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Casey Christie / The Californian

Casey Christie / The Californian Memorial Hospital. In 2010 Memorial gave 2% or about $5,000,000.

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San Joaquin Community Hospital.

A new Medicare program that punishes hospitals with high patient readmission rates is forcing administrators to reach out and improve how patients are cared for even after they're wheeled out the hospital doors.

Working to reduce runaway costs, Medicare is now penalizing hospitals nationwide for patients who must be admitted again within 30 days.

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.

So the federal government has started disciplining hospitals with high readmissions rates, withholding as much as 1 percent of the money that Medicare would normally reimburse them.

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, part of the 2010 federal health care reform law.

Confirming their fears, most of the eight hospitals in California paying the stiffest penalties this year are 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 curb unnecessary patient readmissions, estimated to cost Medicare nearly $18 billion a year. The penalties, they say, will also promote better patient care.

Local impact

In Kern County, Bakersfield Memorial and San Joaquin Community hospitals face the highest penalties at .84 percent and .76 percent respectively.

A Californian analysis of data released by the Centers for Medicare and Medicaid Services (CMS) in March showed those penalties would be about $332,000 for Memorial and $301,700 for San Joaquin.

Robin Mangarin-Scott, a spokeswoman for Mercy and Bakersfield Memorial hospitals, said the number for Memorial was a "fair estimate" of the hospital's penalty but that the actual amount is hard to determine because the numbers are fluid.

Jimmy Phillips, a spokesman for San Joaquin, said he could not verify the estimate of the hospital's penalty on Friday afternoon.

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. "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.

Others serve under-privileged 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. That does not surprise some hospital leaders familiar with the geographic disparities of California's 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.

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.

Is it fair?

The 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 this October and 3 percent a year later.

In all, 276 hospitals nationally this year are paying the maximum penalty, according to the Kaiser Health News analysis.

The program is an outgrowth of mechanisms in the 2010 Affordable Care Act to curtail rising health care costs.

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 policy 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.

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 .82 percent, penalty, just shy of the worst-case fine.

Michael Smith, specialty programs coordinator in Bakersfield Memorial Hospital's Transformational Care department, said there is concern about the growing penalty and the loss of reimbursement dollars.

But he added that he thinks the Centers for Medicare and Medicaid Services is encouraging hospitals to look at their processes and work with the community to improve the whole health care continuum and safely move patients through it.

"I think that the theory is valid," Smith said. "The results of this may prove worthwhile."

Walter Ray, director of physician operations at Mercy and Mercy Southwest hospitals, said he understands where CMS is going with the program.

"They're forcing a higher collaboration and cooperation between inpatient and outpatient," Ray said. "Nobody likes change, but this is something we're going to have to get our head around because this is the way medicine is going."

Attacking the problem

Many hospitals are designing new tools to reduce preventable readmissions.

In Kern County, representatives from hospitals, long-term care facilities, home health agencies and hospice agencies have been meeting for about a year to brainstorm ideas.

Lynne Ashbeck, regional vice president for the Hospital Council of Northern and Central California, said the group known as the Kern County Care Transitions Collaborative started with the goal of applying for a grant from CMS to fund such community collaboratives.

Smith said the funding would be used for a medical social worker who sees patients in the hospital and follows up with them after discharge, including meeting those patients and their caregivers at home.

The group is still waiting to learn if it got the grant, Ashbeck said.

The collaborative meets quarterly and spawned three work groups to address the issues of communication as patients are handed off from agency to agency, making sure patients take medications and ways to maximize community resources.

"My hope for Kern County is that we can develop a standardized patient transfer form" so everyone is looking at the same language and indicators when patients are moved, Ashbeck said.

Similar collaboratives are meeting across the state. Ashbeck said the drivers of readmissions are similar in various regions -- bad communication and medication issues -- but the solutions are different.

In February, Memorial incorporated a risk assessment to rate a patient's 30-day readmissions risk. Smith said the assessment form is designed to collect information including patients' socioeconomic status, living situation, how many medications they take and if they have trouble managing their prescriptions.

"It sort of touches on a number of different hot topic issues that have been found to be the cause of patient readmission nationally," Smith said.

Nurses check in with patients several days after they leave the hospital. The hospital's readmission team, which includes pharmacy, nursing and social services staff, also calls some patients to make sure they are adjusting well and able to make their follow-up doctor's appointments.

San Joaquin Community Hospital is working on a similar post-discharge call program. Nurses will provide follow-up calls to stress the importance of medication and help patients connect with their primary care physician.

"We've been able to make sure that the person knows that they have to get their medications," said Sharlet Briggs, San Joaquin's vice president of organizational excellence.

Ray said Mercy also has a team that coordinates the hand-off of a patient between inpatient and outpatient care. Mercy also hired a nurse about a year or two ago who interviews patients who have been readmitted or are at a high risk of being readmitted, Ray said. She works with them in the hospital and also follows up with them after they leave.

"She has been very helpful in trying to bring those numbers down," Ray said.

As the penalty program matures, it will likely be tweaked to take into account the disparities among hospitals, such as those serving primarily lower-income patients, Wachter said.

"What you see is an environment that's shifting from one where, in the old days, the best hospitals and the worst hospitals got paid exactly the same by Medicare and private insurers," Wachter said.

"We've woken up in American medicine," he added. "We're seeing a sea change in the level of responsibility that people are going to hold us to. And I think that's appropriate."

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. Bakersfield hospitals caught in Medicare rule change over readmissions