource study data presented here merely approaches the tip of the iceberg in terms of understanding this multifaceted, complex problem. Further exploration of the local healthcare delivery system and patient needs is warranted.

 

Dawn M. FitzGerald is chief executive officer of Qsource, a nonprofit, healthcare quality improvement and information technology consultancy headquartered in Tennessee. She recently served on the Institute of Medicine’s Committee on Future Directions for the National Healthcare Quality and Disparities Reports and is a former member of the several National Quality Forum (NKF) workgroups. FitzGerald is currently a member of the NQF Healthcare Disparities and Cultural Competency Consensus Standards Committee.


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