Penrose to face Medicare penalty in October

Only one Colorado Springs hospital will face readmissions penalties to the federal government. That hospital is Penrose-St. Francis Health Services.

Penrose will lose .16 percent of its Medicare payments starting in October. It’s one of the lowest national penalties.

But the hospital isn’t alone – more than 2,000 hospitals nationwide were penalized. And one, Keefe Memorial Hospital in Cheyenne Wells, had to pay the maximum penalty of 1 percent. The study of the nation’s hospitals was done by Kaiser Health News.

Memorial Health System and its proposed lease partner, University of Colorado Hospital, did not have to pay a penalty.

The hospitals’ penalties will start in October and will forfeit a total of $280 million in Medicare funds over the next year as the government begins a wide-ranging push to start paying health care providers based on the quality of care they provide.

With nearly one in five Medicare patients returning to the hospital within a month of discharge, the federal government hopes that penalizing the hospitals for the readmissions will lower health care costs.

Hospitals have had little financial incentive to make sure patients get after-care needed and – before now – actually benefitted when patients return to the hospitals.

Nearly 2 million Medicare patients are readmitted within 30 days of release, costing Medicare $17.5 billion annually in additional hospital bills. On average, the national readmission rate is about 19 percent.

The penalties are part of the Affordable Care Act and an attempt by Medicare to use its financial clout to force improvements in quality.

Overall, Medicare has decided to penalize about two-thirds of the hospitals whose readmission rates it evaluated. Nationally, 278 hospitals received the maximum penalty, while 1,156 hospitals received no penalty at all. More than 1,900 hospitals earned other penalties.

Kaiser Health News says the penalties will fall heavily on hospitals that treat the most low-income patients – and the states with the most number of penalties are New Jersey, New York, the District of Columbia, Arkansas, Kentucky, Mississippi, Illinois and Massachusetts.

This year, the maximum penalty is 1 percent, but next year, that rises to 2 percent of regular payments, and goes up to 3 percent in 2014. The $280 million in penalties is about .3 percent of total Medicare payments.

Hospitals have been complaining that CMS is applying the rule too stringently – penalizing them no matter what reason the patients return.